AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 2003
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
--------------------
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0317849
STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
311 ENTERPRISE DRIVE
PLAINSBORO, NJ 08536
(609) 275-0050
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------
JOHN B. HENNEMAN, III
EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER & SECRETARY
311 ENTERPRISE DRIVE
PLAINSBORO, NJ 08536
(609) 275-0050
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
MICHAEL D. LEVIN
LATHAM & WATKINS ILLINOIS LLC
233 S. WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 876-7700
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| ____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| _____________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SECURITY PRICE(1) REGISTRATION FEE
2 1/2% Contingent Convertible $120,000,000 100% $120,000,000 $9,708.00
Subordinated Notes due 2008 of
Integra LifeSciences Holdings
Corporation ...................
Common Stock, par value $0.01 per 3,514,164 --- --- ---
share shares(2)
(1) Equals the aggregate principal amount of notes being registered. Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended.
(2) Represents the number of shares of common stock that are initially
issuable upon conversion of the notes. Pursuant to Rule 416(a) under the
Securities Act, the registrant is also registering such indeterminate
number of shares of common stock as may be issued from time to time upon
conversion of the notes as a result of dilution resulting from stock
splits, stock dividends or similar transactions. No additional
consideration will be received for the common stock, and therefore no
registration fee is required pursuant to Rule 457(i) under the Securities
Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission becomes effective. This
prospectus is not an offer to sell these securities nor does it seek to offer
to buy these securities in any jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED JUNE 27, 2003
PROSPECTUS
$120,000,000
LOGO
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
----------------------
In March and April 2003, we issued and sold $120,000,000 aggregate
principal amount of our 2 1/2% Contingent Convertible Subordinated Notes due
2008 in private offerings. This prospectus will be used by selling
securityholders to resell the notes and the common stock issuable upon
conversion of the notes. We will pay interest on the notes on March 15 and
September 15 of each year. The first interest payment will be made on September
15, 2003. The notes will mature on March 15, 2008. We may not redeem the notes
prior to their maturity. Holders may require us to repurchase the notes upon a
change in control.
Holders may convert their notes at any time on or before the maturity date
into shares of our common stock at an initial conversion price of $34.1475 per
share if: (1) the price of our common stock reaches 110% of the conversion price
on the trading day prior to the conversion date, (2) specified corporate
transactions occur or (3) the trading price for the notes falls below certain
thresholds. The conversion price will be subject to adjustment for certain
events. The conversion price is equivalent to a conversion rate of approximately
29.2847 shares per $1,000 principal amount of notes. The notes are subordinated
to our existing and future senior indebtedness. Our common stock is quoted on
the Nasdaq National Market under the symbol "IART." The last reported bid price
of our common stock on June 25, 2003 was $26.11 per share.
We will also pay contingent interest in arrears on the final interest
payment date if the closing price of our common stock on February 15, 2008 is
equal to or greater than 110% of the conversion price on February 15, 2008. The
notes will be subject to special United States federal income tax rules. For a
discussion of the special tax regulations governing contingent payment debt
securities, see "Material United States Federal Income Tax Considerations."
YOU SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2003
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information......................................... ii
Incorporation of Certain Documents by Reference............................. iii
About This Prospectus....................................................... iii
Special Note Regarding Forward-Looking Statements........................... iv
Prospectus Summary.......................................................... 1
Risk Factors................................................................ 8
Use of Proceeds............................................................. 21
Price Range of Common Stock................................................. 22
Dividend Policy............................................................. 22
Ratio of Earnings to Fixed Charges.......................................... 23
Description of Notes........................................................ 24
Description of Capital Stock................................................ 38
Material United States Federal Income Tax Considerations.................... 40
Selling Securityholders..................................................... 46
Plan of Distribution........................................................ 47
Validity of the Securities.................................................. 49
Experts..................................................................... 49
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
materials that we have filed with the Securities and Exchange Commission at the
Securities and Exchange Commission public reference room located at 450 Fifth
Street, N. W., Room 1024, Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the public
reference room.
Our common stock is quoted on Nasdaq National Market under the symbol
"IART," and our Securities and Exchange Commission filings can also be read at
the following address:
NASDAQ Operations, 1735 K Street, N.W. Washington, D.C. 20006
Our Securities and Exchange Commission filings are also available to the
public on the Securities and Exchange Commission's Internet website at
http://www.sec.gov.
This prospectus is part of a registration statement on Form S-3 we have
filed with the SEC under the Securities Act of 1933, as amended. This prospectus
does not contain all the information set forth in the registration statement.
For further information about us and the notes, you should refer to the
registration statement. In this prospectus we summarize material provisions of
contracts and other documents to which we refer you. Since this prospectus may
not contain all the information that you may find important, you should review
the full text of these documents. We have filed these documents as exhibits to
our registration statement.
This prospectus incorporates important business and financial information
about us that is not included in or delivered with this prospectus. This
information is available without charge to you upon written or oral request. If
you would like a copy of any of this information, please submit your request to
Integra LifeSciences Holdings Corporation, 311 Enterprise Drive, Plainsboro, New
Jersey 08536, Attention: Investor/Public Relations, or call (609) 936-2239 and
ask to speak to someone in our investor/public relations department.
ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" certain documents, which
means that we can disclose important information to you by referring you to
those documents. We incorporate by reference into this prospectus the documents
listed below and any future filings we make with the Securities and Exchange
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, including any filings after the date of this
prospectus. The information incorporated by reference is an important part of
this prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded to the extent a statement
contained in (1) this prospectus or (2) any other subsequently filed document
that is incorporated by reference into this prospectus modifies or supersedes
such statement.
o Our Annual Report on Form 10-K for our fiscal year ended December 31,
2002.
o Our definitive proxy statement filed with the Securities and Exchange
Commission for our Annual Meeting of Stockholders held on May 21,
2003.
o Our Current Reports on Form 8-K filed on March 25, 2003, June 18, 2003
and June 27, 2003.
o Our Quarterly Report on Form 10-Q for the three months ended March 31,
2003.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Integra LifeSciences Holdings Corporation
Investor/Public Relations
311 Enterprise Drive
Plainsboro, New Jersey 08536
Telephone: (609) 936-2239
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration or
continuous offering process. Under this shelf registration process, selling
securityholders may from time to time sell the securities described in this
prospectus in one or more offerings.
This prospectus provides you with a general description of the
securities that the selling securityholders may offer. A selling securityholder
may be required to provide you with a prospectus supplement containing specific
information about the selling securityholder and the terms of the securities
being offered. That prospectus supplement may include additional risk factors or
other special considerations applicable to those securities. A prospectus
supplement may also add, update or change information in this prospectus. If
there is any inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in that prospectus
supplement. You should read both this prospectus and any prospectus supplement
together with the additional information described under the heading "Where You
Can Find More Information."
iii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated or deemed to be incorporated
by reference herein contain statements concerning our future results and
performance and other matters that are "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act. These statements involve known and unknown risks, uncertainties,
and other factors that may cause our or our industry's results, levels of
activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
those listed under "Risk Factors" and elsewhere in this prospectus. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "intend," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," or "continue" or the negative of such terms
or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance, or achievements. Except as otherwise required by the
federal securities laws, we disclaim any obligations or undertaking to publicly
release any updates or revisions to any forward-looking statement contained in
this report to reflect any change in our expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
iv
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS THE INFORMATION CONTAINED ELSEWHERE OR
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. BECAUSE IT IS A SUMMARY, IT DOES
NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ
THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS,"
ALONG WITH THE DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. AS USED
IN THIS PROSPECTUS, "INTEGRA," THE "COMPANY," "WE," "OUR," "OURS" AND "US" REFER
TO INTEGRA LIFESCIENCES HOLDINGS CORPORATION, EXCEPT WHERE THE CONTEXT OTHERWISE
REQUIRES OR AS OTHERWISE INDICATED.
BUSINESS
Integra develops, manufactures, and markets medical devices for use in
neurosurgery, plastic and reconstructive surgery, general surgery and soft
tissue repair. Integra was founded in 1989 and over the next decade developed
technologies and a product portfolio directed toward tissue regeneration. In
1999, we entered the neurosurgery market through an acquisition and the launch
of our DuraGen(R) Dural Graft Matrix product for the repair of the dura mater.
Since 1999, we have increased our revenues from $42.9 million to $117.8 million,
for an average annual growth rate of 40%, and we have broadened our product
offerings to include more than 10,000 products. We have achieved this growth in
our overall business through 12 acquisitions, the development and introduction
of new products, and the expansion of our direct sales force.
Management has historically managed the business and reviewed financial
results under two separate operating segments: Integra NeuroSciences(TM) and
Integra LifeSciences(TM). In 2003, following the integration of several recently
acquired, diverse businesses, management began to manage the business and review
financial results on an aggregate basis, instead of through these two operating
segments. Accordingly, the Company now reports financial results under a single
operating segment - the development, manufacturing and distribution of medical
devices.
The Company's product lines include traditional medical devices, such
as monitoring and drainage systems, surgical instruments and fixation systems,
as well as innovative tissue repair products, such as the DuraGen(R) Dural Graft
Matrix, the NeuraGen(TM) Nerve Guide, and the INTEGRA(R) Dermal Regeneration
Template, that incorporate the Company's proprietary absorbable implant
technology.
We sell our products directly through various sales forces and through
a variety of distribution channels. Our direct sales organizations include the
following:
o Our Integra NeuroSciences(TM) sales force provides neurosurgeons and
critical care units with implants, devices, instruments, and systems
used in neurosurgery, neuromonitoring, neurotrauma, and related
critical care. Integra NeuroSciences' direct marketing effort in the
United States and Europe currently involves more than 100
professionals, including direct salespeople (called neurospecialists in
the United States), sales management, and clinical educators who
educate and train both our salespeople and customers in the use of our
products. In all other markets, Integra NeuroSciences products are sold
through a network of distributors.
o Our JARIT(R) Surgical Instruments sales force markets a wide variety of
high quality surgical instruments for use in both traditional and
minimally invasive surgery in virtually all surgical applications,
including general, plastic, neuro, ear, nose and throat ("ENT"),
cardiovascular, ob-gyn, and ophthalmic surgical procedures. JARIT sells
its products in the United States through a twenty-person sales
management force that works with over 100 distributor sales
representatives
1
as well as certain original equipment manufacturer accounts. Outside
the United States, JARIT sells its products through a network of
distributors.
o Our Integra Padgett Instruments sales force markets a wide variety of
high quality, reusable surgical instruments and implants to plastic and
reconstructive surgeons, burn surgeons, ENT surgeons, hospitals,
surgery centers, and other physicians. Padgett markets its products
primarily through an eight-person sales force in the United States.
Outside the Unites States, Padgett sells its products through a network
of distributors.
o Integra NeuroSupplies(TM) distributes disposables and supplies used in
the diagnosis and monitoring of neurological disorders. These products
are marketed primarily through a catalog, which is mailed once a year,
and are used by neurologists, hospitals, sleep clinics, and other
physicians in the United States.
We market our private label products through strategic partners or
original equipment manufacturer customers. Our private label products address
large, diverse markets, and we believe that we can develop and promote these
products more cost-effectively through leveraging the product development and
distribution systems of our strategic partners than through developing the
products ourselves or selling them through our own direct sales infrastructure.
We have partnered with market leaders, such as Johnson & Johnson, Medtronic,
Wyeth, and Centerpulse, for the development and marketing efforts related to
many of these products.
CORPORATE INFORMATION
We were incorporated in Delaware in June 1989. Our principal executive
offices are located at 311 Enterprise Drive, Plainsboro, New Jersey 08536. Our
telephone number at this location is (609) 275-0500. Our web site is located at
www.integra-ls.com. The information contained on our web site is not a part of
this prospectus.
2
THE OFFERING
The following summary contains basic information about the notes and is
not intended to be complete. It may not contain all the information that is
important to you. For a more complete description of the notes, please refer to
the section of this document entitled "Description of Notes".
ISSUER Integra LifeSciences Holdings Corporation
NOTES OFFERED $120,000,000 aggregate principal amount of 2 1/2%
Contingent Convertible Subordinated Notes due 2008.
MATURITY DATE March 15, 2008.
INTEREST 2 1/2% per annum on the principal amount, payable
semi-annually on March 15 and September 15 of each
year, beginning September 15, 2003.
CONTINGENT INTEREST We will pay contingent interest on March 15, 2008, if
the common stock price on February 15, 2008 is equal to
or greater than 110% of the conversion price per share
of our common stock in effect on February 15, 2008. The
amount of contingent interest payable per $1,000
principal amount of Notes will equal the sum for each
of the twelve month periods ended March 15, 2006, March
15, 2007 and March 15, 2008 of the greater of (x) 0.50%
per annum of the principal amount of such notes and (y)
the aggregate amount of regular cash dividends paid
during such period on the number of shares of common
stock into which $1,000 principal amount of notes is
convertible.
SUBORDINATION The notes will be unsecured, subordinated obligations
of the Company. They will rank junior in right of
payment to all of our existing and future senior
indebtedness (as defined), and rank equally with all of
our future subordinated indebtedness. The notes will
also be effectively subordinated to all existing and
future indebtedness and other liabilities of our
subsidiaries. As of March 31, 2003, (i) we had no
outstanding senior indebtedness, and (ii) our
subsidiaries had no outstanding indebtedness and
approximately $30.7 million of other liabilities,
including trade payables, but excluding intercompany
liabilities, as to which the notes are effectively
subordinated. Neither we nor our subsidiaries will be
restricted under the indenture from incurring senior
debt or other additional indebtedness. See "Description
of the Notes--Subordination of Notes."
3
CONVERSION RIGHTS You will have the right, at your option, to convert
your notes, in whole or in part, into shares of our
common stock at any time prior to maturity at the
conversion price of $34.1475 per share, subject to the
adjustments described in the description of the notes,
if:
o the last sale price of our common stock on the
trading day prior to the conversion date was 110%
or more of the conversion price on such trading
day;
o we distribute to holders of our common stock
certain rights entitling them to purchase common
stock at less than the last sale price of our
common stock on the day preceding the declaration
for such distribution;
o we distribute to holders of our common stock
assets, debt, securities or certain rights to
purchase our securities, which distribution has a
per share value as determined by our board of
directors exceeding 10% of the last sale price of
our common stock on the day preceding the
declaration of such distribution; or
o we become a party to a consolidation, merger or
sale of all or substantially all of our assets or
a change in control occurs pursuant to which our
common stock would be converted into cash, stock
or other property that is not a common equity
interest traded on a national securities exchange
or quoted on the Nasdaq National Market.
You may also convert your notes into shares of our
common stock:
o at any time prior to March 15, 2006 after any 5
consecutive trading-day period in which the
average trading prices for the notes for that 5
trading-day period was less than 103% of the
average conversion value for the notes during that
period; and
o at any time on or after March 15, 2006 and prior
to maturity after any 5 consecutive trading-day
period in which the average trading prices for the
notes for that 5 trading-day period was less than
97% of the average conversion value for the notes
during that period, however, you may not convert
your notes on or after March 15, 2006 if, at the
time of the calculation, the closing sale price of
shares of our common stock is between the then
current conversion price on the notes and 110% of
the then current conversion price on the notes.
For each $1,000 of aggregate principal amount of notes
converted, we will deliver approximately 29.2847 shares
of our common stock. The conversion price may be
adjusted under certain circumstances. Upon conversion,
you will not receive any cash payment representing
accrued interest. However, if you submit your notes for
conversion between the record date for the final
interest payment and the opening of business on the
final interest payment date, we will pay you the
interest for the final
4
interest payment period (including the contingent
interest, if any). See "Description of the
Notes--Conversion of Notes."
OPTIONAL REDEMPTION We may not redeem the notes prior to their maturity
date.
SINKING FUND None.
PURCHASE UPON CHANGE IN
CONTROL AT YOUR OPTION You may require us to purchase all or part of your
notes at 100% of their principal amount, plus accrued
and unpaid interest, if any, to, but excluding, the
repurchase date in cash in certain circumstances
involving a change in control (as defined).
See "Description of the Notes--Purchase of Notes at
Your Option Upon a Change in Control."
FORM AND DENOMINATION The notes were issued only in fully registered form
without interest coupons and in minimum denominations
of $1,000. The notes are represented by one or more
global notes, deposited with the trustee as a custodian
for The Depository Trust Company, or DTC, and
registered in the name of Cede & Co., DTC's nominee.
Beneficial interests in the global notes are shown on,
and any transfers will be effective only through,
records maintained by DTC and its participants. See
"Description of the Notes--Book-Entry, Delivery and
Form."
USE OF PROCEEDS We will not receive any of the proceeds from the sale
by the selling securityholders of the notes or common
stock issuable upon conversion of the notes.
EVENTS OF DEFAULT The following will be events of default under the
indenture for the notes:
o we fail to pay principal of or any premium on any
note when due, whether or not the payment is
prohibited by the subordination provisions of the
indenture;
o we fail to pay any interest, including contingent
or additional interest, on any note when due and
that default continues for 30 days, whether or not
the payment is prohibited by the subordination
provisions of the indenture;
o we fail to perform any other covenant in the
indenture and that failure continues for 60 days
after written notice to us by the trustee or the
holders of at least 25% in aggregate principal
amount of outstanding notes;
5
o we or any of our subsidaries fail to pay when due,
either at its maturity or upon acceleration
thereof, any indebtedness under any bonds,
debentures, notes or other evidences of
indebtedness for money borrowed in excess of $5.0
million if the indebtedness is not discharged, or
the acceleration is not annulled, within 30 days
after written notice to us by the trustee or the
holders of at least 25% in aggregate principal
amount of the outstanding notes;
o we fail to give notice to you of your right to
require us or any of our subsidiaries to purchase
your notes upon a change in control or fail to
make a payment to purchase notes tendered
following a change in control; and
o events of bankruptcy, insolvency or reorganization
with respect to us specified in the indenture.
See "Description of the Notes--Events of Default."
TRADING The notes are currently trading in the Private
Offerings, Resales and Trading through Automatic
Linkages Market, commonly referred to as the PORTAL
market. Notes sold by means of this prospectus are not
expected to remain eligible for trading in the PORTAL
market but are expected to be traded over the counter.
We do not intend to apply for a listing of the notes on
any securities or any automated dealer quotation
system. Our common stock is quoted on the Nasdaq
National Market under the symbol "IART."
GOVERNING LAW The indenture, the notes and the registration rights
agreement are governed by the laws of the State of New
York.
UNITED STATES
FEDERAL INCOME TAX
CONSIDERATIONS Each holder will agree in the indenture, for United
States federal income tax purposes, to treat the notes
as "contingent payment debt instruments" and to be
bound by our application of the Treasury regulations
that govern contingent payment debt instruments,
including our determination that the rate at which
interest will be deemed to accrue for federal income
tax purposes will be 9.702% compounded semi-annually,
which is the rate comparable to the rate at which we
would borrow on a non-contingent, non-convertible
borrowing with terms and conditions otherwise
comparable to the notes. Accordingly, each holder will
be required to accrue interest on a constant yield to
maturity basis at that rate (subject to certain
adjustments), with the result that a U.S. holder (as
defined below under "Material United States Federal
Income Tax Considerations") will recognize taxable
income significantly in excess of cash received while
the notes are outstanding. In addition, a U.S. holder
will recognize ordinary income upon a sale, exchange,
conversion, redemption or repurchase of the notes at a
gain. In computing such gain, the
6
amount realized by a U.S. holder will include, in the
case of a conversion, the amount of cash and the fair
market value of shares received. However, the proper
United States federal income tax treatment of a holder
of a note is uncertain in various respects. If the
agreed upon treatment was successfully challenged by
the Internal Revenue Service, it might be determined
that, among other differences, a holder should have
accrued interest income at a lower rate, should not
have recognized income or gain upon the conversion, and
should not have recognized ordinary income upon a
taxable disposition of its notes.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE
TAX TREATMENT OF THE NOTES AND WHETHER A PURCHASE OF
THE NOTES IS ADVISABLE IN LIGHT OF THE AGREED UPON TAX
TREATMENT AND THE INVESTOR'S PARTICULAR TAX SITUATION.
RISK FACTORS
In evaluating an investment in the notes, prospective investors should
carefully consider, along with the other information set forth in this
prospectus, the information set forth in the section entitled "Risk Factors" for
risk involved with an investment in the notes.
7
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING
AN INVESTMENT DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES FACING
OUR COMPANY. ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY
DEEM IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.
OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS OR CASH FLOWS
COULD BE MATERIALLY AND ADVERSELY AFFECTED BY ANY OF THESE RISKS. THE TRADING
PRICE OF THE NOTES AND OUR COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS,
AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
RISKS RELATED TO OUR BUSINESS
OUR OPERATING RESULTS MAY FLUCTUATE.
Our operating results may fluctuate from time to time, which could
affect our stock price. Our operating results have fluctuated in the past and
can be expected to fluctuate from time to time in the future. Some of the
factors that may cause these fluctuations include:
o the impact of acquisitions;
o the timing of significant customer orders;
o market acceptance of our existing products, as well as products in
development;
o the timing of regulatory approvals;
o the timing of payments received and the recognition of those payments
as revenue under collaborative arrangements and strategic alliances;
o expenses incurred and business lost in connection with product field
corrections or recalls;
o our ability to manufacture our products efficiently; and
o the timing of our research and development expenditures.
THE INDUSTRY AND MARKET SEGMENTS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE, AND
WE MAY BE UNABLE TO COMPETE EFFECTIVELY WITH OTHER COMPANIES.
In general, the medical technology industry is characterized by intense
competition. We compete with established medical technology and pharmaceutical
companies. Competition also comes from early stage companies that have
alternative technological solutions for our primary clinical targets, as well as
universities, research institutions and other non-profit entities. Many of our
competitors have access to greater financial, technical, research and
development, marketing, manufacturing, sales, distribution services and other
resources than we do. Further, our competitors may be more effective at
implementing their technologies to develop commercial products.
8
Our competitive position will depend on our ability to achieve market
acceptance for our products, implement production and marketing plans, secure
regulatory approval for products under development, obtain patent protection and
secure adequate capital resources. We may need to develop new applications for
our products to remain competitive. Technological advances by one or more of our
current or future competitors could render our present or future products
obsolete or uneconomical. Our future success will depend upon our ability to
compete effectively against current technology as well as to respond effectively
to technological advances. Competitive pressures could adversely affect our
profitability.
The largest competitors of Integra in the neurosurgery markets are the
Medtronic Neurotechnologies division of Medtronic, Inc., the Codman division of
Johnson & Johnson, the Aesculap division of B. Braun, and the Valleylab division
of Tyco International Ltd. In addition, various of our neurosurgery products
compete with smaller specialized companies or larger companies that do not
otherwise focus on neurosurgery. Our private label products face diverse and
broad competition, depending on the market addressed by the product. Finally, in
certain cases our products compete primarily against medical practices that
treat a condition without using a device, rather than any particular product,
such as autograft tissue as a substitute for INTEGRA(R) Dermal Regeneration
Template.
OUR CURRENT STRATEGY INVOLVES GROWTH THROUGH ACQUISITIONS, WHICH REQUIRES US TO
INCUR SUBSTANTIAL COSTS AND POTENTIAL LIABILITIES FOR WHICH WE MAY NEVER REALIZE
THE ANTICIPATED BENEFITS.
In addition to internal growth, our current strategy involves growth
through acquisitions. Since 1999, we have acquired 12 businesses or product
lines at a total cost of approximately $107 million.
We may be unable to continue to implement our growth strategy, and this
strategy may be ultimately unsuccessful. A significant portion of our growth in
revenues has resulted from, and is expected to continue to result from, the
acquisition of businesses complementary to our own. We engage in evaluations of
potential acquisitions and are in various stages of discussion regarding
possible acquisitions, certain of which, if consummated, could be significant to
us. Any potential acquisitions may result in material transaction expenses,
increased interest and amortization expense, increased depreciation expense and
increased operating expense, any of which could have a material adverse effect
on our operating results. As we grow by acquisitions, we must integrate and
manage the new businesses to realize economies of scale and control costs. In
addition, acquisitions involve other risks, including diversion of management
resources otherwise available for ongoing development of our business and risks
associated with entering new markets with which our marketing and sales force
has limited experience or where experienced distribution alliances are not
available. Our future profitability will depend in part upon our ability to
develop further our resources to adapt to these new products or business areas
and to identify and enter into satisfactory distribution networks. We may not be
able to identify suitable acquisition candidates in the future, obtain
acceptable financing or consummate any future acquisitions. If we cannot
integrate acquired operations, manage the cost of providing our products or
price our products appropriately, our profitability could suffer. In addition,
as a result of our acquisitions of other healthcare businesses, we may be
subject to the risk of unanticipated business uncertainties or legal liabilities
relating to those acquired businesses for which the sellers of the acquired
businesses may not indemnify us. Future acquisitions may also result in
potentially dilutive issuances of securities.
9
TO MARKET OUR PRODUCTS UNDER DEVELOPMENT WE WILL FIRST NEED TO OBTAIN REGULATORY
APPROVAL. FURTHER, IF WE FAIL TO COMPLY WITH THE EXTENSIVE GOVERNMENTAL
REGULATIONS THAT AFFECT OUR BUSINESS, WE COULD BE SUBJECT TO PENALTIES AND COULD
BE PRECLUDED FROM MARKETING OUR PRODUCTS.
Our research and development activities and the manufacturing, labeling,
distribution and marketing of our existing and future products are subject to
regulation by numerous governmental agencies in the United States and in other
countries. The Food and Drug Administration (FDA) and comparable agencies in
other countries impose mandatory procedures and standards for the conduct of
clinical trials and the production and marketing of products for diagnostic and
human therapeutic use.
Our products under development are subject to FDA approval or clearance
prior to marketing for commercial use. The process of obtaining necessary FDA
approvals or clearances can take years and is expensive and full of
uncertainties. Our inability to obtain required regulatory approval on a timely
or acceptable basis could harm our business. Further, approval or clearance may
place substantial restrictions on the indications for which the product may be
marketed or to whom it may be marketed. Further studies, including clinical
trials and FDA approvals, may be required to gain approval for the use of a
product for clinical indications other than those for which the product was
initially approved or cleared or for significant changes to the product. In
addition, for products with an approved premarket approval application (PMA),
the FDA requires annual reports and may require post-approval surveillance
programs to monitor the products' safety and effectiveness. Results of
post-approval programs may limit or expand the further marketing of the product.
We believe that the most significant risk of our recent applications to
the FDA relates to the regulatory classification of certain of our new products
or proposed new uses for existing products. In the filing of each application,
we make a legal judgment about the appropriate form and content of the
application. If the FDA disagrees with our judgment in any particular case and,
for example, requires us to file a PMA application rather than allowing us to
market for approved uses while we seek broader approvals or requires extensive
additional clinical data, the time and expense required to obtain the required
approval might be significantly increased or approval might not be granted.
Approved products are subject to continuing FDA requirements relating to
quality control and quality assurance, maintenance of records, reporting of
adverse events and product recalls, documentation, and labeling and promotion of
medical devices.
The FDA and foreign regulatory authorities require that our products be
manufactured according to rigorous standards. These regulatory requirements may
significantly increase our production or purchasing costs and may even prevent
us from making or obtaining our products in amounts sufficient to meet market
demand. If a third-party manufacturer or we change our approved manufacturing
process, the FDA may require a new approval before that process may be used.
Failure to develop our manufacturing capability may mean that even if we develop
promising new products, we may not be able to produce them profitably, as a
result of delays and additional capital investment costs. Manufacturing
facilities, both international and domestic, are also subject to inspections by
or under the authority of the FDA. In addition, failure to comply with
applicable regulatory requirements could subject us to enforcement action,
including product seizures, recalls, withdrawal of clearances or approvals,
restrictions on or injunctions against marketing our product or products based
on our technology, and civil and criminal penalties. See
"Business--Regulation--Government Regulation" in our Annual Report on Form 10-K
incorporated by reference in this prospectus.
10
CERTAIN OF OUR PRODUCTS CONTAIN MATERIALS DERIVED FROM ANIMAL SOURCES AND MAY
BECOME SUBJECT TO ADDITIONAL REGULATION.
Certain of our products, including the DuraGen(R) Dural Graft Matrix
and the INTEGRA(R) Dermal Regeneration Template, contain material derived from
bovine tissue. Products, including food as well as pharmaceuticals and medical
devices, that contain materials derived from animal sources are increasingly
subject to scrutiny in the press and by regulatory authorities. Regulatory
authorities are concerned about the potential for the transmission of disease
from animals to humans via those materials. While a recent announcement in this
regard in Canada has increased press and regulatory scrutiny in the United
States, public scrutiny has been particularly acute in Japan and Western Europe
with respect to products derived from cattle, because of concern that materials
infected with the agent that causes bovine spongiform encephalopathy, otherwise
known as BSE or mad cow disease, may, if ingested or implanted, cause a variant
of the human Creutzfeldt-Jakob Disease, an ultimately fatal disease with no
known cure.
We take great care to provide that our products are safe, and free of
agents that can cause disease. In particular, the collagen used in the
manufacture of our products is derived only from the Achilles tendon of cattle
from the United States, where no cases of BSE have been reported. Scientists and
regulatory authorities classify the Achilles tendon as having a negligible risk
of containing the agent that causes BSE (an improperly folded protein known as a
prion) compared with other parts of the body. Additionally, we use processes in
the manufacturing of our products that are believed to inactivate prions.
Nevertheless, products that contain materials derived from animals, including
our products, may become subject to additional regulation, or even be banned in
certain countries, because of concern over the potential for prion transmission.
Accordingly, new regulation, or a ban of our products, could have a significant
adverse effect on our current business or our ability to expand our business.
LACK OF MARKET ACCEPTANCE FOR OUR PRODUCTS OR MARKET PREFERENCE FOR TECHNOLOGIES
THAT COMPETE WITH OUR PRODUCTS COULD REDUCE OUR REVENUES AND PROFITABILITY.
We cannot be certain that our current products or any other products
that we may develop or market, will achieve or maintain market acceptance.
Certain of the medical indications that can be treated by our devices can also
be treated by other medical devices or by medical practices that do not include
a device. The medical community widely accepts many alternative treatments, and
certain of these other treatments have a long history of use. For example, the
use of autograft tissue is a well-established means for repairing the dermis,
and it may interfere with the widespread acceptance in the market for INTEGRA(R)
Dermal Regeneration Template.
We cannot be certain that our devices and procedures will be able to
replace those established treatments or that either physicians or the medical
community in general will accept and utilize our devices or any other medical
products that we may develop. For example, we cannot be certain that the medical
community will accept the NeuraGen(TM) Nerve Guide over conventional
microsurgical techniques for connecting severed peripheral nerves.
In addition, our future success depends, in part, on our ability to
develop additional products. Even if we determine that a product candidate has
medical benefits, the cost of commercializing that product candidate may be too
high to justify development. Competitors may develop products that are more
effective, cost less, or are ready for commercial introduction before our
products. For example, our sales of shunt products could decline if
neurosurgeons increase their use of programmable valves and we fail to introduce
a competitive product. If we are unable to develop additional, commercially
viable products, our future prospects could be adversely affected.
Market acceptance of our products depends on many factors, including
our ability to convince prospective collaborators and customers that our
technology is an attractive alternative to other technologies, to manufacture
products in sufficient quantities and at acceptable costs, and to supply and
service sufficient quantities of our products directly or through our strategic
alliances. In addition, limited funding available for product and technology
acquisitions by our customers, as well as internal obstacles
11
to customer approvals of purchases of our products, could harm acceptance of our
products. The industry is subject to rapid and continuous change arising from,
among other things, consolidation and technological improvements. One or more of
these factors may vary unpredictably, which could materially adversely affect
our competitive position. We may not be able to adjust our contemplated plan of
development to meet changing market demands.
OUR BUSINESS DEPENDS SIGNIFICANTLY ON KEY RELATIONSHIPS WITH THIRD PARTIES,
WHICH WE MAY BE UNABLE TO ESTABLISH AND MAINTAIN.
Our revenue stream and our business strategy depend in part on our
entering into and maintaining collaborative or alliance agreements with third
parties concerning product marketing, as well as research and development
programs. Our most important strategic alliances are our agreement with Ethicon,
Inc., a division of Johnson & Johnson, relating to INTEGRA(R) Dermal
Regeneration Template, and our agreement with the Wyeth BioPharma division of
Wyeth for the development of collagen matrices to be used in conjunction with
Wyeth BioPharma's recombinant bone protein, a protein that stimulates the growth
of bone in humans. Termination of these alliances would require us to develop
other means to distribute the affected products and could adversely affect our
expectations for the growth of our private label products.
Ethicon has notified us that if we do not agree to substantial
amendments to its agreement with us, it will consider alternatives that may
include exercising its right to terminate the agreement.
Our ability to enter into agreements with collaborators depends in part
on convincing them that our technology can help them achieve their goals and
execute their strategies. This may require substantial time, effort and expense
on our part with no guarantee that a strategic relationship will result. We may
not be able to establish or maintain these relationships on commercially
acceptable terms. Our future agreements may not ultimately be successful. Even
if we enter into collaborative or alliance agreements, our collaborators could
terminate these agreements, or these agreements could expire before meaningful
developmental milestones are reached. The termination or expiration of any of
these relationships could have a material adverse effect on our business.
Much of the revenue that we may receive under these collaborations will
depend upon our collaborators' ability to successfully introduce, market and
sell new products derived from our products. Our success depends in part upon
the performance by these collaborators of their responsibilities under these
agreements. Some collaborators may not perform their obligations as we expect.
Some of the companies we currently have alliances with or are targeting as
potential allies offer products competitive with our products or may develop
competitive production technologies or competitive products outside of their
collaborations with us that could have a material adverse effect on our
competitive position.
In addition, our role in the collaborations is mostly limited to the
production aspects. As a result, we may also be dependent on collaborators for
other aspects of the development, preclinical and clinical testing, regulatory
approval, sales, marketing and distribution of our products. If our current or
future collaborators fail to market our products effectively or to develop
additional products based on our technology, our sales and other revenues could
significantly be reduced.
Finally, we have received and may continue to receive payments from
collaborators that may not be immediately recognized as revenue and therefore
may not contribute to reported profits until further conditions are satisfied.
OUR INTELLECTUAL PROPERTY RIGHTS MAY NOT PROVIDE MEANINGFUL COMMERCIAL
PROTECTION FOR OUR PRODUCTS, WHICH COULD ENABLE THIRD PARTIES TO USE OUR
TECHNOLOGY OR VERY SIMILAR TECHNOLOGY AND COULD REDUCE OUR ABILITY TO COMPETE IN
THE MARKET.
Our ability to compete effectively depends in part, on our ability to
maintain the proprietary nature of our technologies and manufacturing processes,
which includes the ability to obtain, protect and
12
enforce patents on our technology and to protect our trade secrets. We own or
have licensed patents that cover significant aspects of many of our product
lines. However, you should not rely on our patents to provide us with any
significant competitive advantage. Others may challenge our patents and, as a
result, our patents could be narrowed, invalidated or rendered unenforceable.
Competitors may develop products similar to ours that our patents do not cover.
In addition, our current and future patent applications may not result in the
issuance of patents in the United States or foreign countries. Further, there is
a substantial backlog of patent applications at the U.S. Patent and Trademark
Office, and the approval or rejection of patent applications may take several
years.
OUR COMPETITIVE POSITION DEPENDS, IN PART, UPON UNPATENTED TRADE SECRETS WHICH
WE MAY BE UNABLE TO PROTECT.
Our competitive position is also dependent upon unpatented trade
secrets. Trade secrets are difficult to protect. We cannot assure you that
others will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets, that
our trade secrets will not be disclosed, or that we can effectively protect our
rights to unpatented trade secrets.
In an effort to protect our trade secrets, we have a policy of
requiring our employees, consultants and advisors to execute proprietary
information and invention assignment agreements upon commencement of employment
or consulting relationships with us. These agreements provide that, except in
specified circumstances, all confidential information developed or made known to
the individual during the course of their relationship with us must be kept
confidential. We cannot assure you, however, that these agreements will provide
meaningful protection for our trade secrets or other proprietary information in
the event of the unauthorized use or disclosure of confidential information.
OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING OR
MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.
We may be sued for infringing the intellectual property rights of
others. In addition, we may find it necessary, if threatened, to initiate a
lawsuit seeking a declaration from a court that we do not infringe the
proprietary rights of others or that their rights are invalid or unenforceable.
If we do not prevail in any litigation, in addition to any damages we might have
to pay, we would be required to stop the infringing activity or obtain a
license. Any required license may be unavailable to us on acceptable terms, or
at all. In addition, some licenses may be nonexclusive, and allow our
competitors to access the same technology we license. If we fail to obtain a
required license or are unable to design our product so as not to infringe on
the proprietary rights of others, we may be unable to sell some of our products,
which could have a material adverse effect on our revenues and profitability.
IT MAY BE DIFFICULT TO REPLACE SOME OF OUR SUPPLIERS.
Outside vendors, some of whom are sole-source suppliers, provide key
components and raw materials used in the manufacture of our products. Although
we believe that alternative sources for many of these components and raw
materials are available, any supply interruption in a limited or sole source
component or raw material could harm our ability to manufacture our products
until a new source of supply is identified and qualified. In addition, an
uncorrected defect or supplier's variation in a component or raw material,
either unknown to us or incompatible with our manufacturing process, could harm
our ability to manufacture products. We may not be able to find a sufficient
alternative supplier in a reasonable time period, or on commercially reasonable
terms, if at all, and our ability to produce and supply our products could be
impaired. We believe that these factors are most likely to affect our Camino(R)
and Ventrix(R) lines of intracranial pressure monitors and catheters, which we
assemble using many different electronic parts from numerous suppliers. While we
are not dependent on sole-source suppliers, if we were suddenly unable to
purchase products from one or more of these companies, we could need time a
significant period of time to qualify a replacement, and the production of any
affected products could be disrupted. While it is our policy to maintain
sufficient inventory of components so that
13
our production will not be significantly disrupted even if a particular
component or material is not available for a period of time, we remain at risk
that we will not be able to qualify new components or materials quickly enough
to prevent a disruption if one or more of our suppliers ceases production of
important components or materials.
IF ANY OF OUR MANUFACTURING FACILITIES WERE DAMAGED AND/OR OUR MANUFACTURING
PROCESSES INTERRUPTED, WE COULD EXPERIENCE LOST REVENUES AND OUR BUSINESS COULD
BE SERIOUSLY HARMED.
We manufacture our products in a limited number of facilities. Damage
to our manufacturing, development or research facilities due to fire, natural
disaster, power loss, communications failure, unauthorized entry or other events
could cause us to cease development and manufacturing of some or all of our
products. In particular, our San Diego, California facility that manufactures
our Camino(R) and Ventrix(R) product line is as susceptible to earthquake damage
and power losses from electrical shortages as are other businesses in the
Southern California area. Our silicone manufacturing plant in Anasco, Puerto
Rico is vulnerable to hurricane damage. Although we maintain property damage and
business interruption insurance coverage on these facilities, we may not be able
to renew or obtain such insurance in the future on acceptable terms with
adequate coverage or at reasonable costs.
WE MAY BE INVOLVED IN LAWSUITS TO PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY
RIGHTS, WHICH MAY BE EXPENSIVE.
In order to protect or enforce our intellectual property rights, we may
have to initiate legal proceedings against third parties, such as infringement
suits or interference proceedings. Intellectual property litigation is costly,
and, even if we prevail, the cost of that litigation could affect our
profitability. In addition, litigation is time consuming and could divert
management attention and resources away from our business. We may also provoke
these third parties to assert claims against us.
WE ARE EXPOSED TO A VARIETY OF RISKS RELATING TO OUR INTERNATIONAL SALES AND
OPERATIONS, INCLUDING FLUCTUATIONS IN EXCHANGE RATES, LOCAL ECONOMIC CONDITIONS,
AND DELAYS IN COLLECTION OF ACCOUNTS RECEIVABLE.
We generate significant revenues outside the United States, a portion
of which are U.S. dollar-denominated transactions conducted with customers who
generate revenue in currencies other than the U.S. dollar. As a result, currency
fluctuations between the U.S. dollar and the currencies in which those customers
do business may have an impact on the demand for our products in foreign
countries where the U.S. dollar has increased in value compared to the local
currency. We cannot predict the effects of exchange rate fluctuations upon our
future operating results because of the number of currencies involved, the
variability of currency exposure and the potential volatility of currency
exchange rates.
Because we have operating subsidiaries based in Europe and we generate
certain revenues and incur certain operating expenses in British Pounds and the
Euro, we experience currency exchange risk with respect to those foreign
currency denominated revenues or expenses.
Our sales to foreign markets may be affected by local economic
conditions. Relationships with customers and effective terms of sale frequently
vary by country, often with longer-term receivables than are typical in the
United States.
14
CHANGES IN THE HEALTH CARE INDUSTRY MAY REQUIRE US TO DECREASE THE SELLING PRICE
FOR OUR PRODUCTS OR COULD RESULT IN A REDUCTION IN THE SIZE OF THE MARKET FOR
OUR PRODUCTS, AND LIMIT THE MEANS BY WHICH WE MAY DISCOUNT OUR PRODUCTS, EACH OF
WHICH COULD HAVE A NEGATIVE IMPACT ON OUR FINANCIAL PERFORMANCE.
Trends toward managed care, health care cost containment, and other
changes in government and private sector initiatives in the United States and
other countries in which we do business are placing increased emphasis on the
delivery of more cost-effective medical therapies that could adversely affect
the sale and/or the prices of our products. For example:
o major third-party payors of hospital services, including Medicare,
Medicaid and private health care insurers, have substantially revised
their payment methodologies, which has resulted in stricter standards
for reimbursement of hospital charges for certain medical procedures;
o Medicare, Medicaid and private health care insurer cutbacks could
create downward price pressure on our products;
o numerous legislative proposals have been considered that would result
in major reforms in the U.S. health care system that could have an
adverse effect on our business;
o there has been a consolidation among health care facilities and
purchasers of medical devices in the United States, and these entities
may decide to limit the number of suppliers from whom they purchase
medical products and to either stop purchasing our products or demand
discounts on our prices;
o health care facilities have formed group purchasing organizations that
may demand discounts on our prices and assess fees on our sales;
o there is economic pressure to contain health care costs in
international markets;
o there are proposed and existing laws and regulations in domestic and
international markets regulating the sales and marketing practices and
the pricing and profitability of companies in the health care
industry; and
o there have been initiatives by third-party payors to challenge the
prices charged for medical products that could affect our ability to
sell products on a competitive basis.
Both the pressures to reduce prices for our products in response to
these trends and the decrease in the size of the market as a result of these
trends could adversely affect our levels of revenues and profitability of sales.
In addition, there are laws and regulations that regulate the means by
which companies in the health care industry may market their products to health
care professionals and may compete by discounting the prices of their products.
Although we exercise care in structuring our sales and marketing practices and
customer discount arrangements to comply with those laws and regulations, we
cannot assure you that:
o government officials charged with responsibility for enforcing those
laws will not assert that our sales and marketing practices or
customer discount arrangements are in violation of those laws or
regulations; or
o government regulators or courts will interpret those laws or
regulations in a manner consistent with our interpretation.
15
WE MAY HAVE SIGNIFICANT PRODUCT LIABILITY EXPOSURE AND OUR INSURANCE MAY NOT
COVER ALL POTENTIAL CLAIMS.
We are exposed to product liability and other claims in the event that
our technologies or products are alleged to have caused harm. We may not be able
to obtain insurance for the potential liability on acceptable terms with
adequate coverage or at reasonable costs. Any potential product liability claims
could exceed the amount of our insurance coverage or may be excluded from
coverage under the terms of the policy. Our insurance may not be renewed at a
cost and level of coverage comparable to that then in effect.
WE ARE SUBJECT TO OTHER REGULATORY REQUIREMENTS RELATING TO OCCUPATIONAL HEALTH
AND SAFETY AND THE USE OF HAZARDOUS SUBSTANCES WHICH MAY IMPOSE SIGNIFICANT
COMPLIANCE COSTS ON US.
We are subject to regulation under federal and state laws regarding
occupational health and safety, laboratory practices, and the use, handling and
disposal of toxic or hazardous substances. Our research, development and
manufacturing processes involve the controlled use of certain hazardous
materials. Although we believe that our safety procedures for handling and
disposing of those materials comply with the standards prescribed by the
applicable laws and regulations, the risk of accidental contamination or injury
from these materials cannot be eliminated. In the event of such an accident, we
could be held liable for any damages that result and any related liability could
exceed the limits or fall outside the coverage of our insurance and could exceed
our resources. We may not be able to maintain insurance on acceptable terms or
at all. We may incur significant costs to comply with environmental laws and
regulations in the future. We may also be subject to other present and possible
future local, state, federal and foreign regulations.
THE LOSS OF KEY PERSONNEL COULD HARM OUR BUSINESS.
We believe our success depends on the contributions of a number of our
key personnel, including Stuart M. Essig, our President and Chief Executive
Officer. If we lose the services of key personnel, those losses could materially
harm our business. We maintain key person life insurance on Mr. Essig.
RISKS RELATING TO AN INVESTMENT IN THE NOTES AND OUR COMMON STOCK
YOU SHOULD CONSIDER THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING THE NOTES
AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES.
We and each holder agree in the indenture to treat the notes as
indebtedness that is subject to U.S. Treasury regulations governing contingent
payment debt instruments. The following discussion assumes that the notes will
be so treated, though we cannot assure you that the Internal Revenue Service
will not assert that the notes should be treated differently. Under the
contingent payment debt regulations, a holder will be required to include
amounts in income, as original issue discount, in advance of cash such holder
receives on a note, and to accrue interest on a constant yield to maturity basis
at a rate comparable to the rate at which we would borrow in a noncontingent,
nonconvertible borrowing, even though the note will have a significantly lower
stated rate of interest. A holder will recognize taxable income significantly in
excess of cash received while the notes are outstanding. In addition, under the
indenture, a holder will recognize ordinary income, if any, upon a sale,
exchange, conversion or redemption of the notes at a gain. In computing such
gain, the amount realized by a holder will include, in the case of a conversion,
the amount of cash and the fair market value of shares received. Holders are
urged to consult their own tax advisors as to the U.S. federal, state and other
tax consequences of acquiring, owning and disposing of the notes and the shares
of common stock issuable upon conversion of the notes. For more information, see
"Material United States Federal Income Tax Considerations."
16
WE MAY BE UNABLE TO RAISE ADDITIONAL FINANCING NECESSARY TO CONDUCT OUR
BUSINESS, MAKE PAYMENTS WHEN DUE OR REFINANCE OUR DEBT.
We may need to raise additional funds in the future in order to
implement our business plan, to refinance our debt, to conduct research and
development, to fund marketing programs or to acquire complementary businesses,
technologies or services. Any required additional financing may be unavailable
on terms favorable to us, or at all. If we raise additional funds by issuing
equity securities, holders of common stock may experience significant dilution
of their ownership interest and these securities may have rights senior to those
of the holders of our common stock. If we cannot obtain additional financing
when required on acceptable terms, we may be unable to fund our expansion,
develop or enhance our products and services, take advantage of business
opportunities or respond to competitive pressure.
OUR SUBSIDIARIES ARE UNDER NO OBLIGATION TO DISTRIBUTE ANY OF THEIR AVAILABLE
CASH FLOW TO US, WHICH WE WILL NEED TO SERVICE THE NOTES.
The notes are obligations of Integra LifeSciences Holdings Corporation,
which is a holding company. As of March 31, 2003, we owned no significant assets
other than marketable securities, stock, equity and other interests in our
subsidiaries. Because we derive substantially all of our revenues and operating
cash flows from our operating subsidiaries and do not have significant
operations of our own, we are dependent upon the ability of our subsidiaries to
provide us with cash, in the form of dividends or intercompany credits, loans,
or, otherwise, to meet our debt service obligations, including our obligations
under the notes. This creates risks regarding our ability to conduct future
activities, repay any interest and principal which we might owe on the notes or
on other borrowings, pay cash dividends to our preferred and common stock
holders in the future and our ability, and the ability of our subsidiaries, to
respond to changing business and economic conditions and to get new loans. Our
subsidiaries will have no obligation to pay any amounts due on the notes or to
make any funds available to us for payment of the notes, whether by dividends,
loans distributions or other payments. In addition, creditors of our
subsidiaries (including trade creditors) will generally be entitled to payment
from the assets of our subsidiaries before those assets can be distributed to
us. As a result, the notes will effectively be subordinate to the prior payment
of all debts (including trade payables) and preferred stock of our subsidiaries.
OUR INDEBTEDNESS AND INTEREST EXPENSE WILL LIMIT OUR CASH FLOW AND COULD
ADVERSELY AFFECT OUR OPERATIONS AND OUR ABILITY TO MAKE FULL PAYMENT ON YOUR
NOTES.
Due to the offering of the notes we have an increased level of debt and
interest expense. Our aggregate level of indebtedness and our debt service
requirements increased in connection with the offering of the notes.
Our indebtedness poses risks to our business, including the risks that:
o we could use a substantial portion of our consolidated cash flow from
operations to pay principal and interest on our debt, thereby reducing
the funds available for working capital, capital expenditures,
acquisitions and other general corporate purposes, including expanding
our direct sales forces, making additional strategic acquisitions,
continuing to form strategic alliances for our private label products
and continuing to develop new and innovative medical products;
o insufficient cash flow from operations may force us to sell assets, or
seek additional capital, which we may be unable to do at all or on
terms favorable to us;
o our level of indebtedness may make us more vulnerable to economic or
industry downturns; and
o our debt service obligations increase our vulnerabilities to
competitive pressures, because many of our competitors are less
leveraged than we will be.
17
WE MAY BE UNABLE TO REPURCHASE THE NOTES UPON A CHANGE IN CONTROL.
Upon a change in control as defined in the indenture for the notes, you may
require us to repurchase all or a portion of your notes. If a change in control
were to occur, we may not have enough funds to pay the repurchase price for all
tendered notes. Our obligation to offer to repurchase the notes upon a change in
control would not necessarily afford you protection in the event of a highly
leveraged transaction, reorganization, merger or similar transaction because
those transactions could be structured in a manner whereby they would not be
considered a "change in control" for purposes of the indenture for the notes.
NO PUBLIC MARKET EXISTS FOR THE NOTES. THE FAILURE OF A MARKET TO DEVELOP COULD
AFFECT YOUR ABILITY TO, AND THE PRICE AT WHICH YOU MAY, RESELL YOUR NOTES.
The notes are a new issue of securities for which there is currently no
active trading market. We do not intend to list the notes on any national
securities exchange or automated quotation system. Accordingly, we cannot
predict whether an active trading market for the notes will develop or be
sustained. If an active trading market for the notes fails to develop or be
sustained, the trading price for the notes could fall.
Moreover, even if an active trading market for the notes were to
develop, the notes could trade at prices that may be lower than the initial
offering price of the notes. Future trading prices of the notes will depend on
many factors, including, among other things, prevailing interest rate, our
operating results, the price of our common stock and the market for similar
securities. Historically, the market for convertible debt has been subject to
disruptions that have caused volatility in prices. It is possible that the
market for the notes will be subject to disruptions which may have a negative
effect on the holders of the notes, regardless of our prospects or financial
performance.
YOUR RIGHT TO RECEIVE PAYMENT ON THE NOTES MAY BE JUNIOR TO OUR FUTURE
INDEBTEDNESS.
Your right to receive payments on the notes may be junior to all of our
future indebtedness. These notes rank behind all of our future indebtedness
(other than trade payables), except any future indebtedness that expressly
provides that it ranks equal with, or subordinated in right of payment to, the
notes. As a result, upon any distribution to our creditors in a bankruptcy,
liquidation or reorganization or similar proceeding relating to us or our
property, the holders of our senior debt, if any, will be entitled to be paid in
full and before any payment may be made with respect to the notes. In addition,
all payments on the notes will be blocked in the event of a payment default on
senior debt and may be blocked for up to 179 consecutive days in the event of
certain non-payment defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, holders of the notes will participate with trade
creditors and all other holders of our subordinated indebtedness in the assets
remaining after we have paid all of our senior indebtedness. However, because
the indenture requires that amounts otherwise payable to holders of the notes in
a bankruptcy or similar proceeding be paid to holders of senior indebtedness
instead, holders of the notes may receive less, ratably, than holders of trade
payables in any such proceeding. In any of these cases, we may not have
sufficient funds to pay all of our creditors and holders of notes may receive
less, ratably, than the holders of our senior indebtedness.
18
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
Many of our stockholders will have an opportunity to sell their stock.
Also, many of our employees and directors may exercise their stock options in
order to sell the stock underlying their options in the market under a
registration statement we have filed with the Securities and Exchange
Commission. Sales of a substantial number of shares of our common stock in the
public market could depress the market price of the notes or our common stock,
or both, and impair our ability to raise capital through the sale of additional
equity securities. Furthermore, we have registered approximately 9,000,000
shares of common stock and plan to register an additional 2,500,000 shares of
common stock reserved, in each case, for issuance to our employees, directors
and consultants under our stock award and employee benefit plans. Of this
amount, as of May 31, 2003, approximately 3,860,000 shares were held in reserve
for future issuance.
OUR REPORTED EARNINGS PER SHARE MAY BE MORE VOLATILE BECAUSE OF THE CONVERSION
CONTINGENCY PROVISION OF THE NOTES
Holders of the notes are entitled to convert the notes into our common
stock, among other circumstances, if the common stock price on the trading day
prior to the conversion date is more than 110% of the conversion price per share
of our common stock on such trading day. Until this contingency or another
conversion contingency is met, the shares underlying the notes are not included
in the calculation of our basic or fully diluted earnings per share. Should this
contingency be met, fully diluted earnings per share would be expected to
decrease as a result of the inclusion of the underlying shares in the fully
diluted earnings per share calculation. Volatility in our stock price could
cause this condition to be met in one quarter and not in a subsequent quarter,
increasing the volatility of fully diluted earnings per share.
OUR STOCK PRICE MAY CONTINUE TO BE HIGHLY VOLATILE, WHICH MAY SIGNIFICANTLY
AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
The stock market in general, and the stock prices of medical device
companies, biotechnology companies and other technology-based companies in
particular, have experienced significant volatility that often has been
unrelated to the operating performance of and beyond the control of any specific
public company. The market price of our common stock has fluctuated widely in
the past and is likely to continue to fluctuate in the future. Factors that may
have a significant impact on the market price of our common stock include:
o our actual financial results differing from guidance provided by
management;
o our actual financial results differing from that expected by
securities analysts;
o future announcements concerning us or our competitors, including the
announcement of acquisitions;
o changes in the prospects of our business partners or suppliers;
o developments regarding our patents or other proprietary rights or
those of our competitors;
o quality deficiencies in our products;
o competitive developments, including technological innovations by us or
our competitors;
o government regulation, including the FDA's review of our products and
developments;
o changes in recommendations of securities analysts and rumors that may
be circulated about us or our competitors;
o public perception of risks associated with our operations;
o conditions or trends in the medical device and biotechnology
industries;
19
o additions or departures of key personnel; and
o sales of our common stock.
Any of these factors could immediately, significantly and adversely
affect the trading price of the notes and our common stock and you could lose a
substantial amount of your investment.
WE HAVE NOT PAID ANY CASH DIVIDENDS ON OUR COMMON STOCK SINCE OUR FORMATION.
We have not paid any cash dividends on our common stock since our
formation. Any future determinations to pay cash dividends on the common stock
will be at the discretion of our board of directors and will depend upon our
results of operations and financial condition and other factors deemed relevant
by the board of directors. If we do not pay cash dividends in the future, you
may not receive a return on your investment in our common stock through the
payment of dividends and you may not realize a return on your investment even if
you sell your shares. As a result, you may not be able to resell your shares at
or above the price you paid for them.
WE MAY ISSUE ADDITIONAL EQUITY SECURITIES, WHICH WOULD LEAD TO DILUTION OF OUR
ISSUED AND OUTSTANDING COMMON STOCK.
The issuance of additional equity securities or securities convertible
into equity securities would result in dilution of existing stockholders' equity
interests in us. We are authorized to issue, without stockholder approval,
15,000,000 shares of preferred stock, $.01 par value per share, in one or more
series, which may give other stockholders dividend, conversion, voting, and
liquidation rights, among other rights, which may be superior to the rights of
holders of our common stock. Our board of directors has the authority to issue,
without vote or action of stockholders, shares of preferred stock in one or more
series, and has the ability to fix the rights, preferences, privileges and
restrictions of any such series. Any such series of preferred stock could
contain dividend rights, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences or other rights superior to the
rights of holders of our common stock. Our board of directors has no present
intention of issuing any such preferred series, but reserves the right to do so
in the future. In addition, we are authorized to issue, without stockholder
approval, up to 60,000,000 shares of common stock, $.01 par value per share, of
which approximately 26,650,000 were outstanding as of June 25, 2003. We are also
authorized to issue, without stockholder approval, securities convertible into
either common stock or preferred stock.
OUR MAJOR STOCKHOLDERS COULD MAKE DECISIONS ADVERSE TO YOUR INTERESTS.
Our directors and executive officers and affiliates of certain
directors own or control more than thirty percent of our outstanding voting
securities and generally have significant influence over the election of all
directors, the outcome of any corporate action requiring stockholder approval,
and other aspects of the business. The ability of the board of directors to
issue preferred stock, while providing flexibility in connection with financing,
acquisitions and other corporate purposes, could have the effect of
discouraging, deferring or preventing a change in control or an unsolicited
acquisition proposal, since the issuance of preferred stock could be used to
dilute the share ownership of a person or entity seeking to obtain control of
us. This significant influence could preclude any unsolicited acquisition of
Integra and consequently adversely affect the market price of the common stock.
Furthermore, we are subject to Section 203 of the Delaware General Corporation
Law, which could have the effect of delaying or preventing a change of control.
20
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the notes and the common stock issuable upon conversion of the notes
offered by this prospectus. We will not receive any proceeds. See "Selling
Securityholders" for a list of those persons or entities receiving proceeds from
the sale of the notes and the common stock issuable upon conversion of the
notes.
We received net proceeds of approximately $116.4 million from the
initial sale of the notes. We used a portion the proceeds from the sale of the
notes to purchase approximately $35.3 million of our common stock, and have the
remainder available for general corporate purposes, including development of new
products.
21
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on Nasdaq National Market under the symbol
"IART". The following table sets forth, for the periods indicated, the range of
high and low sale prices for our common stock. On June 25, 2003 the last
reported bid price for our common stock was $26.11 per share.
COMMON
STOCK PRICE
--------------------------
HIGH LOW
--------------------------
YEAR ENDED 2001
First Quarter $18.31 $ 9.87
Second Quarter 22.45 11.40
Third Quarter 32.15 18.80
Fourth Quarter 31.03 22.77
YEAR ENDED 2002
First Quarter $33.50 $24.61
Second Quarter 29.00 17.35
Third Quarter 21.80 14.30
Fourth Quarter 18.99 12.06
YEAR ENDING 2003
First Quarter $23.57 $15.80
Second Quarter (through June 25, 2003) 29.95 21.76
The number of stockholders of record as of June 25, 2003 was approximately
500, which includes stockholders whose shares were held in nominee name. The
number of beneficial stockholders at that date was over 6,700.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock since our
formation. Any future determinations to pay cash dividends on the common stock
will be at the discretion of our board of directors and will depend upon our
results of operations and financial condition and other factors deemed relevant
by the board of directors.
22
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the Company's historical ratios of
earnings to fixed charges for the last five fiscal years and three months ended
March 31, 2003. We compute this ratio by dividing the sum of earnings before
income taxes and fixed charges by fixed charges. Fixed charges represent
interest, amortization of debt issuance costs and the interest factor of all
rentals, consisting of an appropriate interest factor on operating leases.
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31, 2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------
Ratio of earnings 38.8 33.9 12.8 N/A N/A N/A
to fixed charges.
- ------------------------------------------------------------------------------------------------
Deficiency of N/A N/A N/A $10,847 $7,784 $12,342
earnings to cover
fixed charges
- ------------------------------------------------------------------------------------------------
23
DESCRIPTION OF NOTES
We issued the notes under an indenture dated as of March 31, 2003 (the
"indenture") between us and Wells Fargo Bank, National Association, as trustee.
The terms of the notes include those expressly set forth in the indenture and
those made part of the indenture by reference to the Trust Indenture Act of
1939, as amended.
The following summarizes some, but not all, provisions of the notes and
the indenture. We urge you to read these documents because they, and not this
description, define your rights as a holder of the notes. A copy of the form of
indenture and the form of certificate evidencing the notes is available to you
upon request to our address on page ii of this prospectus. In this section of
the prospectus entitled "Description of the Notes," when we refer to "Integra,"
"we," "our," or "us," we are referring to Integra LifeSciences Holdings
Corporation and not any of its subsidiaries.
GENERAL
The notes are general unsecured obligations of Integra and are
subordinate in right of payment as described under "--Subordination of Notes."
The notes are convertible into common stock as described under "--Conversion of
Notes." The notes are limited to $120,000,000 aggregate principal amount. The
notes were issued only in denominations of $1,000 or in multiples of $1,000. The
notes will mature on March 15, 2008, unless earlier purchased by us at your
option upon a change in control. The indenture is subject to and governed by the
Trust Indenture Act of 1939.
Neither we nor our subsidiaries are restricted from paying dividends,
incurring debt, or issuing or repurchasing our securities under the indenture.
In addition, there are no financial covenants in the indenture. You are not
protected under the indenture in the event of a highly leveraged transaction or
a change in control of Integra, except to the extent described under "--Purchase
of Notes at Your Option Upon a Change in Control."
The notes will bear interest at the annual rate of 2 1/2% from the date
of issuance. Interest will be payable on March 15 and September 15 of each year,
beginning September 15, 2003, subject to limited exceptions if the notes are
converted or purchased prior to the relevant interest payment date. The record
dates for the payment of interest will be the March 1 and September 1
immediately preceding the relevant interest payment date. We may, at our option,
pay interest on the notes by check mailed to the holders. However, a holder with
an aggregate principal amount in excess of $1 million will be paid by wire
transfer in immediately available funds upon its election if the holder has
provided us with wire transfer instructions at least 10 business days prior to
the payment date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. We will not be required to make any payment
on the notes due on any day which is not a business day until the next
succeeding business day. The payment made on the next succeeding business day
will be treated as though it were paid on the original due date and no interest
will accrue on the payment for the additional period of time.
We will maintain an office in The City of New York where the notes may
be presented for registration, transfer, exchange or conversion. This office
will initially be an office or agency of the trustee. The notes were issued in
fully-registered book-entry form, without coupons, and are represented by one or
more global notes. There will be no service charge for any registration of
transfer or exchange of notes. We may, however, require holders to pay a sum
sufficient to cover any tax or other governmental charge payable in connection
with certain transfers or exchanges.
24
We will pay contingent interest to the holders of notes on March 15,
2008, if the common stock price per share of our common stock on February 15,
2008 (the "Measurement Date") is equal to or greater than 110% of the conversion
price per share in effect on the Measurement Date. The amount of contingent
interest payable per $1,000 principal amount of notes will equal the sum for
each of the twelve month periods ended March 15, 2006, March 15, 2007 and March
15, 2008 of the greater of (x) 0.50% per annum of the principal amount of such
notes and (y) the aggregate amount of regular cash dividends paid during such
twelve-month period on the number of shares of our common stock into which such
notes are convertible. We will pay contingent interest, if any, in the same
manner as we pay interest as described above under "-- General."
CONVERSION OF NOTES
You will have the right, at your option, to convert your notes, in
whole or in part, into shares of our common stock at any time prior to maturity,
unless previously purchased at your option upon a change in control, at an
initial conversion price of $34.1475 per share, subject to the adjustments
described below, if:
o the last sale price of our common stock on the trading day prior to
the conversion date was 110% or more of the then current conversion
price of the notes on such trading day;
o we distribute to holders of our common stock certain rights entitling
them to purchase common stock at less than the last sale price of our
common stock on the day preceding the declaration for such
distribution;
o we distribute to holders of our common stock assets, debt, securities
or certain rights to purchase our securities, which distribution has a
per share value as determined by our board of directors exceeding 10%
of the last sale price of our common stock on the day preceding the
declaration for such distribution; or
o we become a party to a consolidation, merger or sale of all or
substantially all of our assets or a change in control occurs pursuant
to which our common stock would be converted into cash, stock or other
property unless all of the consideration, excluding cash payments for
fractional shares and cash payments made pursuant to dissenters'
appraisal rights, in a merger or consolidation otherwise constituting
a change in control consists of shares of common stock, depository
receipts or other certificates representing common equity interests
traded on a national securities exchange or quoted on the Nasdaq
National Market, or will be so traded or quoted immediately following
such merger or consolidation, and as a result of such merger or
consolidation the notes become convertible solely into such common
stock, American Depositary Shares or other certificates representing
common equity interests.
In the case of the second and third bullet points above, we must notify
holders of notes at least 20 days prior to the ex-dividend date for such
distribution. Once we have given such notice, holders may surrender their notes
for conversion at any time until the earlier of the close of business on the
business day prior to the ex-dividend date or our announcement that such
distribution will not take place. This provision shall not apply if the holder
of a note otherwise participates in the distribution without conversion.
You also may convert your notes into shares of our common stock:
o at any time prior to March 15, 2006 after any 5 consecutive
trading-day period in which the average trading prices for the notes
for that 5 trading-day period was less than 103% of the average
conversion value for the notes during that period; and
o at any time on or after March 15, 2006 and prior to maturity after any
5 consecutive trading-day period in which the average trading prices
for the notes for that 5 trading-day period was less than 97% of the
average conversion value for the notes during that period, however,
you may not convert your notes on or after March 15, 2006 pursuant to
this clause if, at the time of the
25
calculation, the closing sale price of shares of our common stock is
between the then current conversion price on the notes and 110% of the
then current conversion price of the notes.
We define conversion value in the indenture to be equal to the product
of the closing sale price of our shares of common stock on a given day
multiplied by the then current conversion rate, which is the number of shares of
common stock into which each note is convertible.
The initial conversion price of $34.1475 is equivalent to a conversion
rate of approximately 29.2847 shares per $1,000 principal amount of notes.
Except as described below, we will not make any payment or other
adjustment for accrued interest or dividends on any common stock issued upon
conversion of the notes. If you submit your notes for conversion between a
record date and the opening of business on the next interest payment date, you
must pay funds equal to the interest payable on the principal amount being
converted unless a default exists at the time of conversion. As a result of the
foregoing provisions, if you surrender your notes for conversion on a date that
is not an interest payment date, you will not receive any interest for the
period from the interest payment date next preceding the date of conversion or
for any later period. However, if you submit your notes for conversion between
the record date for the final interest payment and the opening of business on
the final interest payment date, you will not be required to pay funds equal to
the interest, and contingent interest, if any, payable on the converted
principal amount, and consequently, you will be able to retain the interest
(including the contingent interest, if any) you receive for the final interest
period.
We will not issue fractional shares of common stock upon conversion of
notes. Instead, we will pay cash for the fractional amount based upon the
closing sale price of the common stock on the last trading day prior to the date
of conversion. If you have submitted your notes for purchase upon a change in
control, you may only convert your notes if you withdraw your election in
accordance with the indenture.
The conversion price will be adjusted (without duplication) upon the
occurrence of:
(1) the issuance of shares of our common stock as a dividend or
distribution on our common stock;
(2) the subdivision, combination or reclassification of our outstanding
common stock;
(3) the issuance to all or substantially all holders of our common stock
of rights or warrants entitling them for a period of not more than 60
days to subscribe for or purchase our common stock, or securities
convertible into our common stock, at a price per share or a
conversion price per share less than the then current market price per
share, provided that the conversion price will be readjusted to the
extent that such rights or warrants are not exercised prior to their
expiration;
(4) the distribution to all or substantially all holders of our common
stock of shares of our capital stock, evidences of indebtedness or
other non-cash assets, or rights or warrants, excluding:
o dividends, distributions and rights or warrants referred to in
clause (1) or (3) above;
o dividends or distributions exclusively in cash not referred to
below; and
o distribution of rights to all holders of common stock pursuant to
an adoption of a stockholder rights plan;
(5) the dividend or distribution to all or substantially all holders of
our common stock of all-cash distributions in an aggregate amount that
together with (A) any cash and the fair market value of any other
consideration payable in respect of any tender or exchange offer by us
or any of our subsidiaries for our common stock consummated within the
preceding 12 months not triggering a conversion price adjustment and
(B) all other all-cash distributions to all or substantially all
holders of our common stock made within the preceding 12 months not
triggering a conversion price adjustment, exceeds an amount equal to
5% of our market capitalization on the business day immediately
preceding the day on which we declare such distribution, the
calculation of our
26
market capitalization being the product of the then current market
price of our common stock multiplied by the number of shares of our
common stock then outstanding; and
(6) the purchase of our common stock pursuant to a tender or exchange
offer made by us or any of our subsidiaries to the extent that the
same involves aggregate consideration that together with (A) any cash
and the fair market value of any other consideration payable in
respect of any tender or exchange offer by us or any of our
subsidiaries for our common stock consummated within the preceding 12
months not triggering a conversion price adjustment and (B) the amount
of any all-cash distributions to all or substantially all holders of
our common stock made within the preceding 12 months not triggering a
conversion price adjustment, exceeds an amount equal to 5% of our
market capitalization on the expiration date of such tender or
exchange offer.
If we implement a rights plan, we will be required under the indenture
to provide that the holders of notes will receive the rights upon conversion of
the notes, whether or not these rights were separated from the common stock
prior to conversion, subject to certain limited exceptions.
In the event of:
o any reclassification of our common stock; or
o a consolidation, merger or combination involving us; or
o a sale or conveyance to another person of our property and assets as
an entirety or substantially as an entirety,
in which holders of our outstanding common stock would be entitled to receive
stock, other securities, other property, assets or cash for their common stock,
holders of notes will generally be entitled to convert their notes into the same
type of consideration received by common stockholders immediately prior to one
of these types of events. This calculation will be based on the assumption that
the holder of common stock failed to exercise any rights of election that the
holder may have to select a particular type of consideration.
You may, in some circumstances, be deemed to have received a
distribution or dividend subject to United States federal income tax as a result
of an adjustment or the nonoccurrence of an adjustment to the conversion price.
We are permitted to reduce the conversion price of the notes by any
amount for a period of at least 20 days if our board of directors determines
that such reduction would be in our best interest. We are required to give at
least 15 days' prior notice of any reduction in the conversion price. We may
also reduce the conversion price to avoid or diminish income tax to holders of
our common stock in connection with a dividend or distribution of stock or
similar event.
No adjustment in the conversion price will be required unless it would
result in a change in the conversion price of at least one percent. Any
adjustment not made will be taken into account in subsequent adjustments. Except
as stated above, we will not adjust the conversion price for the issuance of our
common stock or any securities convertible into or exchangeable for our common
stock or the right to purchase our common stock or such convertible or
exchangeable securities.
SUBORDINATION OF NOTES
The payment of the principal of, premium, if any, and interest on the
notes is subordinated to the prior payment in full, in cash or other payment
satisfactory to the holders of senior indebtedness, of all existing and future
senior indebtedness. If we dissolve, wind up, liquidate or reorganize, or if we
are the subject of any bankruptcy, insolvency, receivership or similar
proceedings, we will pay the holders of senior indebtedness in full in cash or
other payment satisfactory to the holders of senior indebtedness before we pay
the holders of the notes. If the notes are accelerated because of an event of
default we must pay the holders of senior indebtedness in full all amounts due
and owing thereunder before we pay the
27
note holders. The indenture will require that we must promptly notify holders of
senior indebtedness if payment of the notes is accelerated because of an event
of default under the indenture.
We may not make any payment on the notes or purchase or otherwise
acquire the notes if:
o a default in the payment of any designated senior indebtedness occurs
and is continuing beyond any applicable period of grace, or
o any other default of designated senior indebtedness occurs and is
continuing that permits holders of the designated senior indebtedness
to accelerate its maturity and the trustee receives a payment blockage
notice from a person permitted to give such notice under the
indenture.
We are required to resume payments on the notes:
o in case of a payment default, upon the date on which such default is
cured or waived or ceases to exist, and
o in case of a nonpayment default, upon the earlier of the date on which
such nonpayment default is cured or waived or ceases to exist or 179
days after the date on which the payment blockage notice is received.
No new period of payment blockage based on a nonpayment default may be
commenced for a default unless:
o 365 consecutive days have elapsed since the effectiveness of the
immediately prior payment blockage notice, and
o all scheduled payments on the notes that have come due have been paid
in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any payment blockage notice shall be the basis for a subsequent
payment blockage notice. As a result of these subordination provisions, in the
event of our bankruptcy, dissolution or reorganization, holders of senior
indebtedness may receive more, ratably, and holders of the notes may receive
less, ratably, than our other creditors. These subordination provisions will not
prevent the occurrence of any event of default under the indenture. If either
the trustee or any holder of notes receives any payment or distribution of our
assets in contravention of these subordination provisions before all senior
indebtedness is paid in full, then such payment or distribution will be held by
the recipient in trust for the benefit of holders of senior indebtedness to the
extent necessary to make payment in full of all senior indebtedness remaining
unpaid.
Substantially all of our operations are conducted through subsidiaries.
As a result, our cash flow and our ability to service our debt, including the
notes, depend upon the earnings of our subsidiaries. In addition, we are
dependent on the distribution of earnings, loans or other payments by our
subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our
subsidiaries have no obligation to pay any amounts due on the notes or to
provide us with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. In addition, any payment of dividends,
distributions, loans or advances by our subsidiaries will also be contingent
upon our subsidiaries' earnings and could be subject to contractual or statutory
restrictions.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, will be structurally subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us.
As of March 31, 2003 (i) we had no senior indebtedness outstanding and
(ii) our subsidiaries had no outstanding indebtedness and approximately $30.7
million of other liabilities (including trade payables, but excluding
intercompany liabilities) to which the notes are effectively subordinated.
28
Neither we nor our subsidiaries are limited from incurring senior
indebtedness or additional debt under the indenture. If we incur additional
debt, our ability to pay our obligations on the notes could be affected. We
expect from time to time to incur additional indebtedness and other liabilities.
We are obligated to pay reasonable compensation to the trustee. We will
indemnify the trustee against any losses, liabilities or expenses incurred by it
in connection with its duties. The trustee's claims for such payments will be
senior to the claims of the note holders.
"designated senior indebtedness" means any senior indebtedness in which the
instrument creating or evidencing the indebtedness, or any related agreements or
documents to which we are a party, expressly provides that such indebtedness is
"designated senior indebtedness" for purposes of the indenture (provided that
the instrument, agreement or other document may place limitations and conditions
on the right of the senior indebtedness to exercise the rights of designated
senior indebtedness).
"indebtedness" means:
(1) all of our indebtedness, obligations and other liabilities, contingent
or otherwise, (A) for borrowed money, including overdrafts, foreign
exchange contracts, currency exchange agreements, interest rate
protection agreements, and any loans or advances from banks, whether
or not evidenced by notes or similar instruments, or (B) evidenced by
credit or loan, agreements, bonds, debentures, notes or similar
instruments, whether or not the recourse of the lender is to the whole
of our assets or to only a portion thereof, other than any account
payable or other accrued current liability or obligation incurred in
the ordinary course of business in connection with the obtaining of
materials or services;
(2) all of our reimbursement obligations and other liabilities, contingent
or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances;
(3) all of our obligations and liabilities, contingent or otherwise, in
respect of leases required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on our balance sheet;
(4) all of our obligations and other liabilities, contingent or otherwise,
under any lease or related document, including a purchase agreement,
conditional sale or other title retention agreement, in connection
with the lease of real property or improvements thereon (or any
personal property included as part of any such lease) which provides
that we are contractually obligated to purchase or cause a third party
to purchase the leased property or pay an agreed upon residual value
of the leased property, including our obligations under such lease or
related document to purchase or cause a third party to purchase such
leased property or pay an agreed upon residual value of the leased
property to the lessor (whether or not such lease transaction is
characterized as an operating lease or a capitalized lease in
accordance with generally accepted accounting principles);
(5) all of our obligations, contingent or otherwise, with respect to an
interest rate or other swap, cap, floor or collar agreement or hedge
agreement, forward contract or other similar instrument or agreement
or foreign currency hedge, exchange, purchase or similar instrument or
agreement;
(6) all of our direct or indirect guaranties or similar agreement by us in
respect of, and all of our obligations or liabilities to purchase or
otherwise acquire or otherwise assure a creditor against loss in
respect of, indebtedness, obligations or liabilities of another person
of the kinds described in clauses (1) through (5); and
(7) any and all deferrals, renewals, extensions, refinancings and
refundings of, or amendments, modifications or supplements to, any
indebtedness, obligation or liability of the kinds described in
clauses (1) through (6).
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Indebtedness shall not include obligations of any person (A) arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business, provided that such obligations are extinguished
within two business days of their incurrence, (B) resulting from the endorsement
of negotiable instruments for collection in the ordinary course of business and
consistent with past business practices and (C)stand-by letters of credit to the
extent collaterallized by cash or cash equivalents.
"senior indebtedness" means the principal of, premium, if any,
interest, including any interest accruing after the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowed as a claim in the proceeding, and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, our indebtedness whether secured or unsecured,
absolute or contingent, due or to become due, outstanding on the date of the
indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by us, including all deferrals, renewals, extensions or refundings
of, or amendments, modifications or supplements to, the foregoing. Senior
indebtedness does not include:
(1) any indebtedness or obligation whose terms expressly provide that such
indebtedness or obligation shall not be senior in right of payment to
the notes or expressly provides that such indebtedness is on the same
basis or junior to the notes; and
(2) the notes.
REDEMPTION BY INTEGRA
Except as set forth below under "-- Purchase of Notes at Your Option
upon a Change in Control," we are not required to make mandatory redemption of,
or sinking payments with respect to, the notes.
PURCHASE OF NOTES AT YOUR OPTION UPON A CHANGE IN CONTROL
If a change in control (as defined below) occurs, you will have the
right to require us to purchase in cash your notes 30 business days after the
occurrence of such change in control at a purchase price equal to 100% of the
principal amount of the notes together with accrued and unpaid interest to, but
excluding, the purchase date. Notes submitted for purchase must be in integral
multiples of $1,000 principal amount.
We will mail to the trustee and to each holder a written notice of the
change in control within 10 business days after the occurrence of such change in
control. This notice shall state certain specified information, including:
o information about and the terms and conditions of the change in
control;
o information about the holders' right to convert the notes;
o the holders' right to require us to purchase the notes;
o the procedures required for exercise of the purchase option upon the
change in control; and
o the name and address of the paying and conversion agents.
You must deliver written notice of your exercise of this purchase right
to the paying agent at any time prior to the close of business on the second
business day prior to the change in control purchase date. The written notice
must specify the notes for which the purchase right is being exercised. If you
wish to withdraw this election, you must provide a written notice of withdrawal
to the paying agent at any time prior to the close of business on the second
business day prior to the change in control purchase date.
A change in control will be deemed to have occurred if either of the
following occurs:
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o any person acquires, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions,
shares of our capital stock entitling the person to exercise 50% or
more of the total voting power of all shares of our capital stock that
is entitled to vote generally in elections of directors, other than an
acquisition by us, any of our subsidiaries or any of our employee
benefit plans;
o we merge or consolidate with or into any other person, any merger of
another person into us or we convey, sell, transfer or lease all or
substantially all of our assets to another person other than to one or
more of our wholly-owned subsidiaries, other than any such transaction
pursuant to which the holders of 50% or more of the total voting power
of all shares of our capital stock entitled to vote generally in
elections of directors immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving
corporation immediately after such transaction; or
o first day on which a majority of our board of directors are not
continuing directors.
However, a change in control will not be deemed to have occurred if (i)
at least 90% of the consideration, excluding cash payments for fractional shares
and cash payments made pursuant to dissenters' appraisal rights, in a merger or
consolidation otherwise constituting a change in control above consists of
shares of common stock, depository receipts or other certificates representing
common equity interests traded on a national securities exchange or quoted on
the Nasdaq National Market, or will be so traded or quoted immediately following
such merger or consolidation, and as a result of such merger or consolidation
the notes become convertible solely into such common stock, depository receipts
or other certificates representing common equity interests; or (ii) the market
price per share of our common stock for any five trading days within (a) the
period of 10 consecutive trading days ending immediately after the later of the
change in control or the public announcement of the change in control, in the
case of the change in control under the first bullet point above; or (b) the
period of 10 consecutive trading days ending immediately before the change of
control, in the case of a change in control under the second or third bullet
point above, equals or exceeds 110% of the conversion price of the notes in
effect on each such trading day.
For purposes of this change in control definition, "person" includes
any syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act.
"continuing directors" means, as of any date of determination, any
member of the board of directors of Integra who:
o was a member of the board of directors on the date of the indenture;
or
o was nominated for election or elected to the board of directors with
the approval of a majority of the continuing directors who were
members of the board at the time of the new director's nomination or
election.
The term "all or substantially all" as used in the definition of change
in control will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting this phrase. As a result, we cannot assure you how a
court would interpret this phrase under applicable law if you elect to exercise
your rights following the occurrence of a transaction which you believe
constitutes a transfer of "all or substantially all" of our assets.
We will under the indenture:
o comply with the provisions of Rule 13e-4 and Rule 14e-1, if
applicable, under the Exchange Act;
o file a Schedule TO or any successor or similar schedule, if required,
under the Exchange Act; and
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o otherwise comply with all federal and state securities laws in
connection with any offer by us to purchase the notes upon a change in
control.
This change in control purchase feature may make more difficult or
discourage a takeover of us and the removal of incumbent management. We are not,
however, aware of any specific effort to accumulate shares of our common stock
or to obtain control of us by means of a merger, tender offer, solicitation or
otherwise. In addition, the change in control purchase feature is not part of a
plan by management to adopt a series of anti-takeover provisions. Instead, the
change in control purchase feature is a result of negotiations between us and
the initial purchasers.
We could, in the future, enter into certain transactions, including
recapitalizations, that would not constitute a change in control but would
increase the amount of debt, including senior indebtedness, outstanding or
otherwise adversely affect a holder. Neither we nor our subsidiaries are
prohibited from incurring debt, including senior indebtedness, under the
indenture. The incurrence of significant amounts of additional debt could
adversely affect our ability to service our debt, including the notes.
Certain of our debt agreements may prohibit our repurchase of the notes
and provide that a change in control constitutes an event of default.
We may not purchase any note at any time when the subordination
provisions of the indenture otherwise would prohibit us from making such
repurchase. If we fail to repurchase the notes when required, this failure will
constitute an event of default under the indenture whether or not repurchase is
permitted by the subordination provisions of the indenture.
If a change in control were to occur and we did not elect, or were
unable to elect, to pay the purchase price for the notes in common stock or
applicable securities, we may not have sufficient funds to pay the change in
control purchase price for the notes tendered by holders. In addition, we may in
the future incur debt that has similar change in control provisions permitting
holders of that debt to accelerate or require us to repurchase that debt upon
the occurrence of events similar to a change in control.
EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
indenture:
(1) we fail to pay principal or premium, if any, on any note when due,
whether or not prohibited by the subordination provisions of the
indenture;
(2) we fail to pay any interest, including any contingent or additional
interest, if any, on any note when due if such failure continues for
30 days, whether or not prohibited by the subordination provisions of
the indenture;
(3) we fail to perform any other covenant required of us in the indenture
if such failure continues for 60 days after notice is given in
accordance with the indenture;
(4) any indebtedness for money borrowed by us or one of our subsidiaries
(all or substantially all of the outstanding voting securities of
which are owned, directly or indirectly, by us) in an outstanding
principal amount in excess of $5.0 million is not paid at final
maturity or upon acceleration and such indebtedness is not discharged,
or such default in payment or acceleration is not cured or rescinded
within 30 days after written notice as provided in the indenture;
(5) our failure to issue common stock upon conversion of notes by a holder
in accordance with the provisions set forth in the indenture;
(6) we fail to give notice to you of your right to require us to purchase
your notes upon a change in control or fail to make a payment to
purchase notes tendered following a change of control; and
(7) certain events in bankruptcy, insolvency or reorganization involving
us or any of our subsidiaries.
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If an event of default, other than an event of default described in
clause (7) above with respect to us, occurs and is continuing, either the
trustee or the holders of at least 25% in aggregate principal amount of the
outstanding notes may declare the principal amount of the notes to be due and
payable immediately. If an event of default described in clause (7) above occurs
with respect to us, the principal amount of the notes will automatically become
immediately due and payable. Any payment by us on the notes following any
acceleration will be subject to the subordination provisions described above.
Subject to the trustee's duties in the case of an event of default, the
trustee will not be obligated to exercise any of its rights or powers at the
request of the holders, unless the holders have offered to the trustee
reasonable indemnity. Subject to the indenture, applicable law and the trustee's
indemnification, the holders of a majority in aggregate principal amount of the
outstanding notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee with respect to the notes.
No holder will have any right to institute any proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture unless:
o the holder has previously given the trustee written notice of a
continuing event of default;
o the holders of at least 25% in aggregate principal amount of the notes
then outstanding have made a written request and have offered
reasonable indemnity to the trustee to institute such proceeding as
trustee; and
o the trustee has failed to institute such proceeding within 60 days
after such notice, request and offer, and has not received from the
holders of a majority in aggregate principal amount of the notes then
outstanding a direction inconsistent with such request within 60 days
after such notice, request and offer.
However, the above limitations do not apply to a suit instituted by a
holder for the enforcement of payment of the principal of or any premium or
interest on any note on or after the applicable due date or the right to convert
the note in accordance with the indenture.
Generally, the holders of not less than a majority of the aggregate
principal amount of outstanding notes may waive any default or event of default
unless:
o we fail to pay principal, premium or interest on any note when due;
o we fail to convert any note into common stock; or
o we fail to comply with any of the provisions of the indenture that
would require the consent of the holder of each outstanding note
affected.
We are required to furnish to the trustee, on an annual basis, a
statement by certain of our officers as to whether or not Integra, to the
officer's knowledge, is in default in the performance or observance of any of
the terms, provisions and conditions of the indenture, specifying any known
defaults.
MODIFICATION AND WAIVER
We and the trustee may amend or supplement the indenture or the notes
with the consent of the holders of a majority in aggregate principal amount of
the outstanding notes. In addition, the holders of a majority in aggregate
principal amount of the outstanding notes may waive our compliance in any
instance with any provision of the indenture without notice to the note holders.
However, no amendment, supplement or waiver may be made without the consent of
the holder of each outstanding note if such amendment, supplement or waiver
would:
o change the stated maturity of the principal of, or time or manner of
payment of interest (including contingent interest, if any) on, any
note;
o reduce the principal amount of or any premium or interest on any note;
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o reduce the amount of principal payable upon acceleration of the
maturity of any note;
o change the place or currency of payment of principal of, or any
premium or interest on, any note;
o impair the right to institute suit for the enforcement of any payment
on, or with respect to, any note;
o modify the provisions with respect to the purchase right of the
holders upon a change in control in a manner adverse to holders;
o modify the subordination provisions in a manner adverse to the holders
of notes;
o adversely affect the right of holders to convert notes other than as
provided in the indenture;
o reduce the percentage in principal amount of outstanding notes
required for modification or amendment of the indenture;
o reduce the percentage in principal amount of outstanding notes
necessary for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults; or
o modify provisions with respect to modification and waiver (including
waiver of events of default), except to increase the percentage
required for modification or waiver or to provide for consent of each
affected note holder.
We and the trustee may amend or supplement the indenture or the notes
without notice to, or the consent of, the note holders to, among other things,
cure any ambiguity, defect or inconsistency or make any other change that does
not adversely affect the rights of any note holder.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any person in a transaction
in which we are not the surviving person or convey, transfer, sell or lease our
properties and assets substantially as an entirety to any successor person,
other than to one or more of our subsidiaries, unless:
o the successor person, if any, is a corporation, limited liability
company, partnership, trust or other business entity organized and
existing under the laws of the United States, any state of the United
States, or the District of Columbia and, if we are not the successor
person, assumes our obligations on the notes and under the indenture;
o immediately after giving effect to the transaction, no default or
event of default shall have occurred and be continuing; and
o other conditions specified in the indenture are met.
DISCHARGE
The indenture provides that we may terminate our obligations under the
indenture at any time by delivering all outstanding notes to the trustee for
cancellation if we have paid all sums payable by us under the indenture. At any
time after all of the notes have become due and payable we may terminate our
substantive obligations under the indenture, other than our obligations to pay
the principal of, and interest on, the notes, by depositing with the trustee
money or U.S. Government obligations sufficient to pay all remaining
indebtedness on the notes when due.
TRANSFER AND EXCHANGE
We have initially appointed the trustee as the security registrar,
paying agent and conversion agent, acting through its corporate trust office. We
reserve the right to:
o vary or terminate the appointment of the security registrar, paying
agent or conversion agent;
o appoint additional paying agents or conversion agents; and
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o approve any change in the office through which any security registrar
or any paying agent or conversion agent acts.
PURCHASE AND CANCELLATION
All notes surrendered for payment, registration of transfer or exchange
or conversion shall, if surrendered to any person other than the trustee, be
delivered to the trustee. All notes delivered to the trustee shall be cancelled
promptly by the trustee. No notes shall be authenticated in exchange for any
notes cancelled as provided in the indenture.
We may, to the extent permitted by law, purchase notes in the open
market or by tender offer at any price or by private agreement. Any notes
purchased by us may, to the extent permitted by law, be reissued or resold or
may, at our option, be surrendered to the trustee for cancellation. Any notes
surrendered for cancellation may not be reissued or resold and will be promptly
cancelled. Any notes held by us or one of our subsidiaries shall be disregarded
for voting purposes in connection with any notice, waiver, consent or direction
requiring the vote or concurrence of note holders.
REPLACEMENT OF NOTES
We will replace mutilated, destroyed, stolen or lost notes at your
expense upon delivery to the trustee of the mutilated notes, or evidence of the
loss, theft or destruction of the notes satisfactory to us and the trustee. In
the case of a lost, stolen or destroyed note, indemnity satisfactory to the
trustee and us may be required at the expense of the holder of such note before
a replacement note will be issued.
GOVERNING LAW
The indenture and the notes are governed by, and construed in
accordance with, the law of the State of New York.
CONCERNING THE TRUSTEE
Wells Fargo Bank, National Association is the trustee under the
indenture. The trustee is permitted to deal with us and any of our affiliates
with the same rights as if it were not trustee. However, if the trustee acquires
any conflicting interest and there exists a default with respect to the notes,
the trustee must eliminate such conflict or resign.
The holders of a majority in principal amount of all outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the trustee. However,
any such direction may not conflict with any law or the indenture, may not be
unduly prejudicial to the rights of another holder or the trustee and may not
involve the trustee in personal liability.
BOOK-ENTRY, DELIVERY AND FORM
The notes are evidenced by one or more global securities. The global
security was deposited with the trustee as custodian for DTC and registered in
the name of a nominee of DTC. Except as set forth below, the global security may
be transferred, in whole and not in part, only, to DTC or another nominee of
DTC. You may hold your beneficial interests in the global security directly
through DTC if you have an account with DTC or indirectly through organizations
that have accounts with DTC. Notes in definitive certificated form (called
"certificated securities") will be issued only in certain limited circumstances
described below.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the State
of New York;
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o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
DTC was created to hold securities of institutions that have accounts
with DTC (called "participants") and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Access to DTC's
book-entry system is also available to others such as banks, brokers, dealers
and trust companies (called, the "indirect participants") that clear through or
maintain a custodial relationship with a participant, whether directly or
indirectly.
Pursuant to procedures established by DTC upon the deposit of the
global security with DTC, DTC credited, on its book-entry registration and
transfer system, the principal amount of notes represented by such global
security to the accounts of participants. The accounts credited were initially
designated by the initial purchaser. Ownership of beneficial interests in the
global security is limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests in the global security
is shown on, and the transfer of those beneficial interests is effected only
through, records maintained by DTC (with respect to participants' interests),
the participants and the indirect participants. The laws of some jurisdictions
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These limits and laws may impair the ability to
transfer or pledge beneficial interests in the global security.
Owners of beneficial interests in global securities who desire to
convert their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold such beneficial
interests to obtain information on procedures, including proper forms and
cut-off times, for submitting requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global security for all
purposes under the indenture and the notes. In addition, no owner of a
beneficial interest in a global security will be able to transfer that interest
except in accordance with the applicable procedures of DTC. Except as set forth
below, as an owner of a beneficial interest in the global security, you will not
be entitled to have the notes represented by the global security registered in
your name, will not receive or be entitled to receive physical delivery of
certificated securities and will not be considered to be the owner or holder of
any notes under the global security. We understand that under existing industry
practice, if an owner of a beneficial interest in the global security desires to
take any action that DTC, as the holder of the global security, is entitled to
take, DTC would authorize the participants to take such action, and the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
We will make payments of principal of, premium, if any, and interest
(including any additional interest) on the notes represented by the global
security registered in the name of and held by DTC or its nominee to DTC or its
nominee, as the case may be, as the registered owner and holder of the global
security. Neither we, the trustee nor any paying agent will have any
responsibility or liability of any aspect of the records relating to or payments
made on account of beneficial interests in the global security or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
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We expect that DTC or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest (including additional interest) on
the global security, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the records of DTC or its nominee. We also
expect that payments by participants or indirect participants to owners of
beneficial interests in the global security held through such participants or
indirect participants will be governed by standing instructions and customary
practices and will be the responsibility of such participants or indirect
participants. We will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial interests in
the global security for any note or for maintaining, supervising or reviewing
any records relating to such beneficial interests or for any other aspect of the
relationship between DTC and its participants or indirect participants or the
relationship between such participants or indirect participants and the owners
of beneficial interests in the global security owning through such participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken
by a holder of notes only at the direction of one or more participants to whose
account the DTC interests in the global security is credited and only in respect
of such portion of the aggregate principal amount of notes as to which such
participant or participants has or have given such direction. However, if DTC
notifies us that it is unwilling to be a depository for the global security or
ceases to be a clearing agency or there is an event of default under the notes,
DTC will exchange the global security for certificated securities which it will
distribute to its participants.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global security among participants of
DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility, or liability for the performance by
DTC or the participants or indirect participants of their respective obligations
under the rules and procedures governing their respective operations.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock as stated in our Amended and Restated
Certificate of Incorporation consists of 60,000,000 shares of common stock, $.01
par value per share, and 15,000,000 shares of preferred stock, $.01 par value
per share. The following summary of our common stock and preferred stock is not
complete and may not contain all the information you should consider. This
description is subject to and qualified in its entirety by provisions of our
certificate of incorporation and bylaws, which are incorporated by reference
into this prospectus, and by provisions of applicable Delaware law.
COMMON STOCK
As of June 25, 2003 there were approximately 26,650,000 shares of
common stock outstanding and held of record by approximately 500 stockholders.
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the outstanding shares of common
stock entitled to vote in any election of directors may elect all the directors
standing for election. Holders of common stock are entitled to receive ratably
the dividends, if any, as may be declared by our board of directors out of funds
legally available therefor. If we are liquidated, dissolved or wound-up, holders
of common stock are entitled to receive ratably our net assets available for
distribution after the payment of, or adequate provision for, all of our debts
and other liabilities, subject to prior and superior rights of the holders of
preferred stock. Holders of common stock have no preemptive, subscription,
redemption, sinking fund or conversion rights. Immediately upon consummation of
this offering, all of the then-outstanding shares of common stock will be
validly issued, fully paid and nonassessable.
PREFERRED STOCK
The board of directors, without further stockholder authorization, is
authorized to issue, from time to time, up to 15,000,000 shares of preferred
stock in one or more series, to establish the number of shares to be included in
any of these series and to fix the designations, powers, preferences and rights
of the shares of each of these series and any qualifications, limitations or
restrictions thereof, including dividend rights and preferences over dividends
on our common stock, conversion rights, voting rights, redemption rights, the
terms of any sinking fund therefor and rights upon liquidation. The ability of
the board of directors to issue preferred stock, while providing flexibility in
connection with financing, acquisitions and other corporate purposes, could have
the effect of discouraging, deferring or preventing a change in control or an
unsolicited acquisition proposal, since the issuance of preferred stock could be
used to dilute the share ownership of a person or entity seeking to obtain
control of us. In addition, because the board of directors has the power to
establish the preferences, powers and rights of the shares of any of these
series of preferred stock, it may afford the holders of any preferred stock
preferences, powers and rights (including voting rights) senior to the rights of
the holders of common stock, which could adversely affect the rights of holders
of common stock.
As of March 31, 2003 we had designated three series of preferred stock,
none of which were outstanding.
SERIES A PREFERRED STOCK. Our board of directors has authorized
2,000,000 shares of Series A Convertible Preferred Stock, of which 500,000 were
issued in connection with a series of agreements with Century Medical, Inc., a
wholly-owned subsidiary of ITOCHU Corporation, under which Century Medical, Inc.
distributes certain of our products in Japan. Century Medical, Inc. has
converted its Series A Preferred Stock into our common stock. We do not expect
to issue new Series A Preferred Stock.
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SERIES B PREFERRED STOCK. Our board of directors has authorized 120,000
shares of Series B Convertible Preferred Stock, 100,000 of which were issued in
connection with an acquisition in 1999. All of the holders of the Series B
Preferred Stock have converted their shares of Series B Preferred Stock into
shares of our common stock. We do not expect to issue new Series B Preferred
Stock.
SERIES C PREFERRED STOCK. Our board of directors has authorized 54,000
shares of Series C Convertible Preferred Stock, all of which were issued in
March 2000. Each share of Series C Preferred Stock was converted into shares of
our common stock by the holders in April 2002. We do not expect to issue new
Series C Preferred Stock.
REGISTRATION RIGHTS
Under the terms of stockholder and registration rights agreements
between us and certain of our stockholders, holders of an aggregate of
approximately 5,575,000 shares of our common stock (including shares issuable
upon the exercise of certain warrants and shares underlying certain "restricted
units"), are entitled to demand that we register those shares under the
Securities Act. Additionally, if we propose to register any of our securities
under the Securities Act, either for our own account or for the account of any
other stockholder, the parties to certain of our stockholder and registration
rights agreements are entitled to notice of the registration and to include
their shares of common stock in the registration. These registration rights are
subject to limitations and conditions, including the right of the underwriters
of the offering to limit the number of shares included in any registration
thereunder. In general, we are required to indemnify the holders of those
registrable securities under described circumstances and to bear the expense of
registrations, except for the selling stockholders' pro rata portion of the
underwriting discounts and commissions.
DELAWARE ANTI-TAKEOVER LAW
Section 203 of the Delaware General Corporation Law prohibits certain
"business combination" transactions between a Delaware corporation and any
"interested stockholder" owning 15% or more of the corporation's outstanding
voting stock for a period of three years after the date on which the stockholder
became an interested stockholder, unless:
o the board of directors approves, prior to the date, either the
proposed business combination or the proposed acquisition of stock
which resulted in the stockholder becoming an interested stockholder;
o upon consummation of the transaction in which the stockholder becomes
an interested stockholder, the interested stockholder owned at least
85% of those shares of the voting stock of the corporation which are
not held by the directors, officers or certain employee stock plans;
or
o on or subsequent to the date on which the stockholder became an
interested stockholder, the business combination with the interested
stockholder is approved by the board of directors and also approved at
a stockholder's meeting by the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the corporation's voting
stock other than shares held by the interested stockholder.
Under Delaware law, a "business combination" includes a merger, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder.
39
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income
tax considerations relating to the purchase, ownership and disposition of the
notes and common stock into which the notes are convertible, but is not a
complete analysis of all the potential tax considerations relating thereto. This
summary is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations promulgated thereunder,
administrative rulings and judicial decisions, all as of the date hereof. These
authorities may be changed, possibly retroactively, so as to result in United
States federal income tax consequences different from those set forth below. We
have not sought any ruling from the Internal Revenue Service ("IRS") with
respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the IRS will agree with such
statements and conclusions.
This summary is limited to "U.S. holders" who purchase notes for cash
and who hold the notes and the common stock into which such notes are
convertible as capital assets. "U.S. holder" means a holder of a note or common
stock that is:
o an individual citizen or resident of the United States;
o a corporation or other entity taxable as a corporation for United
States federal income tax purposes, or a partnership or other entity
taxable as a partnership for United States federal income tax
purposes, created or organized in the United States or under the laws
of the United States, any state thereof, or the District of Columbia;
o an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
o a trust, if a United States court can exercise primary supervision
over its administration and one or more United States persons have the
authority to control all of its substantial decisions or if such trust
was in existence on August 20, 1996 and has properly elected to
continue to be treated as a United States person.
This summary also does not address the tax considerations arising under
the laws of any foreign, state or local jurisdiction. In addition, this
discussion does not address tax considerations applicable to an investor's
particular circumstances or to investors that may be subject to special tax
rules, including, without limitation:
o banks, insurance companies or other financial institutions;
o persons subject to the United States fedearl estate, gift or
alternative minimum tax arising from the purchase, ownership or
disposition of the notes;
o tax-exempt organizations;
o dealers in securities or currencies;
o traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
o persons that own, or are deemed to own, more than 5% of our Company
(except to the extent specifically set forth below);
o certain former citizens or long-term residents of the United States;
o U.S. holders (as defined below) whose functional currency is not the
U.S. dollar;
o persons who hold the notes as a position in a hedging transaction,
"straddle," "conversion transaction" or other risk reduction
transaction; or
40
o persons deemed to sell the notes or common stock under the
constructive sale provisions of the Code.
In addition, if a holder is an entity treated as a partnership for
United States federal income tax purposes, the tax treatment of each partner of
such partnership will generally depend upon the status of the partner and upon
the activities of the partnership. A holder that is a partnership, and partners
in such partnerships, should consult their own tax advisors regarding the tax
consequences of the purchase, ownership and disposition of the notes and common
stock.
THIS SUMMARY OF MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE
URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND COMMON
STOCK ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF
ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE
TAX TREATY.
CLASSIFICATION OF THE NOTES
Under the indenture governing the notes, we and each holder of the
notes agree, for United States federal income tax purposes, to treat the notes
as indebtedness that are subject to the regulations governing contingent payment
debt instruments (the "Contingent Debt Regulations") in the manner described
below, using the comparable yield set forth below. The remainder of this
discussion assumes that the notes will be so treated and does not address any
possible differing treatment of the notes. The IRS has recently issued a revenue
ruling with respect to instruments similar to the note and this ruling supports
certain aspects of the treatment described below. However, the application of
the Contingent Debt Regulations to instruments such as the notes remains
uncertain in several other respects, and no rulings have been sought from the
IRS or a court with respect to any of the tax consequences discussed below.
Accordingly, no assurance can be given that the IRS or a court will agree with
the treatment described herein. Any differing treatment could affect the amount,
timing and character of income, gain or loss in respect of an investment in the
notes. In particular, a holder might be required to accrue original issue
discount at a lower rate, might not recognize income, gain or loss upon
conversion of the notes to common stock, and might recognize capital gain or
loss upon a taxable disposition of the notes. HOLDERS SHOULD CONSULT THEIR TAX
ADVISORS CONCERNING THE TAX TREATMENT OF HOLDING THE NOTES.
ACCRUAL OF INTEREST
Under the Contingent Debt Regulations, actual cash payments on the
notes will not be reported separately as taxable income, but will be taken into
account under such regulations. As discussed more fully below, the effect of the
Contingent Debt Regulations will be to:
o require you, regardless of your usual method of tax accounting, to use
the accrual method with respect to the notes;
o require you to accrue and include in taxable income each year original
issue discount at the comparable yield (as described below) which will
be substantially in excess of stated interest payments actually
received by you; and
o generally result in ordinary rather than capital treatment of any
gain, and to some extent loss, on the sale, exchange, repurchase or
redemption of the notes.
41
Subject to the adjustments described below under "-Adjustments to
Interest Accruals on the Notes" that are applicable if you purchase the notes
for a price other than the adjusted issue price (as defined below), you will be
required to accrue an amount of ordinary interest income as original issue
discount for U.S. federal income tax purposes, for each accrual period prior to
and including the maturity date of the note that equals:
o the product of (i) the adjusted issue price of the notes as of the
beginning of the accrual period and (ii) the comparable yield to
maturity (as defined below) of the notes, adjusted for the length of
the accrual period;
o divided by the number of days in the accrual period; and
o multiplied by the number of days during the accrual period that you
held the notes.
The issue price of a note is the first price at which a substantial
amount of the notes is sold to the public, excluding sales to bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. The adjusted issue price of a
note is its issue price increased by any original issue discount previously
accrued, determined without regard to any adjustments to original issue discount
accruals described below, and decreased by the projected amounts of any payments
previously made with respect to the notes.
Under the Contingent Debt Regulations, you will be required to include
original issue discount in income each year, regardless of your usual method of
tax accounting, based on the comparable yield of the notes. We have determined
the comparable yield of the notes based on the rate, as of the initial issue
date, at which we would issue a fixed rate nonconvertible debt instrument with
no contingent payments but with terms and conditions similar to the notes.
Accordingly, we have determined that the comparable yield is 9.702%, per annum,
compounded semi-annually.
We are required to furnish to you the comparable yield and, solely for
United States federal income tax purposes, a projected payment schedule that
includes the actual interest payments on the notes and estimates of the amount
and timing of contingent interest payments and payment upon maturity on the
notes taking into account the fair market value of the common stock that might
be paid upon a conversion of the notes. You may obtain the projected payment
schedule by submitting a written request for it to us at the address set forth
on page ii of this prospectus. By purchasing the notes, you agree in the
indenture to be bound by our determination of the comparable yield and projected
payment schedule. For United States federal income tax purposes, you must use
the comparable yield and the schedule of projected payments in determining your
original issue discount accruals, and the adjustments thereto described below,
in respect of the notes.
THE COMPARABLE YIELD AND THE PROJECTED PAYMENT SCHEDULE ARE NOT
PROVIDED FOR ANY PURPOSE OTHER THAN THE DETERMINATION OF YOUR ORIGINAL ISSUE
DISCOUNT ACCRUALS AND ADJUSTMENTS THEREOF IN RESPECT OF THE NOTES FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES AND DO NOT CONSTITUTE A PROJECTION OR
REPRESENTATION REGARDING THE ACTUAL AMOUNT OF THE PAYMENTS ON A NOTE.
ADJUSTMENTS TO INTEREST ACCRUALS ON THE NOTES
If the actual contingent payments made on the notes differ from the
projected contingent payments, adjustments will be made with respect to the
difference. If, during any taxable year, you receive actual payments with
respect to the notes for that taxable year that in the aggregate exceed the
total amount of projected payments for the taxable year, you will incur a
positive adjustment equal to the amount of such excess. Such positive adjustment
will be treated as additional original issue discount in such taxable year. For
these purposes, the payments in a taxable year include the fair market value of
property received in that year, including the fair market value of our common
stock received upon a conversion. If you receive in a taxable year actual
payments that in the aggregate are less than the amount of projected payments
for the taxable year, you will incur a negative adjustment equal to the amount
of such deficit. A negative adjustment will be treated as follows:
42
o first, a negative adjustment will reduce the amount of original issue
discount required to be accrued in the current year;
o second, any negative adjustments that exceed the amount of original
issue discount accrued in the current year will be treated as ordinary
loss to the extent of your total prior original issue discount
inclusions with respect to the notes, reduced to the extent such prior
original issue discount was offset by prior negative adjustments; and
o third, any excess negative adjustments will be treated as a regular
negative adjustment in the succeeding taxable year.
If you purchase a note at a discount or premium to the adjusted issue
price of the note on the acquisition date, you must, upon acquiring the debt
instrument, reasonably allocate the difference between your tax basis and the
adjusted issue price to daily portions of interest or projected payments over
the remaining term of the note. You should consult your tax advisor regarding
these allocations.
If your tax basis is greater than the adjusted issue price of your note
no the acquisition date, the amount of the difference allocated to a daily
portion of interest or to a projected payment is treated as a negative
adjustment on the date the daily portion accrues or the payment is made. On the
date of the adjustment, your adjusted basis in your note is reduced by the
amount treated as a negative adjustment.
If your tax basis is less than the adjusted issue price of your note on
the acquisition date, the amount of the difference allocated to a daily portion
of interest or to a projected payment is treated as a positive adjustment on the
date the daily portion accrues or the payment is made. On the date of the
adjustment, your adjusted basis in your note is increased by the amount treated
as a postive adjustment.
SALE, EXCHANGE, CONVERSION OR REDEMPTION OF THE NOTES
Upon the sale, exchange, repurchase or redemption of a note, as well as
upon a conversion of a note, you will generally recognize gain or loss equal to
the difference between your amount realized and your adjusted tax basis in the
note. As a holder of a note, you agree that under the Contingent Debt
Regulations, the amount realized will include the fair market value of our
common stock that you receive on the conversion as a contingent payment. Such
gain on a note generally will be treated as interest income. Loss from the
disposition of a note will be treated as ordinary loss to the extent of your
prior net original issue discount inclusions with respect to the notes. Any loss
in excess of that amount will be treated as capital loss, which will be
long-term if the notes were held for more than one year. The deductibility of
capital losses is subject to limitations.
Special rules apply in determining the tax basis of a note. Your
adjusted tax basis in a note is generally equal to your original purchase price
for the note, increased by original issue discount (determined without regard to
any adjustments to interest accruals described above, other than any positive or
negative adjustments to reflect discount (which increase basis) or premium
(which decrease basis), respectively, to the adjusted issue price, if any), and
reduced by the amount of any noncontigent payment and the projected amount of
any contingent payments previously scheduled to be made.
Under this treatment, your tax basis in the common stock received upon
conversion of a note will equal the then current fair market value of such
common stock. Your holding period for our common stock will commence on the day
after conversion.
43
CONSTRUCTIVE DIVIDENDS
Holders of convertible debt instruments such as the notes may, in
certain circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. However, adjustments to the
conversion price made pursuant to a bona fide reasonable adjustment formula
which has the effect of preventing the dilution of the interest of the holders
of the debt instruments will generally not be deemed to result in a constructive
distribution of stock. Certain of the possible adjustments provided in the notes
(including, without limitation, adjustments in respect of taxable dividends to
our stockholders) may not qualify as being pursuant to a bona fide reasonable
adjustment formula. If such adjustments are made, you will be deemed to have
received constructive distributions includible in your income in the manner
described under "--Dividends" below even though you have not received any cash
or property as a result of such adjustments. In certain circumstances, the
failure to provide for such an adjustment may also result in a constructive
distribution to you.
DIVIDENDS
If you convert your note into our common stock, distributions, if any,
made on our common stock generally will be included in your income as ordinary
dividend income to the extent of our current or accumulated earnings and
profits. However, under recently enacted legislation, with respect to
noncorporate taxpayers for taxable years beginning after December 31, 2002 and
before January 1, 2009 such dividends are generally taxed at the lower
applicable capital gains rates provided certain holding period requirements are
satisfied. Distributions in excess of our current and accumulated earnings and
profits will be treated as a return of capital to the extent of your adjusted
tax basis in the common stock and thereafter as capital gain from the sale or
exchange of such common stock. Dividends received by a corporate U.S. holder may
be eligible for a dividends received deduction, subject to applicable
limitations.
SALE, EXCHANGE OR REDEMPTION OF COMMON STOCK
If you convert your notes into our common stock, then upon the sale,
exchange or redemption of our common stock, you generally will recognize capital
gain or loss equal to the difference between (i) the amount of cash and the fair
market value of any property received upon the sale or exchange and (ii) your
adjusted tax basis in the common stock. Such capital gain or loss will be
long-term capital gain or loss if your holding period in the common stock is
more than one year at the time of the sale, exchange or redemption. Long-term
capital gains recognized by certain noncorporate U.S. holders, including
individuals, will generally be subject to a reduced rate of United States
federal income tax. Your adjusted tax basis and holding period in common stock
received upon conversion of a note are determined as discussed above under
"--Sale, Exchange, Conversion or Redemption of the Notes." The deductibility of
capital losses is subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
We are required to furnish to the record holders of the notes and
common stock, other than corporations and other exempt holders, and to the IRS,
information with respect to interest on the notes and dividends paid on the
common stock.
You may be subject to backup withholding with respect to interest paid
on the notes, dividends paid on the common stock or with respect to proceeds
received from a disposition of the notes or shares of common stock. Certain
holders (including, among others, corporations and certain tax-exempt
organizations) are generally not subject to backup withholding. You will be
subject to backup withholding if you are not otherwise exempt and you
o fail to furnish your taxpayer identification number ("TIN"), which,
for an individual, is ordinarily his or her social security number;
o furnish an incorrect TIN;
44
o are notified by the IRS that you have failed to properly report
payments of interest or dividends; or
o fail to certify, under penalties of perjury, that you have furnished a
correct TIN and that the IRS has not notified you that you are subject
to backup withholding.
Backup withholding is not an additional tax but, rather, is a method of tax
collection. You generally will be entitled to credit any amounts withheld under
the backup withholding rules against your United States federal income tax
liability provided that the required information is furnished to the IRS in a
timely manner.
45
SELLING SECURITYHOLDERS
The notes were originally issued by Integra and sold by the initial
purchasers of the notes in a transaction exempt from the registration
requirements of the Securities Act of 1933 to persons reasonably believed by the
initial purchasers to be qualified institutional buyers as defined by Rule 144A
under the Securities Act of 1933. Selling securityholders, including their
transferees, pledgees or donees or their successors, may from time to time offer
and sell pursuant to this prospectus any or all of the notes and shares of
common stock into which the notes are convertible.
The following table sets forth information, as of June 26, 2003, with
respect to the selling securityholders and the principal amounts of notes
beneficially owned by each selling securityholder that may be offered pursuant
to this prospectus. The information is based on information provided by or on
behalf of the selling securityholders. The selling securityholders may offer
all, some or none of the notes or the common stock into which the notes are
convertible. Because the selling securityholders may offer all or some portion
of the notes or the common stock, we cannot estimate the amount of the notes or
the common stock that will be held by the selling securityholders upon
termination of any of these sales. In addition, the selling securityholders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information
regarding their notes in transactions exempt from the registration requirements
of the Securities Act of 1933. The percentage of notes outstanding beneficially
owned by each selling securityholder is based on $120,000,000 aggregate
principal amount of notes outstanding.
The number of shares of common stock issuable upon conversion of the
notes shown in the table below assumes conversion of the full amount of notes
held by each selling securityholder at an initial conversion rate of 29.2847
shares per $1,000 principal amount of notes and a cash payment in lieu of any
fractional shares. This conversion price is subject to adjustment in certain
events. Accordingly, the number of conversion shares may increase or decrease
from time to time. Information concerning other selling securityholders will be
set forth in prospectus supplements from time to time, if required. The number
of shares of common stock owned by the other selling securityholders or any
future transferee from any such holder assumes that they do not beneficially own
any common stock other than common stock into which the notes are convertible.
COMMON
PRINCIPAL STOCK
AMOUNT OF NOTES OWNED PERCENTAGE COMMON
BENEFICIALLY PERCENTAGE PRIOR TO OF COMMON STOCK
OWNED AND OF NOTES THE STOCK OFFERED
NAME OFFERED HEREBY OUTSTANDING OFFERING OUTSTANDING HEREBY
---- -------------- ----------- -------- ----------- ------
Man Convertible Bond Master Fund, Ltd. 5,438,000 4.53% 0 * 159,250
Victus Capital, L.P. 5,000,000 4.17% 0 * 146,423
Grace Convertible Arbitrage Fund, Ltd. 2,500,000 2.08% 0 * 73,211
LDG Limited 1,000,000 * 0 * 29,284
Gasner Investors Holdings Ltd. 500,000 * 0 * 14,642
TQA Master Fund, Ltd. 3,431,000 2.86% 0 * 100,475
TQA Master Plus Fund, Ltd. 2,367,000 1.97% 0 * 69,316
Zurich Institutional Benchmarks Master 427,000 * 0 * 12,504
Fund, Ltd. c/o TQA Investors, LCC
Sphinx Fund c/o TQA Investors, LCC 70,000 * 0 * 2,049
Xavex Convertible Arbitrage 7 Fund 45,000 * 0 * 1,317
c/o TQA Investors, LCC
Zurich Institutional Benchmarks Master 2,000,000 1.67% 0 * 58,569
Fund, Ltd.
Zazove Income Fund, L.P. 1,800,000 1.5% 0 * 52,712
Zazove Hedged Convertible Fund, L.P. 2,700,000 2.25% 0 * 79.068
Zazove Convertible Arbitrage Fund, L.P. 3,000,000 2.5% 0 * 87,854
Nomura Securities International Inc. 2,000,000 1.67% 39,000 * 58,569
KBC Financial Products USA Inc. 512,000 * 0 * 14,993
WPG Convertible Arbitrage Overseas Master 750,000 * 0 * 21,963
Fund
WOG MSA Convertible Arbitrage Fund 250,000 * 0 * 7,321
Oakwood Healthcare Inc. Funded 75,000 * 0 * 2,196
Depreciation
Oakwood Healthcare Inc. (Pension) 135,000 * 0 * 3,953
Oakwood Healthcare Inc. Endowment 6,000 * 0 * 175
Oakwood Healthcare Inc. OHP 11,000 * 0 * 322
Oakwood Assurance Company 43,000 * 0 * 1,259
The California Wellness Foundation 370,000 * 0 * 10,835
Munson Medical Center Retirement Plan 55,000 * 0 * 1,610
Munson2 Healthcare Board Designated 45,000 * 0 * 1,317
Operating Fund
The Dow Chemical Company Employee's 2,400,000 2% 0 * 70,283
Retirement Plan
City of Knoxville Pension System 270,000 * 0 * 7,906
Louisiana Workers' Compensation 320,000 * 0 * 9,371
Corporation
Delta Pilots Disability and Survivorship 370,000 * 0 * 10,835
Trust
SCI Endowment Care Common Trust Fund - 70,000 * 0 * 2,049
Suntrust
Union Carbide Retirement Account 1,100,000 * 0 * 32,213
SCI Endowment Care Common Trust Fund - 33,000 * 0 * 966
First Union
Kettering Medical Center Funded 70,000 * 0 * 2,049
Depreciation Account
CEMEX Pension Plan 115,000 0 * 3,367
CALAMOS Convertible Growth & Income fund 17,000,000 14.17% 0 1.87% 497,840
- CALAMOS Investment Trust
St. Thomas Trading, Ltd. 13,620,000 11.35% 0 1.50% 398,857
Credit Suisse First Boston LLC 4,600,000 3.83% 0 * 134,709
OCM Convertible Trust 525,000 * 0 * 15,374
Delta Air Lines Master Trust - CV 210,000 * 0 * 6,149
State Employees Retirement Fund of the 220,000 * 0 * 6,442
State of Delaware
Chrysler Corporation Master Retirement 510,000 * 0 * 14,935
Trust
Motion Picture Industry Health Plan - 55,000 * 0 * 1,610
Active Member Fund
Motion Picture Industry Health Plan - 35,000 * 0 * 1,024
Retiree Member Fund
Delta Pilots Disability and Survivorship 100,000 * 0 * 2,928
Trust - CV
Microsoft Corporation 290,000 * 0 * 8,492
Qwest Occupational Health Trust 55,000 * 0 * 1,610
All other holders of Notes or future 43,502,000 36.25% 4.78% 1,273,943
transferees from such holders (1)
Total 120,000,000 100.0% 13.19% 3,514,164
- ---------------
* Less than 1%
(1) Other selling securityholders may be identified at a later date.
46
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which term includes
their transferees, pledgees or donees or their successors may sell the notes and
the common stock issuable upon conversion of the notes directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the selling
securityholders or the purchasers. These discounts, concessions or commissions
as to any particular underwriter, broker-dealer or agent may be in excess of
those customary in the types of transactions involved.
The notes or common stock issuable upon conversion of the notes may be
sold in one or more transactions at:
o fixed prices;
o prevailing market prices at the time of sale;
o prices related to the prevailing market prices;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions:
o for the common stock, on any national securities exchange or quotation
service on which our common stock may be listed or quoted at the time
of sale;
o in the over-the-counter market;
o otherwise than on such exchanges or services or in the
over-the-counter market;
o through the writing of options, whether the options are listed on an
options exchange or otherwise; or
o through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as agent on both sides of the
trade.
In connection with the sale of the notes and the common stock issuable
upon conversion of the notes or otherwise, the selling securityholders may enter
into hedging transactions with broker-dealers or other financial institutions.
These broker-dealers or financial institutions may in turn engage in short sales
of the common stock in the course of hedging the positions they assume with
selling securityholders. The selling securityholders may also sell the notes and
the common stock issuable upon conversion of the notes short and deliver these
securities to close out such short positions, or loan or pledge the notes or the
common stock issuable upon conversion of the notes to broker-dealers that in
turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale of
the notes or the common stock issuable upon conversion of the notes offered by
them hereby will be the purchase price of the notes
47
or the common stock less discounts and commissions, if any. Each of the selling
securityholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of
common stock to be made directly or through agents. We will not receive any of
the proceeds from this offering.
Our outstanding common stock is listed for trading on the Nasdaq
National Market. We do not intend to list the notes for trading on any national
securities exchange and can give no assurance about the development of any
trading market for the notes.
In order to comply with the securities laws of some states, if
applicable, the notes and the common stock issuable upon conversion of the notes
may be sold in these jurisdictions only through registered or licensed brokers
or dealers.
The selling securityholders and any broker-dealers or agents that
participate in the sale of the notes and the common stock issuable upon
conversion of the notes may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933. Profits on the sale of the notes
and the common stock issuable upon conversion of the notes by selling
securityholders and any discounts, commissions or concessions received by any
broker-dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act of 1933. Selling securityholders who are
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933 will be subject to the prospectus delivery requirements
of the Securities Act of 1933. To the extent the selling securityholders may be
deemed to be "underwriters," they may be subject to statutory liabilities,
including, but not limited to, Sections 11, 12 and 17 of the Securities Act of
1933.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934 and the rules and regulations thereunder. Regulation M of the
Securities Exchange Act of 1934 may limit the timing of purchases and sales of
any of the securities by the selling securityholders and any other person. In
addition, Regulation M may restrict the ability of any person engaged in the
distribution of the securities to engage in market-making activities with
respect to the particular securities being distributed for a period of up to
five business days before the distribution.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholder and any underwriter,
broker-dealer or agent regarding the sale of the notes or common stock issuable
upon conversion of the notes by the selling securityholders.
A selling securityholder may decide not to sell any notes or the common
stock issuable upon conversion of the notes described in this prospectus. We
cannot assure holders that any selling securityholder will use this prospectus
to sell any or all of the notes or the common stock issuable upon conversion of
the notes. Any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act of 1933 may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus. In
addition, a selling securityholder may transfer, devise or gift the notes and
the common stock issuable upon conversion of the notes by other means not
described in this prospectus.
With respect to a particular offering of the notes and the common stock
issuable upon conversion of the notes, to the extent required, an accompanying
prospectus supplement or, if appropriate, a post-effective amendment to the
registration statement of which this prospectus is a part will be prepared and
will set forth the following information:
o the specific notes or common stock to be offered and sold;
48
o the names of the selling securityholders;
o the respective purchase prices and public offering prices and other
material terms of the offering;
o the names of any participating agents, broker-dealers or underwriters;
and
o any applicable commissions, discounts, concessions and other items
constituting, compensation from the selling securityholders.
We entered into the registration rights agreement for the benefit of
holders of the notes to register their notes and the common stock issuable upon
conversion of the notes under applicable federal and state securities laws under
certain circumstances and at certain times. The registration rights agreement
provides that the selling securityholders and we will indemnify each other and
our respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the notes and the common
stock issuable upon conversion of the notes, including liabilities under the
Securities Act of 1933, or will be entitled to contribution in connection with
those liabilities. We will pay all of our expenses and specified expenses
incurred by the selling securityholders incidental to the registration, offering
and sale of the notes and the common stock issuable upon conversion of the notes
to the public, but each selling securityholder will be responsible for payment
of commissions, concessions, fees and discounts of underwriters, broker-dealers
and agents.
VALIDITY OF THE SECURITIES
The validity of the notes and the shares of our common stock issuable
upon conversion of the notes have been passed upon for us by Latham & Watkins
LLP.
EXPERTS
The consolidated financial statements and financial statement schedule
of Integra LifeSciences Holdings Corporation as of December 31, 2002 and
December 31, 2001 and for each of the three years in the period ended December
31, 2002 incorporated in this Registration Statement by reference to the Current
Report on Form 8-K dated June 27, 2003, have been so incorporated in reliance on
the report from PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The financial statements of J. Jamner Surgical Instruments, Inc. as of
and for the year ended December 31, 2002 incorporated in this registration
statement by reference to the Current Report on Form 8-K of Integra LifeSciences
Holdings Corporation filed on March 25, 2003, have been so incorporated in
reliance on the report from WithumSmith+Brown, P.C., independent accountants,
given on the authority of said firm as experts in auditing and accounting.
49
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
$120,000,000
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008 SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
-----------------
PROSPECTUS
, 2003
-----------------
- --------------------------------------------------------------------------------
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid in connection with the distribution of the
securities being registered are as set forth in the following table:
- --------------------------------------------------------------------------------
Securities and Exchange Commission Fee $ 9,708
- --------------------------------------------------------------------------------
*Nasdaq National Market Additional Listing Fee $ 0
- --------------------------------------------------------------------------------
*Legal Fees and Expenses $400,000
- --------------------------------------------------------------------------------
*Accounting Fees and Expenses $200,000
- --------------------------------------------------------------------------------
*Printing Expenses $ 70,000
- --------------------------------------------------------------------------------
*Miscellaneous $ 50,000
- --------------------------------------------------------------------------------
Total $729,708
- --------------------------------------------------------------------------------
- -------------
* Estimated
We will bear each of the expenses in the above table.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Officers and Directors of Integra are covered by certain provisions of
the Delaware General Corporation Law ("DGCL"), Integra's charter, bylaws and
insurance policies which serve to limit, and, in certain circumstances, to
indemnify them against, certain liabilities which they may incur in such
capacities. These various provisions are described below.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
In June 1986, Delaware enacted legislation which authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach of
directors' fiduciary duty of care. This duty of care requires that, when acting
on behalf of the corporation, directors must exercise an informed business
judgment based on all significant information reasonably available to them.
Absent the limitations now authorized by such legislation, directors are
accountable to corporations and their stockholders for monetary damages for
conduct constituting negligence or gross negligence in the exercise of their
duty of care. Although the statute does not change directors' duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. The charter limits the liability of directors to
Integra or its stockholders (in their capacity as directors but not in their
capacity as officers) to the fullest extent permitted by such legislation.
Specifically, the directors of Integra will not be personally liable for
monetary damages for breach of a director's fiduciary duty as director, except
for liability: (1) for any breach of the director's duty of loyalty to Integra
or its stockholders; (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (3) for unlawful
payments of dividends or unlawful share repurchases or redemptions as provided
in Section 174 of the DGCL; or (4) for any transaction from which the director
derived an improper personal benefit.
II-1
INDEMNIFICATION AND INSURANCE
As a Delaware corporation, Integra has the power, under specified
circumstances generally requiring the director or officer to act in good faith
and in a manner he reasonably believes to be in or not opposed to Integra's best
interests, to indemnify its directors and officers in connection with actions,
suits or proceedings brought against them by a third party or in the name of
Integra, by reason of the fact that they were or are such directors or officers,
against expenses, judgments, fines and amounts paid in settlement in connection
with any such action, suit or proceeding. Integra's bylaws generally provide for
mandatory indemnification of Integra's directors and officers to the full extent
provided by Delaware corporate law. In addition, Integra has entered into
indemnification agreements with its directors and officers which generally
provide for mandatory indemnification under circumstances for which
indemnification would otherwise be discretionary under Delaware law.
Integra intends to purchase and maintain insurance on behalf of any
person who is or was a director or officer of Integra, or is or was a director
or officer of Integra serving at the request of Integra as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not Integra would have the power or obligation to indemnify him
against such liability under the provisions of the bylaws.
II-2
ITEM 16. EXHIBITS
INDEX
4.1.............Indenture, dated as of March 31, 2003, between Integra
LifeSciences Holdings Corporation and Wells Fargo Bank
Minnesota, National Association, as trustee,
incorporated by reference to Exhibit 4.1 of our
Quarterly Report on Form 10-Q for the three months
ended March 31, 2003
4.2.............Form of 2 1/2% Convertible Senior Note due 2008
(included in Exhibit 4.1)
4.3.............Registration Rights Agreement, dated as of March 31,
2003, between Integra LifeSciences Holdings Corporation
and Credit Suisse First Boston, LLC, Banc of America
Securities LLC and U.S. Bancorp Piper Jaffray Inc.
5.1.............Opinion of Latham & Watkins LLP
8.1.............Opinion Regarding Tax Matters
12.1............Statement of Computation of Ratio of Earnings to
Fixed Charges
23.1............Consent of PricewaterhouseCoopers LLP
23.2........... Consent of WithumSmith+Brown, P.C.
23.3 ...........Consent of Latham & Watkins LLP (included in Exhibit
5.1)
24.1 .......... Power of Attorney of the Company (included on the
signature page hereto)
25.1........... Statement of Eligibility of Trustee on Form T-1
II-3
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrants pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Plainsboro, State of New
Jersey, on date set forth below.
Integra LifeSciences Holdings Corporation
By: /s/ JOHN B. HENNEMAN, III
---------------------------------------------
John B. Henneman, III
Executive Vice President, Chief Administrative
Officer and Secretary
Date: June 27, 2003
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Stuart M. Essig, John B.
Henneman, III and David B. Holtz and each of them, with full power of
substitution and full power to act without the other, his or her true and lawful
attorney-in-fact and agent to act for him or her in his or her name, place and
stead, in any and all capacities, to sign any and all amendments to the
registration statement to which this power of attorney is attached (including
without limitation any post-effective amendments thereto), and any registration
statement for the same offering that is to be effective under rule 462(b) of the
Securities Act, and to file each of the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully, to all intents and purposes, as they, he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by each of the following persons on June 27, 2003 in
the capacities indicated.
SIGNATURE TITLE
/s/ STUART M. ESSIG
- -------------------
Stuart M. Essig, Ph.D President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ DAVID B. HOLTZ
- -------------------
David B. Holtz Senior Vice President, Finance and Treasurer
(Principal Financial and Accounting Officer)
/s/ RICHARD E. CARUSO
- ------------------------
Richard E. Caruso, Ph.D Chairman of the Board of Directors
/s/ KEITH BRADLEY
- -------------------
Keith Bradley, Ph.D Director
/s/ DAVID AUTH
- -------------------
David Auth Director
- -------------------
Neal Moszkowski Director
/s/ JAMES M. SULLIVAN
- ---------------------
James M. Sullivan Director
S-1
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1........................ Indenture, dated as of March 31, 2003, between
Integra LifeSciences Holdings Corporation and Wells
Fargo Bank Minnesota, National Association, as
trustee, incorporated by reference to Exhibit 4.1 of
our Quarterly Report on Form 10-Q for the three
months ended March 31, 2003
4.2....................... Form of 2 1/2% Convertible Senior Note due 2008
(included in Exhibit 4.1)
4.3....................... Registration Rights Agreement, dated as of March 31,
2003, between Integra LifeSciences Holdings
Corporation and Credit Suisse First Boston, LLC,
Banc of America Securities LLC and U.S. Bancorp
Piper Jaffray Inc.
5.1....................... Opinion of Latham & Watkins LLP
8.1....................... Opinion Regarding Tax Matters
12.1...................... Statement of Computation of Ratio of Earnings to
Fixed Charges
23.1....................... Consent of PricewaterhouseCoopers LLP
23.2....................... Consent of WithumSmith+Brown, P.C.
23.3....................... Consent of Latham & Watkins LLP (included in Exhibit
5.1)
24.1....................... Power of Attorney of the Company (included on the
signature page hereto)
25.1....................... Statement of Eligibility of Trustee on Form T-1
Exhibit 4.3
$100,000,000
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
MARCH 31, 2003
Credit Suisse First Boston LLC
Banc of America Securities LLC
U.S. Bancorp Piper Jaffray Inc.
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
Integra LifeSciences Holdings Corporation , a Delaware corporation (the
"COMPANY"), proposes to issue and sell to Credit Suisse First Boston, LLC and
Banc of America Securities LLC and U.S. Bancorp Piper Jaffray Inc.
(collectively, the "INITIAL PURCHASERS"), upon the terms set forth in a purchase
agreement, dated March 26, 2003 (the "PURCHASE AGREEMENT"), $100,000,000
aggregate principal amount (plus up to an additional $20,000,000 principal
amount) of its 2 1/2% Contingent Convertible Subordinated Notes due 2008 (the
"INITIAL SECURITIES"). The Initial Securities will be convertible into shares of
common stock, par value $.01 per share, of the Company (the "COMMON STOCK") at
the conversion price set forth in the Offering Circular dated March 26, 2003.
The Initial Securities will be issued pursuant to an Indenture, dated as of
March 31, 2003 (the "INDENTURE"), between the Company and Wells Fargo Bank
Minnesota, National Association, as trustee (the "TRUSTEE"). As an inducement to
the Initial Purchasers to enter into the Purchase Agreement, the Company agrees
with the Initial Purchasers, for the benefit of (i) the Initial Purchasers and
(ii) the beneficial holders of the Initial Securities and the Common Stock
issuable upon conversion of the Initial Securities (collectively, the
"SECURITIES") from time to time until such time as such Securities have been
sold pursuant to a Shelf Registration Statement (as defined below) (each of the
forgoing a "HOLDER" and collectively the "HOLDERS"), as follows:
1. SHELF REGISTRATION. (a) The Company shall, at its cost, prepare and,
as promptly as practicable (but in no event more than 90 days after so required
or requested pursuant to this Section 1) file with the Securities and Exchange
Commission (the
1
"COMMISSION") and thereafter use its reasonable efforts to cause
to be declared effective as soon as practicable a registration statement on Form
S-3 (the "SHELF REGISTRATION Statement") relating to the offer and sale of the
Transfer Restricted Securities (as defined in Section 5 hereof) by the Holders
thereof from time to time in accordance with the methods of distribution set
forth in the Shelf Registration Statement and Rule 415 under the Securities Act
of 1933, as amended (the "SECURITIES ACT") (hereinafter, the "SHELF
REGISTRATION"); PROVIDED, HOWEVER, that no Holder (other than an Initial
Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein (the "PROSPECTUS") to be lawfully delivered by the Holders of
the relevant Securities, for a period of two years (or for such longer period if
extended pursuant to Section 2(h) below) from the date of the last of the date
of the original issuance of the Initial Securities or such shorter period that
will terminate when all the Securities covered by the Shelf Registration
Statement (i) have been sold pursuant thereto or (ii) are no longer restricted
securities (as defined in Rule 144(k) under the Securities Act, or any successor
rule thereof), assuming for this purpose that the Holders thereof are not
affiliates of the Company (in any such case, such period being called the "SHELF
REGISTRATION PERIOD"). The Company shall be deemed not to have used its
reasonable efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in Holders
of Securities covered thereby not being able to offer and sell such Securities
during that period, unless such action is (i) required by, or necessary for the
Company to stay in compliance with, applicable law or (ii) taken by the Company
in good faith and contemplated by Section 2(b)(v) below, and the Company
thereafter complies with the requirements of Section 2(h).
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
Prospectus and any amendment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2. REGISTRATION PROCEDURES. In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Shelf Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and, in the event that an Initial Purchaser (with
respect to any portion of an unsold allotment
2
from the original offering) is participating in the Shelf Registration
Statement, shall use its best efforts to reflect in each such document, when so
filed with the Commission, such comments as such Initial Purchaser reasonably
may propose; and (ii) include the names of the Holders who propose to sell
Securities pursuant to the Shelf Registration Statement as selling
securityholders.
(b) The Company shall give written notice to the Initial Purchasers and
the Holders of the Securities (which notice pursuant to clauses (ii)-(v) of this
Section 2(b) shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made):
(i) when the Shelf Registration Statement or any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective;
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Shelf Registration Statement or the Prospectus in
order that the Shelf Registration Statement or the Prospectus does not
contain an untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.
(c) The Company shall make reasonable efforts to obtain the withdrawal
at the earliest possible time, of any order suspending the effectiveness of the
Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one copy
of the Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
3
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the Prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the Prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
(f) Prior to any public offering of the Securities pursuant to the
Shelf Registration Statement, the Company shall register or qualify or cooperate
with the Holders of the Securities included therein and their respective counsel
in connection with the registration or qualification of the Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the Securities covered by such Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to the Shelf Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the Shelf
Registration Statement or an amendment or supplement to the Prospectus and any
other required document so that, as thereafter delivered to Holders or
purchasers of the Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company
notifies the Initial Purchasers and the Holders in accordance with paragraphs
(ii) through (v) of Section 2(b) above to suspend the use of the Prospectus
until the requisite changes to the Prospectus have been made, then the Initial
Purchasers and the Holders shall suspend use of such Prospectus, and the period
of effectiveness of the Shelf Registration Statement provided for in Section
1(b) above shall be extended by the number of days from and including the date
of the giving of such notice to and including the date when the Initial
Purchasers and the
4
Holders shall have received such amended or supplemented prospectus pursuant to
this Section 2(h).
(i) Not later than the effective date of the Shelf Registration
Statement, the Company will provide CUSIP numbers for the Initial Securities and
the Common Stock registered under the Shelf Registration Statement, and provide
the Trustee with certificates for the Initial Securities, in a form eligible for
deposit with The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, (the "TRUST INDENTURE ACT") in a timely
manner and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(l) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company a written
notice containing substantially the information called for by the Form of
Selling Securityholder Notice and Questionnaire attached as Annex A to the
Offering Circular of the Company dated March 26, 2003 relating to the Initial
Securities, and the Company may exclude from such registration the Securities of
any Holder that unreasonably fails to furnish such information within a
reasonable time after receiving such request.
(m) The Company shall take all such other actions, if any, as any
Holder shall reasonably request in order to facilitate the disposition of the
Securities pursuant to the Shelf Registration.
(n) The Company shall (i) make reasonably available for inspection by
the Holders, and any attorney, accountant or other agent retained by the
Holders, all relevant financial and other records, pertinent corporate documents
and properties of the Company and (ii) cause the Company's officers, directors,
employees, accountants and auditors to supply all relevant information
reasonably requested by the Holders or any such attorney, accountant or agent in
connection with the Shelf Registration Statement, in each case, as shall be
reasonably necessary to enable such persons, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; PROVIDED,
HOWEVER,
5
that the foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers by you and on behalf of the other parties, by
one counsel designated by and on behalf of such other parties as described in
Section 3 hereof.
(o) The Company, if requested by any Holder of Securities covered by
the Shelf Registration Statement, shall cause (i) its counsel to deliver an
opinion and updates thereof relating to the Securities in customary form
addressed to such Holders and dated, in the case of the initial opinion, the
effective date of such Shelf Registration Statement (it being agreed that the
matters to be covered by such opinion shall include, without limitation, the due
incorporation and good standing of the Company and its subsidiaries; the
qualification of the Company and its subsidiaries to transact business as
foreign corporations; the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the Securities; the absence of
material legal or governmental proceedings involving the Company and its
subsidiaries; the absence of governmental approvals required to be obtained in
connection with the Shelf Registration Statement, on the offering and sale of
the Securities, the compliance as to form of the Shelf Registration Statement
and any documents incorporated by reference therein and of the Indenture with
the requirements of the Securities Act and the Trust Indenture Act,
respectively; and, as of the date of the opinion and as of the effective date of
the Shelf Registration Statement or most recent post-effective amendment
thereto, as the case may be, the absence from the Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented, and from
any documents incorporated by reference therein of an untrue statement of a
material fact or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange
Act of 1934, as amended (the "EXCHANGE ACT")); (ii) its officers to execute and
deliver all customary documents and certificates and updates thereof requested
by any underwriters of the Securities and (iii) its independent public
accountants to provide to the selling Holders of the applicable Securities and
any underwriter therefor a comfort letter in customary form and covering matters
of the type customarily covered in comfort letters in connection with primary
underwritten offerings, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
(p) The Company will use its best efforts to (a) if the Initial
Securities have been rated prior to the initial sale of such Initial Securities,
confirm such ratings will apply to the Securities covered by a Registration
Statement, or (b) if the Initial Securities were not previously rated, cause the
Securities covered by a Registration Statement to be rated with the appropriate
rating agencies, if so requested by holders of a majority in aggregate principal
amount of Securities covered by the Shelf Registration Statement.
3. REGISTRATION EXPENSES. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
6
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal
securities and state "blue sky" or securities laws;
(iii) all expenses of printing (including printing
certificates for the Securities to be issued and printing of
Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company;
(v) all application and filing fees in connection with
listing the Securities on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified
public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such
performance).
The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.
(b) In connection with the Shelf Registration Statement required by
this Agreement, the Company will reimburse the Initial Purchasers and the
Holders of Securities covered by the Shelf Registration Statement, for the
reasonable fees and disbursements of not more than one counsel, designated by
the Holders of a majority in principal amount of the Securities covered by the
Shelf Registration Statement (provided that Holders of Common Stock issued upon
the conversion of the Initial Securities shall be deemed to be Holders of the
aggregate principal amount of Initial Securities from which such Common Stock
was converted) to act as counsel for the Holders in connection therewith.
4. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder, and such
controlling persons are referred to collectively as the "INDEMNIFIED PARTIES")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
7
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement or prospectus including any document incorporated
by reference therein, or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration, or arise out of, or
are based upon, 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, and shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; PROVIDED, HOWEVER, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Shelf Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration in reliance upon and in conformity
with written information pertaining to such Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to the Shelf Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished by such Holder specifically for use therein; and
PROVIDED, FURTHER, that the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Holder from whom the person asserting any
such losses, claims, damages or liabilities, purchased the Securities concerned
and any such loss, claim, damage or liability of such Holder results from the
fact that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the final
prospectus if the Company had previously furnished copies thereof to such
Holder; PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be in
addition to any liability which the Company may otherwise have to such
Indemnified Party.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or prospectus or in any amendment
or supplement thereto or in any preliminary prospectus relating to the Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in
8
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 4
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have under subsection (a) or (b) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under subsection (a) or (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action, and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or
9
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or such Holder or
such other indemnified party, as the case may be, on the other, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding any other provision of this Section 4(d), the
Holders shall not be required to contribute any amount in excess of the amount
by which the net proceeds received by such Holders from the sale of the
Securities pursuant to the Shelf Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the sale
of the Securities pursuant to the Shelf Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional
interest (the "ADDITIONAL Interest") with respect to the Initial Securities
shall be assessed as follows if any of the following events occur (each such
event in clauses (i) through (iii) below being herein called a "REGISTRATION
DEFAULT"):
(i) the Shelf Registration Statement has not been filed with
the Commission by the 90th day after the first date of original
issuance of the Initial Securities;
(ii) the Shelf Registration Statement has not been declared
effective by the Commission by the 180th day after the first date of
original issue of the Initial Securities; or
(iii) the Shelf Registration Statement is declared effective
by the Commission but (A) the Shelf Registration Statement thereafter
ceases to be
10
effective or (B) the Shelf Registration Statement or the Prospectus
ceases to be usable in connection with resales of Transfer Restricted
Securities (as defined below) during the periods specified herein and
(1) the Company does not cause the Shelf Registration Statement to
become effective within five (5) business days after it has ceased to
be effective by a post-effective amendment or a report filed pursuant
to the Exchange Act or (2) if applicable, the Company does not
terminate the suspension periods described below in the first sentence
of Section 5(d).
Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission.
Additional Interest shall accrue on the Initial Securities over and
above the interest set forth in the title of the Initial Securities from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all such Registration Defaults have been cured, at a
rate of 0.50% per annum (the "ADDITIONAL INTEREST RATE").
(b) Any amounts of Additional Interest due pursuant to Section 5(a)
will be payable in cash on the regular interest payment dates with respect to
the Initial Securities. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest Rate by the principal amount of
the Initial Securities, further multiplied by a fraction, the numerator of which
is the number of days such Additional Interest Rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months), and the denominator of which is 360.
(c) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the
date on which such Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement (ii) the
date on which such Security ceases to be outstanding or (iii) the date on which
such Security is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
(d) Notwithstanding paragraph (a) of this Section 5, the Company shall
be permitted to suspend the effectiveness of a Registration Statement covering
the Securities for any bona fide reason, for up to 45 consecutive days (the
"DEFERRAL PERIOD") in any 90 day period without paying Additional Interest;
PROVIDED, HOWEVER, that Deferral Periods may not total more than 90 days in any
twelve-month period. In addition, the Company shall be, upon written notice to
all Holders, permitted to postpone having the Shelf Registration Statement
declared effective for a reasonable period of time not to exceed 90 days if the
Company possesses material non-public information, the disclosure of which would
have a material adverse effect on the Company and its subsidiaries, taken as a
11
whole; PROVIDED, HOWEVER, that any such postponement or suspension pursuant to
this Section 5(d) shall not effect the Company's obligation to pay Additional
Interest as set forth in Section 5(a) above. The Company shall not be required
to specify in the written notice to the Holders the nature of the event giving
rise to the Deferral Period.
6. RULES 144 AND 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder, make publicly available
other information so long as necessary to permit sales of their securities
pursuant to Rules 144 and 144A. The Company covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rules 144 and 144A (including the requirements of Rule
144A(d)(4)). The Company will provide a copy of this Agreement to prospective
purchasers of Securities identified to the Company by the Initial Purchasers
upon request. Upon the request of any Holder, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
8. MISCELLANEOUS.
(a) REMEDIES. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations under Section 1 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Sections 1 hereof. The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents
(provided that holders of Common Stock issued upon conversion of Initial
Securities shall not be deemed holders
12
of Common Stock, but shall be deemed to be holders of the aggregate
principal amount of Initial Securities from which such Common Stock was
converted). Without the consent of the Holder of each Initial Security,
however, no modification may change the provisions relating to the
payment of Additional Interest.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
Banc of America Securities LLC
9 West 57th Street
47th Floor
New York, NY 10019
Facsimile: (212) 933-2217
U.S. Bancorp Piper Jaffray Inc.
Suite 2200
345 California Street
San Francisco, CA 94104-2606
Facsimile: (415) 984-5121
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Peter H. Jakes, Esq.
David K. Boston, Esq.
(3) if to the Company, at its address as follows:
13
311 Enterprise Drive
Plainsboro, New Jersey 08536
Attention: Jack B. Henneman III
with a copy to:
Latham & Watkins LLP
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: Peter M. Labonski, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(e) THIRD PARTY BENEFICIARIES. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the State of New
York.
(j) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the
14
validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(k) SECURITIES HELD BY THE COMPANY. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
[Signature page follows]
15
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
by /s/ John B. Henneman, III
-------------------------------------
Name: John B. Henneman, III
Title: Executive Vice President, Chief Administrative
Officer and Secretary
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP PIPER JAFFRAY INC.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Pete A. Meyers
------------------------------------
Name: Pete A. Meyers
Title: Director
Exhibit 5.1
June 27, 2003
Integra LifeSciences Holdings Corporation
311 Enterprise Drive
Plainsboro, New Jersey 08536
Re: Integra LifeSciences Holdings Corporation:
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
In connection with the registration for resale by the holders
thereof of $120,000,000 aggregate principal amount of 2 1/2% Contingent
Convertible Subordinated Notes due 2008 (the "NOTES") and the registration of
3,514,162 shares of common stock, par value $0.01 per share (the "SHARES"),
issuable upon conversion of the Notes, under the Securities Act of 1933, as
amended, by Integra LifeSciences Holdings Corporation, a Delaware corporation
(the "COMPANY"), on Form S-3 filed with the Securities and Exchange Commission
on June 27, 2003 (the "REGISTRATION STATEMENT"), you have requested our opinion
with respect to the matters set forth below. The Notes have been issued pursuant
to an indenture, dated as of March 31, 2003 (the "INDENTURE"), between the
Company and Wells Fargo Bank Minnesota, National Association, as trustee (the
"TRUSTEE").
In our capacity as your special counsel in connection with
such registration, we are familiar with the proceedings taken by the Company in
connection with the authorization and issuance of the Notes and the Shares. In
addition, we have examined such matters of fact and questions of law as we have
considered appropriate for the purposes of this letter.
As to facts material to the opinions, statements and
assumptions expressed herein, we have, with your consent, relied upon oral or
written statements and representations of officers and other representatives of
the Company and others. We have not independently verified such factual matters.
We are opining herein as to the effect on the subject
transaction only of the internal laws of the State of New York and the General
Corporation Law of the State of Delaware, and we express no opinion with respect
to the applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any matters
of municipal law or the laws of any local agencies within any state.
Subject to the foregoing and the other matters set forth
herein, it is our opinion that as of the date hereof:
(1) The Notes have been duly authorized by all necessary
corporate action of the Company and constitute legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms.
(2) The Shares initially issuable upon conversion of the Notes
have been duly authorized and reserved for issuance by all necessary corporate
action of the Company and, when issued upon conversion of the Notes in
accordance with the terms of the Indenture and the Notes, will be validly
issued, fully paid and non-assessable.
The opinion rendered in paragraph (1) above is subject to the
following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors; (ii)
the effect of general principles of equity, whether enforcement is considered in
a proceeding in equity or at law (including the possible unavailability of
specific performance or injunctive relief), concepts of materiality,
reasonableness, good faith and fair dealing, and the discretion of the court
before which any proceeding therefore may be brought; (iii) the unenforceability
under certain circumstances under law or court decisions of provisions providing
for the indemnification of or contribution to a party with respect to a
liability where such indemnification or contribution is contrary to public
policy; (iv) we express no opinion concerning the enforceability of the waiver
of rights or defenses contained in Section 6.7 of the Indenture; and (v) the
unenforceability of any provision requiring the payment of attorneys' fees,
where such payment is contrary to law or public policy.
We have not been requested to express, and with your knowledge
and consent, do not render any opinion as to the applicability to the
obligations of the Company under the Indenture and the Notes of Section 548 of
the United States Bankruptcy Code or applicable state law (including, without
limitation, Article 10 of the New York Debtor and Creditor Law) relating to
fraudulent transfers and obligations.
With your consent, we have assumed for purposes of this
opinion that (i) each of the parties to the Indenture and the Notes
(collectively the "OPERATIVE DOCUMENTS") (a) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; (b) has
the requisite power and authority to execute and deliver and to perform its
obligations under each of the Operative Documents to which it is a party; and
(c) has duly authorized, executed and delivered each such Operative Document;
(ii) with respect to each of the parties to the Operative Documents (other than
the Company with respect to the Notes), each Operative Document to which it is a
party constitutes its legally valid and binding agreement, enforceable against
it in accordance with its terms; and (iii) the Trustee is in compliance,
generally and with respect to acting as trustee under the Indenture, with all
applicable laws and regulations.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Validity of the Securities."
Very truly yours
/s/ Latham & Watkins LLP
Exhibit 8.1
June 27, 2003
Integra LifeSciences Holdings Corporation
311 Enterprise Drive
Plainsboro, New Jersey 08536
Re: Integra LifeSciences Holdings Corporation:
Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the registration for resale by the holders
thereof of $120,000,000 aggregate principal amount of 2 1/2% Contingent
Convertible Subordinated Notes due 2008 (the "Notes") and the registration of
3,514,162 shares of common stock, par value $0.01 per share, issuable upon
conversion of the Notes, under the Securities Act of 1933, as amended, by
Integra LifeSciences Holdings Corporation, a Delaware corporation (the
"Company"), on Form S-3 filed with the Securities and Exchange Commission on
June 27, 2003 (the "Registration Statement"), you have requested our opinion
with respect to the matters set forth below. The Notes have been issued pursuant
to an indenture dated as of March 31, 2003, between the Company and Wells Fargo
Bank Minnesota, National Association, as trustee.
We are opining as to the effect on the subject transaction
only of the federal income tax laws of the United States, and we express no
opinion with respect to the applicability thereto, or the effect thereon, of
other federal laws, the laws of any state or any other jurisdiction or as to any
other matters of municipal law or the laws of any local agencies within any
state. Our opinion is not binding upon the Internal Revenue Service or the
courts. Furthermore, no assurance can be given that future legislation, judicial
or administrative changes, on either a prospective or retroactive basis, would
not adversely affect the accuracy of the conclusions stated in the following
paragraph.
Based on the facts and assumptions and subject to the
limitations set forth in the Registration Statement, the statements under the
caption "Material United States Federal Income Tax Considerations" in the
Registration Statement, insofar as they purport to summarize certain provisions
of the statutes or regulations referred to therein, are accurate summaries in
all material respects.
No opinion is expressed as to any matter not discussed herein.
This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion subsequent to the date
hereof. This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the
Internal Revenue Service and the courts having jurisdiction over such matters,
all of which are subject to change either prospectively or retroactively. Also,
any variation or difference in the facts from those set forth in the
Registration Statement may affect the conclusions stated herein.
This opinion is furnished to you, and is for your use in
connection with the transactions set forth in the Registration Statement upon
the understanding that we are not hereby assuming professional responsibility to
any other person whatsoever. This opinion may not be relied upon by you for any
other purpose or relied upon by any other person, firm or corporation, for any
purpose, without our prior written consent in each instance, except that this
opinion may be relied upon by persons entitled to rely on it pursuant to
applicable provisions of federal securities law. We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement and to the use of
our name under the caption "Validity of the Securities" in the Registration
Statement. In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules or regulations of the SEC promulgated
thereunder.
Very truly yours,
/s/ Latham & Watkins LLP
Exhibit 12.1
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the Company's historical
ratios of earnings to fixed charges for the last five fiscal years and for
the three months ended March 31, 2003. This ratio is computed by dividing the
sum of earnings before income taxes and fixed charges by fixed charges. Fixed
charges represent interest, amortization of debt issuance costs, and the
interest factor of all rentals, consisting of an appropriate interest factor on
operating leases.
Year Ended December 31,
Three Months Ended -----------------------
March 31, 2003 2002 2001 2000 1999 1998
-------------- ---- ---- ---- ---- ----
$ amounts in 000's
Ratio of Earnings
to Fixed Charges............ 38.8 33.9 12.8 N/A N/A N/A
Deficiency of Earnings
Available to Cover
Fixed Charges............... N/A N/A N/A $ 10,847 $ 7,784 $ 12,342
Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of Integra LifeSciences Holdings Corporation of our report dated February 21, 2003, except Note 15 for which the date is March 17, 2003 and Notes 1 and 13 for which the date is June 26, 2003, relating to the consolidated financial statements of Integra LifeSciences Holdings Corporation, which appears in the Company's Current Report on Form 8-K dated June 27, 2003. We also consent to the incorporation by reference of our report dated February 21, 2003 relating to the financial statement schedule, which appears in such Form 8-K. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ PricewaterhouseCoopers LLP Florham Park, New Jersey June 26, 2003
Exhibit 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of Integra LifeSciences Holdings Corporation of our report dated March 18, 2003, relating to the 2002 financial statements of J. Jamner Surgical Instruments, Inc., which appears in the Current Report on Form 8-K of Integra LifeSciences Holdings Corporation filed on March 25, 2003. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ WithumSmith+Brown, P.C. New Brunswick, New Jersey June 27, 2003
Exhibit 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b) (2)
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
-----------------------------
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 51-0317849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 ENTERPRISE DRIVE
PLAINSBORO, NEW JERSEY 08536
Address of principal executive offices) (Zip code)
-----------------------------
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
(Title of the indenture securities)
================================================================================
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 15. FOREIGN TRUSTEE. Not applicable.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility. Wells Fargo
Bank incorporates by reference into this Form
T-1 the exhibits attached hereto.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.***
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to
The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of The
Northwestern National Bank of Minneapolis and
The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January 12,
1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
d. A copy of the letter dated May 12, 1983 from
the Regional Counsel, Comptroller of the
Currency, acknowledging receipt of notice of
name change effective May 1, 1983 from
Northwestern National Bank of Minneapolis to
Norwest Bank Minneapolis, National
Association.*
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks for
the Comptroller of the Currency certifying
approval of consolidation and merger
effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
f. A copy of the letter dated July 10, 2000 from
the Administrator of National Banks for the
Comptroller of the Currency certifying
approval of consolidation effective July 8,
2000 of Norwest Bank Minnesota, National
Association with various other banks under
the title of "Wells Fargo Bank Minnesota,
National Association."****
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the Federal
Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.***
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b) of the
Act.
Exhibit 7. Consolidated Report of Condition attached.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to exhibit number 25.1(b) filed with
registration statement number 333-74872.
*** Incorporated by reference to exhibit T3G filed with registration
statement number 022-22473.
**** Incorporated by reference to exhibit number 2f to the trustee's Form T-1
filed as exhibit 25.1 to the Current Report Form 8-K dated September 8,
2000 of NRG Energy Inc. file number 001-15891.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Wells Fargo Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 19th day of June 2003.
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Joseph P. O'Donnell
------------------------------------
Joseph P. O'Donnell
Corporate Trust Officer
EXHIBIT 6
June 19, 2003
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Joseph P. O'Donnell
------------------------------------
Joseph P. O'Donnell
Corporate Trust Officer
EXHIBIT 7
Consolidated Report of Condition of
Wells Fargo Bank Minnesota, National Association
of Sixth Street and Marquette Avenue, Minneapolis, MN 55479
And Foreign and Domestic Subsidiaries,
at the close of business March 31, 2003, filed in
accordance with 12 U.S.C.ss.161 for National Banks.
Dollar Amounts
In Millions
--------------
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin $ 1,808
Interest-bearing balances 62
Securities:
Held-to-maturity securities 0
Available-for-sale securities 1,895
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices 4,420
Securities purchased under agreements to resell 66
Loans and lease financing receivables:
Loans and leases held for sale 21,750
Loans and leases, net of unearned income 18,479
LESS: Allowance for loan and lease losses 283
Loans and leases, net of unearned income and allowance 18,196
Trading Assets 53
Premises and fixed assets (including capitalized leases) 156
Other real estate owned 6
Investments in unconsolidated subsidiaries and associated companies 0
Customers' liability to this bank on acceptances outstanding 6
Intangible assets
Goodwill 292
Other intangible assets 7
Other assets 1,388
-------
Total assets $50,105
=======
LIABILITIES
Deposits:
In domestic offices $32,836
Noninterest-bearing 20,287
Interest-bearing 12,549
In foreign offices, Edge and Agreement subsidiaries, and IBFs 4,729
Noninterest-bearing 1
Interest-bearing 4,728
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices 2,035
Securities sold under agreements to repurchase 323
Dollar Amounts
In Millions
---------------
Trading liabilities 49
Other borrowed money
(includes mortgage indebtedness and obligations under capitalized leases) 5,526
Bank's liability on acceptances executed and outstanding 6
Subordinated notes and debentures 0
Other liabilities 919
-------
Total liabilities $46,423
Minority interest in consolidated subsidiaries 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus 0
Common stock 100
Surplus (exclude all surplus related to preferred stock) 2,134
Retained earnings 1,397
Accumulated other comprehensive income 51
Other equity capital components 0
-------
Total equity capital 3,682
-------
Total liabilities, minority interest, and equity capital $50,105
=======
I, Karen B. Martin, Vice President of the above-named bank do hereby declare
that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
Karen B. Martin
Vice President
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
Jon R. Campbell
Marilyn A. Dahl Directors
Gerald B. Stenson