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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(Name of Issuer)
INTEGRA LIFESCIENCES HOLDINGS CORPORATION (ISSUER)
(Name of Filing Person (Identifying Status as Offeror, Issuer or Other Person))
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
(Title of Class of Securities)
(CUSIP Nos. 457985AA7 AND 457985AB5)
(CUSIP Number of Class of Securities)
MAUREEN B. BELLANTONI
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
311 ENTERPRISE DRIVE
PLAINSBORO, NEW JERSEY
(609) 275-0500
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Filing Person(s))
COPY TO:
PETER LABONSKI, ESQ.
LATHAM & WATKINS LLP
885 THIRD AVENUE
NEW YORK, NY 10022
(212) 906-1200
CALCULATION OF FILING FEE
Transaction valuation* Amount of filing fee
---------------------- --------------------
$120,000,000 $12,840
* Calculated solely for the purpose of determining the amount of the filing
fee, based upon the exchange of $120,000,000 aggregate principal amount of
the Issuer's 2 1/2% Contingent Convertible Subordinated Notes due 2008 in
exchange for Integra LifeSciences Holdings Corporation's 2 1/2% Contingent
Convertible Subordinated Notes due 2008.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] third-party tender offer subject to Rule 14d-1
[X] issuer tender offer subject to Rule 13e-4
[ ] going private transaction subject to Rule 13e-3
[ ] amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer [ ]
This Schedule TO relates to the offer by Integra LifeSciences
Holdings Corporation, a Delaware corporation, (the "Issuer") (i) to exchange
$1,000 in principal amount of 2 1/2% Contingent Convertible Subordinated Notes
due 2008 (the "New Notes") and (ii) a one time cash payment (an "Exchange Fee")
equal to $2.50 for each $1,000 in principal amount of the Issuer's outstanding 2
1/2% Contingent Convertible Subordinated Notes due 2008 (the "Old Notes" and
together with the New Notes, the "Notes") that is properly tendered and accepted
for exchange upon the terms and subject to the conditions set forth in the Offer
to Exchange (this "Offer to Exchange") and in the related Letter of Transmittal
(the "Letter of Transmittal") attached to this Schedule TO as Exhibit (a)(1)(i)
and Exhibit (a)(1)(ii), respectively. The offer to exchange the Notes (including
the payment of an Exchange Fee) pursuant to this Offer to Exchange is referred
to herein as an "Offer." The Offer is not contingent upon the tender or exchange
of any minimum principal amount of Old Notes. The Offer, however, is conditioned
upon satisfaction of certain conditions.
This Tender Offer Statement on Schedule TO is intended to
satisfy the reporting requirements of Rule 13e-4 under the Securities Exchange
Act of 1934, as amended.
ITEM 1. SUMMARY TERM SHEET
The information set forth in the Offer to Exchange under the
caption "Summary" and "The Offer to Exchange" is incorporated herein by
reference.
ITEM 2. SUBJECT COMPANY INFORMATION
(a) NAME AND ADDRESS. The name of the Issuer is Integra
LifeSciences Holdings Corporation, a Delaware corporation. The Issuer's
principal executive offices are located at 311 Enterprise Drive, Plainsboro, New
Jersey, 08536. The telephone number of the Issuer is (609) 275-0500.
(b) SECURITIES. The securities that are the subject of the
tender offer are the Old Notes. The aggregate principal amount of outstanding
Old Notes is $120,000,000.
(c) TRADING MARKET AND PRICE. The Old Notes are not listed
and the New Notes will not be listed on any national securities exchange or
included on the NASDAQ Stock Market. There is no established trading market for
the New Notes. The Issuer's common stock underlying the New Notes trades on the
Nasdaq Global Select Market under the symbol "IART". The quarterly high and low
trading prices for the underlying stock is set forth in the Offer to Exchange
under the heading "Price Range of Common Stock and Dividend Policy" and is
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON
(a) NAME AND ADDRESS. Integra LifeSciences Holdings
Corporation is the filing person. The business address and telephone number of
the filing person are set forth under Item 2(a) above. The executive officers
and directors of the filing person are: Stuart M. Essig, Maureen B. Bellantoni,
Gerard S. Carlozzi, John B. Henneman, III, David B. Holtz, Judith O'Grady, Keith
Bradley, Richard E. Caruso, Christian S. Schade, James M. Sullivan and Anne M.
VanLent. The address of each executive officer and director is c/o Integra
LifeSciences Holdings Corporation, 311 Enterprise Drive, Plainsboro, New Jersey
08536
ITEM 4. TERMS OF THE TRANSACTION
(a) MATERIAL TERMS.
(1) TENDER OFFERS.
2
(i)-(iii) The information set forth in the Offer to
Exchange under the heading "The Offer to Exchange" is incorporated herein by
reference.
(iv) Not applicable.
(v)-(viii) The information set forth in the Offer to
Exchange under the hading "The Offer to Exchange" is incorporated herein by
reference.
(ix) Not applicable.
(x) The information in the Offer to Exchange under
the headings "Summary"; "Summary Comparison of the Old Notes and the New Notes";
"The Offer to Exchange" and "Description of New Notes" are incorporated herein
by reference.
(xi) Not applicable.
(xii) The information in the Offer to Exchange under
the heading "Certain United States Federal Income Tax Consequences" is
incorporated herein by reference.
(b) PURCHASES. Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(e) AGREEMENTS INVOLVING THE COMPANY'S SECURITIES. Pursuant
to the terms of a forward sale contract entered into with Credit Suisse First
Boston Capital LLC on December 14, 2004, Stuart Essig, the Issuer's President
and Chief Executive Officer, is obligated to deliver to Credit Suisse First
Boston LLC on March 28, 2013 between 264,550 and 500,000 shares of common stock
(or, at the election of Mr. Essig, the cash equivalent of such shares). Mr.
Essig retains voting power over these shares pending the settlement of the
forward sale contract. Pursuant to the terms of a forward sale contract entered
into with Credit Suisse First Boston Capital LLC on November 23, 2004, TRU ST
PARTNERSHIP, L.P., a Pennsylvania general partnership of which Richard E.
Caruso, the Issuer's Chairman, is the President of the corporate general partner
("TRU ST"), is obligated to deliver to Credit Suisse First Boston LLC on January
15, 2013 between 322,581 and 600,000 shares of common stock (or, at the election
of TRU ST, the cash equivalent of such shares). TRU ST retains voting power over
these shares pending the settlement of the forward sale contract. The Issuer has
also granted Mr. Essig registration rights requiring the Issuer to file a
"shelf" registration statement at Mr. Essig's request that will provide for the
registration and sale on a continuous or delayed basis of the shares of common
stock underlying the options and restricted units that he holds.
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) PURPOSES. The information set forth in the Offer to
Exchange under the headings "The Offer to Exchange" and "Summary" is
incorporated herein by reference.
(b) USE OF SECURITIES ACQUIRED. The Old Notes acquired in
the transaction will be retired.
(c) PLANS. Except as otherwise disclosed in the Offer to
Exchange, the Issuer does not have any plans, proposals or negotiations that
relate to or would result in: (1) any extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving the Issuer or any or all
of its subsidiaries; (2) any purchase, sale or transfer of a material amount of
assets of the Issuer or any of its subsidiaries; (3) any material change in the
Issuer's present dividend rate or policy, or indebtedness or capitalization; (4)
any change in the Issuer's present board of directors or management, other than
to change the number or the term of directors or to fill any existing vacancies
on the board of directors or to change any material term of the employment
contract of any executive officer; (5) any other material change in the Issuer's
corporate structure or business; (6) any class of the Issuer's equity securities
being delisted from a national securities exchange; (7) any class of the
Issuer's equity securities becoming eligible for termination of registration
under Section 12 (g) (4) of the Exchange Act; (8) the suspension of the Issuer's
obligation to file reports under Section 15 (d) of the Exchange Act; (9) the
acquisition by any person of additional securities of the Issuer or the
disposition of securities of the Issuer; or (10) any change in the Issuer's
amended and restated certificate of incorporation, amended by-laws or other
governing instruments or other actions which could impede the acquisition of
control of the Issuer.
3
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) SOURCE OF FUNDS. The information set forth in the Offer
to Exchange under the caption "Summary" is incorporated herein by reference. In
connection with the Offer to Exchange, an Exchange Fee will be paid noteholders
who exchange their Old Notes for New Notes. The Exchange Fee will be paid from
cash on hand.
(b) CONDITIONS. Not applicable.
(d) BORROWED FUNDS. Not applicable.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) SECURITIES OWNERSHIP. None of the Old Notes are
beneficially owned by the Issuer or any director, officer or affiliate of the
Issuer.
(b) SECURITIES TRANSACTIONS. None.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
(a) SOLICITATION OR RECOMMENDATION. None.
ITEM 10. FINANCIAL STATEMENTS
(a) FINANCIAL INFORMATION.
(a)(1) The information in Part II, Item 8 of the Issuer's
Annual Report on Form 10-K for the year ended December 31, 2005 is incorporated
herein by reference.
(a)(2) The information in Part I, Item 1 of the Issuer's
Quarterly Report on Form 10-Q for the quarterly period ending on March 31, 2006
is incorporated herein by reference.
(a)(3) The information set forth in the Offer to Exchange under
the heading "Price Range of Common Stock and Dividend Policy--Ratio of Earnings
to Fixed Charges" is incorporated herein by reference.
(a)(4) The information set forth in the Offer to Exchange under
the heading "Selected Financial Information" is incorporated herein by
reference.
(b) PRO FORMA FINANCIAL INFORMATION. None.
(c) SUMMARY INFORMATION. The information set forth in the
Offer to Exchange under the heading "Selected Financial Information" is
incorporated herein by reference.
ITEM 11. ADDITIONAL INFORMATION
(a) AGREEMENTS, REGULATORY REQUIREMENTS AND LEGAL
PROCEEDINGS. None.
(b) OTHER MATERIAL INFORMATION. None.
ITEM 12. EXHIBITS.
(a)(1)(i) Offer to Exchange, dated July 17, 2006.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
4
(a)(1)(iv) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(1)(v) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5)(i) Press Release, dated July 17, 2006.
5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 17, 2006 INTEGRA LIFESCIENCES HOLDINGS CORPORATION
By: /s/ Maureen B. Bellantoni
-------------------------------------
Name: Maureen B. Bellantoni
Title: Executive Vice President
and Chief Financial Officer
6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(1)(i) Offer to Exchange, dated July 17, 2006.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(1)(v) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5)(i) Press Release, dated July 17, 2006.
7
Exhibit-99.(A)(1)(I)
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
OFFER TO EXCHANGE
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
FOR ANY AND ALL OUTSTANDING
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
(CUSIP NOS. 457985AA7 AND 457985AB5)
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST 14, 2006,
UNLESS EXTENDED OR EARLIER TERMINATED (SUCH TIME AND DATE, AS THE SAME MAY BE
EXTENDED OR EARLIER TERMINATED, THE "EXPIRATION DATE"). HOLDERS OF OLD NOTES
MUST TENDER, AND NOT WITHDRAW, THEIR OLD NOTES PRIOR TO THE EXPIRATION DATE TO
BE ELIGIBLE TO EXCHANGE THEIR OLD NOTES FOR NEW NOTES (AS DESCRIBED BELOW).
Integra LifeSciences Holdings Corporation, a Delaware corporation
("Integra" or the "Company"), hereby offers (i) to exchange $1,000 in principal
amount of 2 1/2% Contingent Convertible Subordinated Notes due 2008 (the "New
Notes") and (ii) a one time cash payment (an "Exchange Fee") equal to $2.50 for
each $1,000 in principal amount of our outstanding 2 1/2% Contingent Convertible
Subordinated Notes due 2008 (the "Old Notes" and together with the New Notes,
the "Notes") that is properly tendered and accepted for exchange upon the terms
and subject to the conditions set forth in this Offer to Exchange (the "Offer to
Exchange") and in the related Letter of Transmittal (the "Letter of
Transmittal"). The offer to exchange the Notes (including the payment of an
Exchange Fee) pursuant to this Offer to Exchange is referred to herein as an
"Offer." The Offer is contingent upon the tender or exchange of at least 50% of
the principal amount of Old Notes outstanding and the satisfaction of certain
other conditions.
The Offer will expire at 5:00 p.m., New York City time, on August 14,
2006 unless extended by the Company and subject to the right of the Company, in
its sole discretion, subject to applicable law, to terminate, withdraw or amend
the Offer at any time as discussed below. Any extension of the Offer will be
announced by press release no later than 9:00 a.m. New York City time, on the
next New York Stock Exchange trading day after the previously scheduled
Expiration Date.
The terms of the New Notes are substantially similar to the terms of the
Old Notes, except the New Notes will have a net share settlement mechanism, as
described below in more detail.
Subject to the terms of the Offer and upon satisfaction or waiver of the
conditions thereto, the Old Notes will be exchanged in the manner described in
this Offer to Exchange. Any amendment to the terms of the Offer will be made by
press release not later than 10 business days prior to the Expiration Date.
Our common stock is quoted on the Nasdaq Global Select Market under the
symbol "IART." On July 12, 2006, the last reported bid price for our common
stock was $37.96 per share.
THE OFFER IS DESCRIBED IN DETAIL IN THIS OFFER TO EXCHANGE, AND WE URGE
YOU TO READ IT CAREFULLY, INCLUDING THE SECTION TITLED "RISK FACTORS," BEGINNING
ON PAGE 14 OF THIS OFFER TO EXCHANGE, FOR A DISCUSSION OF FACTORS THAT YOU
SHOULD CONSIDER BEFORE YOU DECIDE TO PARTICIPATE IN THE OFFER.
NEITHER INTEGRA'S BOARD OF DIRECTORS NOR ANY OTHER PERSON IS MAKING ANY
RECOMMENDATION AS TO WHETHER YOU SHOULD CHOOSE TO TENDER AND EXCHANGE YOUR OLD
NOTES FOR NEW NOTES AND NO ONE HAS BEEN AUTHORIZED TO MAKE SUCH A
RECOMMENDATION. YOU MUST MAKE YOUR OWN DECISIONS AS TO WHETHER TO TENDER YOUR
OLD NOTES, AND, IF SO, THE PRINCIPAL AMOUNT OF OLD NOTES TO TENDER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS OFFER TO EXCHANGE IS ACCURATE OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS OFFER TO
EXCHANGE. THE COMPANY HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT
FROM THAT CONTAINED IN THIS OFFER TO EXCHANGE. THE CONTENTS OF ANY WEBSITES
REFERRED TO IN THIS OFFER TO EXCHANGE ARE NOT PART OF THIS OFFER TO EXCHANGE.
THIS OFFER TO EXCHANGE DOES NOT CONSTITUTE AN OFFER TO EXCHANGE IN ANY
JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON WHO, IT IS UNLAWFUL TO MAKE SUCH
OFFER UNDER APPLICABLE SECURITIES OR "BLUE SKY" LAWS. THE DELIVERY OF THIS OFFER
TO EXCHANGE SHALL NOT UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR
ANY ATTACHMENTS HERETO NOR IN THE AFFAIRS OF THE COMPANY OR ANY OF ITS
AFFILIATES SINCE THE DATE HEREOF.
IN MAKING A DECISION IN CONNECTION WITH THE OFFER, YOU MUST RELY ON YOUR
OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFER, INCLUDING THE MERITS
AND RISKS INVOLVED. YOU SHOULD NOT CONSTRUE THE CONTENTS OF THIS OFFER TO
EXCHANGE AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. YOU SHOULD
CONSULT WITH YOUR OWN LEGAL, BUSINESS, FINANCIAL AND TAX ADVISORS WITH RESPECT
TO ANY SUCH MATTERS CONCERNING THIS OFFER TO EXCHANGE AND THE OFFER CONTEMPLATED
HEREBY.
WE ARE RELYING ON SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), TO EXEMPT THE OFFER FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT WITH RESPECT TO THE EXCHANGE OF THE NEW NOTES
FOR THE OLD NOTES. WE ARE ALSO RELYING ON SECTIONS 18(a) AND 18(b)(4)(C) OF THE
SECURITIES ACT TO EXEMPT THE OFFER FROM STATE SECURITIES LAW REQUIREMENTS. WE
HAVE NOT FILED A REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR ANY OTHER
FEDERAL OR STATE SECURITIES LAWS WITH RESPECT TO THE NEW NOTES THAT MAY BE
DEEMED TO BE OFFERED BY VIRTUE OF THIS OFFER.
ii
GENERALLY, THE SECURITIES ACT PROHIBITS THE OFFER OF SECURITIES TO THE
PUBLIC UNLESS A REGISTRATION STATEMENT HAS BEEN FILED WITH THE SEC, AND THE SALE
OF SECURITIES UNTIL SUCH REGISTRATION STATEMENT HAS BEEN DECLARED EFFECTIVE BY
THE SEC, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE OFFER
CONSTITUTES AN "OFFER" OF SECURITIES UNDER THE SECURITIES ACT. HOWEVER, WE ARE
AVAILING OURSELVES OF SECTION 3(a)(9) OF THE SECURITIES ACT WHICH PROVIDES AN
EXEMPTION FROM REGISTRATION FOR EXCHANGES OF SECURITIES BY THE ISSUER WITH ITS
EXISTING NOTEHOLDERS EXCLUSIVELY WHERE NO COMMISSION OR OTHER REMUNERATION IS
PAID OR GIVEN DIRECTLY OR INDIRECTLY FOR SOLICITING SUCH EXCHANGE. ACCORDINGLY,
NO REGISTRATION STATEMENT IS BEING FILED WITH THE SEC WITH RESPECT TO THE OFFER.
WE HAVE NEVERTHELESS PREPARED THIS OFFER TO EXCHANGE WHICH CONTAINS
SUBSTANTIALLY THE SAME INFORMATION THAT WOULD BE REQUIRED FOR A REGISTRATION
STATEMENT AND ARE DISTRIBUTING THIS OFFER TO EXCHANGE TO THE HOLDERS OF OLD
NOTES.
Any questions or requests for assistance concerning the Offer may be
directed to Georgeson Inc. (referred to herein as the "Information Agent") at
the address and telephone number set forth on the back cover of this Offer to
Exchange. Requests for additional copies of this Offer to Exchange, the Letter
of Transmittal or any other related documents may be directed to the Information
Agent at the address and telephone numbers set forth on the back cover of this
Offer to Exchange. Beneficial owners may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
Georgeson Inc.
17 State Street - 10th Floor
New York, NY 10004
Banks and Brokers Call: (212) 440-9800
All Others Call Toll Free: (866) 482-4943
July 17, 2006
iii
THIS OFFER TO EXCHANGE INCORPORATES BY REFERENCE IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT THE COMPANY THAT IS NOT INCLUDED IN OR DELIVERED
WITH THIS DOCUMENT. THIS INFORMATION MAY BE READ AND COPIED AT THE SEC'S PUBLIC
REFERENCES ROOMS AT 100 F. STREET, N.E., WASHINGTON, D.C. 20549 AND IN NEW YORK,
NEW YORK AND CHICAGO, ILLINOIS. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR
FURTHER INFORMATION ON THE PUBLIC REFERENCE ROOMS. THE SEC ALSO MAINTAINS AN
INTERNET SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS CERTAIN INFORMATION FILED BY
THE COMPANY ELECTRONICALLY WITH THE SEC.
iv
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Offer to Exchange includes forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events.
These forward-looking statements are subject to numerous assumptions,
risks and uncertainties including, among other things:
o general economic and business conditions, both nationally and in our
international markets;
o our expectations and estimates concerning future financial
performance, financing plans and the impact of competition;
o anticipated trends in our business;
o existing and future regulations affecting our business;
o our ability to obtain additional debt and equity financing to fund
capital expenditures and working capital requirements and
acquisitions;
o physicians' willingness to adopt our recently launched and planned
products, third-party payors' willingness to provide reimbursement
for these products and our ability to secure regulatory approval for
products in development;
o our ability to protect our intellectual property, including trade
secrets;
o our ability to complete acquisitions, integrate operations
post-acquisition and maintain relationships with customers of
acquired entities;
o work stoppages at our facilities; and
o other risk factors described in the section entitled "Risk Factors"
in this Offer to Exchange.
You can identify these forward-looking statements by forward-looking
words such as believe, may, could, will, estimate, continue, anticipate, intend,
seek, plan, expect, should, would and similar expressions.
In light of these risks and uncertainties, the forward-looking events
and circumstances discussed in this Offer to Exchange may not occur and actual
results could differ materially from those anticipated or implied in the
forward-looking statements.
These risks and uncertainties, as well as others, are discussed in
greater detail in our other filings with the SEC, including our most recent
Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. You
should read carefully the section of this Offer to Exchange under the heading
"Risk Factors" beginning on page 14.
v
SUMMARY
THE FOLLOWING SUMMARY IS PROVIDED FOR YOUR CONVENIENCE. IT HIGHLIGHTS
MATERIAL INFORMATION IN THIS OFFER TO EXCHANGE AND THE RELATED LETTER OF
TRANSMITTAL, BUT DOES NOT DESCRIBE ALL OF THE DETAILS OF THE OFFER. HOLDERS ARE
URGED TO READ THE MORE DETAILED INFORMATION SET FORTH IN THIS OFFER TO EXCHANGE
AND IN THE RELATED LETTER OF TRANSMITTAL BEFORE DECIDING WHETHER TO TENDER OLD
NOTES.
The Company has commenced the Offer to exchange $1,000 in principal
amount of New Notes and an Exchange Fee for each $1,000 in principal amount of
our outstanding Old Notes, that is properly tendered and accepted for exchange
upon the terms and subject to the conditions described below. For the
convenience of the holders of Old Notes, the Offer is summarized below. This
summary is qualified in its entirety by reference to the terms of the Offer
described more fully in this Offer to Exchange and in the related Letter of
Transmittal.
IF YOU HAVE QUESTIONS, PLEASE CALL THE INFORMATION AGENT AT ITS
TELEPHONE NUMBER ON THE BACK COVER OF THIS OFFER TO EXCHANGE.
Reasons for the Offer.......... Because of accounting changes that would
otherwise require Integra to include the shares
of common stock issuable upon conversion of the
Old Notes in its earnings per share
calculations, Integra is offering to exchange
Old Notes for New Notes with a net share
settlement mechanism. The net share settlement
provisions being introduced in the New Notes
will allow Integra to substitute cash for the
principal value portion of the conversion value
due holders of the New Notes, thereby reducing
the number of shares of common stock issued
upon such conversions of the New Notes. In
addition, the requirement that Integra pay in
cash the purchase price to holders upon
redemption by the holders in connection with
the occurrence of certain events will eliminate
Integra's option of using shares to pay the
purchase price. This will allow Integra to
exclude the shares of common stock issuable
upon conversion of the Old Notes in its
earnings per share calculations.
Expiration Date................ The Offer commenced on July 17, 2006 and will
expire at 5:00 p.m., New York City time, on
August 14, 2006, unless extended by Integra in
its sole discretion (the "Expiration Date"),
subject to Integra's right, in its sole
discretion and subject to applicable law, to
terminate, withdraw or amend such Offer at any
time as described in this Offer to Exchange.
Terms of the Exchange.......... Integra is offering to exchange $1,000 in
principal amount of New Notes and an Exchange
Fee for each $1,000 in principal amount of Old
Notes tendered and accepted for exchange. New
Notes will be issued in denominations of $1,000
and any integral multiple of $1,000. Holders of
Old Notes may tender all, some or none of their
Old Notes.
Payment of Interest............ Holders whose Old Notes are exchanged for New
Notes pursuant to the Offer will not be
entitled to any additional interest payments on
the Old Notes, and all accrued and unpaid
interest from the most recent interest payment
date under the Old Notes will roll over to the
New Notes.
How to Tender.................. Any beneficial holder desiring to tender Old
Notes pursuant to the Offer should request such
beneficial owner's custodian or nominee to
effect the transaction for such beneficial
owner. Participants in The Depository Trust
Company ("DTC") may electronically transmit
their acceptance of an Offer by causing DTC to
transfer Old Notes to the Exchange Agent in
accordance with DTC's Automated Tender Offer
Program ("ATOP") procedures for transfers. In
addition, the Information Agent can answer
questions regarding how to tender Old Notes.
Withdrawal Rights.............. Tendered Old Notes may be withdrawn at any time
up until 5:00 p.m. on the Expiration Date, or
any subsequent date and time to which Integra
extends the Offer. See "The Offer to
Exchange--Withdrawal of Tenders."
Acceptance of Tendered Notes... Subject to the terms of the Offer and upon
satisfaction or waiver of the conditions
thereto, Integra will accept for exchange and
will promptly exchange all Old Notes validly
tendered and not withdrawn prior to the
Expiration Date. Integra will issue the New
Notes promptly after the Expiration Date.
Integra will issue New Notes in exchange for
Old Notes that are accepted for exchange only
after receipt by the Exchange Agent of (i) a
timely book-entry confirmation of transfer of
Old Notes into the Exchange Agent's DTC account
or if the tender is made through an eligible
institution, a notice of guaranteed delivery
and (ii) a properly completed and executed
letter of transmittal or an electronic
confirmation pursuant to DTC's Automatic Tender
Offer Program. See "The Offer to
Exchange--Acceptance of Old Notes and Delivery
of New Notes." Conditions to the Offer......
The Offer is contingent upon the tender of at
least 50% of the principal amount of Old Notes
outstanding and the satisfaction of certain
other conditions. Integra reserves the right to
waive any and all conditions to the Offer. See
"The Offer to Exchange--Conditions to the
Offer."
Amendment to the Offer......... Integra reserves the right to accept any of the
Old Notes tendered and to otherwise interpret
or modify the terms of the Offer, provided that
Integra will extend the period during which Old
Notes may be tendered or withdrawn as a result
of any material amendment or the waiver of a
material condition.
2
Consequences of Not
Exchanging Old Notes........... If a holder of Old Notes does not tender and
exchange for New Notes in the Offer, and to the
extent that Old Notes are tendered and accepted
for exchange in the Offer, the liquidity of any
trading market for Old Notes not tendered for
exchange, or tendered and withdrawn, or
tendered and not accepted, could be
significantly reduced.
Use of Proceeds; Fees and
Expenses of the Offer ......... Integra will not receive any cash proceeds from
the Offer. Old Notes that are properly tendered
and not withdrawn, and exchanged pursuant to
the Offer, will be retired and canceled.
Integra estimates, excluding the Exchange Fee,
that the total fees and expenses of the Offer,
excluding the Exchange Fee, will be
approximately $128,000.
Tax Consequences............... The U.S. federal income tax consequences of the
exchange of Old Notes for New Notes are
unclear. The Company will take the position
that the exchange of Old Notes for New Notes
does not constitute a significant modification
of the terms of the Old Notes. Assuming such
position is correct, the New Notes will be
treated as a continuation of the Old Notes and
there should be no U.S. federal income tax
consequences to holders who participate in the
Offer, except that holders will have to
recognize the receipt of the Exchange Fee as
ordinary income.
By participating in the Offer, each holder will
be deemed to have agreed pursuant to the
indenture governing the New Notes to treat the
exchange as not constituting a significant
modification of the terms of the Old Notes. If,
contrary to this position, the exchange of Old
Notes for New Notes does constitute a
significant modification of the terms of the
Old Notes for U.S. federal income tax purposes,
the tax consequences to holders could be
materially different. For a discussion of the
potential tax consequences of the exchange, see
"Certain United States Federal Income Tax
Consequences."
Deciding Whether to
Participate in the Offer....... Neither Integra, nor its officers or directors
nor any other person makes any recommendation
as to whether you should choose to tender and
exchange your Old Notes for New Notes and no
one has been authorized to make such a
recommendation. Holders of Old Notes must make
their own decisions as to whether to tender Old
Notes, and, if so, the principal amount of Old
Notes to tender after reading this Offer to
Exchange and the related Letter of Transmittal
and consulting with their advisers, if any,
based on each holder's financial position and
requirements.
Information Agent.............. Georgeson Inc.
Exchange Agent ................ Wells Fargo Bank, National Association.
Risk Factors................... You should carefully consider the matters
described under "Risk Factors," as well as
other information set forth in this Offer to
3
Exchange and in the related Letter of
Transmittal before deciding to participate in
the Offer.
4
NEW NOTES
The following summary contains basic information about the New Notes and
is not intended to be complete. It does not contain all the information that is
important to you. For a complete understanding of the New Notes and before you
decide whether to tender your Old Notes in the Offer, please refer to the
section of this document entitled "Description of New Notes." For purposes of
the description of the New Notes included in this Offer to Exchange, references
to "the Company," "Integra," "us," "we," and "our" refer only to Integra
LifeSciences Holdings Corporation and do not include our subsidiaries.
Issuer......................... Integra LifeSciences Holdings Corporation.
New Notes Offered.............. Up to $120.0 million in aggregate principal
amount of 2 1/2% Contingent Convertible
Subordinated Notes Due 2008.
Maturity....................... March 15, 2008, unless earlier redeemed,
repurchased or converted.
Interest....................... 2 1/2% per year on the principal amount,
payable semiannually in arrears on March 15 and
September 15 of each year, beginning on
September 15, 2006.
Contingent Interest............ We will pay contingent interest to the holders
of the New Notes 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
New 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 New 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 New
Notes is convertible.
Subordination.................. The New Notes will be unsecured, subordinated
obligations of the Company. They will rank
junior in right of payment to all of the
Company's 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. Neither we nor our
subsidiaries will be restricted under the
indenture governing the New Notes from
incurring senior debt or other additional
indebtedness. See "Description of New
Notes--Subordination of Notes."
Conversion Rights.............. You will have the right to convert your New
Notes, in whole or in part, into cash, and if
applicable, shares of our common stock at any
time prior to maturity at a conversion price of
$34.1475 per share, subject to the adjustments
described in the description of notes, if:
5
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 Global Select 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.
You may also convert your New Notes into cash,
and if applicable, shares of our common stock
at any time prior to maturity after any 5
consecutive trading-day period in which the
average trading prices for the New Notes for
that 5 trading-day period was less than 97% of
the average conversion value for the New Notes
during that period, however, you may not
convert your New Notes 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 New Notes.
The conversion value of the cash and, if
applicable, shares of our common stock per
$1,000 principal amount of New Notes converted
will equal the product of (a) the conversion
rate at the time the New Notes are tendered for
conversion and (b) the five-day average closing
stock price. 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 New 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 interest payment
period (including the contingent interest, if
any). See "Description of New Notes--Conversion
Rights."
6
Net Share Settlement........... We are offering to exchange Old Notes for New
Notes with a net share settlement mechanism.
The net share settlement provisions being
introduced in the New Notes will allow Integra
to substitute cash for the principal value
portion of the conversion value due holders of
the New Notes, thereby reducing the number of
shares of common stock issued upon such
conversions of the New Notes.
Optional Redemption............ We may not redeem the New Notes prior to their
maturity date.
Purchase of New Notes Upon
Change in Control.............. You may require us to purchase all or a portion
of your New Notes at 100% of the principal
amount of the New Notes to be purchased plus
accrued and unpaid interest, if any, to but
excluding the purchase date in cash in certain
events involving change in control (as
defined). See "Description of New
Notes--Purchase of New Notes Upon a Change in
Control."
U.S. Federal Income
Tax Consequences............... Under the indenture governing the Old Notes, we
and each holder agreed for U.S. federal income
tax purposes to treat the Old Notes as
"contingent payment debt instruments" and to be
bound by our application of the U.S. Treasury
regulations governing 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 could
have issued, on the date the Old Notes were
issued, a non-contingent, non-convertible debt
instrument with terms and conditions otherwise
comparable to the Old Notes. Similar provisions
will be included in the indenture governing the
New Notes. Holders of debt instruments subject
to the U.S. Treasury regulations governing
contingent payment debt instruments are
required to accrue interest at the comparable
yield at which the issuer could have issued a
fixed-rate nonconvertible debt instrument with
no contingent payments, but with similar other
terms and conditions. Assuming that the
exchange of the Old Notes for New Notes does
not constitute a significant modification of
the terms of the Old Notes, and the New Notes
accordingly will be treated as a continuation
of the Old Notes for U.S. federal income tax
purposes, holders will continue to accrue
interest on the New Notes at a rate of 9.702%,
compounded semi-annually (subject to certain
adjustments). As a result, a U.S. holder may
recognize taxable income significantly in
excess of cash actually received while New
Notes are outstanding. Additionally, a U.S.
holder will recognize any gain realized on a
sale, exchange, conversion, redemption or
repurchase of the New Notes as ordinary income,
rather than capital gain. In computing such
gain, the amount realized by a U.S. holder will
include, in the case of a conversion, the
amount of cash and fair market value of any
shares received. The application of the
contingent payment debt rules 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
7
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
the New Notes. You should consult your tax
advisor concerning the tax consequences of
owning the New Notes. For more information, see
"Certain United States Federal Income Tax
Consequences."
Book-Entry Form................ The New Notes will be issued in book-entry form
and will be represented by permanent global
certificates deposited with, or on behalf of,
DTC and registered in the name of a nominee of
DTC. Beneficial interests in any of the New
Notes will be shown on, and transfers will be
affected only through, records maintained by
DTC or its nominee and any such interest may
not be exchanged for certificated securities,
except in limited circumstances.
Absence of a Public Market
for the New Notes.............. The New Notes are new securities and there is
currently no established market for the New
Notes. Accordingly, we cannot assure you as to
the development or liquidity of any market for
the New Notes. We do not intend to apply for a
listing of the New Notes on any securities or
any automated dealer quotation system. Our
common stock is quoted on the Nasdaq Global
Select Market under the symbol "IART." See
"Risk Factors."
8
THE COMPANY
Integra is a market leading, innovative medical device company focused
on helping the medical professional enhance the standard of care for patients.
Integra provides customers with clinically relevant, innovative and
cost-effective products that improve the quality of life for patients. We focus
on cranial and spinal procedures, peripheral nerve repair, small bone and joint
injuries, and the repair and reconstruction of soft tissue.
Integra was founded in 1989 and since then has leveraged its expertise
in regenerative technologies to develop numerous products based on its Ultra
Pure Collagen(TM) technology. Early in Integra's history, these regenerative
products were sold through a number of private label arrangements with other
large medical device companies. 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 our entry into the neurosurgery
field in 1999, we have entered the surgical instruments and reconstructive
surgery businesses. We have increased our consolidated revenues from $42.9
million in 1999 to $277.9 million in 2005, a compound annual growth rate of 37%,
and we have broadened our product offerings to include more than 15,300
products. We have achieved this growth in our business by developing and
introducing new products, expanding our sales and distribution channels and
acquiring new businesses and product lines.
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 website is located at www.integra-ls.com. The information on our
website is not part of this Offer to Exchange. See "Where You Can Find More
Information."
9
SUMMARY COMPARISON OF THE OLD NOTES AND THE NEW NOTES
OLD NOTES NEW NOTES
--------------------------- -----------------------------
Issuer.............. Integra LifeSciences Same as the Old Notes.
Holdings Corporation.
Notes Offered....... $120.0 million in aggregate Up to $120.0 million in
principal amount of 2 1/2% aggregate principal amount
Contingent Convertible of 2 1/2% Contingent
Subordinated Notes Due 2008. Convertible Subordinated
Notes Due 2008.
Interest Payment
Dates .............. Payable semiannually on Same as the Old Notes.
March 15 and September 15
of each year.
Interest............ 2 1/2% per year on the Same as the Old Notes.
principal amount.
Maturity............ March 15, 2008, unless Same as the Old Notes.
earlier redeemed,
repurchased or converted.
Conversion Rights... Holders may, at their Same as the Old Notes,
option, convert their Old except that upon conversion
Notes into shares of our of the New Notes at any time
common stock at any time prior to the business day
prior to maturity, at a immediately preceding the
conversion price of maturity date, holders will
$34.1475 per share, if: receive cash or a
combination of cash and
o the last sale price of common stock, as described
our common stock on the under "Description of New
trading day prior to the Notes--Conversion Rights."
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
10
OLD NOTES NEW NOTES
--------------------------- -----------------------------
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 Global Select
Market.
Holders may also convert
Old Notes into shares of
our common stock if, 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 New Notes 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 New Notes and
110% of the then current
conversion price on the
New Notes.
Conversion Price.... Each $1,000 of aggregate Same as the Old Notes,
principal amount of Old except that:
Notes may be converted into
the Company's common stock (i) Subject to certain
at the initial conversion exceptions described in
rate of approximately "Description of the New
29.2847 shares of our Notes," once New Notes are
common stock (the surrendered for conversion,
"Conversion Rate"). The the value (the "Conversion
conversion rate is subject Value") of the cash and
to adjustment under certain shares of our common stock,
circumstances. Upon if any, to be received by a
conversion, you will not holder converting $1,000
receive any cash payment principal amount of New
representing accrued Notes will be determined by
interest. multiplying the Conversion
Rate by the Five Day Average
Closing Stock Price (as
defined below). We will
deliver the Conversion Value
to holders as follows: (1)
an amount in cash (the
"Principal Return") equal to
the lesser of (a) the
aggregate Conversion Value
of the New Notes to be
converted and (b) the
aggregate principal amount
of the New Notes to be
converted, (2) if the
aggregate Conversion Value
of the New Notes to be
converted is greater than
the Principal Return, an
amount in whole shares (the
"Net Shares"), determined as
set forth below, equal to
such aggregate Conversion
Value less the Principal
Return (the "Net Share
Amount"), and (3) an amount
in cash in lieu of any
fractional shares of common
stock. We will pay the
Principal Return and cash in
lieu of
11
OLD NOTES NEW NOTES
--------------------------- -----------------------------
fractional shares and deliver
the Net Shares, if any, as
promptly as practicable after
determination of the Net
Share Amount. The number of
Net Shares to be paid will be
determined by dividing the
Net Share Amount by the Five
Day Average Closing Stock
Price. The "Five Day Average
Closing Stock Price" will be
the average of the closing
per share prices of our
common stock on the New York
Stock Exchange on the five
consecutive trading days
beginning on the second
trading day following the day
the New Notes are submitted
for conversion. See
"Description of New
Notes--Conversion Price
Adjustments."
Optional Redemption
of Notes ........... We may not redeem the Old Same as the Old Notes.
Notes prior to their
maturity date.
Purchase of Notes
by Us Upon Change
in Control......... You may require us to Same as the Old Notes.
purchase all or a portion
of your Old Notes at 100%
of the principal amount of
the Old Notes to be
purchased plus accrued and
unpaid interest, if any, to
but excluding the purchase
date in cash in certain
events involving a change
in control (as defined).
Events of Default... o failure to pay principal Same as the Old Notes.
of or any premium on any
Old Note when due,
whether or not the
payment is prohibited by
the subordination
provisions of the
indenture;
o failure to pay any
interest, including
contingent or additional
interest, on any Old
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 failure 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
Old Notes;
o failure to pay when due,
either at its maturity
or upon acceleration
12
OLD NOTES NEW NOTES
--------------------------- -----------------------------
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 Old Notes;
o failure to give notice
to you of your right to
require us or any of our
subsidiaries to purchase
Old Notes upon a change
in control or failure to
make a payment to
purchase Old Notes
tendered following a
change in control; and
o events of bankruptcy,
insolvency or
reorganization with
respect to us specified
in the indenture.
13
RISK FACTORS
OUR BUSINESS, OPERATIONS AND FINANCIAL CONDITION ARE SUBJECT TO VARIOUS
RISKS. WE DESCRIBE SOME OF THESE RISKS BELOW, AND YOU SHOULD CAREFULLY CONSIDER
THE FOLLOWING FACTORS AND OTHER INFORMATION CONTAINED AND INCORPORATED BY
REFERENCE IN THIS OFFER TO EXCHANGE. THIS SECTION DOES NOT DESCRIBE ALL THE
RISKS APPLICABLE TO US, OUR INDUSTRY OR OUR BUSINESS, AND WE INTEND IT ONLY AS A
SUMMARY OF CERTAIN MATERIAL FACTORS.
RISKS RELATED TO OUR BUSINESS
OUR OPERATING RESULTS MAY FLUCTUATE.
Our operating results, including components of operating results, such
as gross margin on product sales, may fluctuate from time to time, and such
fluctuations 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 changes in the rate of exchange between the U.S. dollar and other
currencies of foreign countries in which we do business, such as the
euro and the British pound;
o expenses incurred and business lost in connection with product field
corrections or recalls;
o increases in the cost of energy and steel;
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 COMPLETE EFFECTIVELY WITH OTHER COMPANIES.
In general, there is intense competition among medical device companies.
We compete with established medical technology and pharmaceutical companies in
many of our product areas. 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. Our competitors may be more effective at
implementing their technologies to develop commercial products. Our competitors
may be able to gain market share by offering lower-cost products.
Our competitive position will depend on our ability to achieve market
acceptance for our products, develop new products, implement production and
marketing plans, secure regulatory approval
14
for products under development, obtain reimbursement under Medicare and obtain
patent protection. 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. For example, two of our largest competitors introduced an onlay
dural graft matrix during 2004, and other companies have introduced and may be
preparing to introduce similar products. The introduction of such products could
reduce the sales, growth in sales and profitability of our duraplasty products.
Our largest competitors in the neurosurgery markets are the Medtronic
Neurosurgery division of Medtronic, Inc., the Codman division of Johnson &
Johnson, the Aesculap division of B. Braun Medical Inc. and Stryker Corporation.
In addition, many of our product lines compete with smaller specialized
companies or larger companies that do not otherwise focus on neurosurgery. Our
competitors in reconstructive surgery include LifeCell Corporation,
Organogenesis Inc., Wright Medical Group, Inc., the DePuy division of Johnson &
Johnson, Synthes, Inc. and Stryker Corporation. Some of these are major
orthopedic companies that carry a full line of reconstructive products. Our
private label products face diverse and broad competition, depending on the
market that an individual product addresses.
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 an alternative for our dermal
regeneration products, our duraplasty products and our nerve repair products.
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 24 businesses or product
lines at a total cost of approximately $396 million.
We may be unable to continue to implement our growth strategy, and our
strategy ultimately may be 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, regulatory matters
or legal liabilities relating to those acquired businesses for which the sellers
of the acquired businesses may not indemnify us.
15
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, the warnings that may be required to
accompany the product or additional restrictions placed on the sale and/or use
of the product. 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 Pre-Marketing Approval (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.
Another risk of application to the FDA relates to the regulatory
classification of 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 we or a third-party manufacturer 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, cessation of operations and civil and criminal penalties.
We are also subject to the regulatory requirements of countries outside
of the United States where we do business. For example, Japan is in the process
of reforming its medical device regulations. A recent amendment to Japan's
Pharmaceutical Affairs Law went into effect on April 1, 2005. New regulations
16
and requirements exist for obtaining approval of medical devices, including new
requirements governing the conduct of clinical trials, the manufacturing of
products and the distribution of products in Japan. Significant resources also
may be needed to comply with the extensive auditing of and requests for
documentation relating to all manufacturing facilities of our company and our
vendors by the Ministry of Health, Labor and Welfare in Japan to comply with the
amendment to the Pharmaceutical Affairs Law. These new regulations may affect
our ability to obtain approvals of new products for sale in Japan.
CERTAIN OF OUR PRODUCTS CONTAIN MATERIALS DERIVED FROM ANIMAL SOURCES AND MAY
BECOME SUBJECT TO ADDITIONAL REGULATION.
Certain of our products, including our dermal regeneration products, our
duraplasty products and our nerve repair products, contain material derived from
bovine tissue. Products that contain materials derived from animal sources,
including food as well as pharmaceuticals and medical devices, 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. This public scrutiny has been
particularly acute in Japan and Western Europe with respect to products derived
from animal sources, 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.
Recent cases of BSE in cattle discovered in Canada and the United States have
increased awareness of the issue in North America.
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 products
that Integra manufactures is derived only from the deep flexor tendon of cattle
less than 24 months old from New Zealand, a country that has never had a case of
BSE, or the United States. The collagen used in a product that we sell, but do
not manufacture, is derived from bovine pericardium. We are also qualifying
sources of collagen from other countries that are considered BSE-free. The World
Health Organization classifies different types of cattle tissue for relative
risk of BSE transmission. Deep flexor tendon and bovine pericardium are in the
lowest risk categories for BSE transmission (the same category as milk, for
example), and are therefore considered to have a negligible risk of containing
the agent that causes BSE (an improperly folded protein known as a prion) .
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.
Significant new regulation, or a ban of our products, could have a material
adverse effect on our current business or our ability to expand our business.
In addition, we have been notified that Japan has issued new regulations
regarding medical devices that contain tissue of animal origin. Among other
regulations, Japan may require that the tendon used in the manufacture of
medical devices sold in Japan originate in a country that has never had a case
of BSE. Currently, we purchase our tendon from the United States and New
Zealand. If we cannot continue to use or qualify a source of tendon from New
Zealand or another country that has never had a case of BSE, we will not be
permitted to sell our collagen hemostatic agents and products for oral surgery
in Japan. We do not currently sell our dural or skin repair products in Japan.
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
17
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 competes for
acceptance in the market with the INTEGRA(R) Dermal Regeneration Template. In
addition, the acceptance of our Newdeal products, which previously were
distributed by third parties, faces similar competition.
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.
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, achieve more favorable reimbursement status from third-party payors,
cost less or are ready for commercial introduction before our products. 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 distribution
alliances. In addition, unfavorable reimbursement methodologies of third-party
payors 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 have a material adverse effect on our competitive position. We may
not be able to adjust our contemplated plan of development to meet changing
market demands.
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 enforce patents on our
technology and to protect our trade secrets. We own or have licensed patents
that cover aspects of some 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 usually takes approximately two years.
OUR COMPETITIVE POSITION DEPENDS, IN PART, UPON UNPATENTED TRADE SECRETS WHICH
WE MAY BE UNABLE TO PROTECT.
Our competitive position also depends 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 require our employees,
consultants and advisors to execute proprietary information and invention
assignment agreements upon commencement of
18
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
for the proprietary rights involved. 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.
WE MAY BE INVOLVED IN LAWSUITS RELATING TO OUR INTELLECTUAL PROPERTY RIGHTS AND
PROMOTIONAL PRACTICES, WHICH MAY BE EXPENSIVE.
To protect or enforce our intellectual property rights, we may have to
initiate legal proceedings, such as infringement suits or interference
proceedings, against third parties. For example, in December 2005 our Newdeal
subsidiary sued Wright Medical Group, Inc. and Wright Medical's French
subsidiary alleging that certain products within Wright Medical's "Charlotte
System" of foot and ankle products infringe upon Newdeal's foot-and-ankle
system. In addition, we may have to institute proceedings regarding our
competitors' promotional practices. 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.
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 the following
products that we manufacture:
o our collagen-based products, such as the INTEGRA(R) Dermal
Regeneration Template and wound dressing products, the DuraGen(R)
family of products, and our Absorbable Collagen Sponges;
o our products made from silicone, such as our neurosurgical shunts and
drainage systems and hemodynamic shunts; and
19
o products which use many different electronic parts from numerous
suppliers, such as our intracranial monitors and catheters.
If we were suddenly unable to purchase products from one or more of
these companies, we would need 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
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 OR
BUSINESS 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) catheter product lines is as susceptible to
earthquake damage, wildfire damage and power losses from electrical shortages as
are other businesses in the Southern California area. Our Anasco, Puerto Rico
plant, where we manufacture collagen, silicone and our private label products,
is vulnerable to hurricane, storm and wind damage. Although we maintain property
damage and business interruption insurance coverage on these facilities, our
insurance might not cover all losses under such circumstances and we may not be
able to renew or obtain such insurance in the future on acceptable terms with
adequate coverage or at reasonable costs.
In addition, we began implementing an enterprise business system in
2004, which we intend to use in all of our facilities. This system, the hosting
and maintenance of which we outsource, replaces several systems on which we
previously relied and will be implemented in several stages. We have outsourced
our product distribution function in the United States and in the fourth quarter
of 2005 began to outsource our European product distribution function. A delay
or other problem with the system or in our implementation schedule for any of
these initiatives could have a material adverse effect on our operations.
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 in euros,
British pounds and in U.S. dollar-denominated transactions conducted with
customers who generate revenue in currencies other than the U.S. dollar. For
those foreign customers who purchase our products in U.S. dollars, 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.
Because we have operations based in Europe and we generate revenues and
incur operating expenses in euros and British pounds, we experience currency
exchange risk with respect to those foreign currency-denominated revenues and
expenses. In 2004 and 2005, the cost of products we manufactured in our European
facilities or purchased in foreign currencies exceeded our foreign
currency-denominated
20
revenues. We expect this imbalance to continue. Accordingly, a weakening of the
dollar against the euro and British pound could negatively affect future gross
margins and operating margins.
Currently, we do not use derivative financial instruments to manage
operating foreign currency risk. As the volume of our business transacted in
foreign currencies increases, we expect to continue to assess the potential
effects that changes in foreign currency exchange rates could have on our
business. If we believe that this potential impact presents a significant risk
to our business, we may enter into derivative financial instruments to mitigate
this risk.
In general, we cannot predict the consolidated 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.
Our international operations subject us to customs and import-export
laws. These laws restrict, and in some cases prohibit, United States companies
from directly or indirectly selling goods, technology or services to people or
entities in certain countries. These laws also prohibit transactions with
certain designated persons.
Our sales to foreign markets also may be affected by local economic
conditions, legal, regulatory or political considerations, the effectiveness of
our sales representatives and distributors, local competition and changes in
local medical practice. Relationships with customers and effective terms of sale
frequently vary by country, often with longer-term receivables than are typical
in the United States.
CHANGES IN THE HEALTH CARE INDUSTRY MAY REQUIRE US TO DECREASE THE SELLING PRICE
FOR OUR PRODUCTS OR MAY REDUCE THE SIZE OF THE MARKET FOR OUR PRODUCTS, EITHER
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 and hospital outpatient
services, including Medicare, Medicaid and private health care
insurers, annually revise their payment methodologies, which can
result 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 potential 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 who prefer to
limit the number of suppliers from whom they purchase medical
products, and these entities may decide to stop purchasing our
products or demand discounts on our prices;
o we are party to contracts with group purchasing organizations, which
negotiate pricing for many member hospitals, that require us to
discount our prices for certain of our
21
products and limit our ability to raise prices for certain of our
products, particularly surgical instruments;
o there is economic pressure to contain health care costs in domestic
and international markets;
o there are proposed and existing laws, regulations and industry
policies in domestic and international markets regulating the sales
and marketing practices and the pricing and profitability of
companies inthe health care industry;
o proposed laws or regulations that will permit hospitals to provide
financial incentives to doctors for reducing hospital costs (known as
gainsharing) and to award physician efficiency (known as physician
profiling) could reduce prices; 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.
REGULATORY OVERSIGHT OF THE MEDICAL DEVICE INDUSTRY MIGHT AFFECT THE MANNER IN
WHICH WE MAY SELL MEDICAL DEVICES.
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.
In January 2004, ADVAMED, the principal U.S. trade association for the
medical device industry, put in place a model "code of conduct" that sets forth
standards by which its members should abide in the promotion of their products.
We have in place policies and procedures for compliance that we believe are at
least as stringent as those set forth in the ADVAMED Code, and we provide
routine training to our sales and marketing personnel on our policies regarding
sales and marketing practices. Nevertheless, the sales and marketing practices
of our industry has been the subject of increased scrutiny from government
agencies, and we believe that this trend will continue.
OUR PRIVATE LABEL BUSINESS DEPENDS SIGNIFICANTLY ON KEY RELATIONSHIPS WITH THIRD
PARTIES, WHICH WE MAY BE UNABLE TO ESTABLISH AND MAINTAIN.
Our private label business depends 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 alliance is 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
22
bone protein, a protein that stimulates the growth of bone in humans. The third
parties with whom we have entered into agreements might terminate these
agreements for a variety of reasons, including developing other sources for the
product supplied by us. Termination of any of our alliances would require us to
develop other means to distribute the affected products and could adversely
affect our expectations for the growth of private label products.
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 REGULATORY REQUIREMENTS RELATING TO THE USE OF HAZARDOUS
SUBSTANCES WHICH MAY IMPOSE SIGNIFICANT COMPLIANCE COSTS ON US.
Our research, development and manufacturing processes involve the
controlled use of certain hazardous materials. We are subject to federal, state
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of these materials and certain waste products. 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.
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 and two
other members of management.
RISKS RELATED TO THE NOTES AND OUR COMMON STOCK
IF NOTES ARE NOT EXCHANGED IN THE OFFER, THE INCLUSION OF THE COMMON STOCK
UNDERLYING THE OLD NOTES WOULD AFFECT THE COMPANY'S EARNINGS PER SHARE
CALCULATION.
At the September 29-30, 2004 meeting of the Emerging Issues Task Force
("EITF"), the EITF concluded that issuers of contingently convertible notes must
retroactively and prospectively report the earnings per share impact of their
contingently convertible notes on an "if-converted" accounting basis, regardless
of whether the contingencies to conversion of the notes have been met. The Old
Notes are contingently convertible into shares of the Company's common stock and
so they are affected by the EITF's decision. If there are Old Notes that remain
outstanding as of the effective date of the EITF decision, the Company's
historical and future reporting of earnings per share would be impacted.
23
In addition, holders of Old Notes have the right to require us to
purchase their Old Notes upon the occurrence of a change in control. Pursuant to
the indenture relating to the Old Notes, the Company may pay the purchase price
for the Old Notes in such instances in cash, shares of its common stock or a
combination of cash and shares of its common stock. If the Old Notes are not
exchanged in the Offer, recently proposed accounting rules may require that the
Company include the underlying shares of such Old Notes in its earnings per
share calculation.
THE INCLUSION OF THE COMMON STOCK UNDERLYING THE NEW NOTES MAY AFFECT THE
COMPANY'S EARNINGS PER SHARE CALCULATIONS.
At the September 29-30, 2004 meeting of the EITF, the EITF concluded
that issuers of contingently convertible notes must retroactively and
prospectively report the earnings per share impact of their contingently
convertible notes on an "if-converted" accounting basis, regardless of whether
the contingencies to conversion of the notes have been met. The conversion value
minus the principal returned on the New Notes will be contingently convertible
into shares of the Company's common stock and so the New Notes are affected by
the EITF's decision.
IF YOU DO NOT EXCHANGE YOUR OLD NOTES, THERE MAY BE A SUBSTANTIALLY SMALLER
PUBLIC TRADING MARKET FOR YOUR OLD NOTES AND THE MARKET PRICE OF YOUR OLD NOTES
MAY DECLINE.
If the Offer is consummated, the trading and the liquidity of the market
for the Old Notes may be significantly limited. As a result, the unexchanged Old
Notes may trade at a discount to the price at which they would trade if the
transactions contemplated by this Offer to Exchange were not consummated,
subject to the market for similar securities and other factors. We cannot assure
you that an active market in the unexchanged Old Notes will exist or be
maintained and we cannot assure you as to the prices at which the unexchanged
Old Notes may be traded.
OUR BOARD OF DIRECTORS HAS NOT MADE A RECOMMENDATION WITH REGARD TO WHETHER OR
NOT YOU SHOULD TENDER YOUR OLD NOTES IN THE OFFER NOR HAS THE COMPANY OBTAINED A
THIRD-PARTY DETERMINATION THAT THE OFFER IS FAIR TO HOLDERS OF THE OLD NOTES.
We have designed the New Notes to have terms substantially similar to
the Old Notes. The Offer has been approved by our board of directors. We are
not, however, making a recommendation whether holders of Old Notes should
exchange their notes. We have not retained and do not intend to retain any
unaffiliated representative to act solely on behalf of the holders for purposes
of negotiating the terms of the Offer and/or preparing a report concerning the
fairness of the Offer. We cannot assure holders of the Old Notes that the value
of the New Notes received in the Offer will in the future equal or exceed the
value of the Old Notes tendered and we do not take a position as to whether you
should participate in the Offer.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF THE OLD NOTES FOR
NEW NOTES ARE UNCLEAR.
We and each holder agree in the indenture governing the New Notes to
treat the exchange of the Old Notes for New Notes as not constituting a
significant modification of the terms of the Old Notes for U.S. federal income
tax purposes. Accordingly, we and each holder will take the position that the
exchange of Old Notes for New Notes should not be treated as an exchange of the
Notes for U.S. federal income tax purposes. We cannot assure you that the
Internal Revenue Service will agree with this position. If the exchange does not
constitute an exchange of the Notes for U.S. federal income tax purposes, the
New Notes will be treated as a continuation of the Old Notes, and holders
generally should not recognize any gain or loss as a result of the exchange. If,
contrary to this position, the exchange of
24
Old Notes for New Notes does constitute an exchange of the Notes for U.S.
federal income tax purposes, the tax consequences to holders could be materially
different. For more information, see "Certain United States Federal Income Tax
Consequences."
YOU SHOULD CONSIDER THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING THE NEW
NOTES AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NEW NOTES.
We and each holder agree in the indenture to treat the New Notes as
indebtedness that is subject to U.S. Treasury regulations governing contingent
payment debt instruments. The following discussion assumes that the New Notes
will be so treated, though we cannot assure you that the Internal Revenue
Service will not assert that the New 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 New Notes are outstanding. In addition, under
the indenture governing the New Notes, a holder will recognize ordinary income,
if any, upon a sale, exchange, conversion or redemption of the New 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 tax advisors as to the U.S.
federal, state and other tax consequences of acquiring, owning and disposing of
the New Notes and the shares of common stock issuable upon conversion of the New
Notes. For more information, see "Certain United States Federal Income Tax
Consequences."
WE MAY BE UNABLE TO RAISE ADDITIONAL FINANCING NECESSARY TO CONDUCT OUR
BUSINESS, MAKE PAYMENTS WHEN DUE OR REFINANCE OUR DEBT, WHICH MAY CAUSE DILUTIVE
EFFECTS TO THE HOLDERS OF OUR COMMON STOCK.
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. We have a credit facility available for borrowing, but
may require additional financings. 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 NEW NOTES.
The New Notes are obligations of Integra LifeSciences Holdings
Corporation, which is a holding company. We own no significant assets other than
marketable securities and 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 New
Notes. This creates risks regarding our ability to conduct future activities,
repay any interest and principal which we might owe on the New 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 obtain new loans. Our
subsidiaries will have no obligation to
25
pay any amounts due on the New Notes or to make any funds available to us for
payment of the New Notes, whether by dividends, loans distributions or other
payments. In addition, creditors of our subsidiaries (including trade creditors
and the lenders under our credit facility) will generally be entitled to payment
from the assets of our subsidiaries before those assets can be distributed to
us. As a result, the New Notes will effectively be subordinated to the prior
payment of all debts (including trade payables).
OUR INDEBTEDNESS AND INTEREST EXPENSE WILL LIMIT OUR CASH FLOW AND COULD
ADVERSELY AFFECT OUR OPERATIONS AND OUR ABILITY TO MAKE FULL PAYMENT ON THE NEW
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.
WE MAY BE UNABLE TO REPURCHASE THE NEW NOTES UPON A CHANGE IN CONTROL.
Upon a change in control as defined in the indenture for the New Notes,
you may require us to repurchase all or a portion of your New Notes. If a change
in control were to occur, we may not have enough funds to pay the repurchase
price for all tendered New Notes. Our obligation to offer to repurchase the New
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 New Notes.
NO PUBLIC MARKET EXISTS FOR THE NEW NOTES. THE FAILURE OF A MARKET TO DEVELOP
COULD AFFECT YOUR ABILITY TO, AND THE PRICE AT WHICH YOU MAY, RESELL YOUR NEW
NOTES.
The New Notes are a new issue of securities for which there is currently
no active trading market. We do not intend to list the New Notes on any national
securities exchange or automated quotation system. Accordingly, we cannot
predict whether an active trading market for the New Notes will develop or be
sustained. If an active trading market for the New Notes fails to develop or be
sustained, the trading price for the New Notes could fall.
Moreover, even if an active trading market for the New Notes were to
develop, the New Notes could trade at prices that may be lower than the initial
offering price of the New Notes. Future trading prices of the New 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
26
prices. It is possible that the market for the New Notes will be subject to
disruptions which may have a negative effect on the holders of the New Notes,
regardless of our prospects or financial performance.
YOUR RIGHT TO RECEIVE PAYMENT ON THE NEW NOTES MAY BE JUNIOR TO OUR FUTURE
INDEBTEDNESS.
Your right to receive payments on the New Notes may be junior to all of
our future indebtedness. The New Notes rank behind any borrowing under our
credit facility and 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 New 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 New Notes. In addition, all payments on the New 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 New 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 New
Notes in a bankruptcy or similar proceeding be paid to holders of senior
indebtedness instead, holders of the New 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 the New
Notes may receive less, ratably, than the holders of our senior indebtedness.
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 New 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
13,500,000 shares of common stock reserved for issuance to our employees,
directors and consultants under our stock award and employee benefit plans. Of
this amount, as of March 31, 2006, approximately 7,693,000 shares were held in
reserve for future issuance.
OUR REPORTED EARNINGS PER SHARE MAY BE VOLATILE BECAUSE OF THE CONVERSION
CONTINGENCY PROVISION OF THE NEW NOTES.
Holders of the New Notes are entitled to convert the New Notes into cash
and, if applicable, shares of 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 New 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.
27
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;
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 New 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. Our credit facility limits the amount of dividends that we may pay.
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.
28
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 28,222,000 were outstanding as of June 30, 2006. 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 twenty five 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 our 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.
29
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is quoted on the Nasdaq Global Select 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 July 12, 2006 the
last reported bid price for our common stock was $37.96 per share.
COMMON STOCK PRICE
------------------
LOW HIGH
-------- --------
YEAR ENDED 2004
First Quarter ............................ $28.74 $33.86
Second Quarter ........................... 29.76 36.00
Third Quarter ............................ 27.14 35.79
Fourth Quarter ........................... 29.41 37.36
YEAR ENDING 2005
First Quarter ............................ $34.75 39.87
Second Quarter ........................... 28.69 37.31
Third Quarter ............................ 28.74 38.26
Fourth Quarter ........................... 32.00 38.89
YEAR ENDING 2006
First Quarter ............................ $35.00 41.72
Second Quarter ........................... 36.27 42.90
Third Quarter (through July 12, 2006) .... 37.90 39.51
On June 30, 2006, we had approximately 530 stockholders of record, which
includes stockholders whose shares were held in nominee name.
We have not paid any cash dividends on our common stock since our
formation. Our credit facility limits the amount of dividends that we may pay.
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.
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the Company's historical ratios of earnings
to fixed charges for the three months ended March 31, 2005 and 2006 and for the
years ended December 31 of the dates indicated. 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 MARCH 31, YEAR ENDED DECEMBER 31,
-------------- --------------------------------------
2005 2006 2001 2002 2003 2004 2005
------ ------ ------ ------ ------ ------ ------
Ratio of earnings
to fixed charges ....... 12.0 7.8 12.8 33.9 12.7 7.6 11.9
30
SELECTED FINANCIAL INFORMATION
Set forth below is certain selected financial information relating to us
for the periods indicated. The selected financial information (other than the
ratio of earnings to fixed charges and book value per common share) set forth as
of and for the years ended December 31, 2005 and 2004 has been excerpted or
derived from the audited financial statements contained in our 2005 Annual
Report filed on Form 10-K. The selected financial information (other than the
ratio of earnings to fixed charges and book value per common share) set forth as
of and for the three months ended March 31, 2006 and 2005 has been excerpted or
derived from the unaudited financial statements set forth in our Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2006 and 2005. In the
opinion of management, the financial information as of and for the three months
ended March 31, 2006 and 2005 reflects all normal recurring adjustments
considered necessary for a fair presentation. Operating results for the three
months ended March 31, 2006 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2006. More comprehensive
information is included in our most recent Annual Report on Form 10-K for the
year ended December 31, 2005 and our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006. The financial information that follows is
qualified in its entirety by reference to such reports, which are incorporated
into this Offer to Exchange by reference.
SUMMARY FINANCIAL INFORMATION
(In thousands, except per share amounts and ratios)
AS OF AND FOR THE AS OF AND FOR THE
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ---------------------
2006 2005 2005 2004
--------- --------- --------- ---------
RESULTS OF OPERATIONS
Revenues ......................... $ 77,135 $ 65,839 $ 277,935 $ 229,825
Cost of product revenues ......... 27,937 24,496 105,536 87,299
Gross margin on total revenues ... 49,198 41,343 172,399 142,526
Operating income ................. 13,624 12,956 56,105 24,779
Net income ....................... 8,705 8,443 37,194 17,197
Earnings per share -- basic ...... 0.29 0.28 1.23 0.57
Earnings per share -- diluted .... 0.28 0.26 1.15 0.55
BALANCE SHEET DATA
Current assets ................... $ 242,826 $ 204,958 $ 265,952 $ 216,238
Noncurrent assets ................ 248,805 265,449 182,480 240,475
Current liabilities .............. 53,768 30,979 31,287 24,234
Noncurrent liabilities ........... 128,815 125,083 127,327 124,656
OTHER FINANCIAL DATA
Ratio of earnings to
fixed charges .................... 7.8x 12.0x 11.9x 7.6x
Book value per common share ...... $ 10.00 $ 10.71 $ 9.72 $ 10.54
31
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as adjusted to give effect to the Offer, assuming all Old Notes
are exchanged for New Notes. You should read this table in conjunction with our
financial statements and accompanying notes included in our 2005 Annual Report
filed on Form 10-K, the management's discussion analysis and results of
operations section included in our 2005 Annual Report on Form 10-K and the
consolidated financial statements and accompanying notes included in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, all
incorporated into this Offer to Exchange by reference.
AS OF MARCH 31,
2006
----------------------
AS
ACTUAL ADJUSTED
--------- ---------
(dollars in thousands)
Cash, cash equivalents and marketable securities ..... $ 97,863 $ 97,435
Total debt:
Old Notes (1) .................................... 117,976 0
New Notes ........................................ 0 117,976
Credit facility borrowings ....................... 16,000 16,000
Other debt ....................................... 193 193
--------- ---------
Total debt ................................... $ 134,169 $ 134,169
========= =========
Stockholders' equity
Common stock, $.01 par value, 60,000 shares
authorized, 30,903 shares issued ............... 310 310
Capital in excess of par ......................... 341,829 341,829
Accumulated other comprehensive loss ............. (2,910) (2,910)
Retained earnings (2) ............................ 45,634 44,305
Treasury stock at cost; 2,368 shares ............. (75,815) (75,815)
--------- ---------
Total shareholders' equity ................... $ 309,048 $ 307,719
--------- ---------
Total capitalization ................................. $ 443,217 $ 441,888
========= =========
(1) In 2003, we issued $120.0 million of the Old Notes. The net proceeds
generated by the Old Notes, after expenses, were $115.9 million. The Old
Notes are convertible into approximately 3.5 million shares.
(2) The change in retained earnings represents $300,000 of Exchange Fees to
be paid to tendering holders of Old Notes, $128,000 of estimated
expenses in connection with the Offer and the acceleration of
unamortized debt issuance costs of $1,546,954 associated with the Old
Notes that would have been expensed immediately. The acceleration of the
debt issuance costs is required because the New Notes would have been
convertible as of March 31, 2006, based on the Company's stock price as
of March 31, 2006. Therefore the debt would have been considered demand
debt. The overall impact is net of the related tax effects.
32
THE OFFER TO EXCHANGE
PURPOSE OF THE OFFER
Because of accounting changes that would otherwise require Integra to
include underlying shares of common stock of the Old Notes in its earning per
share calculations, Integra is offering to exchange Old Notes for New Notes with
a net share settlement mechanism.
With this Offer, we will be able to reduce the number of shares we would
need to issue under certain conversion scenarios by substituting cash for the
principal value portion of the conversion value.
The Offer is not being made to, nor will we accept tenders for exchange
from, holders of Old Notes in any jurisdiction in which the Offer or the
acceptance of it would not be in compliance with the securities or blue sky laws
of such jurisdiction.
NONE OF THE COMPANY, OUR BOARD OF DIRECTORS AND OFFICERS NOR ANY OTHER
REPRESENTATIVE OF THE COMPANY MAKES ANY RECOMMENDATION TO THE HOLDERS OF OLD
NOTES AS TO WHETHER OR NOT TO TENDER ALL OR ANY PORTION OF THE PRINCIPAL AMOUNT
OF THEIR OLD NOTES. IN ADDITION, WE HAVE NOT AUTHORIZED ANYONE TO MAKE ANY SUCH
RECOMMENDATION. YOU MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR OLD NOTES
AND, IF SO, THE AMOUNT OF OLD NOTES TO TENDER. NO OFFICER, DIRECTOR OR AFFILIATE
OF THE COMPANY BENEFICIALLY OWNS ANY OF THE OLD NOTES.
TERMS OF THE OFFER; PERIOD FOR TENDERING
This Offer to Exchange and the related Letter of Transmittal contain the
terms and conditions of the Offer. Upon the terms and subject to the conditions
included in this Offer to Exchange and in the related Letter of Transmittal,
which together are the Offer, we will accept for exchange Old Notes which are
properly tendered prior to the Expiration Date, unless you have previously
withdrawn them.
o When you tender to us Old Notes as provided below, our acceptance of
the Old Notes will constitute a binding agreement between you and us
upon the terms and subject to the conditions in this Offer to
Exchange and in the related Letter of Transmittal.
o For each $1,000 principal amount of Old Notes you tender and that is
accepted by us in the Offer, we will give you $1,000 principal amount
of New Notes and an Exchange Fee.
o Any validly tendered Old Notes accepted for exchange in the Offer
will be retired and will not be reissuable.
o You may tender all, some or none of your existing Old Notes.
o Our obligation to accept Old Notes for exchange in the Offer is
subject to the conditions described under "--Conditions to the
Offer."
o The Offer expires at 5:00 p.m., New York City time, on August 14,
2006. We may, however, in our sole discretion, extend the period of
time for which the Offer is open. References in this Offer to
Exchange to the Expiration Date mean 5:00 p.m., New York City time,
on August 14, 2006 or, if extended by us, the latest date to which
the Offer is extended.
33
o We will keep the Offer open for 20 business days, or longer if
required by applicable law, including the date hereof. We are sending
this Offer to Exchange, together with the related Letter of
Transmittal, on or about the date of this Offer to Exchange to all of
the registered holders of Old Notes at their addresses listed in the
trustee's security register with respect to the Old Notes.
o We expressly reserve the right, at any time, to extend the period of
time during which the Offer is open, and thereby delay acceptance of
any Old Notes, by giving oral or written notice of an extension to
the Exchange Agent and notice of that extension to the holders as
described below. During any extension, all Old Notes previously
tendered will remain subject to the Offer unless withdrawal rights
are exercised. Any Old Notes not accepted for exchange for any reason
will be returned without expense to the tendering holder promptly
after the expiration or termination of the Offer.
o We expressly reserve the right to amend or terminate the Offer at any
time prior to the Expiration Date, and not to accept for exchange any
Old Notes that we have not yet accepted for exchange, if any of the
conditions of the Offer specified below under "--Conditions to the
Offer" are not satisfied.
o We will give oral or written notice of any extension, amendment,
waiver, termination or non-acceptance described above to holders of
the Old Notes promptly. If we amend this Offer in any respect or
waive any condition to the Offer, we will give written notice of the
amendment or waiver to the Exchange Agent and will make a public
announcement of the amendment or waiver promptly afterward. If we
extend the Expiration Date, we will give notice by means of a press
release or other public announcement no later than 9:00 a.m. New York
City time, on the next New York Stock Exchange trading day after the
previously scheduled Expiration Date. Without limiting the manner in
which we may choose to make any public announcement and subject to
applicable law, we will have no obligation to publish, advertise or
otherwise communicate any public announcements other than by issuing
a press release to the PR Newswire.
o If we consider an amendment to the Offer to be material, or if we
waive a material condition of the Offer, we will promptly disclose
the amendment or waiver in a supplement to the Offer to Exchange, and
if required by law, we will extend the Offer for a period of five to
ten business days.
o Holders of Old Notes do not have any appraisal or dissenters' rights
in connection with the Offer.
o We intend to conduct the Offer in accordance with the applicable
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the applicable rules and regulations of the SEC.
IMPORTANT RESERVATION OF RIGHTS REGARDING THE OFFER
You should note that:
o All questions as to the validity, form, eligibility, time of receipt
and acceptance of Old Notes tendered for exchange, including the
Letter of Transmittal and the instructions to such Letter of
Transmittal, will be determined by us in our sole discretion and our
determination shall be final and binding.
34
o We reserve the absolute right to reject any and all tenders of any
particular Old Notes not properly tendered or to not accept any
particular Old Notes the acceptance of which might, in our judgment
or the judgment of our counsel, be unlawful.
o We also reserve the absolute right to waive any defects or
irregularities or conditions of the Offer as to any particular Old
Notes before or after the Expiration Date.
o Neither the Company, the Exchange Agent, the Information Agent nor
any other person shall be under any duty to give notification of any
defect or irregularity with respect to any tender of Old Notes for
exchange, nor shall any of them incur any liability for failure to
give any notification.
CONDITIONS TO THE OFFER
We may not accept Old Notes for exchange and may take the actions listed
below if, prior to the Expiration Date, any of the following events occur:
o more than 50% of the principal amount of Old Notes outstanding is not
tendered or exchanged;
o any action, proceeding or litigation seeking to enjoin, make illegal
or delay completion of the Offer or otherwise relating in any manner
to the Offer is instituted or threatened;
o any order, stay, judgment or decree is issued by any court,
government, governmental authority or other regulatory or
administrative authority and is in effect, or any statute, rule,
regulation, governmental order or injunction shall have been
proposed, enacted, enforced or deemed applicable to the Offer, any of
which would or might restrain, prohibit or delay completion of the
Offer or impair the contemplated benefits of the Offer to us. See
"--Purpose of the Offer";
o any of the following occurs and the adverse effect of such occurrence
shall, in our reasonable judgment, be continuing:
(i) any general suspension of trading in, or limitation on
prices for, securities on any national securities
exchange or in the over-the-counter market in the United
States;
(ii) any extraordinary or material adverse change in United
States financial markets generally;
(iii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States;
(iv) any limitation, whether or not mandatory, by any
governmental entity on, or any other event that would
reasonably be expected to materially adversely affect,
the extension of credit by banks or other lending
institutions; or
35
(v) a commencement of a war, act of terrorism or other
national or international calamity directly or
indirectly involving the United States, which would
reasonably be expected to affect materially and
adversely, or to delay materially, the completion of the
Offer.
o any of the situations described above existed at the time of
commencement of the Offer and that situation deteriorates materially
after commencement of the Offer;
o any tender or exchange offer, other than this Offer by us, with
respect to some or all of our outstanding common stock or any merger,
acquisition or other business combination proposal involving us shall
have been proposed, announced or made by any person or entity;
o any event or events occur that have resulted or may result, in our
reasonable judgment, in an actual or threatened change in the
business condition, income, operations, stock ownership or prospects
of the Company and our subsidiaries, taken as a whole that, in our
reasonable judgment, would have a material adverse effect on the
Company; or
o a stop order issued by the SEC is threatened or in effect with
respect to the qualification of the Indenture governing the New Notes
under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
If any of the above events occur, we may:
o terminate the Offer and promptly return all tendered Old Notes to
tendering noteholders;
o extend the Offer, subject to the withdrawal rights described in
"--Withdrawal of Tenders" herein, and retain all tendered Old Notes
until the extended Offer expires;
o amend the terms of the Offer, which may result in an extension of the
period of time for which the Offer is kept open; or
o waive the unsatisfied condition, subject to any requirement to extend
the period of time during which the Offer is open, and complete the
Offer.
LEGAL LIMITATION
The above conditions are for our sole benefit. We may assert these
conditions with respect to all or any portion of the Offer regardless of the
circumstances giving rise to them. We may waive, in our discretion, any
condition, in whole or in part, at any time prior to the Expiration Date of the
Offer. Our failure at any time to exercise our rights under any of the above
conditions does not represent a waiver of these rights. Each right is an ongoing
right that may be asserted at any time prior to the Expiration Date of the
Offer. Any determination by us concerning the conditions described above will be
final and binding upon all parties.
If a stop order issued by the SEC is threatened or in effect with
respect to the qualification of the Indenture governing the New Notes under the
Trust Indenture Act, we will not:
o accept for exchange any Old Notes tendered; or
o issue any New Notes in exchange for Old Notes.
36
PROCEDURES FOR TENDERING OLD NOTES
TENDER OF OLD NOTES HELD THROUGH A CUSTODIAN
If you are a beneficial owner of Old Notes that are held of record by a
custodian bank, depository institution, broker, dealer, trust company or other
nominee, you must instruct the custodian to tender the Old Notes on your behalf.
Your custodian will provide you with its instruction letter which you must use
to give these instructions.
TENDER OF OLD NOTES HELD THROUGH DTC
To effectively tender Old Notes that are held through DTC, DTC
participants should transmit their acceptance through the Automated Tender Offer
Program, or ATOP, for which the transaction will be eligible, and DTC will then
edit and verify the acceptance and send an agent's message to the Exchange Agent
for its acceptance. Delivery of tendered Old Notes must be made to the Exchange
Agent pursuant to the book-entry delivery procedures set forth below or the
tendering DTC participant must comply with the guaranteed delivery procedures
set forth below. No Letters of Transmittal will be required to tender Old Notes
through ATOP.
In addition, the Exchange Agent must receive:
o an electronic confirmation pursuant to DTC's ATOP system indicating
the aggregate principal amount of Old Notes to be tendered and any
other documents required by the Letter of Transmittal; and
o prior to the Expiration Date, a confirmation of book-entry transfer
of such Old Notes into the Exchange Agent's account at DTC, in
accordance with the procedure for book-entry transfer described
below; or
o the holder must comply with the guaranteed delivery procedures
described below.
Your Old Notes must be tendered by book-entry transfer. The Exchange
Agent will establish an account with respect to the Old Notes at DTC for
purposes of the Offer within two business days after the commencement of the
Offer. Any financial institution that is a participant in DTC must make
book-entry delivery of the Old Notes by having DTC transfer such Old Notes into
the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfer. Although your Old Notes will be tendered through the DTC facility, the
Letter of Transmittal, or facsimile, or an electronic confirmation pursuant to
DTC's ATOP system, with any required signature guarantees and any other required
documents must be transmitted to and received or confirmed by the Exchange Agent
at its address set forth on the back cover of this Offer to Exchange.
You or your broker must ensure that the Exchange Agent receives an
agent's message from DTC confirming the book-entry transfer of your Old Notes.
An agent's message is a message transmitted by DTC and received by the Exchange
Agent that forms a part of the book-entry confirmation that states that DTC has
received an express acknowledgment from the DTC participant tendering the Old
Notes that such participant agrees to be bound by the terms of the Letter of
Transmittal.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the Exchange Agent.
37
If you are an institution that is a participant in DTC's book-entry
transfer facility, you should follow the same procedures that are applicable to
persons holding Old Notes through a financial institution.
DO NOT SEND LETTERS OF TRANSMITTAL OR OTHER OFFER DOCUMENTS TO US.
It is your responsibility to provide all necessary materials to the
Exchange Agent before the Expiration Date. If the Exchange Agent does not
receive all of the required materials before the Expiration Date, your Old Notes
will not be validly tendered.
We will have accepted the validity of tendered Old Notes if and when we
give oral or written notice to the Exchange Agent. The Exchange Agent will act
as the new trustee's agent for purposes of receiving the New Notes from us. If
we do not accept any tendered Old Notes for exchange because of an invalid
tender or the occurrence of any other event, the Exchange Agent will return
those Old Notes to you, without expense, promptly after the Expiration Date via
book-entry transfer through DTC.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your Old Notes and you cannot complete the
procedures for book-entry transfer set forth above on a timely basis, you may
still tender your Old Notes if:
o your tender is made through an eligible institution;
o prior to the Expiration Date, the Exchange Agent receives from the
eligible institution a properly completed and duly executed Letter of
Transmittal, or a facsimile of such Letter of Transmittal or an
electronic confirmation pursuant to DTC's ATOP system, and notice of
guaranteed delivery, substantially in the form provided by us, by
facsimile transmission, mail or hand delivery, that:
(i) sets forth the name and address of the holder of Old
Notes and the principal amount of Old Notes tendered;
(ii) states that the tender is being made thereby; and
(iii) guarantees that within three New York Stock Exchange
trading days after the Expiration Date a book-entry
confirmation and any other documents required by the
Letter of Transmittal will be deposited by the eligible
institution with the Exchange Agent.
ACCEPTANCE OF OLD NOTES AND DELIVERY OF NEW NOTES
If all of the conditions to the Offer are satisfied or waived prior to
the Expiration Date, we will accept all Old Notes properly tendered and not
withdrawn as of the Expiration Date and will issue the New Notes and pay an
Exchange Fee promptly after the Expiration Date. See "--Conditions to the
Offer." For purposes of the Offer, our giving of oral or written notice of our
acceptance to the Exchange Agent will be considered our acceptance of the Offer.
In all cases, we will issue New Notes in exchange for Old Notes that are
accepted for exchange only after timely receipt by the Exchange Agent of:
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o a book-entry confirmation of transfer of Old Notes into the Exchange
Agent's account at DTC using the book-entry transfer procedures
described above;
o properly completed and duly executed Letter of Transmittal or an
electronic confirmation of the submitting holder's acceptance through
DTC's ATOP system; and
o any other required documents.
The Exchange Agent will act as agent for the tendering holders for the
purposes of receiving the New Notes from us, and will make the exchange on, or
promptly after, the Expiration Date. Following this exchange the holders in
whose names the New Notes will be issuable upon exchange will be deemed the
holders of record of the New Notes.
The reasons we may not accept tendered Old Notes include:
o the Old Notes were not validly tendered pursuant to the procedures
for tendering; See "--Procedures for Tendering Old Notes";
o we determine in our reasonable discretion that any of the conditions
to the Offer have not been satisfied prior to the Expiration Date;
See "--Conditions to the Offer";
o holder has validly withdrawn a tender of Old Notes; See "--Withdrawal
of Tenders"; or
o we have, prior to the Expiration Date of the Offer, delayed or
terminated the Offer; See "--Terms of the Offer; Period for
Tendering."
If we do not accept any tendered Old Notes for any reason included in
the terms and conditions of the Offer, we will return any unaccepted or
non-exchanged Old Notes tendered by book-entry transfer into the Exchange
Agent's account at DTC using the book-entry transfer procedures described above,
and non-exchanged Old Notes will be credited to an account maintained with DTC
promptly after the expiration or termination of the Offer.
Old Notes which are not tendered for exchange or are tendered but not
accepted in connection with the Offer will remain outstanding and remain subject
to the indenture governing the Old Notes.
Any validly tendered Old Notes accepted for exchange in the Offer will
be retired and will not be reissuable.
CONSEQUENCES OF NOT EXCHANGING OLD NOTES
If the Offer is consummated, Old Notes that are not tendered, or are
tendered but not accepted in the Offer, will remain outstanding. Accordingly,
interest thereon will continue to accrue in accordance with their terms, and the
Old Notes will continue to have the benefit of the indenture governing the
unexchanged Old Notes but not the benefit of the Indenture governing the New
Notes. However, any trading market for unexchanged Old Notes could become
significantly limited due to the reduction in the amount of Old Notes
outstanding after completion of the Offer, which may adversely affect the market
price and price volatility of the Old Notes. See "Risk Factors."
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WITHDRAWAL OF TENDERS
You may withdraw your tender of Old Notes (i) at any time prior to 5:00
p.m., New York City time, on the Expiration Date, or any subsequent date to
which we extend it; or (ii) if not exchanged for New Notes, after the expiration
of 40 business days from the commencement of the Offer. Holders who wish to
exercise their right of withdrawal with respect to the Offer must give written
notice of withdrawal delivered by mail, hand delivery or facsimile transmission,
which notice must be received by the Exchange Agent on or prior to 5:00 p.m.,
New York City time, on the Expiration Date at its address set forth on the back
cover of this Offer to Exchange. In order to be valid, a notice of withdrawal
must:
o specify the name of the person who tendered the Old Notes to be
withdrawn;
o specify the aggregate amount of Old Notes to be withdrawn, if not all
of the Old Notes are tendered by the holder;
o contain a statement that you are withdrawing your election to have
your Old Notes exchanged; and
o specify, on the notice of withdrawal, the name and number of the
account at DTC to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility, if you
tendered your Old Notes in accordance with the procedure for
book-entry transfer described above.
A valid withdrawal of tendered Old Notes on or prior to the Expiration
Date shall be deemed a valid revocation of the tender of Old Notes. Properly
withdrawn Old Notes may be retendered by following the procedures described
under "--Procedures for Tendering Old Notes" above at any time on or prior to
5:00 p.m., New York City time, on the Expiration Date.
Tenders of any Old Notes will automatically be withdrawn if the Offer is
terminated without any such Old Notes being exchanged thereunder or otherwise
provided herein. In the event of termination of the Offer, the Old Notes
tendered pursuant to the Offer will be returned to the tendering holder
promptly. If we are delayed in our acceptance for exchange of any Old Notes or
if we are unable to accept for exchange Old Notes pursuant to the Offer for any
reason, then, without prejudice to our rights hereunder, tendered Old Notes may
be retained by the Exchange Agent on our behalf, and may not be withdrawn,
subject to Rule 14e-1 of the Exchange Act, which requires that an offeror pay
the consideration offered or return the Old Notes deposited by or on behalf of
the holders promptly after the termination or withdrawal of a tender offer,
except as otherwise provided in this section.
ANY ATTEMPTED WITHDRAWAL OF PREVIOUSLY TENDERED OLD NOTES OTHER THAN IN
ACCORDANCE WITH THE PROVISIONS DESCRIBED ABOVE WILL NOT CONSTITUTE A VALID
WITHDRAWAL OF SUCH TENDER.
All questions as to form and validity (including time of receipt) of any
delivery or revocation of a tender will be determined by us, in our sole
discretion, which determination will be final and binding.
None of us, the Exchange Agent, the Information Agent, the trustee or
any other person will be under any duty to give notification of any defect or
irregularity in any delivery or revocation of a tender or incur any liability
for failure to give any such notification.
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EXCHANGE AGENT AND INFORMATION AGENT
Wells Fargo Bank, National Association has been appointed to act as the
exchange agent for the Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at the addresses set forth on the back cover of
this offering circular. Questions and requests for assistance, requests for
additional copies of this Offer to Exchange or of the Letter of Transmittal and
requests for notices of guaranteed delivery should be directed to the
Information Agent at the address set forth on the back cover of this Offer to
Exchange.
Georgeson Inc. will assist us with the distribution of this Offer to
Exchange and the other exchange materials. The Exchange Agent and Information
Agent will receive customary compensation for its services, will be reimbursed
for reasonable out-of-pocket expenses and will be indemnified against
liabilities in connection with its services, including liabilities under the
federal securities laws. The Exchange Agent and Information Agent have not been
retained to make solicitations or recommendations. The fees received by the
Exchange Agent and Information Agent will not be based on the aggregate
principal amount of Old Notes tendered in the Offer.
FEES AND EXPENSES
We will pay the reasonable and customary fees and reasonable
out-of-pocket expenses of Wells Fargo Bank, National Association and Georgeson
Inc. in their capacities as Exchange Agent and Information Agent, respectively.
In addition, we will pay the reasonable legal, accounting, and trustee-related
fees and expenses. We will not pay any fees or commissions to any broker or
dealer or any other person for soliciting tenders of Old Notes under the Offer.
Brokers, dealers, commercial banks and trust companies will, upon request, be
reimbursed by us for reasonable and necessary costs and expenses incurred by
them in forwarding materials to their customers.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes, except that holders who instruct us to register New
Notes in the name of, or request that Old Notes not tendered or not accepted in
the Offer be returned to, a person other than the registered tendering holder,
will be responsible for the payment of any applicable transfer tax.
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DESCRIPTION OF NEW NOTES
The New Notes will be issued under an Indenture between Integra
LifeSciences Holdings Corporation and Wells Fargo Bank, National Association, as
trustee.
The following summarizes some, but not all, provisions of the New 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 New Notes is
available to you upon request to our address on page 71 of this Offer to
Exchange. In this "Description of New 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 New Notes will be general unsecured obligations of Integra and are
subordinate in right of payment as described under "--Subordination of Notes."
The New Notes are convertible into common stock as described under "--Conversion
Rights." The New Notes are limited to $120,000,000 aggregate principal amount.
The New Notes will be issued only in denominations of $1,000 or in multiples of
$1,000. The New 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 New Notes Upon a Change in Control."
The New 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, 2006, subject to limited exceptions if the New
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 New 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 New 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 where the New Notes may be presented for
registration, transfer, exchange or conversion. This office will initially be an
office or agency of the trustee. The New Notes will be issued in
fully-registered book-entry form, without coupons, and are represented by one or
more global New Notes. There will be no service charge for any registration of
transfer or exchange of New 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.
We will pay contingent interest to the holders of New 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
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contingent interest payable per $1,000 principal amount of New 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 New 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 New Notes are convertible. We will pay contingent interest, if
any, in the same manner as we pay interest as described above under "--General."
During the twelve month period preceding March 15, 2006, no cash dividends were
paid.
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
o approve any change in the office through which any security registrar
or any paying agent or conversion agent acts.
PURCHASE AND CANCELLATION
All New 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 New Notes delivered to the trustee
shall be cancelled promptly by the trustee. No New Notes shall be authenticated
in exchange for any New Notes cancelled as provided in the indenture.
We may, to the extent permitted by law, purchase New Notes in the open
market or by tender offer at any price or by private agreement. Any New 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 New
Notes surrendered for cancellation may not be reissued or resold and will be
promptly cancelled. Any New 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 holders of the New Notes.
REPLACEMENT OF NEW NOTES
We will replace mutilated, destroyed, stolen or lost New Notes at your
expense upon delivery to the trustee of the mutilated New Notes, or evidence of
the loss, theft or destruction of the New Notes satisfactory to us and the
trustee. In the case of a lost, stolen or destroyed New Note, indemnity
satisfactory to the trustee and us may be required at the expense of the holder
of such New Note before a replacement New Note will be issued.
SUBORDINATION OF NOTES
The payment of the principal of, premium, if any, and interest on the
New Notes is subordinate 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 New Notes. If the New Notes are accelerated because of an
event of
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default we must pay the holders of senior indebtedness in full all amounts due
and owing thereunder before we pay the holders of New Notes. The indenture will
require that we must promptly notify holders of senior indebtedness if payment
of the New Notes is accelerated because of an event of default under the
indenture.
We may not make any payment on the New Notes or purchase or otherwise
acquire the New 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 New 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 New 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 New 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 New 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
New 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 New Notes or to
provide us with funds for our payment obligations, whether
44
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 New
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, 2006, (i) we had no senior indebtedness outstanding and
(ii) our subsidiaries had $16.3 million of outstanding indebtedness and
approximately $42.5 million of other liabilities (including, in each case, trade
payables, but excluding intercompany liabilities) to which the New Notes are
effectively subordinated.
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 New 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 holders of New Notes.
"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:
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;
all of our reimbursement obligations and other liabilities, contingent
or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances;
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;
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
45
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);
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;
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
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).
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 New Notes or expressly provides that
such indebtedness is on the same basis or junior to the New
Notes; and
(2) the New Notes and the Old Notes.
REDEMPTION BY INTEGRA
Except as set forth under "--Purchase of New Notes Upon a Change in
Control," we are not required to make mandatory redemption of, or sinking
payments with respect to, the New Notes.
CONVERSION RIGHTS
You will have the right, at your option, to convert your New Notes, in
whole or in part, into cash or, if applicable, shares of our common stock at any
time prior to maturity, unless previously purchased at
46
your option upon a change in control, at a 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 New 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 Global Select 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 New Notes at least 20 days prior to the ex-dividend date for such
distribution. Once we have given such notice, holders may surrender their New
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 New Note otherwise participates in the distribution without conversion.
You also may convert your New Notes into shares of our common stock at
any time prior to maturity after any 5 consecutive trading-day period in which
the average trading prices for the New Notes for that 5 trading-day period was
less than 97% of the average conversion value for the New Notes during that
period, however, you may not convert your New Notes pursuant to this clause 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 of the New 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 New 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 New Notes. If you submit your New 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
47
default exists at the time of conversion. As a result of the foregoing
provisions, if you surrender your New 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 New 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
New 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 New Notes for purchase upon a change
in control, you may only convert your New Notes if you withdraw your election in
accordance with the indenture.
PAYMENT UPON CONVERSION
Holders that tender their New Notes for conversion will receive cash
and, if applicable, shares of our common stock. The aggregate value (the
"conversion value") of the cash and, if applicable, shares of common stock per
$1,000 principal amount of New Notes converted will be equal to the product of:
o the conversion rate in effect at the time the New Notes are tendered
for conversion; and
o the average of the daily average closing stock price per share of our
common stock for each of the five consecutive trading days beginning
on the second trading day immediately following the day the New Notes
are tendered for conversion (the "five-day average closing stock
price").
Our board of directors will make appropriate adjustments, in its good
faith determination, to account for any adjustment to the conversion rate that
becomes effective, or any event requiring an adjustment to the conversion rate
where the ex date of the event occurs, at any time from, and including, the date
the notes are tendered for conversion to, and including, the date that we
deliver the consideration payable upon conversion.
The "average closing stock price" per share of our common stock on a
trading day is the average closing stock price per share of our common stock on
the Nasdaq Global Select Market or, if our common stock is not listed on the
Nasdaq Global Select Market, on the principal exchange or over-the-counter
market on which our common stock is then listed or traded in all cases, from
9:30 a.m. to 4:30 p.m. New York city time, on that trading day, as displayed by
Bloomberg or such other comparable service that has replaced Bloomberg. If such
average closing stock price is not available, then our board of directors will
in good faith determine the amount to be used as the average closing stock
price.
Except as described below under "--Conversion Price Adjustments", we
will deliver the conversion value of the New Notes surrendered for conversion to
converting holders as follows:
o a cash amount (the "principal return") equal to the lesser of:
o the aggregate conversion value of the New Notes to be converted;
and
o the aggregate principal amount of the New Notes to be converted;
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o if the aggregate conversion value of the New Notes to be converted is
greater than the principal return, an amount in whole shares (the
"net shares"), determined as set forth below, equal to the aggregate
conversion value less the principal return (the "net share amount");
and
o a cash amount, based on the five-day average closing stock price per
share of our common stock, in lieu of any fractional shares of common
stock.
The number of net shares we will deliver upon conversion will be
determined by dividing the net share amount by the five-day average closing
stock price per share of our common stock.
We will determine the conversion value, principal return, net share
amount and number of net shares at the end of the five consecutive trading day
period beginning on the second trading day immediately following the day the New
Notes are tendered for conversion. We may not have the financial resources, and
we may not be able to arrange for financing, to pay the principal return for all
holders of New Notes have tendered for conversion. See "Risk Factors--Risks
Related to the Notes and Our Common Stock--We may be unable to repurchase the
New Notes upon a change in control." Our failure to pay the principal return on
the New Notes when converted would result in an event of default with respect to
the New Notes, whether or not the subordination provisions permit the payment.
CONVERSION PRICE ADJUSTMENTS
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
49
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 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 New 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 New 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
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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.
Holders of the New Notes may, in some circumstances, be deemed to have
received a distribution or dividend subject to U.S. federal income tax as a
result of an adjustment or the nonoccurrence of an adjustment to the conversion
price. See "Certain United States Federal Income Tax Consequences."
As used in this section "Description of New Notes," the "market price"
means the average of the last reported sale prices of our common stock for the
20 trading day period ending on the third business day prior to the applicable
purchase date (including upon the occurrence of a change in control) or the date
of determination (if the third business day prior to the applicable purchase
date or the date of determination is a trading day, or if not, then on the last
trading day prior to the third business day), appropriately adjusted to take
into account the occurrence, during the period commencing on the first of the
trading days during the 20 trading day period and ending on the applicable
purchase date or the date of determination, of any event that would result in an
adjustment of the conversion price under the indenture.
PURCHASE OF NEW NOTES 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 New 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 New Notes together with accrued and unpaid interest
to, but excluding, the purchase date. New 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 New Notes;
o the holders' right to require us to purchase the New 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 New 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:
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
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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 Global Select 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:
52
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
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.
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 of the New Notes. 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 New 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 New 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 New Notes in cash, or if
applicable, common stock or applicable securities, we may not have sufficient
funds to pay the change in control purchase price for the New 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.
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 New 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
53
o other conditions specified in the indenture are met.
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 New 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 New 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 New 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 New 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.
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 New Notes may declare the principal amount of the New 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 New Notes will
automatically become immediately due and payable. Any payment by us on the New
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 New 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 New
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:
54
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 New
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 New 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 New Note on or after the applicable due date or the right to
convert the New Note in accordance with the indenture.
Generally, the holders of not less than a majority of the aggregate
principal amount of outstanding New Notes may waive any default or event of
default unless:
o we fail to pay principal, premium or interest on any New Note when
due;
o we fail to convert any New 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 New 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 AMENDMENT
We and the trustee may amend or supplement the indenture or the New
Notes with the consent of the holders of a majority in aggregate principal
amount of the outstanding New Notes. In addition, the holders of a majority in
aggregate principal amount of the outstanding New 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 New 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
New Note;
o reduce the principal amount of or any premium or interest on any New
Note;
o reduce the amount of principal payable upon acceleration of the
maturity of any New Note;
o change the place or currency of payment of principal of, or any
premium or interest on, any New Note;
o impair the right to institute suit for the enforcement of any payment
on, or with respect to, any New Note;
55
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 New Notes;
o adversely affect the right of holders to convert New Notes other than
as provided in the indenture;
o reduce the percentage in principal amount of outstanding New Notes
required for modification or amendment of the indenture;
o reduce the percentage in principal amount of outstanding New 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 New
Notes without notice to, or the consent of, the holders of New Notes to, among
other things, cure any ambiguity, defect or inconsistency or make any other
change that does not adversely affect the rights of any holder of New Notes.
DISCHARGE
The indenture will provide that we may terminate our obligations under
the indenture at any time delivering all outstanding New Notes to the trustee
for cancellation if we have paid all sums payable by us under the indenture. At
any time after the New 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 New Notes, by depositing with the trustee
money or U.S. government obligations sufficient to pay all remaining
indebtedness on the New Notes when due.
CALCULATIONS IN RESPECT OF NEW NOTES
Except as otherwise provided above, we will be responsible for making
all calculations called for under the New Notes. These calculations include, but
are not limited to, determinations of the market prices of our common stock,
accrued interest payable on the New Notes and the conversion price of the New
Notes. We will make all these calculations in good faith and, absent manifest
error, our calculations will be final and binding on holders of New Notes.
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 New
Notes, the trustee must eliminate such conflict or resign. Wells Fargo Bank,
National Association is also trustee for the Old Notes.
The holders of a majority in principal amount of all outstanding New
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
56
not be unduly prejudicial to the rights of another holder or the trustee and may
not involve the trustee in personal liability.
GOVERNING LAW
The indenture provides that it and the New Notes are governed by, and
construed in accordance with, the laws of the State of New York.
57
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 30, 2006 there were approximately 28,222,000 shares of common
stock outstanding and held of record by approximately 530 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
Our 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.
We have designated and issued three series of preferred stock. None of
these shares are currently outstanding.
REGISTRATION RIGHTS
Under the terms of registration rights agreements between us and one of
our stockholders, a holder of approximately 3,252,000 shares of our common stock
(including shares issuable upon the exercise of options and restricted units),
is entitled to demand that we register those shares under the Securities Act.
These registration rights are subject to limitations and conditions. In general,
we are
58
required to indemnify the holder 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 corporations
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.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar of our common stock is American Stock
Transfer & Trust, Co.
59
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. federal income tax
consequences of the Offer and the ownership and disposition of New Notes and
Company common stock into which New Notes may be convertible. This discussion
does not purport to be a complete analysis of all potential federal income tax
considerations and does not address any tax consequences arising under any
state, local or foreign tax laws or under any other U.S. federal tax laws.
This discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), U.S. Treasury regulations promulgated thereunder, judicial
decisions and administrative pronouncements and published rulings of the
Internal Revenue Service ("IRS"), all as of the date hereof. These authorities
may change, possibly retroactively, resulting in U.S. federal income tax
consequences different from those set forth below. We have not sought and will
not seek any ruling from the IRS regarding the tax consequences of the Offer or
the ownership and disposition of New Notes or any common stock into which New
Notes may be convertible. There can be no assurance that the IRS will not take a
contrary position regarding such tax consequences, or that any such contrary
position would not be sustained by a court.
To comply with Internal Revenue Service Circular 230, you are hereby
notified that: (a) any discussion of U.S. federal tax issues contained or
referred to in this Offer to Exchange and the Letter of Transmittal is not
intended or written to be used, and cannot be used by you, for the purposes of
avoiding penalties that may be imposed on you under the Code; (b) such
discussion is being used in connection with the solicitation of exchanges
pursuant to the Offer by us; and (c) you should seek advice based on your
particular circumstances from an independent tax advisor.
This discussion is limited to holders who receive New Notes in exchange
for Old Notes pursuant to the Offer or, with respect to the discussion under
"--Consequences of the Offer--Non-Exchanging Holders," holders who do not
exchange their Old Notes pursuant to the Offer. In addition, this discussion
only addresses holders who hold their Notes and any Company common stock
received upon conversion of New Notes as capital assets. This discussion does
not address tax considerations that may be relevant to a holder in light of such
holder's particular circumstances or to holders subject to special rules under
the U.S. federal income tax laws, including, without limitation:
o banks, insurance companies, or other financial institutions;
o holders subject to the alternative minimum tax;
o tax-exempt organizations or tax-qualified retirement plans;
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 foreign persons or entities (except to the extent
specifically set forth below);
o persons that own, or are deemed to own, more than 5% of our
Company (except to the extent specifically set forth below);
o U.S. expatriates;
60
o U.S. holders (as defined below) whose functional currency is
not the U.S. dollar; or
o persons who hold the Notes as part of a hedge, straddle,
conversion transaction or other risk reduction strategy, or
as a part of an integrated investment.
If a partnership or other entity treated as a partnership for U.S.
federal income tax purposes holds Notes or Company common stock, the tax
treatment of each partner in the partnership generally will depend upon the
status of the partner and the activities of the partnership. Partnerships that
hold Notes or Company common stock and their partners should consult their tax
advisors regarding their tax treatment.
For purposes of this discussion, a "U.S. holder" means a beneficial
owner of Notes or Company common stock that is:
o an individual citizen or resident of the United States;
o a corporation or partnership, or other entity taxable as a
corporation or partnership for U.S. federal income tax
purposes, created or organized 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 U.S. federal
income taxation regardless of its source; or
o a trust that (1) is subject to the primary supervision of a
U.S. court and the control of one or more U.S. persons or (2)
has validly elected to be treated as a U.S. person for U.S.
federal income tax purposes.
A non-U.S. holder is a beneficial owner of Notes or Company common stock that is
not a U.S. holder.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES TO YOU OF THE OFFER AND THE OWNERSHIP AND DISPOSITION OF NEW NOTES
AND COMPANY COMMON STOCK, AS WELL AS THE APPLICATION OF THE FEDERAL ESTATE AND
GIFT TAX LAWS, ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND ANY APPLICABLE TAX
TREATY.
CONSEQUENCES OF THE OFFER
EXCHANGING HOLDERS
In general, a "significant modification" of a debt instrument, whether
effected pursuant to an amendment of the terms of a debt instrument or an actual
exchange of a debt instrument for a new debt instrument, will be treated as an
exchange of the existing debt instrument for a new debt instrument for U.S.
federal income tax purposes. A modification will be considered "significant" if,
based on all facts and circumstances, the legal rights or obligations that are
altered and the degree to which they are altered are economically significant.
It is unclear whether the exchange of the Old Notes for New Notes will
be treated as a "significant modification" of the terms of the Old Notes for
U.S. federal income tax purposes. We believe that the differences between the
terms of the Old Notes and New Notes should not be considered economically
significant and, as a result, do not constitute a "significant modification" for
U.S. federal income tax purposes. Thus, we will take the position that the
exchange of the Old Notes for New Notes does not constitute an exchange of the
Notes for U.S. federal income tax purposes, and will treat the New
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Notes (with their modified terms) as a continuation of the Old Notes. By
participating in the Offer, each holder will be deemed to have agreed pursuant
to the indenture governing the New Notes to treat the exchange of the Old Notes
for New Notes as not constituting a significant modification of the terms of the
Old Notes. Assuming the exchange of the Old Notes for New Notes does not
constitute a significant modification of the terms of the Old Notes, a holder
will not recognize any gain or loss as a result of the exchange, but the receipt
of the Exchange Fee will constitute ordinary income to the holder as described
below. A holder's tax basis and holding period in the New Notes will be the same
as the holder's tax basis and holding period in the Old Notes exchanged
therefor.
There can be no assurance that the IRS will agree that the exchange of
the Old Notes for New Notes does not constitute a significant modification of
the terms of the Old Notes. If the exchange constitutes a significant
modification of the Old Notes, the tax consequences of the exchange will depend
on whether the notes are considered "securities" for U.S. federal income tax
purposes. Whether a debt instrument constitutes a security depends on a variety
of factors, including the term of the instrument. As a general rule, a debt
instrument with a term of five years or less will not be considered a security;
however, it is unclear whether a debt instrument with a term of five years or
less that is convertible into stock of the obligor would be considered a
security.
If the exchange of the Notes constitutes a significant modification of
the Old Notes and both the Old Notes and the New Notes are considered
securities, the exchange would be treated as a non-taxable recapitalization and
a holder would not recognize any gain or loss as a result of the exchange. A
holder generally would have the same tax basis and holding period in the New
Notes as the holder had in the Old Notes exchanged therefor.
If the exchange constitutes a significant modification of the Old Notes
and either the Old Notes or the New Notes are not considered securities for U.S.
federal income tax purposes, then the exchange would be a taxable transaction.
In such case, holders of the Notes would recognize gain or loss, treating the
issue price of the New Notes as the amount realized in the exchange. Any gain
generally would be treated as interest income. Any loss would be treated as
ordinary loss to the extent of the excess of previous interest inclusions over
the total negative adjustments previously taken into account as ordinary loss
with respect to the Old Notes; the balance would be treated as capital loss.
Each holder's holding period in the New Notes would begin the day after the
exchange, and each holder's tax basis in the New Notes generally would equal the
issue price of the New Notes (as described above).
If the exchange of Old Notes for New Notes were treated as an exchange
for tax purposes (i.e., as either a recapitalization or a taxable exchange), the
tax treatment of the New Notes would depend on whether the Old Notes or New
Notes were considered to be traded on an established securities market for
purposes of the original issue discount provisions of the Code. If either the
Old Notes or New Notes were considered to be traded on an established securities
market, then the New Notes generally would be subject to the rules discussed
below (but a holder's tax basis in a New Note would be determined in accordance
with the rules discussed above), except that we would need to determine a new
comparable yield and projected payment schedule for the New Notes.
Alternatively, if both the Old Notes and New Notes were not considered to be
traded on an established securities market, then the New Notes would be subject
to a different set of rules applicable to contingent payment debt instruments
that may have a material effect on the amount, timing and character of the
income, gain or loss recognized by a holder with respect to a New Note.
TAX TREATMENT OF THE EXCHANGE FEE
Although the tax treatment of the Exchange Fee is not entirely clear
under current law, absent further relevant IRS guidance, we intend to treat the
payment of the Exchange Fee as additional ordinary
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income to holders participating in the Offer and to report such payments to the
IRS and to holders in accordance with such treatment. In addition, we intend to
withhold 30% of any Exchange Fee paid to a non-U.S. holder unless we receive an
IRS Form W-8ECI certifying that such payment is effectively connected with such
holder's conduct of a U.S. trade or business, or an IRS Form W-8BEN certifying
that such payment is subject to a reduced rate of withholding under an
applicable U.S. income tax treaty.
If the exchange of the Old Notes for New Notes were treated as an
exchange for U.S. federal income tax purposes, holders should consult their own
advisors as to whether the Exchange Fee could be treated as additional
consideration for the Old Notes and whether any amounts withheld may be eligible
for a refund.
NON-EXCHANGING HOLDERS
Holders who do not exchange their Old Notes for New Notes in the Offer
will not recognize any gain or loss for U.S. federal income tax purposes as a
result of the Offer. Non-exchanging holders will continue to have the same tax
basis and holding period in their Old Notes as they had prior to the Offer.
CLASSIFICATION OF THE NEW NOTES
Under the indentures governing the Old Notes and New Notes, we and each
holder of the Notes agree to treat the Notes, for U.S. federal income tax
purposes, as indebtedness subject to the U.S. Treasury regulations governing
contingent payment debt instruments (the "Contingent Debt Regulations") in the
manner described below and 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 other possible tax treatment of the Notes. The IRS has issued a
revenue ruling with respect to instruments similar to the Notes which 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 different tax 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 recognize different amounts of income, gain or
loss (or possibly no loss) upon conversion of the Notes to common stock and
cash, 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.
Under the indenture governing the New Notes, we and each holder will
agree to treat the exchange of the Old Notes for New Notes as not constituting a
significant modification of the terms of the Old Notes for U.S. federal income
tax purposes. The remainder of this discussion assumes that this treatment will
be respected and the New Notes will be treated as a continuation of the Old
Notes for U.S. federal income tax purposes.
U.S. HOLDERS-CONSEQUENCES OF OWNERSHIP AND DISPOSITION OF NEW NOTES
The following discussion summarizes certain U.S. federal income tax
consequences to U.S. holders of the New Notes or our common stock. It is not a
complete analysis of all the potential tax consequences or considerations and
holders are urged to consult their tax advisors.
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ACCRUAL OF INTEREST
Under the Contingent Debt Regulations, actual cash payments on the New
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 New
Notes;
o require you to accrue and include in taxable income each year
original issue discount at the comparable yield set forth
below, which will be substantially in excess of the stated
interest payments you actually receive; 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 New Notes.
Subject to the adjustments described below under "--ADJUSTMENTS TO
INTEREST ACCRUALS ON THE NOTES" that apply to holders that purchase New 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 New Note that equals:
o the product of (i) the adjusted issue price of the New Note
as of the beginning of the accrual period and (ii) the
comparable yield to maturity (determined as set forth below)
of the New Note, 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 adjusted issue price of a New Note is equal to the issue price of
the Old Note (the first price at which a substantial amount of the Old Notes
were 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) for which it was exchanged, increased by any original
issue discount previously accrued with respect to the Old Note and New Note,
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 Old Note and New Note. The comparable yield
for the New Notes will be the same as the comparable yield we determined for the
Old Notes-9.702%, per annum, compounded semi-annually. The comparable yield for
the Old Notes was based on the rate at which we could have issued, on the issue
date of the Old Notes, a fixed rate nonconvertible debt instrument with no
contingent payments but with terms and conditions similar to the Old Notes.
We prepared a projected payment schedule for the Old Notes, solely for
U.S. federal income tax purposes, that included 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. Under the
indentures governing the Old Notes and New Notes, holders agree to be bound by
our determination of the comparable yield for the Old Notes and the projected
payment schedule that we prepared for the Old Notes. For U.S. federal income tax
purposes, you must continue to 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 New Notes. You may obtain
the projected payment schedule by submitting a written request for it to us at
the address set forth in "Where You Can Find More Information."
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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 U.S. 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 New Notes differ from the
projected contingent payments, adjustments will be made to account for the
difference. In addition to the interest accrual discussed above, if you receive
actual payments with respect to New Notes for a taxable year that in the
aggregate exceed the total amount of projected payments for the taxable year,
you will incur a "positive adjustment" and be required to include additional
original issue discount in income equal to the amount of the excess of actual
payments over projected payments. For these purposes, payments in a taxable year
include the fair market value of property received in that year, including the
fair market value of any Company common stock received upon a conversion of the
New Notes. If you receive actual payments in a taxable year 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:
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 Old
Notes and New Notes, reduced to the extent such prior
original issue discount was offset by prior negative
adjustments on the Old Notes and New Notes; and
o third, any excess negative adjustments will be treated as a
regular negative adjustment in the succeeding taxable year.
If you acquire a New Note at a discount or premium to the adjusted issue
price of the New 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 New Note. You should consult your tax advisor
regarding these allocations.
If your tax basis is greater than the adjusted issue price of your New
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 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 New Note is reduced by the
amount treated as a negative adjustment.
If your tax basis is less than the adjusted issue price of your New 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 New Note is increased by the
amount treated as a positive adjustment.
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SALE, EXCHANGE, CONVERSION OR REDEMPTION OF THE NOTES
Upon the sale, exchange, repurchase or redemption of a New Note, or upon
the conversion of a New Note for cash or a combination of cash and common stock,
you generally will recognize gain or loss equal to the difference between the
amount realized and your adjusted tax basis in the New Note. As a holder of a
New Note, you agree that under the Contingent Debt Regulations, the amount
realized will include the fair market value of any common stock that you receive
on the conversion as a contingent payment. Such gain on a New Note generally
will be treated as interest income. Loss from the disposition of a New Note will
be treated as ordinary loss to the extent of your prior net original issue
discount inclusions with respect to the New Note and Old Note exchanged
therefor. Any loss in excess of that amount will be treated as capital loss,
which will be long-term if the New Note was 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 New Note generally will be equal to your original
purchase price of the Old 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 noncontingent payment and the
projected amount of any contingent payments previously scheduled to be made on
the New Note and Old Note exchanged therefor.
Under this treatment, your tax basis in any Company common stock
received upon conversion of a New 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.
CONSTRUCTIVE DIVIDENDS
Holders of convertible debt instruments such as the New 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 generally will not be deemed to result in a constructive
distribution of stock. Certain of the possible adjustments provided in the New
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 receive our common stock upon conversion of your New Note, any
distributions made on our common stock generally will be included in your income
as ordinary dividend income to the extent of our current and accumulated
earnings and profits. With respect to noncorporate taxpayers for taxable years
beginning before January 1, 2011, such dividends generally will be taxed at the
lower applicable capital gains rate 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.
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SALE, EXCHANGE OR REDEMPTION OF COMMON STOCK
If you receive our common stock upon conversion of your New Note, 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, generally will be subject to a reduced rate of
U.S. federal income tax. Your adjusted tax basis and holding period in common
stock received upon conversion of a New Note are determined as discussed above
under "--Sale, Exchange, Conversion or Redemption of the Notes or Common Stock."
The deductibility of capital losses is subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
We are required to furnish to the IRS and to record holders of the New
Notes and Company common stock, other than corporations and other exempt
holders, 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 New Notes, dividends paid on the common stock or with respect to proceeds
received from a disposition of the New Notes or shares of common stock. Certain
holders (including, among others, corporations and certain tax-exempt
organizations) generally are 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;
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. You generally will be
entitled to credit any amounts withheld under the backup withholding rules
against your U.S. federal income tax liability provided that you furnish the
required information to the IRS in a timely manner.
NON-U.S. HOLDERS-CONSEQUENCES OF OWNERSHIP AND DISPOSITION OF NEW NOTES
The following discussion summarizes certain U.S. federal income tax
consequences to non-U.S. holders of the New Notes or our common stock. It is not
a complete analysis of all the potential tax consequences or considerations and
holders are urged to consult their tax advisors.
PAYMENTS OF INTEREST; CONVERSION OF NOTES
You will not be subject to the 30% U.S. federal withholding tax with
respect to payments of interest on the New Notes (including amounts taken into
income as interest under the accrual rules described above under "U.S.
Holders--Consequences of Ownership and Disposition of New Notes--Accrual of
Interest" and amounts attributable to any shares of our common stock received
upon a conversion of the New Notes) provided that:
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o such interest is not effectively connected with your conduct
of a trade or business in the United States;
o you do not own, actually or constructively, 10% or more of
the total combined voting power of all classes of our stock
entitled to vote within the meaning of Code Section
871(h)(3);
o you are not a "controlled foreign corporation" with respect
to which we are, directly or indirectly, a "related person";
o in the case of contingent interest deemed received on a
conversion of the Notes, our common stock continues to be
actively traded within the meaning of Code Section
871(h)(4)(C)(v)(I) and we are not a "United States real
property holding corporation";
o you are not a bank whose receipt of interest (including
original issue discount) on a Note is described in Code
Section 881(c)(3)(A); and
o you provide your name and address, and certify, under
penalties of perjury, that you are not a U.S. person (which
certification may be made on an IRS Form W-8BEN or any such
successor form), or you hold your Notes through certain
intermediaries, and you and the intermediaries satisfy the
certification requirements of applicable U.S. Treasury
regulations.
Special certification rules apply to non-U.S. holders that are
pass-through entities rather than corporations or individuals. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-U.S. holders.
The applicable rules for payments of contingent interest are unclear and
payments of contingent interest (other than contingent interest deemed received
on a conversion of notes) may be subject to the 30% withholding tax even if all
of the above requirements are met. We have not determined whether payments of
contingent interest will be subject to withholding. If we do withhold, you
should consult your own tax advisers as to whether you can obtain a refund for
any withholding taxes imposed on such payments on the grounds that such payments
are exempt from such withholding taxes.
If you cannot satisfy the requirements described above, you will be
subject to the 30% U.S. federal withholding tax with respect to payments of
interest on the New Notes, unless you provide us with a properly executed (1)
IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in
withholding under the benefit of an applicable U.S. income tax treaty or (2) IRS
Form W-8ECI (or successor form) stating that interest paid on the New Notes is
not subject to withholding tax because it is effectively connected with the
conduct of a U.S. trade or business.
If you are engaged in a trade or business in the United States and
interest on a New Note is effectively connected with your conduct of that trade
or business, you will be subject to U.S. federal income tax on that interest on
a net income basis (although you will be exempt from the 30% withholding tax,
provided the certification requirements described above are satisfied) in the
same manner as if you were a U.S. person (as defined under the Code). In
addition, if you are a foreign corporation, you may be subject to a branch
profits tax equal to 30% (or such lower rate prescribed by an applicable U.S.
income tax treaty) of your earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with your conduct of a trade or
business in the United States. For this purpose, interest (including original
issue discount) will be included in your earnings and profits.
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SALE, EXCHANGE, CONVERSION OR REDEMPTION OF THE NOTES OR COMMON STOCK
Any gain realized by you on the sale, exchange, conversion or redemption
of a New Note generally will be treated as contingent interest income subject to
the rules described above for conversions under "--Payments of Interest;
Conversion of Notes." If such gain which is treated as interest income does not
qualify for the portfolio interest exemption discussed above under "--Payments
of Interest; Conversion of Notes," you generally will have an obligation under
United States federal income tax laws to file a United States federal income tax
return and to pay taxes on such gain if such tax is not withheld by the payor of
the sale, exchange or redemption proceeds.
Any gain realized by you on the sale, exchange or other taxable
disposition of our common stock generally will not be subject to U.S. federal
income tax unless:
o the gain is effectively connected with your conduct of a U.S.
trade or business;
o you are an individual who is present in the United States for
183 days or more in the taxable year of disposition, and
certain conditions are met; or
o we are or have been a "United States real property holding
corporation" for United States federal income tax purposes at
any time during the shorter of the five-year period ending on
the date of disposition or the period that you held our
common stock.
If your gain is described in the first bullet point above, you generally
will be subject to U.S. federal income tax on the net gain derived from the
sale, and if you are a corporation, then under certain circumstances, any such
effectively connected gain also may be subject to the branch profits tax at a
30% rate (or such lower rate prescribed by an applicable U.S. income tax
treaty). If you are an individual described in the second bullet point above,
you will be subject to a flat 30% U.S. federal income tax on the gain derived
from the sale, which may be offset by U.S. source capital losses, even though
you are not considered a resident of the United States. Such holders are urged
to consult their tax advisers regarding the tax consequences of the acquisition,
ownership and disposition of the common stock.
We do not believe that we currently are, and we do not anticipate
becoming, a U.S. real property holding corporation. Even if we were, or were to
become, a U.S. real property holding corporation, no adverse tax consequences
would apply to you if you hold, directly and indirectly, at all times during the
applicable period, five percent or less of our common stock, provided that our
common stock was regularly traded on an established securities market.
DIVIDENDS
In general, any dividends received by you with respect to our common
stock (and any deemed distributions resulting from adjustments, or failures to
make adjustments, to the conversion price of the New Notes, see "U.S.
Holders--Consequences of Ownership and Disposition of New Notes-- Constructive
Dividends" above) will be subject to withholding of U.S. federal income tax at a
30% rate, unless such rate is reduced by an applicable U.S. income tax treaty.
Dividends that are effectively connected with your conduct of a trade or
business in the United States generally are subject to U.S. federal income tax
on a net income basis and are exempt from the 30% withholding tax (assuming
compliance with certification requirements). Under various circumstances, any
such effectively connected dividends received by a non-U.S. holder that is a
corporation also may be subject to the branch profits tax at a 30% rate or such
lower rate prescribed by an applicable U.S. income tax treaty.
69
In order to claim the benefit of a U.S. income tax treaty or to claim
exemption from withholding because dividends paid to you on our common stock are
effectively connected with your conduct of a trade or business in the United
States, you must provide a properly executed IRS Form W-8BEN for treaty benefits
or W-8ECI for effectively connected income (or such successor form as the IRS
designates), prior to the payment of dividends. These forms must be periodically
updated. You may obtain a refund of any excess amounts withheld by timely filing
an appropriate claim for refund.
BACKUP WITHHOLDING AND INFORMATION REPORTING
If you are a non-U.S. holder, you generally will not be subject to
backup withholding and information reporting with respect to payments that we
make to you (including interest, dividends and proceeds received from a
disposition of the New Notes pursuant to a conversion, redemption or repurchase)
or with respect to the proceeds of the sale of a New Note or a share of common
stock within the United States or conducted through certain U.S.-related
financial intermediaries, if the payor receives the statement described above
under "--Payments of Interest; Conversion of Notes" and does not have actual
knowledge or reason to know that you are a U.S. person (as defined under the
Code) or you otherwise establish an exemption. However, we may be required to
report annually to the IRS and to you the amount of, and the tax withheld with
respect to, any interest or dividends paid to you, regardless of whether any tax
was actually withheld. Copies of these information returns also may be made
available under the provisions of a specific treaty or agreement to the tax
authorities of the country in which you reside.
You generally will be entitled to credit any amounts withheld under the
backup withholding rules against your U.S. federal income tax liability provided
that you furnish the required information to the IRS in a timely manner.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any materials we file with
the SEC at the SEC's public reference room at Room 580, 100 F. Street, N.E.,
Washington, D.C. You can request copies of these documents by writing to the SEC
and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
more information about the operation of the public reference rooms. Our SEC
filings are also available at the SEC's website at "http://www.sec.gov." In
addition, we make our reports on Form 10-K, 10-Q and 8-K available through our
internet website free of charge after we file them with the SEC. Our internet
website address is www.integra-ls.com. The information incorporated by reference
is deemed part of this Offer to Exchange, except for any information superseded
by information contained directly in this Offer to Exchange.
In addition, because our common stock is quoted on the Nasdaq Global
Select Market, you may read review our SEC filings at the following address:
NASDAQ Operations, 1735K Street, N.W. Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Offer to Exchange. All information appearing in this
Offer to Exchange is qualified in its entirety by the information and financial
statements (including notes thereto) appearing in the documents incorporated by
reference, except to the extent set forth in the immediately preceding sentence.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Offer to Exchange. We
incorporate by reference the documents listed below:
o Annual Report on Form 10-K for the year ended December 31,
2005, filed with the SEC on March 15, 2006;
o Current Reports on Form 8-K filed on January 9, 2006, January
17, 2006, March 8, 2006 (as amended on May 12, 2006), March
10, 2006, April 13, 2006, April 25, 2006, May 17, 2006, July
7, 2006 and July 14, 2006; and
o Quarterly Report on Form 10-Q for the quarter ended March 31,
filed with the SEC on May 10, 2006 and Amendment No. 1
thereto that was filed with the SEC on July 6, 2006.
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 Relations Department
311 Enterprise Drive
Plainsboro, New Jersey 08536
Telephone: (609) 936-2491
71
To obtain additional copies of the Offer to Exchange, please contact the
Information Agent. Any questions about the Offer or procedures for accepting the
Offer may be directed to the Information Agent.
The Information Agent for the Offer is:
Georgeson Inc.
Banks and Brokers Call: (212) 440-9800
All Others Call Toll Free: (866) 482-4943
The Exchange Agent for the Offer is:
Wells Fargo Bank, National Association
Call Toll Free: (800) 344-5128
BY REGISTERED AND BY OVERNIGHT COURIER
CERTIFIED MAIL OR REGULAR MAIL: BY HAND DELIVERY
Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A.
Corporate Trust Operations Corporate Trust Operations Corporate Trust Services
MAC N9303-121 MAC N9303-121 608 2nd Avenue South
P.O. Box 1517 6th & Marquette Avenue Northstar East Building -
12th Floor
Minneapolis, MN 55480 Minneapolis, MN 55479 Minneapolis, MN 55402
or
BY FACSIMILE TRANSMISSION:
(612) 667-6282
If you have questions about the Company you may contact the Company at
the address or telephone number set forth below:
Integra LifeSciences Holdings Corporation
311 Enterprise Drive
Plainsboro, New Jersey, 08536
Attention: Investor Relations Department
(609) 936-2491
72
Exhibit-99.(A)(1)(II)
LETTER OF TRANSMITTAL
TO OFFER TO EXCHANGE
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
FOR ANY AND ALL OUTSTANDING
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
OF
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
Pursuant to the Offer to Exchange Dated July 17, 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST 14,
2006, UNLESS EXTENDED BY US (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT
ANY TIME PRIOR TO THE EXPIRATION DATE.
DELIVERY TO:
WELLS FARGO BANK, NATIONAL ASSOCIATION, THE EXCHANGE AGENT
OR
CALL TOLL FREE: (800) 344-5128
BY REGISTERED AND BY OVERNIGHT COURIER
CERTIFIED MAIL OR REGULAR MAIL: BY HAND DELIVERY
Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A.
Corporate Trust Operations Corporate Trust Operations Corporate Trust Services
MAC N9303-121 MAC N9303-121 608 2nd Avenue South
P.O. Box 1517 6th & Marquette Avenue Northstar East Building -
12th Floor
Minneapolis, MN 55480 Minneapolis, MN 55479 Minneapolis, MN 55402
BY FACSIMILE:
(For Eligible Institutions Only)
(612) 667-6282
Attention: Bondholder Communications
Confirm by Receipt of Facsimile Only: (800) 344-5128
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY. IF A DELIVERY IS MADE TO INTEGRA
LIFESCIENCES HOLDINGS CORPORATION, IT WILL NOT BE FORWARDED TO THE EXCHANGE
AGENT AND THEREFORE SUCH DELIVERY WILL NOT CONSTITUTE A VALID DELIVERY.
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL, YOU SHOULD READ THE LETTER
OF TRANSMITTAL AND THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
The undersigned acknowledges that he or she has received and reviewed
the Offer to Exchange, dated July 17, 2006 (as amended or supplemented from time
to time, the "Offer to Exchange"), of Integra LifeSciences Holdings Corporation,
a Delaware corporation (the "Company"), and this Letter of Transmittal, which
together constitute the Company's offer (the "Offer") (i) to exchange: $1,000 in
principal amount of 2 1/2% Contingent Convertible Subordinated Notes due 2008
(the "New Notes") and (ii) a one time cash payment (an "Exchange Fee") equal to
$2.50 for each $1,000 in principal amount of our outstanding 2 1/2% Contingent
Convertible Subordinated Notes due 2008 (the "Old Notes" and together with the
New Notes, the "Notes") held by the registered holders thereof (the "Holders").
2
The undersigned hereby tenders the Old Notes described in the box
entitled "Description of Old Notes" below pursuant to the terms and conditions
described in the Offer to Exchange and this Letter of Transmittal. The
undersigned is the registered holder of all the Old Notes (the "Holder") and the
undersigned represents that it has received from each beneficial owner of Old
Notes (the "Beneficial Owners") a duly completed and executed form of
"Instructions to Registered Holder from Beneficial Owner with respect to the
Offer" accompanying this Letter of Transmittal, instructing the undersigned to
take the action described in this Letter of Transmittal.
In order to tender Old Notes in the Offer, you must BOTH:
1. (A) tender your Old Notes by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company
("DTC") such that the Old Notes are received by the Exchange Agent prior
to 5:00 P.M., New York City time, on the Expiration Date according to
the procedures set forth in the section titled "The Offer to
Exchange--Procedures for Tendering Old Notes," in the Offer to Exchange
and the instructions in this Letter of Transmittal, or
(B) tender your Old Notes according to the guaranteed delivery
procedures set forth in the section titled "The Offer to
Exchange--Guaranteed Delivery Procedures," in the Offer to Exchange and
the instructions in this Letter of Transmittal, if you are unable to
deliver confirmation of the book-entry tender of your Old Notes into the
Exchange Agent's account at DTC (a "Book-Entry Confirmation") and all
other documents required by this Letter of Transmittal to the Exchange
Agent prior to 5:00 P.M., New York City time, on the Expiration Date,
AND
2. submit a properly completed Letter of Transmittal to the
Exchange Agent by mail or facsimile so that it is received by the
Exchange Agent at the address set forth on the cover of this Letter of
Transmittal prior to 5:00 P.M., New York City time, on the Expiration
Date. You need not submit this Letter of Transmittal if, in accordance
with DTC's Automatic Tender Offer Program ("ATOP"), DTC will send an
agent's message ("Agent's Message") stating that DTC has received an
express acknowledgment from you that you will be bound by the terms and
conditions hereof as if you had completed, executed and delivered this
Letter of Transmittal. Delivery of documents to DTC does not constitute
delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed
this Letter of Transmittal to indicate the action the undersigned desires to
take with respect to the Offer.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the information required below should be
listed and attached on a separate signed schedule. Tenders of Old Notes will be
accepted only in denominations of $1,000 and multiples thereof.
3
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) OR NAME
OF DTC PARTICIPANT AND
PARTICIPANT'S DTC
ACCOUNT NUMBER IN WHICH OLD NOTES ARE HELD AGGREGATE PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) OF OLD NOTES PRESENTLY HELD TENDERED*
- --------------------------------------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------
* Unless otherwise specified above, all Old Notes held for the account of the
undersigned will be tendered.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
- -----------------------------------------------------
DTC Account Number:
- -----------------------------------------------------
Transaction Code Number:
- -----------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holders(s):
- -----------------------------------------------------
Window Ticket Number (if any):
- -----------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- -----------------------------------------------------
Name of Institution which Guaranteed Delivery:
- -----------------------------------------------------
If guaranteed delivery is to be made by book-entry transfer, complete the
following:
Name of Tendering Institution:
- -----------------------------------------------------
DTC Account Number:
- -----------------------------------------------------
Transaction Code Number:
- -----------------------------------------------------
Please read the section tiled "The Offer to Exchange--Conditions to the Offer,"
in the Offer to Exchange.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN (10)
ADDITIONAL COPIES OF THE OFFER TO EXCHANGE.
Name:
- -----------------------------------------------------
Address:
- -----------------------------------------------------
4
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes and
an Exchange Fee for its own account in exchange for Old Notes that were acquired
as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended (the "Securities Act") in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering such a prospectus the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. If the
undersigned is a broker-dealer that will receive New Notes and an Exchange Fee,
it represents that the Old Notes to be exchanged for the New Notes and an
Exchange Fee were acquired as a result of market-making activities or other
trading activities.
SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
5
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer set forth in
the Offer to Exchange, receipt of which is hereby acknowledged, and this Letter
of Transmittal, the undersigned hereby tenders to the Company the aggregate
principal amount of Old Notes indicated in this Letter of Transmittal. Subject
to, and effective upon, the acceptance for exchange of the Old Notes tendered
hereby in accordance with the terms and conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Company all right, title and interest in and to such Old Notes as
are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes with full knowledge that the Exchange Agent
also acts as an agent for the Company, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), subject only to the right of withdrawal described in the Offer to
Exchange, to deliver Old Notes to the Company together with all accompanying
evidences of transfer and authenticity to, or upon the order of the Company,
upon receipt by the Exchange Agent, as the undersigned's agent, of the New Notes
and an Exchange Fee to be issued in exchange for such Old Notes, present such
Old Notes for transfer, and transfer the Old Notes on the books of the Company
and receive for the account of the Company all benefits and otherwise exercise
all rights of beneficial ownership of such Old Notes, all in accordance with the
terms and conditions of the Offer.
The undersigned hereby covenants, represents and warrants that:
1. the undersigned is the holder of the Old Notes tendered for
exchange hereby;
2. the undersigned has full power and authority to tender,
exchange, sell, assign and transfer the Old Notes tendered hereby, and
to acquire New Notes and an Exchange Fee issuable upon the exchange of
such tendered Old Notes;
3. when the Old Notes are accepted for exchange, the Company will
acquire good, marketable and unencumbered title thereto, free and clear
of all security interests, liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale
or transfer of the Old Notes, and not subject to any adverse claim or
right when the same are accepted by the Company;
4. any New Notes and Exchange Fee acquired in exchange for Old
Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such
person is the undersigned;
5. neither the Holder of such Old Notes nor any such other person
is an "affiliate" of the Company, as defined in Rule 405 under the
Securities Act;
6. the undersigned has read all of the terms and conditions of the
Offer and agrees that tenders of Old Notes pursuant to any of the
procedures described in the accompanying instructions will constitute
the undersigned's acceptance of the terms and conditions of the Offer;
and
7. the undersigned has a "net long position," within the meaning of
Rule 14e 4 promulgated under the Securities Exchange Act of 1934, as
amended, ("Rule 14e-4") in the Old Notes or
6
equivalent securities at least equal to the Old Notes being tendered,
and the tender of the Old Notes complies with Rule 14e-4.
The undersigned acknowledges that this Offer is being made in reliance
on interpretations by the staff of the Securities and Exchange Commission (the
"SEC") as set forth in no-action letters issued to third parties, that the New
Notes issued pursuant to the Offer in exchange for the Old Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of the Company of the Old Notes or the New
Notes, within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business, such holders are not holding any Old Notes that have
the status of, or are reasonably likely to have the status of, an unsold
allotment in the initial offering, and such Holders have no arrangement with any
person to participate in the distribution of such New Notes. However, the SEC
has not considered the Offer in the context of a no-action letter and there can
be no assurance that the staff of the SEC would make a similar determination
with respect to the Offer as in other circumstances. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any Holder is an
affiliate of the Company, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Offer, such Holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive New Notes and an Exchange Fee for its own account in exchange
for Old Notes, it represents that the Old Notes to be exchanged for the New
Notes were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus meeting the
requirements of the Securities Act, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
The undersigned understands that acceptance of tendered Old Notes by the
Company for exchange will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer. In
all cases in which a participant elects to accept the Offer by transmitting an
express acknowledgement in accordance with the ATOP procedures, such participant
shall be bound by all of the terms and conditions of this Letter of Transmittal.
The undersigned recognizes that, under certain circumstances set forth in the
Offer to Exchange, the Company may not be required to accept for exchange any of
the Old Notes tendered thereby.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company or the Exchange Agent to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby. The undersigned agrees that it (and any beneficial owner(s) on
whose behalf it is acting) will not sell, pledge, hypothecate or otherwise
encumber or transfer any Old Notes tendered thereby from the date of this Letter
of Transmittal and agrees that any purported sale, pledge, hypothecation or
other encumbrance or transfer will be void and of no effect.
For purposes of the Offer, the Company will be deemed to have accepted
for exchange, and to have exchanged, validly tendered Old Notes (or defectively
tendered Old Notes which defect the Company has, or has caused to be, waived) if
and when the Company gives oral or written notice thereof to the Exchange Agent.
This tender may be withdrawn only in accordance with the procedures set forth in
the section titled "The Offer to Exchange--Withdrawal of Tenders," in the Offer
to Exchange.
7
All authority conferred or agreed to be conferred in this Letter of
Transmittal and every obligation of the undersigned hereunder shall be binding
upon the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please credit the New Notes and Exchange Fee to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated herein
in the box entitled "Special Delivery Instructions" below, please deliver the
New Notes and pay the Exchange Fee to the account indicated above maintained at
DTC. Any Old Notes not exchanged or not accepted for exchange will be credited
to the account indicated above maintained at DTC promptly following the
expiration or termination of the Offer.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE
TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
8
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 2 AND 3)
To be completed ONLY if the New Notes are to be issued and Exchange Fee
is to be paid in the name of someone other than the registered holder of the Old
Notes whose name(s) appear(s) above.
Issue New Notes and pay Exchange Fee to:
Name(s):
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
(U.S. HOLDERS COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2 AND 3)
To be completed ONLY if the New Notes are to be delivered and Exchange
Fee is to be paid to someone other than the registered holder of the Old Notes
whose name(s) appear(s) above, or to such registered holder(s) at an address
other than that shown above.
Deliver New Notes and pay Exchange Fee to:
Name(s):
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
(U.S. HOLDERS COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE)
PLEASE SIGN HERE TO TENDER YOUR OLD NOTES
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(U.S. Holders COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
9
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
- --------------------------------------- ----------------------------------------
DATE AREA CODE AND TELEPHONE NUMBER
If a Holder is tendering any Old Notes, this Letter of Transmittal must
be signed by the registered Holder(s) as the name(s) appear(s) on the
certificate(s) for the Old Notes or by any person(s) authorized to become
registered Holder(s) by endorsements and documents transmitted herewith. If
signature is by an attorney-in-fact, trustee, executor, administrator, guardian,
officer or other person acting in a fiduciary or representative capacity, please
set forth full title. SEE INSTRUCTION 2.
Names(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity or Title:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 2)
Signature(s) Guaranteed by
an Eligible Institution:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME OF FIRM)
- --------------------------------------- ----------------------------------------
DATE AREA CODE AND TELEPHONE NUMBER
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF, OR AN ELECTRONIC
CONFIRMATION PURSUANT TO DTC'S ATOP SYSTEM (TOGETHER WITH A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY
BOX ABOVE.
10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal, or an electronic confirmation pursuant
to DTC's ATOP system, is to be completed by Holders of Old Notes for tenders
that are made pursuant to the procedures for delivery by book-entry transfer set
forth in the section titled "The Offer to Exchange--Procedures for Tendering Old
Notes" in the Offer to Exchange. Book-Entry Confirmation as well as a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
hereof), or an electronic confirmation pursuant to DTC's ATOP system, and any
other required documents, including any required signature guarantees, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering Holder must comply with the guaranteed
delivery procedures set forth below. The book-entry transfer of Old Notes must
be accompanied by an agent's message (an "Agent's Message") confirming that DTC
has received express acknowledgment from the Holder that such Holder agrees to
be bound by the Letter of Transmittal and that the Letter of Transmittal may be
enforced against such Holder. Electronic confirmation pursuant to DTC's ATOP
system must also include an express acknowledgment (an "Express Acknowledgment")
by the Holder that such Holder has received and agreed to be bound by the Letter
of Transmittal and that the Letter of Transmittal may be enforced against such
Holder. Old Notes tendered hereby must be in denominations of $1,000 principal
amount or any integral multiples thereof.
Holders who wish to tender their Old Notes and who cannot complete the
procedure for book-entry transfer on a timely basis or who cannot deliver all
other required documents to the Exchange Agent on or prior to the Expiration
Date may tender their Old Notes pursuant to the guaranteed delivery procedures
set forth in the section titled "The Offer to Exchange--Guaranteed Delivery
Procedures," in the Offer to Exchange. Pursuant to such procedures, (i) such
tender must be made through an Eligible Institution (as defined below), (ii)
prior to 5:00 P.M., New York City time, on the Expiration Date, the Exchange
Agent must receive from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile hereof), or an
electronic confirmation pursuant to DTC's ATOP system, and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
Holder of Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three (3) New York
Stock Exchange, Inc. ("NYSE") trading days after the Expiration Date, a
Book-Entry Confirmation and any other documents requested by this Letter of
Transmittal, including any signature guarantees, an Agent's Message in the case
of a book-entry transfer or an Express Acknowledgment in the case of a transfer
through the ATOP system, will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) a Book-Entry Confirmation and all other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three (3) NYSE trading days after the Expiration Date.
The delivery of the Old Notes and all other required documents will be
deemed made only when confirmed by the Exchange Agent. The method of delivery of
this Letter of Transmittal and all other required documents is at the election
and risk of the tendering Holder. If such delivery is by mail, it is recommended
that registered mail with return receipt requested, properly insured, be used.
In all cases, sufficient time should be allowed to assure timely delivery. No
Letters of Transmittal or other documents should be sent to the Company.
See the section titled "The Offer to Exchange," in the Offer to
Exchange.
11
2. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder of the Old Notes tendered hereby, the signature must
correspond exactly with the name as it appears on a security position listing as
the Holder of such Old Notes in the DTC system without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal as there are different registrations. When this Letter of
Transmittal is signed by the registered Holder or Holders of the Old Notes
specified herein and tendered hereby, no separate bond powers are required. If,
however, the New Notes are to be issued and an Exchange Fee is to be paid to a
person other than the registered Holder, then separate bond powers are required.
If this Letter of Transmittal or any bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Signatures on bond powers required by this Instruction 2 must be
guaranteed by a firm which is a financial institution (including most banks,
savings and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program (each an
"Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered:
(i) by a registered Holder of Old Notes (including any
participant in the DTC system whose name appears on a security position
listing as the Holder of such Old Notes) who has not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal, or
(ii) for the account of an Eligible Institution.
3. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Notes are to
be issued and the Exchange Fee is to be paid in the name of a person other than
the signer of this Letter of Transmittal, or if New Notes and the Exchange Fee
are to be sent to someone other than the signer of this Letter of Transmittal or
to an address other than that shown above, the appropriate boxes on this Letter
of Transmittal should be completed. Old Notes not exchanged will be returned by
crediting the account maintained at DTC specified herein. See Instruction 10.
In the case of issuance in a different name, separate bond powers with a
guaranteed signature is required and the employer identification or social
security number of the person named must also be indicated.
4. IMPORTANT TAX INFORMATION AND SUBSTITUTE FORM W-9. Under U.S.
federal income tax law, a Holder (other than certain exempt Holders) who tenders
Old Notes and receives New Notes in the exchange may be subject to backup
withholding at the current applicable rate on payments with respect to the New
Notes, and any Exchange Fee received by such Holder in the exchange. To avoid
backup withholding, each tendering U.S. Holder not otherwise exempt from backup
withholding must provide its
12
taxpayer identification number ("TIN") and certify that such number is correct.
Accordingly, each tendering U.S. Holder should complete and sign the Substitute
Form W-9 included as part of the Letter of Transmittal, unless such Holder
otherwise establishes to the satisfaction of the Exchange Agent that such Holder
is not subject to backup withholding. U.S. Holders that have applied for a TIN,
or intend to apply for a TIN, must check the applicable box on the Substitute
Form W-9 and sign the applicable certification. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 (the
"Guidelines") for additional instructions.
Certain U.S. Holders (including, among others, all corporations) are
exempt from backup withholding. For a non-U.S. Holder to avoid backup
withholding, such holder must submit to the Exchange Agent a properly completed
IRS Form W-8BEN or W-8ECI, as applicable, signed under penalty of perjury,
attesting to the Holder's foreign status. Such forms are available from the
Exchange Agent and at WWW.IRS.GOV.
For these purposes, a "U.S. Holder" is any beneficial owner that for
U.S. federal income tax purposes is (i) a citizen or resident of the United
States, (ii) a corporation or partnership (or other entity taxed as a
corporation or partnership) created or organized under the laws of the United
States, any state thereof or the District of Columbia, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, or (iv) a trust that (A) is subject to the primary supervision of a U.S.
court and the control of one or more U.S. persons or (B) has validly elected to
be treated as a U.S. person for U.S. federal income tax purposes.
FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF A PORTION OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
5. WITHHOLDING ON CERTAIN FOREIGN HOLDERS. Under U.S. federal
income tax law, a non-U.S. Holder who tenders Old Notes and receives New Notes
in the exchange will be subject to a 30% withholding tax on certain payments
under the New Notes, including any Exchange Fee received by such Holder in the
exchange, unless the Exchange Agent determines that a reduced rate of
withholding applies pursuant to a tax treaty or that such payments are exempt
from withholding because such payments are effectively connected with the
non-U.S. Holder's conduct of a U.S. trade or business. To establish the
application of a reduced treaty rate, prior to payment, a non-U.S. Holder must
provide the Exchange Agent a properly completed and executed IRS Form W-8BEN. To
establish an exemption from withholding because payments on the New Notes are
effectively connected with the conduct of a U.S. trade or business, a non-U.S.
Holder must provide the Exchange Agent a properly completed and executed IRS
Form W-8ECI. The Exchange Agent will determine a non-U.S. Holder's eligibility
for a reduced rate of, or an exemption from, withholding based on these forms
unless facts and circumstances indicate that such reliance is not warranted. A
non-U.S. Holder that does not qualify for the benefits of a tax treaty and for
whom payments on the New Notes are not treated as effectively connected with a
trade or business should nevertheless provide an IRS Form W-8BEN to establish
its non-U.S. holder status in order to avoid backup withholding and withholding
on certain payments of interest on the New Notes.
For these purposes, a "non-U.S. Holder" is any beneficial owner that for
U.S. federal income tax purposes is not a U.S. Holder.
NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
APPLICATION OF U.S. FEDERAL INCOME TAX WITHHOLDING, INCLUDING ELIGIBILITY FOR A
REDUCED RATE OF WITHHOLDING OR A WITHHOLDING EXEMPTION.
13
6. TRANSFER TAXES. The Company will pay all transfer taxes., if
any, applicable to the transfer of Old Notes to it or its order pursuant to the
Offer. If, however, New Notes are to be registered or issued in the name of any
person other than the registered Holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the transfer of Old Notes to the Company or its order
pursuant to the Offer, the amount of any such transfer taxes (whether imposed on
the registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted herewith, no New Notes will be issued until such evidence is
received by the Exchange Agent.
7. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive or amend, in its discretion, in whole or in part, at any time prior to
5:00 P.M., New York City time, on the Expiration Date, satisfaction of any or
all conditions enumerated in the Offer to Exchange, which may result in an
extension of the period of time for which the Offer is kept open.
8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular
or contingent tenders will be accepted. All tendering Holders of Old Notes, by
execution of this Letter of Transmittal (or an Agent's Message in lieu thereof),
shall waive any right to receive notice of the acceptance of their Old Notes for
exchange.
The Company will determine, in its sole discretion, all questions as to
the form, validity, eligibility (including time of receipt) and acceptance for
exchange of any tender of Old Notes, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right, in its
sole discretion, to waive any defects or irregularities or conditions of the
Offer as to any particular Old Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any Holder who seeks to
tender Old Notes in the Offer). The interpretation of the terms and conditions
of the Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with the tender of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
9. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Old Notes,
fill in the principal amount of Old Notes which are tendered for exchange on the
form entitled "Description of Old Notes," as more filly described in the
footnotes thereto. In the case of a partial tender for exchange, a new
certificate for the remainder of the principal amount of the Old Notes, will be
sent to the Holders unless otherwise indicated in the appropriate box on this
Letter of Transmittal as promptly as practicable after the expiration or
termination of the Offer.
10. WITHDRAWAL OF TENDERS. Tenders of Old Notes may be withdrawn at
any time prior to 5:00 P.M., New York City time, on the Expiration Date. A valid
withdrawal of tendered Old Notes on or prior to the Expiration Date shall be
deemed a valid revocation of the tender of the Old Notes. Tenders of any Old
Notes will automatically be withdrawn if the Offer is terminated without any
such Old Notes being exchanged as provided in the Offer to Exchange. In the
event of termination of the Offer, the Old Notes tendered pursuant to such Offer
will be returned to the tendering Holder promptly.
14
For a withdrawal of a tender of Old Notes to be effective, a written
notice of withdrawal must be received by the Exchange Agent at the address set
forth above or, in the case of Eligible Institutions, at the facsimile number
above, prior to 5:00 P.M., New York City time, on the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having tendered the
Old Notes to be withdrawn (the "Depositor"), (ii) in the case of a tender by
book-entry transfer, specify the name and number of the account at DTC to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility, (iii) contain a statement that such Holder is withdrawing his
election to have such Old Notes exchanged, (iv) be signed by the Holder in the
same manner as the original signature on the Letter of Transmittal by which such
Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer to have the trustee with respect to the Old
Notes register the transfer of such Old Notes in the name of the person
withdrawing the tender, and (v) specify the principal amount of Old Notes to be
withdrawn, if not all of the Old Notes tendered by the Holder. All questions as
to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Offer and no New
Notes will be issued nor Exchange Fees paid with respect thereto unless the Old
Notes so withdrawn are validly retendered. Any Old Notes that have been tendered
for exchange but which are not exchanged for any reason will be credited into
the Exchange Agent's account at DTC pursuant to the book-entry transfer
procedures set forth in the section titled "The Offer to Exchange--Procedures
for Tendering Old Notes," in the Offer to Exchange, and such Old Notes will be
credited to the account specified herein maintained with DTC for the Old Notes
as soon as practicable after withdrawal, rejection of tender or termination of
the Offer. Properly withdrawn Old Notes may be retendered by following the
procedures described above at any time prior to 5:00 P.M., New York City time,
on the Expiration Date.
Any attempted withdrawal of previously tendered Old Notes other than in
accordance with the provisions described above and in the Offer to Exchange will
not constitute a valid withdrawal of such tender.
All questions as to form and validity (including time of receipt) of any
delivery or revocation of a tender will be determined by the Company, in its
sole discretion, which determination will be final and binding. None of the
Company, the Exchange Agent, the trustee or any other person will be under any
duty to give notification of any defect or irregularity in any delivery or
revocation of a tender or incur any liability for failure to give any such
notification.
11. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES. Any
tendering Holder whose Old Notes have been mutilated, lost, stolen or destroyed,
should contact the Exchange Agent at the address indicated herein for further
instructions.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating
to the procedure for tendering Old Notes and requests for assistance may be
directed to Georgeson Inc. (the "Information Agent") at the address and
telephone number set forth herein. Requests for additional copies of the Offer
to Exchange and this Letter of Transmittal, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the
Information Agent or from your broker, dealer, commercial bank, trust company or
other nominee.
15
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 4)
- --------------------------------------------------------------------------------
PAYER'S NAME: WELLS FARGO BANK, NATIONAL ASSOCIATION
- --------------------------------------------------------------------------------
Social Security
Number OR
PART 1 -- PLEASE PROVIDE YOUR TIN Employer
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY BY Identification
FORM W-9 SIGNING AND DATING BELOW. Number:
-----------------------------------------------------------
DEPARTMENT OF THE PART 2 -- CERTIFICATION -- PART 3 --
TREASURY Awaiting TIN [ ]
INTERNAL REVENUE
SERVICE
Under Penalties of Perjury, I certify
that:
(1) The number shown on this form is my
correct taxpayer identification number
(or I am waiting for a number to be
issued to me);
(2) I am not subject to backup
withholding because:
(a) I am exempt from backup
withholding;
(b) I have not been notified by the
Internal Revenue Service (the "IRS")
that I am subject to backup withholding
as a result of failure to report all
interest or dividends; or
(c) the IRS has notified me that I
am no longer subject to backup
withholding;
(3) I am a U.S. person (including U.S.
resident alien); and
(4) Any other information provided on
this form is true and correct.
-----------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION INSTRUCTIONS -- You must cross out item
TAXPAYER (2) in Part 2 if you have been notified by the IRS
IDENTIFICATION that you currently are subject to backup withholding
NUMBER (TIN) AND because of underreporting interest or dividends on
CERTIFICATION your tax return. If you have been notified by the
IRS that you are no longer subject to such
withholding, do not cross out item (2).
Signature:
-----------------------------------------------------------
Name:
-----------------------------------------------------------
(PLEASE PRINT)
-----------------------------------------------------------
Date:
-----------------------------------------------------------
Address:
-----------------------------------------------------------
City:
-----------------------------------------------------------
State:
-----------------------------------------------------------
Zip Code:
-----------------------------------------------------------
16
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECK THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center of Social Security Administration Office or (b)
I intend to mail or deliver an application soon. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, a portion
of all reportable payments made to me thereafter will be withheld until I
provide a number.
Signature: Date:
- --------------------------------------- ----------------------------------------
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
17
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER --
Social Security Numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer Identification Numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF:
- --------------------------------------------------------------------------------
1. An individual The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under state law
5. Sole proprietorship or The owner((3))
single-owner LLC
- --------------------------------------------------------------------------------
For this type of account: Give the EMPLOYER IDENTIFICATION
NUMBER of:
- --------------------------------------------------------------------------------
6. Sole proprietorship or single-owner The owner((3))
LLC
7. A valid trust, estate or pension The legal entity((4))
trust
8. Corporate or LLC electing The corporation
corporate status on Form 8832
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization
10. Partnership or multi-member LLC The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state
or local government, school
district, or prison) that receives
agricultural program payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name and you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number (if you have one). If you are a sole
proprietor, the IRS encourages you to use your social security number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
18
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or if you do not know your
number, obtain Form SS-5, Application for Social Security Card, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number. Section references in these guidelines refer to sections
under the Internal Revenue Code of 1986, as amended.
Payees specifically exempted from backup withholding include:
o An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section
403(b)(7), if the account satisfies the requirements of Section
401(f)(2).
o The United States, a state thereof, the District of Columbia or a
possession of the United States, or a political subdivision or agency or
instrumentality of any the foregoing.
o An international organization or any agency or instrumentality thereof.
o A foreign government or any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
o A corporation.
o A financial institution.
o A dealer in securities or commodities required to register in the United
States, the District of Colombia, or a possession of the United States.
o A real estate investment trust.
o A common trust fund operated by a bank under Section 584(a).
o An entity registered at all times during the tax year under the
Investment Company Act of 1940, as amended.
o A middleman known in the investment community as a nominee or custodian.
o A futures commission merchant registered with the Commodity Futures
Trading Commission.
o A foreign central bank of issue.
o A trust exempt from tax under Section 664 or a non-exempt trust
described in a Section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under Section
1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident alien partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an ESOP.
19
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
o Payments of tax exempt interest (including exempt-interest dividends
under Section 852).
o Payments described in Section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under Section 1451.
o Payments made by certain foreign organizations.
o Mortgage or student loan interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" IN PART 3 OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER.
CERTAIN PAYMENTS OTHER THAN INTEREST, DIVIDENDS, AND PATRONAGE DIVIDENDS, WHICH
ARE NOT SUBJECT TO INFORMATION REPORTING ARE ALSO NOT SUBJECT TO BACKUP
WITHHOLDING. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045, 6050A AND
6050N AND THEIR REGULATIONS.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or certain other income to give taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of tax returns. The IRS
may also provide this information to the Department of Justice for civil and
criminal litigation and to cities, states and the District of Columbia to carry
out their tax laws. The IRS may also disclose this information to other
countries under a tax treaty, or to Federal and state agencies to enforce
Federal nontax criminal laws and to combat terrorism. Payers must be given the
numbers whether or not recipients are required to file tax returns. Payers must
generally withhold a portion of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS. -- If the requester discloses or
uses taxpayer identification numbers in violation of federal law, the requester
may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
20
THE INFORMATION AGENT FOR THE OFFER IS:
Georgeson Inc.
17 State Street - 10th Floor
New York, NY 10004
Banks and Brokers Call: (212) 440-9800
or
All Others Call Toll Free: (866) 482-4943
Any questions regarding the Offer or requests for additional copies of the Offer
to Exchange or the Letter of Transmittal may be directed to the Information
Agent at the address and telephone number set forth above.
21
Exhibit-99.(A)(1)(III)
NOTICE OF GUARANTEED DELIVERY
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
FOR TENDER OF
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
PURSUANT TO ITS OFFER TO EXCHANGE
DESCRIBED IN THE OFFER TO EXCHANGE, DATED JULY 17, 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST
14, 2006, UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). TENDERS MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
THE EXCHANGE AGENT IS:
WELLS FARGO BANK, NATIONAL ASSOCIATION, THE EXCHANGE AGENT
WELLS FARGO BANK, NATIONAL ASSOCIATION
OR
CALL TOLL FREE: (800) 344-5128
BY REGISTERED AND BY OVERNIGHT COURIER
CERTIFIED MAIL OR REGULAR MAIL: BY HAND DELIVERY
Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A.
Corporate Trust Operations Corporate Trust Operations Corporate Trust Services
MAC N9303-121 MAC N9303-121 608 2nd Avenue South
P.O. Box 1517 6th & Marquette Avenue Northstar East Building -
12th Floor
Minneapolis, MN 55480 Minneapolis, MN 55479 Minneapolis, MN 55402
BY FACSIMILE:
(For Eligible Institutions Only)
(612) 667-6282
Attention: Bondholder Communications
Confirm by Receipt of Facsimile Only: (800) 344-5128
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE, OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
You must use this form to accept the offer (the "Offer") of Integra
LifeSciences Holdings Corporation (the "Company") made pursuant to the Offer
to Exchange, dated July 17, 2006 (the "Offer to Exchange"), if the procedure
for book-entry transfer cannot be completed on a timely basis or time will
not permit all required documents to reach Wells Fargo Bank, National
Association, as exchange agent for the Offer (the "Exchange Agent") prior to
5:00 P.M., New York City time, on August 14, 2006. This letter or such form
may be delivered or transmitted by facsimile transmission, mail or hand
delivery to the Exchange Agent as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender your 2 1/2% Contingent
Convertible Subordinated Notes Due 2008 (the "Old Notes") pursuant to the
Offer, a Letter of Transmittal (or manually signed facsimile thereof) or an
electronic confirmation
pursuant to The Depository Trust Company's Automatic Tender Offer Program
("ATOP") system, with any required signature guarantees and any other required
documents (including an agent's message, or an express acknowledgment,
confirming that you have received and agree to be bound by the Letter of
Transmittal and that the Letter of Transmittal may be enforced against you) must
also be received by the Exchange Agent prior to the Expiration Date (as defined
in the Offer to Exchange). Capitalized terms used but not defined herein are
defined in the Letter of Transmittal.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES.
IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN
"ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE
GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER OF
TRANSMITTAL.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Offer to Exchange and
the accompanying Letter of Transmittal the undersigned hereby tenders to the
Company the aggregate principal amount of Old Notes set forth below pursuant
to the guaranteed delivery procedure described in the section titled "The
Offer to Exchange--Guaranteed Delivery Procedures," in the Offer to Exchange.
By so tendering, the undersigned does hereby make, at and as of the date
hereof, the representations and warranties of a tendering Holder of Old Notes
set forth in the Letter of Transmittal.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the
undersigned and every obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, executors, successors,
assigns, trustees in bankruptcy and other legal representatives of the
undersigned.
2
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
CERTIFICATE NUMBERS OF PRINCIPAL AMOUNT OF OLD
(IF AVAILABLE) OLD NOTES NOTES TENDERED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
Name(s):
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- --------------------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and
Telephone Number:
---------------------------------------------------------------
Date:
----------------------------------------------------------------------
If Old Notes will be tendered by book-entry
transfer, check the trust company below:
[ ] The Depository Trust Company
Depository Account Number:
------------------------------------------------------
================================================================================
3
This Notice of Guaranteed Delivery must be signed by the Holder(s) of
Old Notes exactly as its (their) name(s) appear(s) on a security position
listing as the owner of the Old Notes, or by person(s) authorized to become
registered Holder(s) by endorsements and documents transmitted with this
Notice of Guaranteed Delivery. If signature is by an attorney in fact,
trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, such person must provide the
following information:
NAMES(S): CAPACITY: ADDRESS(ES):
- ------------------------- ------------------------ -----------------------
- ------------------------- ------------------------ -----------------------
- ------------------------- ------------------------ -----------------------
- ------------------------- ------------------------ -----------------------
- ------------------------- ------------------------ -----------------------
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
================================================================================
4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, or an "eligible
guarantor institution" (as such term is defined in Rule l7Ad-15 under the
Securities Exchange Act of 1934, as amended), hereby guarantees that, within
three New York Stock Exchange trading days after the date of execution of
this Notice of Guaranteed Delivery, a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof), the Old Notes,
in proper form for transfer, or a book-entry confirmation of transfer of such
Old Notes into the Exchange Agent's account at The Depository Trust Company,
including the agent's message instead of a Letter of Transmittal, as the case
may be, with any required signature guarantees and any other documents
required by the Letter of Transmittal, will be deposited by the undersigned
with the Exchange Agent.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND THE OLD NOTES TENDERED HEREBY, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE INSTEAD OF A LETTER OF TRANSMITTAL,
TO THE EXCHANGE AGENT WITHIN THE TIME PERIOD SET FORTH ABOVE AND THAT FAILURE
TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE UNDERSIGNED.
SIGN HERE
Name of Firm:
- --------------------------------------------------------------------------------
Authorized Signature:
- --------------------------------------------------------------------------------
Name (please type or print):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
================================================================================
5
Exhibit-99.(A)(1)(IV)
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
INVITES HOLDERS OF ITS
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
(CUSIP NOS. 457985AA7 AND 457985AB5)
TO EXCHANGE THEIR NOTES FOR
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST 14,
2006, UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Integra LifeSciences Holdings Corporation (the "Company") is offering,
upon and subject to the terms and conditions set forth in the Offer to Exchange,
dated July 17, 2006 (as amended or supplemented from time to time, the "Offer to
Exchange"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange: (i) $1,000 in principal amount of 2 1/2% Contingent
Convertible Subordinated Notes Due 2008 (the "New Notes"); and (ii) a one time
cash payment (an "Exchange Fee") equal to $2.50 for each $1,000 in principal
amount of our outstanding 2 1/2% Contingent Convertible Subordinated Notes due
2008 (the "Old Notes" and together with the New Notes, the "Notes") held by the
registered holders thereof (the "Holders"). The offer to exchange the Notes
(including the payment of the Exchange Fee) pursuant to the Offer to Exchange is
referred to herein as the "Offer." The Offer is subject to important conditions
as described in the Offer to Exchange.
We are requesting that you contact your clients for whom you hold Old
Notes regarding the Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. The Offer to Exchange, dated July 17, 2006;
2. The Letter of Transmittal (including the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9)
for your use and for the information of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Offer
if time will not permit all required documents to reach Wells Fargo
Bank, National Association (the "Exchange Agent") prior to the
Expiration Date or if the procedure for book-entry transfer cannot be
completed on a timely basis; and
4. A form of letter which may be sent to your clients for whose
account you hold Old Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
A substitute Form W-8 BEN, containing information for Non-U.S. holders
relating to United States federal income tax withholding, shall be made
available by the Company upon your request.
Your prompt action is requested. The Offer will expire at 5:00 P.M., New
York City time, on the Expiration Date. Old Notes tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date.
To participate in the Offer, a duly executed and properly completed
Letter of Transmittal (or manually signed facsimile thereof), or an electronic
confirmation pursuant to the Depository Trust Company's Automated Tender Offer
Program system, with any required signature guarantees and any other required
documents, should be sent to the Exchange Agent, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Exchange.
If a Holder of Old Notes desires to tender, but the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected by following the guaranteed delivery procedures described in the
section titled "The Offer to Exchange--Guaranteed Delivery Procedures," in the
Offer to Exchange.
The Company will, upon request, reimburse brokers, dealers, commercial'
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Offer to Exchange and the related documents
to the beneficial owners of Old Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Old Notes pursuant to the Offer, except as set
forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer, or requests for
additional copies of the enclosed materials, should be directed to Georgeson
Inc. at the address and phone number set forth below:
Georgeson Inc.
17 State Street - 10th Floor
New York, NY 10004
or
Banks and Brokers Call: (212) 440-9800
All Others Call Toll Free: (866) 482-4943
Very truly yours,
Integra LifeSciences Holdings Corporation
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
OFFER TO EXCHANGE OR THE LETTER OF TRANSMITTAL.
2
Exhibit-99.(A)(1)(V)
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
INVITES HOLDERS OF ITS
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
(CUSIP NOS. 457985AA7 AND 457985AB5)
TO EXCHANGE THEIR NOTES FOR
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST
14, 2006 UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). TENDERS MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
July 17, 2006
To Our Clients:
Enclosed for your consideration are an Offer to Exchange, dated July
17, 2006 (as amended or supplemented from time to time, the "Offer to
Exchange"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer by Integra LifeSciences Holdings
Corporation (the "Company") to exchange: (i) $1,000 in principal amount of
2 1/2% Contingent Convertible Subordinated Notes Due 2008 (the "New Notes"); and
(ii) a one time cash payment (an "Exchange Fee") equal to $2.50 for each
$1,000 in principal amount of our outstanding 2 1/2% Contingent Convertible
Subordinated Notes due 2008 (the "Old Notes" and together with the New Notes,
the "Notes") held by the registered holders thereof (the "Holders"). The
offer to exchange the Notes (including the payment of the Exchange Fee)
pursuant to the Offer to Exchange is referred to herein as the "Offer."
This material is being forwarded to you as the beneficial owner of the
Old Notes held by us for your account or benefit but not registered in your
name. A tender of such Old Notes may only be made by us as the registered
holder of record and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf any or all of the Old Notes held by us for your
account, pursuant to the terms and conditions set forth in the enclosed Offer
to Exchange and Letter of Transmittal, which we urge you to read carefully.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with
the provisions of the Offer.
Any Old Notes tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. New Notes will not be issuable in
exchange for Old Notes so withdrawn. Any permitted withdrawal of Old Notes
may not be rescinded, and any Old Notes properly withdrawn will afterwards be
deemed not validly tendered for purposes of the Offer. Withdrawn Old Notes
may, however, be re-tendered by again following one of the appropriate
procedures described in the Offer to Exchange and in the Letter of
Transmittal at any time before the Expiration Date.
Your attention is directed to the following:
1. The Offer is subject to certain conditions set forth in the
section titled "The Offer to Exchange--Conditions to the Offer," in the
Offer to Exchange.
2. The Offer is for any and all of the outstanding Old Notes.
3. If you desire to tender your Old Notes pursuant to the Offer,
we must receive your instructions in ample time to permit us to effect a
tender of Old Notes prior to the Expiration Date.
4. Any transfer taxes incident to the transfer of Old Notes from
the holder to the Company will be paid by the Company, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Old Notes held by us
for your account or benefit pursuant to the Offer, please so instruct us by
completing, executing and returning to us the instruction form included with
this letter. The accompanying Letter of Transmittal is furnished to you for
informational purposes only and may not be used directly by you to tender Old
Notes held by us and registered in our name for your account.
Very truly yours,
2
INSTRUCTIONS TO REGISTERED HOLDER FROM BENEFICIAL OWNER
WITH RESPECT TO THE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Offer made by Integra
LifeSciences Holdings Corporation (the "Company") with respect to the Old
Notes of the Company. This will instruct you to tender with respect to the
principal amount of Old Notes indicated below (or, if no number is indicated
below, all Old Notes) held by you for the account of the undersigned, upon
and subject to the terms and conditions set forth in the Offer to Exchange
and the related Letter of Transmittal.
2 1/2% Contingent Convertible Subordinated Notes Due 2008 (CUSIP Nos. 457985AA7
and 457985AB5)
$
- -----------------------------------------------
(Aggregate Amount of Old Notes to be tendered)*
Please do not tender any Old Notes held by you for any account.
Dated:
- --------------------------------------------------------------------------------
Signature(s)**:
- --------------------------------------------------------------------------------
Print name(s) here**:
- --------------------------------------------------------------------------------
Print Address(es):
- --------------------------------------------------------------------------------
Area Code and Telephone Number(s):
- --------------------------------------------------------------------------------
Area Code and Facsimile Number(s):
- --------------------------------------------------------------------------------
Tax Identification or Social Security Number(s):
- --------------------------------------------------------------------------------
My Account Number(s) with you:
- --------------------------------------------------------------------------------
None of the Old Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. After receipt of
instructions to tender, we will tender all of the Old Notes held by us for
your account unless we receive specific contrary instructions.
- ----------
* If no aggregate principal amount of the Notes is specified, the Holder
will be deemed to have tendered his or her Old Notes with respect to the
entire aggregate principal amount of Old Notes that such Holder holds.
** If Old Notes are beneficially owned by two or more beneficial owners, all
such owners must sign.
3
Exhibit-99.(A)(5)(I)
NEWS RELEASE
CONTACTS:
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
MAUREEN B. BELLANTONI MARIA PLATSIS
EXECUTIVE VICE PRESIDENT VICE PRESIDENT, CORPORATE DEVELOPMENT
AND CHIEF FINANCIAL OFFICER (609) 936-2333
(609) 936-6822 mplatsis@Integra-LS.com
maureen.bellantoni@Integra-LS.com
INTEGRA LIFESCIENCES ANNOUNCES EXCHANGE OFFER FOR ITS 2 1/2% CONTINGENT
CONVERTIBLE SUBORDINATED NOTES DUE 2008
Plainsboro, New Jersey, July 17, 2006 - Integra LifeSciences Holdings
Corporation (NASDAQ: IART) announced today that it has commenced an offer to
exchange up to $120 million principal amount of new notes with a "net share
settlement" mechanism for its currently outstanding 2 1/2% Contingent
Convertible Subordinated Notes due 2008. Holders who exchange their old notes
will receive new notes with the net share settlement feature and otherwise
substantially similar terms to the old notes plus an exchange fee of $2.50 per
$1,000 principal amount of their old notes validly tendered and accepted for
exchange. The offer is contingent upon the tender or exchange of 50% of the
principal amount of the old notes and upon the satisfaction of certain other
conditions.
The exchange offer will expire at 5:00 p.m., New York City time, on August 14,
2006, unless extended or earlier terminated by Integra. Old notes must be
tendered on or prior to the expiration of the offer, and tendered old notes may
be withdrawn at any time on or prior to the expiration of the offer. Validly
withdrawn old notes will be returned to the holder in accordance with the terms
of the offer. Following the expiration of the offer and subject to the terms of
the offer, Integra will accept all old notes validly tendered and not validly
withdrawn prior to the expiration of the offer and will issue the new notes in
exchange promptly thereafter.
Neither Integra's Board of Directors nor any other person makes any
recommendation as to whether holders of old notes should choose to tender and
exchange their old notes for new notes, and no one has been authorized to make
such a recommendation.
This press release is for informational purposes only and is not an offer to buy
or the solicitation of an offer to sell securities of Integra. The solicitation
of offers to exchange the outstanding 2 1/2% Contingent Convertible Subordinated
Notes is only being made pursuant to the exchange offer documents, including the
Offer to Exchange and the related Letter of Transmittal that Integra will be
distributing to its noteholders and filing with the Securities and Exchange
Commission. Noteholders and investors should read carefully the Offer to
Exchange and related materials when they are available because they contain
important information. Noteholders and investors may obtain a free copy (when
available) of the Offer to Exchange and other documents that will be filed by
Integra with the Securities and Exchange Commission at the Security and Exchange
Commission's website at www.sec.gov or from the information agent, Georgeson
Inc., at (212) 440-9800 (banks and brokers) or (866) 482-4943 (all others).
Noteholders are urged to carefully read these materials before making any
decision with respect to the exchange offer.
This announcement is neither an offer to sell nor a solicitation of an offer to
buy any securities and shall not constitute an offer, solicitation or sale in
any jurisdiction in which such offer, solicitation or sale is unlawful. The new
notes will not be registered under the Securities Act of 1933, as amended, or
any state securities laws, and unless so registered, may not be offered or sold
in the United States except pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended and applicable state
laws.
Integra LifeSciences Holdings Corporation is a diversified medical technology
company that develops, manufactures, and markets medical devices for use in a
variety of applications. The primary applications for our products are
neurosurgery, reconstructive surgery and general surgery. Integra is a leader in
applying the principles of biotechnology to medical devices that improve
patients' quality of life. Our corporate headquarters are in Plainsboro, New
Jersey, and we have manufacturing and research facilities located throughout the
world. We have approximately 1,600 employees. Please visit our website at
(http://www.Integra-LS.com).
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from predicted or expected results. Among other things,
Integra's ability to successfully complete the exchange offer on the above terms
could affect Integra's future financial results. In addition, the economic,
competitive, governmental, technological and other factors identified under the
heading "Factors That May Affect Our Future Performance" included in the
Business section of Integra's Annual Report on Form 10-K for the year ended
December 31, 2005 and information contained in subsequent filings with the
Securities and Exchange Commission could affect actual results.
SOURCE: INTEGRA LIFESCIENCES HOLDINGS CORPORATION