AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 2004
REGISTRATION NO. 333-106625
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
POST EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0317849
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
311 ENTERPRISE DRIVE
PLAINSBORO, NJ 08536
(609) 275-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------------------
JOHN B. HENNEMAN, III COPY TO:
EXECUTIVE VICE PRESIDENT,
CHIEF ADMINISTRATIVE OFFICER & SECRETARY MICHAEL D. LEVIN
311 ENTERPRISE DRIVE LATHAM & WATKINS LLP
PLAINSBORO, NJ 08536 233 S. WACKER DRIVE
(609) 275-0500 CHICAGO, ILLINOIS 60606
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (312) 876-7700
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
_______________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|_________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
EXPLANATORY NOTE
The purpose of this Post-Effective Amendment No. 2 to the Registration
Statement on Form S-3 of Integra LifeSciences Holdings Corporation (333-106625)
is to amend the table under the caption "Selling Securityholders" in the
prospectus to add the names of selling securityholders who have requested
inclusion in the prospectus since October 23, 2003, the date of Post Effective
Amendment No. 1 to the Registration Statement, and to update certain other
disclosure in the prospectus.
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission becomes effective. This prospectus
is not an offer to sell these securities nor does it seek to offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED AUGUST 3, 2004
PROSPECTUS
$120,000,000
LOGO
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
----------------------
In March and April 2003, we issued and sold $120,000,000 aggregate
principal amount of our 2 1/2% Contingent Convertible Subordinated Notes due
2008 in private offerings. This prospectus will be used by selling
securityholders to resell the notes and the common stock issuable upon
conversion of the notes. We will pay interest on the notes on March 15 and
September 15 of each year. The first interest payment was made on September 15,
2003. The notes will mature on March 15, 2008. We may not redeem the notes prior
to their maturity. Holders may require us to repurchase the notes upon a change
in control.
Holders may convert their notes at any time on or before the maturity date
into shares of our common stock at an initial conversion price of $34.1475 per
share if: (1) the price of our common stock reaches 110% of the conversion price
on the trading day prior to the conversion date, (2) specified corporate
transactions occur or (3) the trading price for the notes falls below certain
thresholds. The conversion price will be subject to adjustment for certain
events. The conversion price is equivalent to a conversion rate of approximately
29.2847 shares per $1,000 principal amount of notes. The notes are subordinated
to our future senior indebtedness. Our common stock is quoted on the Nasdaq
National Market under the symbol "IART." The last reported bid price of our
common stock on August 2, 2004 was $32.72 per share.
We will also pay contingent interest in arrears on the final interest
payment date if the closing price of our common stock on February 15, 2008 is
equal to or greater than 110% of the conversion price on February 15, 2008. The
notes will be subject to special United States federal income tax rules. For a
discussion of the special tax regulations governing contingent payment debt
securities, see "Material United States Federal Income Tax Considerations."
YOU SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2004
TABLE OF CONTENTS
PAGE
Where You Can Find More Information ........................................ ii
Incorporation of Certain Documents by Reference ............................ iii
About This Prospectus ...................................................... iii
Special Note Regarding Forward-Looking Statements .......................... iv
Prospectus Summary ......................................................... 1
Risk Factors ............................................................... 7
Use of Proceeds ............................................................ 12
Price Range of Common Stock ................................................ 13
Dividend Policy ............................................................ 13
Ratio of Earnings to Fixed Charges ......................................... 14
Description of Notes ....................................................... 15
Description of Capital Stock ............................................... 29
Material United States Federal Income Tax Considerations ................... 31
Selling Securityholders .................................................... 39
Plan of Distribution ....................................................... 41
Validity of the Securities ................................................. 43
Experts .................................................................... 43
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
materials that we have filed with the Securities and Exchange Commission at the
Securities and Exchange Commission public reference room located at 450 Fifth
Street, N. W., Room 1024, Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the public
reference room.
Our common stock is quoted on Nasdaq National Market under the symbol
"IART," and our Securities and Exchange Commission filings can also be read at
the following address:
NASDAQ Operations, 1735 K Street, N.W. Washington, D.C. 20006
Our Securities and Exchange Commission filings are also available to the
public on the Securities and Exchange Commission's Internet website at
http://www.sec.gov.
This prospectus is part of a registration statement on Form S-3 we have
filed with the SEC under the Securities Act of 1933, as amended. This prospectus
does not contain all the information set forth in the registration statement.
For further information about us and the notes, you should refer to the
registration statement. In this prospectus we summarize material provisions of
contracts and other documents to which we refer you. Since this prospectus may
not contain all the information that you may find important, you should review
the full text of these documents. We have filed these documents as exhibits to
our registration statement.
This prospectus incorporates important business and financial information
about us that is not included in or delivered with this prospectus. This
information is available without charge to you upon written or oral request. If
you would like a copy of any of this information, please submit your request to
Integra LifeSciences Holdings Corporation, 311 Enterprise Drive, Plainsboro, New
Jersey 08536, Attention: Investor/Public Relations, or call (609) 936-2239 and
ask to speak to someone in our investor/public relations department.
ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" certain documents, which
means that we can disclose important information to you by referring you to
those documents. We incorporate by reference into this prospectus the documents
listed below and any future filings we make with the Securities and Exchange
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, including any filings after the date of this
prospectus. The information incorporated by reference is an important part of
this prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded to the extent a statement
contained in (1) this prospectus or (2) any other subsequently filed document
that is incorporated by reference into this prospectus modifies or supersedes
such statement.
o Our Annual Report on Form 10-K for our fiscal year ended December
31, 2003.
o Our definitive proxy statement filed with the Securities and
Exchange Commission for our Annual Meeting of Stockholders held on
May 17, 2004.
o Our Current Reports on Form 8-K filed on March 8, 2004, July 28,
2004 and August 3, 2004.
o Our Quarterly Report on Form 10-Q for the three months ended March
31, 2004.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Integra LifeSciences Holdings Corporation
Investor/Public Relations
311 Enterprise Drive
Plainsboro, New Jersey 08536
Telephone: (609) 936-2239
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration or
continuous offering process. Under this shelf registration process, selling
securityholders may from time to time sell the securities described in this
prospectus in one or more offerings.
This prospectus provides you with a general description of the
securities that the selling securityholders may offer. A selling securityholder
may be required to provide you with a prospectus supplement containing specific
information about the selling securityholder and the terms of the securities
being offered. That prospectus supplement may include additional risk factors or
other special considerations applicable to those securities. A prospectus
supplement may also add, update or change information in this prospectus. If
there is any inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in that prospectus
supplement. You should read both this prospectus and any prospectus supplement
together with the additional information described under the heading "Where You
Can Find More Information."
iii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated or deemed to be incorporated
by reference herein contain statements concerning our future results and
performance and other matters that are "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act. These statements involve known and unknown risks, uncertainties,
and other factors that may cause our or our industry's results, levels of
activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
those listed under "Risk Factors" and elsewhere in this prospectus. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "intend," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," or "continue" or the negative of such terms
or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance, or achievements. Except as otherwise required by the
federal securities laws, we disclaim any obligations or undertaking to publicly
release any updates or revisions to any forward-looking statement contained in
this report to reflect any change in our expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
iv
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS THE INFORMATION CONTAINED ELSEWHERE OR
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. BECAUSE IT IS A SUMMARY, IT DOES
NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ
THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS,"
ALONG WITH THE DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. AS USED
IN THIS PROSPECTUS, "INTEGRA," THE "COMPANY," "WE," "OUR," "OURS" AND "US" REFER
TO INTEGRA LIFESCIENCES HOLDINGS CORPORATION, EXCEPT WHERE THE CONTEXT OTHERWISE
REQUIRES OR AS OTHERWISE INDICATED.
BUSINESS
For information regarding our business, please see our Annual Report
on Form 10-K for the fiscal year ended December 31, 2003 and our Quarterly
Report on From 10-Q for the three months ended March 31, 2004, each incorporated
by reference into this prospectus.
RECENT DEVELOPMENTS
On July 27, 2004, Integra reported financial results for the second
quarter ended June 30, 2004. We reported income of $7.5 million, or $0.24 per
diluted share.
CORPORATE INFORMATION
We were incorporated in Delaware in June 1989. Our principal executive
offices are located at 311 Enterprise Drive, Plainsboro, New Jersey 08536. Our
telephone number at this location is (609) 275-0500. Our web site is located at
www.integra-ls.com. The information contained on our web site is not a part of
this prospectus.
1
THE OFFERING
The following summary contains basic information about the notes and
is not intended to be complete. It may not contain all the information that is
important to you. For a more complete description of the notes, please refer to
the section of this document entitled "Description of Notes".
ISSUER Integra LifeSciences Holdings Corporation
NOTES OFFERED $120,000,000 aggregate principal amount of 2 1/2%
Contingent Convertible Subordinated Notes due 2008.
MATURITY DATE March 15, 2008.
INTEREST 2 1/2% per annum on the principal amount, payable
semi-annually on March 15 and September 15 of each
year, beginning September 15, 2003.
CONTINGENT INTEREST We will pay contingent interest on March 15, 2008,
if the common stock price on February 15, 2008 is
equal to or greater than 110% of the conversion
price per share of our common stock in effect on
February 15, 2008. The amount of contingent
interest payable per $1,000 principal amount of
Notes will equal the sum for each of the twelve
month periods ended March 15, 2006, March 15, 2007
and March 15, 2008 of the greater of (x) 0.50% per
annum of the principal amount of such notes and (y)
the aggregate amount of regular cash dividends paid
during such period on the number of shares of
common stock into which $1,000 principal amount of
notes is convertible.
SUBORDINATION The notes will be unsecured, subordinated
obligations of the Company. They will rank junior
in right of payment to all of our existing and
future senior indebtedness (as defined), and rank
equally with all of our future subordinated
indebtedness. The notes will also be effectively
subordinated to all existing and future
indebtedness and other liabilities of our
subsidiaries. As of March 31, 2004, (i) we had no
outstanding senior indebtedness, and (ii) our
subsidiaries had no outstanding indebtedness and
approximately $22.1 million of other liabilities,
including trade payables, but excluding
intercompany liabilities, as to which the notes are
effectively subordinated. Neither we nor our
subsidiaries will be restricted under the indenture
from incurring senior debt or other additional
indebtedness. See "Description of the
Notes--Subordination of Notes."
2
CONVERSION RIGHTS You will have the right, at your option, to convert
your notes, in whole or in part, into shares of our
common stock at any time prior to maturity at the
conversion price of $34.1475 per share, subject to
the adjustments described in the description of the
notes, if:
o the last sale price of our common stock on the
trading day prior to the conversion date was
110% or more of the conversion price on such
trading day;
o we distribute to holders of our common stock
certain rights entitling them to purchase common
stock at less than the last sale price of our
common stock on the day preceding the
declaration for such distribution;
o we distribute to holders of our common stock
assets, debt, securities or certain rights to
purchase our securities, which distribution has
a per share value as determined by our board of
directors exceeding 10% of the last sale price
of our common stock on the day preceding the
declaration of such distribution; or
o we become a party to a consolidation, merger or
sale of all or substantially all of our assets
or a change in control occurs pursuant to which
our common stock would be converted into cash,
stock or other property that is not a common
equity interest traded on a national securities
exchange or quoted on the Nasdaq National
Market.
You may also convert your notes into shares of our
common stock:
o at any time prior to March 15, 2006 after any 5
consecutive trading-day period in which the
average trading prices for the notes for that 5
trading-day period was less than 103% of the
average conversion value for the notes during
that period; and
o at any time on or after March 15, 2006 and prior
to maturity after any 5 consecutive trading-day
period in which the average trading prices for
the notes for that 5 trading-day period was less
than 97% of the average conversion value for the
notes during that period, however, you may not
convert your notes on or after March 15, 2006
if, at the time of the calculation, the closing
sale price of shares of our common stock is
between the then current conversion price on the
notes and 110% of the then current conversion
price on the notes.
For each $1,000 of aggregate principal amount of
notes converted, we will deliver approximately
29.2847 shares of our common stock. The conversion
price may be adjusted under certain circumstances.
Upon conversion, you will not receive any cash
payment representing accrued interest. However, if
you submit your notes for conversion between the
record date for the final interest payment and the
opening of business on the final interest payment
date, we will pay you the interest for the final
3
interest payment period (including the contingent
interest, if any). See "Description of the
Notes--Conversion of Notes."
OPTIONAL REDEMPTION We may not redeem the notes prior to their maturity
date.
SINKING FUND None.
PURCHASE UPON CHANGE IN
CONTROL AT YOUR OPTION You may require us to purchase all or part of your
notes at 100% of their principal amount, plus
accrued and unpaid interest, if any, to, but
excluding, the repurchase date in cash in certain
circumstances involving a change in control (as
defined).
See "Description of the Notes--Purchase of Notes at
Your Option Upon a Change in Control."
FORM AND DENOMINATION The notes were issued only in fully registered form
without interest coupons and in minimum
denominations of $1,000. The notes are represented
by one or more global notes, deposited with the
trustee as a custodian for The Depository Trust
Company, or DTC, and registered in the name of Cede
& Co., DTC's nominee. Beneficial interests in the
global notes are shown on, and any transfers will
be effective only through, records maintained by
DTC and its participants. See "Description of the
Notes--Book-Entry, Delivery and Form."
USE OF PROCEEDS We will not receive any of the proceeds from the
sale by the selling securityholders of the notes or
common stock issuable upon conversion of the notes.
EVENTS OF DEFAULT The following will be events of default under the
indenture for the notes:
o we fail to pay principal of or any premium on
any note when due, whether or not the payment is
prohibited by the subordination provisions of
the indenture;
o we fail to pay any interest, including
contingent or additional interest, on any note
when due and that default continues for 30 days,
whether or not the payment is prohibited by the
subordination provisions of the indenture;
o we fail to perform any other covenant in the
indenture and that failure continues for 60 days
after written notice to us by the trustee or the
holders of at least 25% in aggregate principal
amount of outstanding notes;
4
o we or any of our subsidaries fail to pay when
due, either at its maturity or upon acceleration
thereof, any indebtedness under any bonds,
debentures, notes or other evidences of
indebtedness for money borrowed in excess of
$5.0 million if the indebtedness is not
discharged, or the acceleration is not annulled,
within 30 days after written notice to us by the
trustee or the holders of at least 25% in
aggregate principal amount of the outstanding
notes;
o we fail to give notice to you of your right to
require us or any of our subsidiaries to
purchase your notes upon a change in control or
fail to make a payment to purchase notes
tendered following a change in control; and
o events of bankruptcy, insolvency or
reorganization with respect to us specified in
the indenture.
See "Description of the Notes--Events of Default."
TRADING The notes are currently trading in the Private
Offerings, Resales and Trading through Automatic
Linkages Market, commonly referred to as the PORTAL
market. Notes sold by means of this prospectus are
not expected to remain eligible for trading in the
PORTAL market but are expected to be traded over
the counter. We do not intend to apply for a
listing of the notes on any securities or any
automated dealer quotation system. Our common stock
is quoted on the Nasdaq National Market under the
symbol "IART."
GOVERNING LAW The indenture, the notes and the registration
rights agreement are governed by the laws of the
State of New York.
UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS Each holder will agree in the indenture, for United
States federal income tax purposes, to treat the
notes as "contingent payment debt instruments" and
to be bound by our application of the Treasury
regulations that govern contingent payment debt
instruments, including our determination that the
rate at which interest will be deemed to accrue for
federal income tax purposes will be 9.702%
compounded semi-annually, which is the rate
comparable to the rate at which we would borrow on
a non-contingent, non-convertible borrowing with
terms and conditions otherwise comparable to the
notes. Accordingly, each holder will be required to
accrue interest on a constant yield to maturity
basis at that rate (subject to certain
adjustments), with the result that a U.S. holder
(as defined below under "Material United States
Federal Income Tax Considerations") will recognize
taxable income significantly in excess of cash
received while the notes are outstanding. In
addition, a holder will recognize ordinary income
upon a sale, exchange, conversion, redemption or
repurchase of the notes at a gain. In computing
such gain, the
5
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. However, the
proper United States federal income tax treatment
of a holder of a note is uncertain in various
respects. If the agreed upon treatment was
successfully challenged by the Internal Revenue
Service, it might be determined that, among other
differences, a holder should have accrued interest
income at a lower rate, should not have recognized
income or gain upon the conversion, and should not
have recognized ordinary income upon a taxable
disposition of its notes.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING
THE TAX TREATMENT OF THE NOTES AND WHETHER A
PURCHASE OF THE NOTES IS ADVISABLE IN LIGHT OF THE
AGREED UPON TAX TREATMENT AND THE INVESTOR'S
PARTICULAR TAX SITUATION.
RISK FACTORS
In evaluating an investment in the notes, prospective investors should
carefully consider, along with the other information set forth or incorporated
by reference in this prospectus, the information set forth or incorporated by
reference in the section entitled "Risk Factors" for risk involved with an
investment in the notes.
6
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED AND INCORPORATED BY
REFERENCE BELOW BEFORE MAKING AN INVESTMENT DECISION. THE RISKS DESCRIBED AND
INCORPORATED BY REFERENCE BELOW ARE NOT THE ONLY ONES FACING OUR COMPANY.
ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL
MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.
OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS OR CASH FLOWS
COULD BE MATERIALLY AND ADVERSELY AFFECTED BY ANY OF THESE RISKS. THE TRADING
PRICE OF THE NOTES AND OUR COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS,
AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED AND INCORPORATED BY REFERENCE BELOW
AND DESCRIBED ELSEWHERE IN THIS PROSPECTUS.
RISKS RELATED TO OUR BUSINESS
For risks related to our business, please see our Annual Report on
Form 10-K for our fiscal year ended December 31, 2003 and our Quarterly Report
on Form 10-Q for the three months ended March 31, 2004, each incorporated by
reference into this prospectus.
RISKS RELATING TO AN INVESTMENT IN THE NOTES AND OUR COMMON STOCK
YOU SHOULD CONSIDER THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING THE NOTES
AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES.
We and each holder agree in the indenture to treat the notes as
indebtedness that is subject to U.S. Treasury regulations governing contingent
payment debt instruments. The following discussion assumes that the notes will
be so treated, though we cannot assure you that the Internal Revenue Service
will not assert that the notes should be treated differently. Under the
contingent payment debt regulations, a holder will be required to include
amounts in income, as original issue discount, in advance of cash such holder
receives on a note, and to accrue interest on a constant yield to maturity basis
at a rate comparable to the rate at which we would borrow in a noncontingent,
nonconvertible borrowing, even though the note will have a significantly lower
stated rate of interest. A holder will recognize taxable income significantly in
excess of cash received while the notes are outstanding. In addition, under the
indenture, a holder will recognize ordinary income, if any, upon a sale,
exchange, conversion or redemption of the notes at a gain. In computing such
gain, the amount realized by a holder will include, in the case of a conversion,
the amount of cash and the fair market value of shares received. Holders are
urged to consult their own tax advisors as to the U.S. federal, state and other
tax consequences of acquiring, owning and disposing of the notes and the shares
of common stock issuable upon conversion of the notes. For more information, see
"Material United States Federal Income Tax Considerations."
WE MAY BE UNABLE TO RAISE ADDITIONAL FINANCING NECESSARY TO CONDUCT OUR
BUSINESS, MAKE PAYMENTS WHEN DUE OR REFINANCE OUR DEBT.
We may need to raise additional funds in the future in order to
implement our business plan, to refinance our debt, to conduct research and
development, to fund marketing programs or to acquire complementary businesses,
technologies or services. Any required additional financing may be unavailable
on terms favorable to us, or at all. If we raise additional funds by issuing
equity securities, holders of common stock may experience significant dilution
of their ownership interest and these securities may have rights senior to those
of the holders of our common stock. If we cannot obtain additional financing
when required on acceptable terms, we may be unable to fund our expansion,
7
develop or enhance our products and services, take advantage of business
opportunities or respond to competitive pressure.
OUR SUBSIDIARIES ARE UNDER NO OBLIGATION TO DISTRIBUTE ANY OF THEIR AVAILABLE
CASH FLOW TO US, WHICH WE WILL NEED TO SERVICE THE NOTES.
The notes are obligations of Integra LifeSciences Holdings
Corporation, which is a holding company. As of March 31, 2004, we owned no
significant assets other than marketable securities, stock, equity and other
interests in our subsidiaries. Because we derive substantially all of our
revenues and operating cash flows from our operating subsidiaries and do not
have significant operations of our own, we are dependent upon the ability of our
subsidiaries to provide us with cash, in the form of dividends or intercompany
credits, loans, or, otherwise, to meet our debt service obligations, including
our obligations under the notes. This creates risks regarding our ability to
conduct future activities, repay any interest and principal which we might owe
on the notes or on other borrowings, pay cash dividends to our preferred and
common stock holders in the future and our ability, and the ability of our
subsidiaries, to respond to changing business and economic conditions and to get
new loans. Our subsidiaries will have no obligation to pay any amounts due on
the notes or to make any funds available to us for payment of the notes, whether
by dividends, loans distributions or other payments. In addition, creditors of
our subsidiaries (including trade creditors) will generally be entitled to
payment from the assets of our subsidiaries before those assets can be
distributed to us. As a result, the notes will effectively be subordinate to the
prior payment of all debts (including trade payables) and preferred stock of our
subsidiaries.
OUR INDEBTEDNESS AND INTEREST EXPENSE WILL LIMIT OUR CASH FLOW AND COULD
ADVERSELY AFFECT OUR OPERATIONS AND OUR ABILITY TO MAKE FULL PAYMENT ON YOUR
NOTES.
Due to the offering of the notes we have an increased level of debt
and interest expense. Our aggregate level of indebtedness and our debt service
requirements increased in connection with the offering of the notes.
Our indebtedness poses risks to our business, including the risks
that:
o we could use a substantial portion of our consolidated cash flow from
operations to pay principal and interest on our debt, thereby reducing
the funds available for working capital, capital expenditures,
acquisitions and other general corporate purposes, including expanding
our direct sales forces, making additional strategic acquisitions,
continuing to form strategic alliances for our private label products
and continuing to develop new and innovative medical products;
o insufficient cash flow from operations may force us to sell assets, or
seek additional capital, which we may be unable to do at all or on
terms favorable to us;
o our level of indebtedness may make us more vulnerable to economic or
industry downturns; and
o our debt service obligations increase our vulnerabilities to
competitive pressures, because many of our competitors are less
leveraged than we will be.
WE MAY BE UNABLE TO REPURCHASE THE NOTES UPON A CHANGE IN CONTROL.
Upon a change in control as defined in the indenture for the notes, you may
require us to repurchase all or a portion of your notes. If a change in control
were to occur, we may not have enough funds to pay the repurchase price for all
tendered notes. Our obligation to offer to repurchase the notes upon a change in
control would not necessarily afford you protection in the event of a highly
leveraged transaction, reorganization, merger or similar transaction because
those transactions could be structured in a manner whereby they would not be
considered a "change in control" for purposes of the indenture for the notes.
8
NO PUBLIC MARKET EXISTS FOR THE NOTES. THE FAILURE OF A MARKET TO DEVELOP COULD
AFFECT YOUR ABILITY TO, AND THE PRICE AT WHICH YOU MAY, RESELL YOUR NOTES.
The notes are a new issue of securities for which there is currently
no active trading market. We do not intend to list the notes on any national
securities exchange or automated quotation system. Accordingly, we cannot
predict whether an active trading market for the notes will develop or be
sustained. If an active trading market for the notes fails to develop or be
sustained, the trading price for the notes could fall.
Moreover, even if an active trading market for the notes were to
develop, the notes could trade at prices that may be lower than the initial
offering price of the notes. Future trading prices of the notes will depend on
many factors, including, among other things, prevailing interest rate, our
operating results, the price of our common stock and the market for similar
securities. Historically, the market for convertible debt has been subject to
disruptions that have caused volatility in prices. It is possible that the
market for the notes will be subject to disruptions which may have a negative
effect on the holders of the notes, regardless of our prospects or financial
performance.
YOUR RIGHT TO RECEIVE PAYMENT ON THE NOTES MAY BE JUNIOR TO OUR FUTURE
INDEBTEDNESS.
Your right to receive payments on the notes may be junior to all of
our future indebtedness. These notes rank behind all of our future indebtedness
(other than trade payables), except any future indebtedness that expressly
provides that it ranks equal with, or subordinated in right of payment to, the
notes. As a result, upon any distribution to our creditors in a bankruptcy,
liquidation or reorganization or similar proceeding relating to us or our
property, the holders of our senior debt, if any, will be entitled to be paid in
full and before any payment may be made with respect to the notes. In addition,
all payments on the notes will be blocked in the event of a payment default on
senior debt and may be blocked for up to 179 consecutive days in the event of
certain non-payment defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, holders of the notes will participate with trade
creditors and all other holders of our subordinated indebtedness in the assets
remaining after we have paid all of our senior indebtedness. However, because
the indenture requires that amounts otherwise payable to holders of the notes in
a bankruptcy or similar proceeding be paid to holders of senior indebtedness
instead, holders of the notes may receive less, ratably, than holders of trade
payables in any such proceeding. In any of these cases, we may not have
sufficient funds to pay all of our creditors and holders of notes may receive
less, ratably, than the holders of our senior indebtedness.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
Many of our stockholders will have an opportunity to sell their stock.
Also, many of our employees and directors may exercise their stock options in
order to sell the stock underlying their options in the market under a
registration statement we have filed with the Securities and Exchange
Commission. Sales of a substantial number of shares of our common stock in the
public market could depress the market price of the notes or our common stock,
or both, and impair our ability to raise capital through the sale of additional
equity securities. Furthermore, we have registered approximately 10,900,000
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, 2004, approximately 7,633,000 shares were held in reserve for
future issuance.
OUR REPORTED EARNINGS PER SHARE MAY BE MORE VOLATILE BECAUSE OF THE CONVERSION
CONTINGENCY PROVISION OF THE NOTES
Holders of the notes are entitled to convert the notes into our common
stock, among other circumstances, if the common stock price on the trading day
prior to the conversion date is more than
9
110% of the conversion price per share of our common stock on such trading day.
Until this contingency or another conversion contingency is met, the shares
underlying the notes are not included in the calculation of our basic or fully
diluted earnings per share. Should this contingency be met, fully diluted
earnings per share would be expected to decrease as a result of the inclusion of
the underlying shares in the fully diluted earnings per share calculation.
Volatility in our stock price could cause this condition to be met in one
quarter and not in a subsequent quarter, increasing the volatility of fully
diluted earnings per share.
OUR STOCK PRICE MAY CONTINUE TO BE HIGHLY VOLATILE, WHICH MAY SIGNIFICANTLY
AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
The stock market in general, and the stock prices of medical device
companies, biotechnology companies and other technology-based companies in
particular, have experienced significant volatility that often has been
unrelated to the operating performance of and beyond the control of any specific
public company. The market price of our common stock has fluctuated widely in
the past and is likely to continue to fluctuate in the future. Factors that may
have a significant impact on the market price of our common stock include:
o our actual financial results differing from guidance provided by
management;
o our actual financial results differing from that expected by
securities analysts;
o future announcements concerning us or our competitors, including the
announcement of acquisitions;
o changes in the prospects of our business partners or suppliers;
o developments regarding our patents or other proprietary rights or
those of our competitors;
o quality deficiencies in our products;
o competitive developments, including technological innovations by us or
our competitors;
o government regulation, including the FDA's review of our products and
developments;
o changes in recommendations of securities analysts and rumors that may
be circulated about us or our competitors;
o public perception of risks associated with our operations;
o conditions or trends in the medical device and biotechnology
industries;
o additions or departures of key personnel; and
o sales of our common stock.
Any of these factors could immediately, significantly and adversely
affect the trading price of the notes and our common stock and you could lose a
substantial amount of your investment.
WE HAVE NOT PAID ANY CASH DIVIDENDS ON OUR COMMON STOCK SINCE OUR FORMATION.
We have not paid any cash dividends on our common stock since our
formation. Any future determinations to pay cash dividends on the common stock
will be at the discretion of our board of directors and will depend upon our
results of operations and financial condition and other factors deemed relevant
by the board of directors. If we do not pay cash dividends in the future, you
may not receive a return on your investment in our common stock through the
payment of dividends and you may not realize a return on your investment even if
you sell your shares. As a result, you may not be able to resell your shares at
or above the price you paid for them.
10
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 28,753,000 were outstanding as of July 6, 2004. We are also
authorized to issue, without stockholder approval, securities convertible into
either common stock or preferred stock.
OUR MAJOR STOCKHOLDERS COULD MAKE DECISIONS ADVERSE TO YOUR INTERESTS.
Our directors and executive officers and affiliates of certain
directors own or control more than thirty percent of our outstanding voting
securities and generally have significant influence over the election of all
directors, the outcome of any corporate action requiring stockholder approval,
and other aspects of the business. The ability of the board of directors to
issue preferred stock, while providing flexibility in connection with financing,
acquisitions and other corporate purposes, could have the effect of
discouraging, deferring or preventing a change in control or an unsolicited
acquisition proposal, since the issuance of preferred stock could be used to
dilute the share ownership of a person or entity seeking to obtain control of
us. This significant influence could preclude any unsolicited acquisition of
Integra and consequently adversely affect the market price of the common stock.
Furthermore, we are subject to Section 203 of the Delaware General Corporation
Law, which could have the effect of delaying or preventing a change of control.
11
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the notes and the common stock issuable upon conversion of the notes
offered by this prospectus. We will not receive any proceeds. See "Selling
Securityholders" for a list of those persons or entities receiving proceeds from
the sale of the notes and the common stock issuable upon conversion of the
notes.
We received net proceeds of approximately $115.9 million from the
initial sale of the notes. We used a portion the proceeds from the sale of the
notes to purchase approximately $35.3 million of our common stock, and have the
remainder available for general corporate purposes, including development of new
products.
12
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on Nasdaq National Market under the symbol
"IART". The following table sets forth, for the periods indicated, the range of
high and low sale prices for our common stock. On August 2, 2004 the last
reported bid price for our common stock was $32.72 per share.
COMMON
STOCK PRICE
---------------------
HIGH LOW
------ ------
YEAR ENDED 2002
First Quarter $33.50 $24.61
Second Quarter 29.00 17.35
Third Quarter 21.80 14.30
Fourth Quarter 18.99 12.06
YEAR ENDED 2003
First Quarter $23.57 $15.80
Second Quarter 29.94
21.75
Third Quarter 30.65
23.39
Fourth Quarter 34.99
27.23
YEAR ENDING 2004
First Quarter $33.86 $29.00
Second Quarter $36.00 $29.76
Third Quarter (As of August 2, 2004.) $35.79 $30.02
The number of stockholders of record as of July 6, 2004 was approximately
500, which includes stockholders whose shares were held in nominee name. The
number of beneficial stockholders at that date was over 5,000.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock since our
formation. Any future determinations to pay cash dividends on the common stock
will be at the discretion of our board of directors and will depend upon our
results of operations and financial condition and other factors deemed relevant
by the board of directors.
13
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the Company's historical ratios of
earnings to fixed charges for the last five fiscal years and three months ended
March 31, 2004. We compute this ratio by dividing the sum of earnings before
income taxes and fixed charges by fixed charges. Fixed charges represent
interest, amortization of debt issuance costs and the interest factor of all
rentals, consisting of an appropriate interest factor on operating leases.
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31, 2004 2003 2002 2001 2000 1999
---------------- -------------------- ------ ------ ------ --------- --------
Ratio of 12.3 12.7 33.9 12.6 -- --
earnings to
fixed charges.
---------------- -------------------- ------ ------ ------ --------- --------
Deficiency of -- -- -- -- $10,847 $7,784
earnings to
cover fixed
charges
---------------- -------------------- ------ ------ ------ --------- --------
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DESCRIPTION OF NOTES
We issued the notes under an indenture dated as of March 31, 2003 (the
"indenture") between us and Wells Fargo Bank, National Association, as trustee.
The terms of the notes include those expressly set forth in the indenture and
those made part of the indenture by reference to the Trust Indenture Act of
1939, as amended.
The following summarizes some, but not all, provisions of the notes
and the indenture. We urge you to read these documents because they, and not
this description, define your rights as a holder of the notes. A copy of the
form of indenture and the form of certificate evidencing the notes is available
to you upon request to our address on page ii of this prospectus. In this
section of the prospectus entitled "Description of the Notes," when we refer to
"Integra," "we," "our," or "us," we are referring to Integra LifeSciences
Holdings Corporation and not any of its subsidiaries.
GENERAL
The notes are general unsecured obligations of Integra and are
subordinate in right of payment as described under "--Subordination of Notes."
The notes are convertible into common stock as described under "--Conversion of
Notes." The notes are limited to $120,000,000 aggregate principal amount. The
notes were issued only in denominations of $1,000 or in multiples of $1,000. The
notes will mature on March 15, 2008, unless earlier purchased by us at your
option upon a change in control. The indenture is subject to and governed by the
Trust Indenture Act of 1939.
Neither we nor our subsidiaries are restricted from paying dividends,
incurring debt, or issuing or repurchasing our securities under the indenture.
In addition, there are no financial covenants in the indenture. You are not
protected under the indenture in the event of a highly leveraged transaction or
a change in control of Integra, except to the extent described under "--Purchase
of Notes at Your Option Upon a Change in Control."
The notes will bear interest at the annual rate of 2 1/2% from the
date of issuance. Interest will be payable on March 15 and September 15 of each
year, beginning September 15, 2003, subject to limited exceptions if the notes
are converted or purchased prior to the relevant interest payment date. The
record dates for the payment of interest will be the March 1 and September 1
immediately preceding the relevant interest payment date. We may, at our option,
pay interest on the notes by check mailed to the holders. However, a holder with
an aggregate principal amount in excess of $1 million will be paid by wire
transfer in immediately available funds upon its election if the holder has
provided us with wire transfer instructions at least 10 business days prior to
the payment date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. We will not be required to make any payment
on the notes due on any day which is not a business day until the next
succeeding business day. The payment made on the next succeeding business day
will be treated as though it were paid on the original due date and no interest
will accrue on the payment for the additional period of time.
We will maintain an office in The City of New York where the notes may
be presented for registration, transfer, exchange or conversion. This office
will initially be an office or agency of the trustee. The notes were issued in
fully-registered book-entry form, without coupons, and are represented by one or
more global notes. There will be no service charge for any registration of
transfer or exchange of notes. We may, however, require holders to pay a sum
sufficient to cover any tax or other governmental charge payable in connection
with certain transfers or exchanges.
15
We will pay contingent interest to the holders of notes on March 15,
2008, if the common stock price per share of our common stock on February 15,
2008 (the "Measurement Date") is equal to or greater than 110% of the conversion
price per share in effect on the Measurement Date. The amount of contingent
interest payable per $1,000 principal amount of notes will equal the sum for
each of the twelve month periods ended March 15, 2006, March 15, 2007 and March
15, 2008 of the greater of (x) 0.50% per annum of the principal amount of such
notes and (y) the aggregate amount of regular cash dividends paid during such
twelve-month period on the number of shares of our common stock into which such
notes are convertible. We will pay contingent interest, if any, in the same
manner as we pay interest as described above under "-- General."
CONVERSION OF NOTES
You will have the right, at your option, to convert your notes, in
whole or in part, into shares of our common stock at any time prior to maturity,
unless previously purchased at your option upon a change in control, at an
initial conversion price of $34.1475 per share, subject to the adjustments
described below, if:
o the last sale price of our common stock on the trading day prior to
the conversion date was 110% or more of the then current conversion
price of the notes on such trading day;
o we distribute to holders of our common stock certain rights entitling
them to purchase common stock at less than the last sale price of our
common stock on the day preceding the declaration for such
distribution;
o we distribute to holders of our common stock assets, debt, securities
or certain rights to purchase our securities, which distribution has a
per share value as determined by our board of directors exceeding 10%
of the last sale price of our common stock on the day preceding the
declaration for such distribution; or
o we become a party to a consolidation, merger or sale of all or
substantially all of our assets or a change in control occurs pursuant
to which our common stock would be converted into cash, stock or other
property unless all of the consideration, excluding cash payments for
fractional shares and cash payments made pursuant to dissenters'
appraisal rights, in a merger or consolidation otherwise constituting
a change in control consists of shares of common stock, depository
receipts or other certificates representing common equity interests
traded on a national securities exchange or quoted on the Nasdaq
National Market, or will be so traded or quoted immediately following
such merger or consolidation, and as a result of such merger or
consolidation the notes become convertible solely into such common
stock, American Depositary Shares or other certificates representing
common equity interests.
In the case of the second and third bullet points above, we must
notify holders of notes at least 20 days prior to the ex-dividend date for such
distribution. Once we have given such notice, holders may surrender their notes
for conversion at any time until the earlier of the close of business on the
business day prior to the ex-dividend date or our announcement that such
distribution will not take place. This provision shall not apply if the holder
of a note otherwise participates in the distribution without conversion.
You also may convert your notes into shares of our common stock:
o at any time prior to March 15, 2006 after any 5 consecutive
trading-day period in which the average trading prices for the notes
for that 5 trading-day period was less than 103% of the average
conversion value for the notes during that period; and
o at any time on or after March 15, 2006 and prior to maturity after any
5 consecutive trading-day period in which the average trading prices
for the notes for that 5 trading-day period was less than 97% of the
average conversion value for the notes during that period, however,
you may not convert your notes on or after March 15, 2006 pursuant to
this clause if, at the time of the
16
calculation, the closing sale price of shares of our common stock is
between the then current conversion price on the notes and 110% of the
then current conversion price of the notes.
We define conversion value in the indenture to be equal to the product
of the closing sale price of our shares of common stock on a given day
multiplied by the then current conversion rate, which is the number of shares of
common stock into which each note is convertible.
The initial conversion price of $34.1475 is equivalent to a conversion
rate of approximately 29.2847 shares per $1,000 principal amount of notes.
Except as described below, we will not make any payment or other
adjustment for accrued interest or dividends on any common stock issued upon
conversion of the notes. If you submit your notes for conversion between a
record date and the opening of business on the next interest payment date, you
must pay funds equal to the interest payable on the principal amount being
converted unless a default exists at the time of conversion. As a result of the
foregoing provisions, if you surrender your notes for conversion on a date that
is not an interest payment date, you will not receive any interest for the
period from the interest payment date next preceding the date of conversion or
for any later period. However, if you submit your notes for conversion between
the record date for the final interest payment and the opening of business on
the final interest payment date, you will not be required to pay funds equal to
the interest, and contingent interest, if any, payable on the converted
principal amount, and consequently, you will be able to retain the interest
(including the contingent interest, if any) you receive for the final interest
period.
We will not issue fractional shares of common stock upon conversion of
notes. Instead, we will pay cash for the fractional amount based upon the
closing sale price of the common stock on the last trading day prior to the date
of conversion. If you have submitted your notes for purchase upon a change in
control, you may only convert your notes if you withdraw your election in
accordance with the indenture.
The conversion price will be adjusted (without duplication) upon the
occurrence of:
(1) the issuance of shares of our common stock as a dividend or
distribution on our common stock;
(2) the subdivision, combination or reclassification of our outstanding
common stock;
(3) the issuance to all or substantially all holders of our common stock
of rights or warrants entitling them for a period of not more than 60
days to subscribe for or purchase our common stock, or securities
convertible into our common stock, at a price per share or a
conversion price per share less than the then current market price per
share, provided that the conversion price will be readjusted to the
extent that such rights or warrants are not exercised prior to their
expiration;
(4) the distribution to all or substantially all holders of our common
stock of shares of our capital stock, evidences of indebtedness or
other non-cash assets, or rights or warrants, excluding:
o dividends, distributions and rights or warrants referred to in
clause (1) or (3) above;
o dividends or distributions exclusively in cash not referred to
below; and
o distribution of rights to all holders of common stock pursuant to
an adoption of a stockholder rights plan;
(5) the dividend or distribution to all or substantially all holders of
our common stock of all-cash distributions in an aggregate amount that
together with (A) any cash and the fair market value of any other
consideration payable in respect of any tender or exchange offer by us
or any of our subsidiaries for our common stock consummated within the
preceding 12 months not triggering a conversion price adjustment and
(B) all other all-cash distributions to all or substantially all
holders of our common stock made within the preceding 12 months not
triggering a conversion price adjustment, exceeds an amount equal to
5% of our market capitalization on the business day immediately
preceding the day on which we declare such distribution, the
calculation of our
17
market capitalization being the product of the then current market
price of our common stock multiplied by the number of shares of our
common stock then outstanding; and
(6) the purchase of our common stock pursuant to a tender or exchange
offer made by us or any of our subsidiaries to the extent that the
same involves aggregate consideration that together with (A) any cash
and the fair market value of any other consideration payable in
respect of any tender or exchange offer by us or any of our
subsidiaries for our common stock consummated within the preceding 12
months not triggering a conversion price adjustment and (B) the amount
of any all-cash distributions to all or substantially all holders of
our common stock made within the preceding 12 months not triggering a
conversion price adjustment, exceeds an amount equal to 5% of our
market capitalization on the expiration date of such tender or
exchange offer.
If we implement a rights plan, we will be required under the indenture
to provide that the holders of notes will receive the rights upon conversion of
the notes, whether or not these rights were separated from the common stock
prior to conversion, subject to certain limited exceptions.
In the event of:
o any reclassification of our common stock; or
o a consolidation, merger or combination involving us; or
o a sale or conveyance to another person of our property and assets as
an entirety or substantially as an entirety,
in which holders of our outstanding common stock would be entitled to receive
stock, other securities, other property, assets or cash for their common stock,
holders of notes will generally be entitled to convert their notes into the same
type of consideration received by common stockholders immediately prior to one
of these types of events. This calculation will be based on the assumption that
the holder of common stock failed to exercise any rights of election that the
holder may have to select a particular type of consideration.
You may, in some circumstances, be deemed to have received a
distribution or dividend subject to United States federal income tax as a result
of an adjustment or the nonoccurrence of an adjustment to the conversion price.
We are permitted to reduce the conversion price of the notes by any
amount for a period of at least 20 days if our board of directors determines
that such reduction would be in our best interest. We are required to give at
least 15 days' prior notice of any reduction in the conversion price. We may
also reduce the conversion price to avoid or diminish income tax to holders of
our common stock in connection with a dividend or distribution of stock or
similar event.
No adjustment in the conversion price will be required unless it would
result in a change in the conversion price of at least one percent. Any
adjustment not made will be taken into account in subsequent adjustments. Except
as stated above, we will not adjust the conversion price for the issuance of our
common stock or any securities convertible into or exchangeable for our common
stock or the right to purchase our common stock or such convertible or
exchangeable securities.
SUBORDINATION OF NOTES
The payment of the principal of, premium, if any, and interest on the
notes is subordinated to the prior payment in full, in cash or other payment
satisfactory to the holders of senior indebtedness, of all existing and future
senior indebtedness. If we dissolve, wind up, liquidate or reorganize, or if we
are the subject of any bankruptcy, insolvency, receivership or similar
proceedings, we will pay the holders of senior indebtedness in full in cash or
other payment satisfactory to the holders of senior indebtedness before we pay
the holders of the notes. If the notes are accelerated because of an event of
default we must pay the holders of senior indebtedness in full all amounts due
and owing thereunder before we pay the
18
note holders. The indenture will require that we must promptly notify holders of
senior indebtedness if payment of the notes is accelerated because of an event
of default under the indenture.
We may not make any payment on the notes or purchase or otherwise
acquire the notes if:
o a default in the payment of any designated senior indebtedness occurs
and is continuing beyond any applicable period of grace, or
o any other default of designated senior indebtedness occurs and is
continuing that permits holders of the designated senior indebtedness
to accelerate its maturity and the trustee receives a payment blockage
notice from a person permitted to give such notice under the
indenture.
We are required to resume payments on the notes:
o in case of a payment default, upon the date on which such default is
cured or waived or ceases to exist, and
o in case of a nonpayment default, upon the earlier of the date on which
such nonpayment default is cured or waived or ceases to exist or 179
days after the date on which the payment blockage notice is received.
No new period of payment blockage based on a nonpayment default may be
commenced for a default unless:
o 365 consecutive days have elapsed since the effectiveness of the
immediately prior payment blockage notice, and
o all scheduled payments on the notes that have come due have been paid
in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any payment blockage notice shall be the basis for a subsequent
payment blockage notice. As a result of these subordination provisions, in the
event of our bankruptcy, dissolution or reorganization, holders of senior
indebtedness may receive more, ratably, and holders of the notes may receive
less, ratably, than our other creditors. These subordination provisions will not
prevent the occurrence of any event of default under the indenture. If either
the trustee or any holder of notes receives any payment or distribution of our
assets in contravention of these subordination provisions before all senior
indebtedness is paid in full, then such payment or distribution will be held by
the recipient in trust for the benefit of holders of senior indebtedness to the
extent necessary to make payment in full of all senior indebtedness remaining
unpaid.
Substantially all of our operations are conducted through
subsidiaries. As a result, our cash flow and our ability to service our debt,
including the notes, depend upon the earnings of our subsidiaries. In addition,
we are dependent on the distribution of earnings, loans or other payments by our
subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our
subsidiaries have no obligation to pay any amounts due on the notes or to
provide us with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. In addition, any payment of dividends,
distributions, loans or advances by our subsidiaries will also be contingent
upon our subsidiaries' earnings and could be subject to contractual or statutory
restrictions.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, will be structurally subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us.
As of March 31, 2004 (i) we had no senior indebtedness outstanding and
(ii) our subsidiaries had no outstanding indebtedness and approximately $22.1
million of other liabilities (including trade payables, but excluding
intercompany liabilities) to which the notes are effectively subordinated.
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Neither we nor our subsidiaries are limited from incurring senior
indebtedness or additional debt under the indenture. If we incur additional
debt, our ability to pay our obligations on the notes could be affected. We
expect from time to time to incur additional indebtedness and other liabilities.
We are obligated to pay reasonable compensation to the trustee. We
will indemnify the trustee against any losses, liabilities or expenses incurred
by it in connection with its duties. The trustee's claims for such payments will
be senior to the claims of the note holders.
"designated senior indebtedness" means any senior indebtedness in which the
instrument creating or evidencing the indebtedness, or any related agreements or
documents to which we are a party, expressly provides that such indebtedness is
"designated senior indebtedness" for purposes of the indenture (provided that
the instrument, agreement or other document may place limitations and conditions
on the right of the senior indebtedness to exercise the rights of designated
senior indebtedness).
"indebtedness" means:
(1) all of our indebtedness, obligations and other liabilities, contingent
or otherwise, (A) for borrowed money, including overdrafts, foreign
exchange contracts, currency exchange agreements, interest rate
protection agreements, and any loans or advances from banks, whether
or not evidenced by notes or similar instruments, or (B) evidenced by
credit or loan, agreements, bonds, debentures, notes or similar
instruments, whether or not the recourse of the lender is to the whole
of our assets or to only a portion thereof, other than any account
payable or other accrued current liability or obligation incurred in
the ordinary course of business in connection with the obtaining of
materials or services;
(2) all of our reimbursement obligations and other liabilities, contingent
or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances;
(3) all of our obligations and liabilities, contingent or otherwise, in
respect of leases required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on our balance sheet;
(4) all of our obligations and other liabilities, contingent or otherwise,
under any lease or related document, including a purchase agreement,
conditional sale or other title retention agreement, in connection
with the lease of real property or improvements thereon (or any
personal property included as part of any such lease) which provides
that we are contractually obligated to purchase or cause a third party
to purchase the leased property or pay an agreed upon residual value
of the leased property, including our obligations under such lease or
related document to purchase or cause a third party to purchase such
leased property or pay an agreed upon residual value of the leased
property to the lessor (whether or not such lease transaction is
characterized as an operating lease or a capitalized lease in
accordance with generally accepted accounting principles);
(5) all of our obligations, contingent or otherwise, with respect to an
interest rate or other swap, cap, floor or collar agreement or hedge
agreement, forward contract or other similar instrument or agreement
or foreign currency hedge, exchange, purchase or similar instrument or
agreement;
(6) all of our direct or indirect guaranties or similar agreement by us in
respect of, and all of our obligations or liabilities to purchase or
otherwise acquire or otherwise assure a creditor against loss in
respect of, indebtedness, obligations or liabilities of another person
of the kinds described in clauses (1) through (5); and
(7) any and all deferrals, renewals, extensions, refinancings and
refundings of, or amendments, modifications or supplements to, any
indebtedness, obligation or liability of the kinds described in
clauses (1) through (6).
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Indebtedness shall not include obligations of any person (A) arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business, provided that such obligations are extinguished
within two business days of their incurrence, (B) resulting from the endorsement
of negotiable instruments for collection in the ordinary course of business and
consistent with past business practices and (C)stand-by letters of credit to the
extent collaterallized by cash or cash equivalents.
"senior indebtedness" means the principal of, premium, if any,
interest, including any interest accruing after the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowed as a claim in the proceeding, and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, our indebtedness whether secured or unsecured,
absolute or contingent, due or to become due, outstanding on the date of the
indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by us, including all deferrals, renewals, extensions or refundings
of, or amendments, modifications or supplements to, the foregoing. Senior
indebtedness does not include:
(1) any indebtedness or obligation whose terms expressly provide that such
indebtedness or obligation shall not be senior in right of payment to
the notes or expressly provides that such indebtedness is on the same
basis or junior to the notes; and
(2) the notes.
REDEMPTION BY INTEGRA
Except as set forth below under "-- Purchase of Notes at Your Option
upon a Change in Control," we are not required to make mandatory redemption of,
or sinking payments with respect to, the notes.
PURCHASE OF NOTES AT YOUR OPTION UPON A CHANGE IN CONTROL
If a change in control (as defined below) occurs, you will have the
right to require us to purchase in cash your notes 30 business days after the
occurrence of such change in control at a purchase price equal to 100% of the
principal amount of the notes together with accrued and unpaid interest to, but
excluding, the purchase date. Notes submitted for purchase must be in integral
multiples of $1,000 principal amount.
We will mail to the trustee and to each holder a written notice of the
change in control within 10 business days after the occurrence of such change in
control. This notice shall state certain specified information, including:
o information about and the terms and conditions of the change in
control;
o information about the holders' right to convert the notes;
o the holders' right to require us to purchase the notes;
o the procedures required for exercise of the purchase option upon the
change in control; and
o the name and address of the paying and conversion agents.
You must deliver written notice of your exercise of this purchase
right to the paying agent at any time prior to the close of business on the
second business day prior to the change in control purchase date. The written
notice must specify the notes for which the purchase right is being exercised.
If you wish to withdraw this election, you must provide a written notice of
withdrawal to the paying agent at any time prior to the close of business on the
second business day prior to the change in control purchase date.
A change in control will be deemed to have occurred if either of the
following occurs:
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o any person acquires, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions,
shares of our capital stock entitling the person to exercise 50% or
more of the total voting power of all shares of our capital stock that
is entitled to vote generally in elections of directors, other than an
acquisition by us, any of our subsidiaries or any of our employee
benefit plans;
o we merge or consolidate with or into any other person, any merger of
another person into us or we convey, sell, transfer or lease all or
substantially all of our assets to another person other than to one or
more of our wholly-owned subsidiaries, other than any such transaction
pursuant to which the holders of 50% or more of the total voting power
of all shares of our capital stock entitled to vote generally in
elections of directors immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving
corporation immediately after such transaction; or
o first day on which a majority of our board of directors are not
continuing directors.
However, a change in control will not be deemed to have occurred if (i)
at least 90% of the consideration, excluding cash payments for fractional shares
and cash payments made pursuant to dissenters' appraisal rights, in a merger or
consolidation otherwise constituting a change in control above consists of
shares of common stock, depository receipts or other certificates representing
common equity interests traded on a national securities exchange or quoted on
the Nasdaq National Market, or will be so traded or quoted immediately following
such merger or consolidation, and as a result of such merger or consolidation
the notes become convertible solely into such common stock, depository receipts
or other certificates representing common equity interests; or (ii) the market
price per share of our common stock for any five trading days within (a) the
period of 10 consecutive trading days ending immediately after the later of the
change in control or the public announcement of the change in control, in the
case of the change in control under the first bullet point above; or (b) the
period of 10 consecutive trading days ending immediately before the change of
control, in the case of a change in control under the second or third bullet
point above, equals or exceeds 110% of the conversion price of the notes in
effect on each such trading day.
For purposes of this change in control definition, "person" includes
any syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act.
"continuing directors" means, as of any date of determination, any
member of the board of directors of Integra who:
o was a member of the board of directors on the date of the indenture;
or
o was nominated for election or elected to the board of directors with
the approval of a majority of the continuing directors who were
members of the board at the time of the new director's nomination or
election.
The term "all or substantially all" as used in the definition of
change in control will likely be interpreted under applicable state law and will
be dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting this phrase. As a result, we cannot assure you how a
court would interpret this phrase under applicable law if you elect to exercise
your rights following the occurrence of a transaction which you believe
constitutes a transfer of "all or substantially all" of our assets.
We will under the indenture:
o comply with the provisions of Rule 13e-4 and Rule 14e-1, if
applicable, under the Exchange Act;
o file a Schedule TO or any successor or similar schedule, if required,
under the Exchange Act; and
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o otherwise comply with all federal and state securities laws in
connection with any offer by us to purchase the notes upon a change in
control.
This change in control purchase feature may make more difficult or
discourage a takeover of us and the removal of incumbent management. We are not,
however, aware of any specific effort to accumulate shares of our common stock
or to obtain control of us by means of a merger, tender offer, solicitation or
otherwise. In addition, the change in control purchase feature is not part of a
plan by management to adopt a series of anti-takeover provisions. Instead, the
change in control purchase feature is a result of negotiations between us and
the initial purchasers.
We could, in the future, enter into certain transactions, including
recapitalizations, that would not constitute a change in control but would
increase the amount of debt, including senior indebtedness, outstanding or
otherwise adversely affect a holder. Neither we nor our subsidiaries are
prohibited from incurring debt, including senior indebtedness, under the
indenture. The incurrence of significant amounts of additional debt could
adversely affect our ability to service our debt, including the notes.
Certain of our debt agreements may prohibit our repurchase of the
notes and provide that a change in control constitutes an event of default.
We may not purchase any note at any time when the subordination
provisions of the indenture otherwise would prohibit us from making such
repurchase. If we fail to repurchase the notes when required, this failure will
constitute an event of default under the indenture whether or not repurchase is
permitted by the subordination provisions of the indenture.
If a change in control were to occur and we did not elect, or were
unable to elect, to pay the purchase price for the notes in common stock or
applicable securities, we may not have sufficient funds to pay the change in
control purchase price for the notes tendered by holders. In addition, we may in
the future incur debt that has similar change in control provisions permitting
holders of that debt to accelerate or require us to repurchase that debt upon
the occurrence of events similar to a change in control.
EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
indenture:
(1) we fail to pay principal or premium, if any, on any note when due,
whether or not prohibited by the subordination provisions of the
indenture;
(2) we fail to pay any interest, including any contingent or additional
interest, if any, on any note when due if such failure continues for
30 days, whether or not prohibited by the subordination provisions of
the indenture;
(3) we fail to perform any other covenant required of us in the indenture
if such failure continues for 60 days after notice is given in
accordance with the indenture;
(4) any indebtedness for money borrowed by us or one of our subsidiaries
(all or substantially all of the outstanding voting securities of
which are owned, directly or indirectly, by us) in an outstanding
principal amount in excess of $5.0 million is not paid at final
maturity or upon acceleration and such indebtedness is not discharged,
or such default in payment or acceleration is not cured or rescinded
within 30 days after written notice as provided in the indenture;
(5) our failure to issue common stock upon conversion of notes by a holder
in accordance with the provisions set forth in the indenture;
(6) we fail to give notice to you of your right to require us to purchase
your notes upon a change in control or fail to make a payment to
purchase notes tendered following a change of control; and
(7) certain events in bankruptcy, insolvency or reorganization involving
us or any of our subsidiaries.
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If an event of default, other than an event of default described in
clause (7) above with respect to us, occurs and is continuing, either the
trustee or the holders of at least 25% in aggregate principal amount of the
outstanding notes may declare the principal amount of the notes to be due and
payable immediately. If an event of default described in clause (7) above occurs
with respect to us, the principal amount of the notes will automatically become
immediately due and payable. Any payment by us on the notes following any
acceleration will be subject to the subordination provisions described above.
Subject to the trustee's duties in the case of an event of default,
the trustee will not be obligated to exercise any of its rights or powers at the
request of the holders, unless the holders have offered to the trustee
reasonable indemnity. Subject to the indenture, applicable law and the trustee's
indemnification, the holders of a majority in aggregate principal amount of the
outstanding notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee with respect to the notes.
No holder will have any right to institute any proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture unless:
o the holder has previously given the trustee written notice of a
continuing event of default;
o the holders of at least 25% in aggregate principal amount of the notes
then outstanding have made a written request and have offered
reasonable indemnity to the trustee to institute such proceeding as
trustee; and
o the trustee has failed to institute such proceeding within 60 days
after such notice, request and offer, and has not received from the
holders of a majority in aggregate principal amount of the notes then
outstanding a direction inconsistent with such request within 60 days
after such notice, request and offer.
However, the above limitations do not apply to a suit instituted by a
holder for the enforcement of payment of the principal of or any premium or
interest on any note on or after the applicable due date or the right to convert
the note in accordance with the indenture.
Generally, the holders of not less than a majority of the aggregate
principal amount of outstanding notes may waive any default or event of default
unless:
o we fail to pay principal, premium or interest on any note when due;
o we fail to convert any note into common stock; or
o we fail to comply with any of the provisions of the indenture that
would require the consent of the holder of each outstanding note
affected.
We are required to furnish to the trustee, on an annual basis, a
statement by certain of our officers as to whether or not Integra, to the
officer's knowledge, is in default in the performance or observance of any of
the terms, provisions and conditions of the indenture, specifying any known
defaults.
MODIFICATION AND WAIVER
We and the trustee may amend or supplement the indenture or the notes
with the consent of the holders of a majority in aggregate principal amount of
the outstanding notes. In addition, the holders of a majority in aggregate
principal amount of the outstanding notes may waive our compliance in any
instance with any provision of the indenture without notice to the note holders.
However, no amendment, supplement or waiver may be made without the consent of
the holder of each outstanding note if such amendment, supplement or waiver
would:
o change the stated maturity of the principal of, or time or manner of
payment of interest (including contingent interest, if any) on, any
note;
o reduce the principal amount of or any premium or interest on any note;
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o reduce the amount of principal payable upon acceleration of the
maturity of any note;
o change the place or currency of payment of principal of, or any
premium or interest on, any note;
o impair the right to institute suit for the enforcement of any payment
on, or with respect to, any note;
o modify the provisions with respect to the purchase right of the
holders upon a change in control in a manner adverse to holders;
o modify the subordination provisions in a manner adverse to the holders
of notes;
o adversely affect the right of holders to convert notes other than as
provided in the indenture;
o reduce the percentage in principal amount of outstanding notes
required for modification or amendment of the indenture;
o reduce the percentage in principal amount of outstanding notes
necessary for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults; or
o modify provisions with respect to modification and waiver (including
waiver of events of default), except to increase the percentage
required for modification or waiver or to provide for consent of each
affected note holder.
We and the trustee may amend or supplement the indenture or the notes
without notice to, or the consent of, the note holders to, among other things,
cure any ambiguity, defect or inconsistency or make any other change that does
not adversely affect the rights of any note holder.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any person in a transaction
in which we are not the surviving person or convey, transfer, sell or lease our
properties and assets substantially as an entirety to any successor person,
other than to one or more of our subsidiaries, unless:
o the successor person, if any, is a corporation, limited liability
company, partnership, trust or other business entity organized and
existing under the laws of the United States, any state of the United
States, or the District of Columbia and, if we are not the successor
person, assumes our obligations on the notes and under the indenture;
o immediately after giving effect to the transaction, no default or
event of default shall have occurred and be continuing; and
o other conditions specified in the indenture are met.
DISCHARGE
The indenture provides that we may terminate our obligations under the
indenture at any time by delivering all outstanding notes to the trustee for
cancellation if we have paid all sums payable by us under the indenture. At any
time after all of the notes have become due and payable we may terminate our
substantive obligations under the indenture, other than our obligations to pay
the principal of, and interest on, the notes, by depositing with the trustee
money or U.S. Government obligations sufficient to pay all remaining
indebtedness on the notes when due.
TRANSFER AND EXCHANGE
We have initially appointed the trustee as the security registrar,
paying agent and conversion agent, acting through its corporate trust office. We
reserve the right to:
o vary or terminate the appointment of the security registrar, paying
agent or conversion agent;
o appoint additional paying agents or conversion agents; and
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o approve any change in the office through which any security registrar
or any paying agent or conversion agent acts.
PURCHASE AND CANCELLATION
All notes surrendered for payment, registration of transfer or
exchange or conversion shall, if surrendered to any person other than the
trustee, be delivered to the trustee. All notes delivered to the trustee shall
be cancelled promptly by the trustee. No notes shall be authenticated in
exchange for any notes cancelled as provided in the indenture.
We may, to the extent permitted by law, purchase notes in the open
market or by tender offer at any price or by private agreement. Any notes
purchased by us may, to the extent permitted by law, be reissued or resold or
may, at our option, be surrendered to the trustee for cancellation. Any notes
surrendered for cancellation may not be reissued or resold and will be promptly
cancelled. Any notes held by us or one of our subsidiaries shall be disregarded
for voting purposes in connection with any notice, waiver, consent or direction
requiring the vote or concurrence of note holders.
REPLACEMENT OF NOTES
We will replace mutilated, destroyed, stolen or lost notes at your
expense upon delivery to the trustee of the mutilated notes, or evidence of the
loss, theft or destruction of the notes satisfactory to us and the trustee. In
the case of a lost, stolen or destroyed note, indemnity satisfactory to the
trustee and us may be required at the expense of the holder of such note before
a replacement note will be issued.
GOVERNING LAW
The indenture and the notes are governed by, and construed in
accordance with, the law of the State of New York.
CONCERNING THE TRUSTEE
Wells Fargo Bank, National Association is the trustee under the
indenture. The trustee is permitted to deal with us and any of our affiliates
with the same rights as if it were not trustee. However, if the trustee acquires
any conflicting interest and there exists a default with respect to the notes,
the trustee must eliminate such conflict or resign.
The holders of a majority in principal amount of all outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the trustee. However,
any such direction may not conflict with any law or the indenture, may not be
unduly prejudicial to the rights of another holder or the trustee and may not
involve the trustee in personal liability.
BOOK-ENTRY, DELIVERY AND FORM
The notes are evidenced by one or more global securities. The global
security was deposited with the trustee as custodian for DTC and registered in
the name of a nominee of DTC. Except as set forth below, the global security may
be transferred, in whole and not in part, only, to DTC or another nominee of
DTC. You may hold your beneficial interests in the global security directly
through DTC if you have an account with DTC or indirectly through organizations
that have accounts with DTC. Notes in definitive certificated form (called
"certificated securities") will be issued only in certain limited circumstances
described below.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the State
of New York;
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o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
DTC was created to hold securities of institutions that have accounts
with DTC (called "participants") and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Access to DTC's
book-entry system is also available to others such as banks, brokers, dealers
and trust companies (called, the "indirect participants") that clear through or
maintain a custodial relationship with a participant, whether directly or
indirectly.
Pursuant to procedures established by DTC upon the deposit of the
global security with DTC, DTC credited, on its book-entry registration and
transfer system, the principal amount of notes represented by such global
security to the accounts of participants. The accounts credited were initially
designated by the initial purchaser. Ownership of beneficial interests in the
global security is limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests in the global security
is shown on, and the transfer of those beneficial interests is effected only
through, records maintained by DTC (with respect to participants' interests),
the participants and the indirect participants. The laws of some jurisdictions
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These limits and laws may impair the ability to
transfer or pledge beneficial interests in the global security.
Owners of beneficial interests in global securities who desire to
convert their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold such beneficial
interests to obtain information on procedures, including proper forms and
cut-off times, for submitting requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global security for all
purposes under the indenture and the notes. In addition, no owner of a
beneficial interest in a global security will be able to transfer that interest
except in accordance with the applicable procedures of DTC. Except as set forth
below, as an owner of a beneficial interest in the global security, you will not
be entitled to have the notes represented by the global security registered in
your name, will not receive or be entitled to receive physical delivery of
certificated securities and will not be considered to be the owner or holder of
any notes under the global security. We understand that under existing industry
practice, if an owner of a beneficial interest in the global security desires to
take any action that DTC, as the holder of the global security, is entitled to
take, DTC would authorize the participants to take such action, and the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
We will make payments of principal of, premium, if any, and interest
(including any additional interest) on the notes represented by the global
security registered in the name of and held by DTC or its nominee to DTC or its
nominee, as the case may be, as the registered owner and holder of the global
security. Neither we, the trustee nor any paying agent will have any
responsibility or liability of any aspect of the records relating to or payments
made on account of beneficial interests in the global security or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
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We expect that DTC or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest (including additional interest) on
the global security, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the records of DTC or its nominee. We also
expect that payments by participants or indirect participants to owners of
beneficial interests in the global security held through such participants or
indirect participants will be governed by standing instructions and customary
practices and will be the responsibility of such participants or indirect
participants. We will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial interests in
the global security for any note or for maintaining, supervising or reviewing
any records relating to such beneficial interests or for any other aspect of the
relationship between DTC and its participants or indirect participants or the
relationship between such participants or indirect participants and the owners
of beneficial interests in the global security owning through such participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken
by a holder of notes only at the direction of one or more participants to whose
account the DTC interests in the global security is credited and only in respect
of such portion of the aggregate principal amount of notes as to which such
participant or participants has or have given such direction. However, if DTC
notifies us that it is unwilling to be a depository for the global security or
ceases to be a clearing agency or there is an event of default under the notes,
DTC will exchange the global security for certificated securities which it will
distribute to its participants.
Although DTC is expected to follow the foregoing procedures in order
to facilitate transfers of interests in the global security among participants
of DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility, or liability for the performance by
DTC or the participants or indirect participants of their respective obligations
under the rules and procedures governing their respective operations.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock as stated in our Amended and Restated
Certificate of Incorporation consists of 60,000,000 shares of common stock, $.01
par value per share, and 15,000,000 shares of preferred stock, $.01 par value
per share. The following summary of our common stock and preferred stock is not
complete and may not contain all the information you should consider. This
description is subject to and qualified in its entirety by provisions of our
certificate of incorporation and bylaws, which are incorporated by reference
into this prospectus, and by provisions of applicable Delaware law.
COMMON STOCK
As of July 6, 2004 there were approximately 28,753,000 shares of
common stock outstanding and held of record by approximately 500 stockholders.
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the outstanding shares of common
stock entitled to vote in any election of directors may elect all the directors
standing for election. Holders of common stock are entitled to receive ratably
the dividends, if any, as may be declared by our board of directors out of funds
legally available therefor. If we are liquidated, dissolved or wound-up, holders
of common stock are entitled to receive ratably our net assets available for
distribution after the payment of, or adequate provision for, all of our debts
and other liabilities, subject to prior and superior rights of the holders of
preferred stock. Holders of common stock have no preemptive, subscription,
redemption, sinking fund or conversion rights. Immediately upon consummation of
this offering, all of the then-outstanding shares of common stock will be
validly issued, fully paid and nonassessable.
PREFERRED STOCK
The board of directors, without further stockholder authorization, is
authorized to issue, from time to time, up to 15,000,000 shares of preferred
stock in one or more series, to establish the number of shares to be included in
any of these series and to fix the designations, powers, preferences and rights
of the shares of each of these series and any qualifications, limitations or
restrictions thereof, including dividend rights and preferences over dividends
on our common stock, conversion rights, voting rights, redemption rights, the
terms of any sinking fund therefor and rights upon liquidation. The ability of
the board of directors to issue preferred stock, while providing flexibility in
connection with financing, acquisitions and other corporate purposes, could have
the effect of discouraging, deferring or preventing a change in control or an
unsolicited acquisition proposal, since the issuance of preferred stock could be
used to dilute the share ownership of a person or entity seeking to obtain
control of us. In addition, because the board of directors has the power to
establish the preferences, powers and rights of the shares of any of these
series of preferred stock, it may afford the holders of any preferred stock
preferences, powers and rights (including voting rights) senior to the rights of
the holders of common stock, which could adversely affect the rights of holders
of common stock.
As of March 31, 2004 we had designated three series of preferred
stock, none of which were outstanding.
SERIES A PREFERRED STOCK. Our board of directors has authorized
2,000,000 shares of Series A Convertible Preferred Stock, of which 500,000 were
issued in connection with a series of agreements with Century Medical, Inc., a
wholly-owned subsidiary of ITOCHU Corporation, under which Century Medical, Inc.
distributes certain of our products in Japan. Century Medical, Inc. has
converted its Series A Preferred Stock into our common stock. We do not expect
to issue new Series A Preferred Stock.
SERIES B PREFERRED STOCK. Our board of directors has authorized
120,000 shares of Series B Convertible Preferred Stock, 100,000 of which were
issued in connection with an acquisition in 1999. All of the holders of the
Series B Preferred Stock have converted their shares of Series B Preferred Stock
into shares of our common stock. We do not expect to issue new Series B
Preferred Stock.
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SERIES C PREFERRED STOCK. Our board of directors has authorized 54,000
shares of Series C Convertible Preferred Stock, all of which were issued in
March 2000. Each share of Series C Preferred Stock was converted into shares of
our common stock by the holders in April 2002. We do not expect to issue new
Series C Preferred Stock.
REGISTRATION RIGHTS
Under the terms of stockholder and registration rights agreements
between us and certain of our stockholders, holders of an aggregate of
approximately 4,875,000 shares of our common stock (including shares issuable
upon the exercise of certain warrants and shares underlying certain "restricted
units"), are entitled to demand that we register those shares under the
Securities Act. Additionally, if we propose to register any of our securities
under the Securities Act, either for our own account or for the account of any
other stockholder, the parties to certain of our stockholder and registration
rights agreements are entitled to notice of the registration and to include
their shares of common stock in the registration. These registration rights are
subject to limitations and conditions, including the right of the underwriters
of the offering to limit the number of shares included in any registration
thereunder. In general, we are required to indemnify the holders of those
registrable securities under described circumstances and to bear the expense of
registrations, except for the selling stockholders' pro rata portion of the
underwriting discounts and commissions.
DELAWARE ANTI-TAKEOVER LAW
Section 203 of the Delaware General Corporation Law prohibits certain
"business combination" transactions between a Delaware corporation and any
"interested stockholder" owning 15% or more of the corporation's outstanding
voting stock for a period of three years after the date on which the stockholder
became an interested stockholder, unless:
o the board of directors approves, prior to the date, either the
proposed business combination or the proposed acquisition of stock
which resulted in the stockholder becoming an interested stockholder;
o upon consummation of the transaction in which the stockholder becomes
an interested stockholder, the interested stockholder owned at least
85% of those shares of the voting stock of the corporation which are
not held by the directors, officers or certain employee stock plans;
or
o on or subsequent to the date on which the stockholder became an
interested stockholder, the business combination with the interested
stockholder is approved by the board of directors and also approved at
a stockholder's meeting by the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the corporation's voting
stock other than shares held by the interested stockholder.
Under Delaware law, a "business combination" includes a merger, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal
income tax considerations relating to the purchase, ownership and disposition of
the notes and common stock into which the notes are convertible, but is not a
complete analysis of all the potential tax considerations relating thereto. This
summary is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations promulgated thereunder,
administrative rulings and judicial decisions, all as of the date hereof. These
authorities may be changed, possibly retroactively, so as to result in United
States federal income tax consequences different from those set forth below. We
have not sought any ruling from the Internal Revenue Service ("IRS") with
respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the IRS will agree with such
statements and conclusions.
This summary is limited to holders who purchase notes for cash and who
hold the notes and the common stock into which such notes are convertible as
capital assets. "U.S. holder" means a holder of a note or common stock that is:
o an individual citizen or resident of the United States;
o a corporation or other entity taxable as a corporation for United
States federal income tax purposes, or a partnership or other entity
taxable as a partnership for United States federal income tax
purposes, created or organized in the United States or under the laws
of the United States, any state thereof, or the District of Columbia;
o an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
o a trust, if a United States court can exercise primary supervision
over its administration and one or more United States persons have the
authority to control all of its substantial decisions or if such trust
was in existence on August 20, 1996 and has properly elected to
continue to be treated as a United States person.
This summary also does not address the tax considerations arising
under the laws of any foreign, state or local jurisdiction. In addition, this
discussion does not address tax considerations applicable to an investor's
particular circumstances or to investors that may be subject to special tax
rules, including, without limitation:
o banks, insurance companies or other financial institutions;
o persons subject to the United States federal estate, gift or
alternative minimum tax arising from the purchase, ownership or
disposition of the notes;
o tax-exempt organizations;
o dealers in securities or currencies;
o traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
o persons that own, or are deemed to own, more than 5% of our Company
(except to the extent specifically set forth below);
o certain former citizens or long-term residents of the United States;
o U.S. holders whose functional currency is not the U.S. dollar;
o persons who hold the notes as a position in a hedging transaction,
"straddle," "conversion transaction" or other risk reduction
transaction; or
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o persons deemed to sell the notes or common stock under the
constructive sale provisions of the Code.
In addition, if a holder is an entity treated as a partnership for
United States federal income tax purposes, the tax treatment of each partner of
such partnership will generally depend upon the status of the partner and upon
the activities of the partnership. A holder that is a partnership, and partners
in such partnerships, should consult their own tax advisors regarding the tax
consequences of the purchase, ownership and disposition of the notes and common
stock.
THIS SUMMARY OF MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE
URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND COMMON
STOCK ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF
ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE
TAX TREATY.
CLASSIFICATION OF THE NOTES
Under the indenture governing the notes, we and each holder of the
notes agree, for United States federal income tax purposes, to treat the notes
as indebtedness that are subject to the regulations governing contingent payment
debt instruments (the "Contingent Debt Regulations") in the manner described
below, using the comparable yield set forth below. The remainder of this
discussion assumes that the notes will be so treated and does not address any
possible differing treatment of the notes. The IRS has recently issued a revenue
ruling with respect to instruments similar to the note and this ruling supports
certain aspects of the treatment described below. However, the application of
the Contingent Debt Regulations to instruments such as the notes remains
uncertain in several other respects, and no rulings have been sought from the
IRS or a court with respect to any of the tax consequences discussed below.
Accordingly, no assurance can be given that the IRS or a court will agree with
the treatment described herein. Any differing treatment could affect the amount,
timing and character of income, gain or loss in respect of an investment in the
notes. In particular, a holder might be required to accrue original issue
discount at a lower rate, might not recognize income, gain or loss upon
conversion of the notes to common stock, and might recognize capital gain or
loss upon a taxable disposition of the notes. HOLDERS SHOULD CONSULT THEIR TAX
ADVISORS CONCERNING THE TAX TREATMENT OF HOLDING THE NOTES.
U.S. HOLDERS
The following is a summary of the material United States federal
income tax considerations that will apply to you if you are a U.S. holder of the
notes or our common stock, but is not a complete analysis of all the potential
tax considerations relating thereto.
ACCRUAL OF INTEREST
Under the Contingent Debt Regulations, actual cash payments on the
notes will not be reported separately as taxable income, but will be taken into
account under such regulations. As discussed more fully below, the effect of the
Contingent Debt Regulations will be to:
o require you, regardless of your usual method of tax accounting, to use
the accrual method with respect to the notes;
o require you to accrue and include in taxable income each year original
issue discount at the comparable yield (as described below) which will
be substantially in excess of stated interest payments actually
received by you; and
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o generally result in ordinary rather than capital treatment of any
gain, and to some extent loss, on the sale, exchange, repurchase or
redemption of the notes.
Subject to the adjustments described below under "-Adjustments to
Interest Accruals on the Notes" that are applicable if you purchase the notes
for a price other than the adjusted issue price (as defined below), you will be
required to accrue an amount of ordinary interest income as original issue
discount for U.S. federal income tax purposes, for each accrual period prior to
and including the maturity date of the note that equals:
o the product of (i) the adjusted issue price of the notes as of the
beginning of the accrual period and (ii) the comparable yield to
maturity (as defined below) of the notes, adjusted for the length of
the accrual period;
o divided by the number of days in the accrual period; and
o multiplied by the number of days during the accrual period that you
held the notes.
The issue price of a note is the first price at which a substantial
amount of the notes is sold to the public, excluding sales to bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. The adjusted issue price of a
note is its issue price increased by any original issue discount previously
accrued, determined without regard to any adjustments to original issue discount
accruals described below, and decreased by the projected amounts of any payments
previously made with respect to the notes.
Under the Contingent Debt Regulations, you will be required to include
original issue discount in income each year, regardless of your usual method of
tax accounting, based on the comparable yield of the notes. We have determined
the comparable yield of the notes based on the rate, as of the initial issue
date, at which we would issue a fixed rate nonconvertible debt instrument with
no contingent payments but with terms and conditions similar to the notes.
Accordingly, we have determined that the comparable yield is 9.702%, per annum,
compounded semi-annually.
We are required to furnish to you the comparable yield and, solely for
United States federal income tax purposes, a projected payment schedule that
includes the actual interest payments on the notes and estimates of the amount
and timing of contingent interest payments and payment upon maturity on the
notes taking into account the fair market value of the common stock that might
be paid upon a conversion of the notes. You may obtain the projected payment
schedule by submitting a written request for it to us at the address set forth
on page ii of this prospectus. By purchasing the notes, you agree in the
indenture to be bound by our determination of the comparable yield and projected
payment schedule. For United States federal income tax purposes, you must use
the comparable yield and the schedule of projected payments in determining your
original issue discount accruals, and the adjustments thereto described below,
in respect of the notes.
THE COMPARABLE YIELD AND THE PROJECTED PAYMENT SCHEDULE ARE NOT
PROVIDED FOR ANY PURPOSE OTHER THAN THE DETERMINATION OF YOUR ORIGINAL ISSUE
DISCOUNT ACCRUALS AND ADJUSTMENTS THEREOF IN RESPECT OF THE NOTES FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES AND DO NOT CONSTITUTE A PROJECTION OR
REPRESENTATION REGARDING THE ACTUAL AMOUNT OF THE PAYMENTS ON A NOTE.
ADJUSTMENTS TO INTEREST ACCRUALS ON THE NOTES
If the actual contingent payments made on the notes differ from the
projected contingent payments, adjustments will be made with respect to the
difference. If, during any taxable year, you receive actual payments with
respect to the notes for that taxable year that in the aggregate exceed the
total amount of projected payments for the taxable year, you will incur a
positive adjustment equal to the amount of such excess. Such positive adjustment
will be treated as additional original issue discount in such taxable year. For
these purposes, the payments in a taxable year include the fair market value of
property received in that year, including the fair market value of our common
stock received upon a conversion. If you receive in a taxable year actual
payments that in the aggregate are less than the amount
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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 notes, reduced to the extent such prior
original issue discount was offset by prior negative adjustments; and
o third, any excess negative adjustments will be treated as a regular
negative adjustment in the succeeding taxable year.
If you purchase a note at a discount or premium to the adjusted issue
price of the note on the acquisition date, you must, upon acquiring the debt
instrument, reasonably allocate the difference between your tax basis and the
adjusted issue price to daily portions of interest or projected payments over
the remaining term of the note. You should consult your tax advisor regarding
these allocations.
If your tax basis is greater than the adjusted issue price of your
note 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 note is reduced by the
amount treated as a negative adjustment.
If your tax basis is less than the adjusted issue price of your note
on the acquisition date, the amount of the difference allocated to a daily
portion of interest or to a projected payment is treated as a positive
adjustment on the date the daily portion accrues or the payment is made. On the
date of the adjustment, your adjusted basis in your note is increased by the
amount treated as a postive adjustment.
SALE, EXCHANGE, CONVERSION OR REDEMPTION OF THE NOTES
Upon the sale, exchange, repurchase or redemption of a note, as well
as upon a conversion of a note, you will generally recognize gain or loss equal
to the difference between your amount realized and your adjusted tax basis in
the note. As a holder of a note, you agree that under the Contingent Debt
Regulations, the amount realized will include the fair market value of our
common stock that you receive on the conversion as a contingent payment. Such
gain on a note generally will be treated as interest income. Loss from the
disposition of a note will be treated as ordinary loss to the extent of your
prior net original issue discount inclusions with respect to the notes. Any loss
in excess of that amount will be treated as capital loss, which will be
long-term if the notes were held for more than one year. The deductibility of
capital losses is subject to limitations.
Special rules apply in determining the tax basis of a note. Your
adjusted tax basis in a note is generally equal to your original purchase price
for the note, increased by original issue discount (determined without regard to
any adjustments to interest accruals described above, other than any positive or
negative adjustments to reflect discount (which increase basis) or premium
(which decrease basis), respectively, to the adjusted issue price, if any), and
reduced by the amount of any noncontigent payment and the projected amount of
any contingent payments previously scheduled to be made.
Under this treatment, your tax basis in the common stock received upon
conversion of a note will equal the then current fair market value of such
common stock. Your holding period for our common stock will commence on the day
after conversion.
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CONSTRUCTIVE DIVIDENDS
Holders of convertible debt instruments such as the notes may, in
certain circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. However, adjustments to the
conversion price made pursuant to a bona fide reasonable adjustment formula
which has the effect of preventing the dilution of the interest of the holders
of the debt instruments will generally not be deemed to result in a constructive
distribution of stock. Certain of the possible adjustments provided in the notes
(including, without limitation, adjustments in respect of taxable dividends to
our stockholders) may not qualify as being pursuant to a bona fide reasonable
adjustment formula. If such adjustments are made, you will be deemed to have
received constructive distributions includible in your income in the manner
described under "--Dividends" below even though you have not received any cash
or property as a result of such adjustments. In certain circumstances, the
failure to provide for such an adjustment may also result in a constructive
distribution to you.
DIVIDENDS
If you convert your note into our common stock, distributions, if any,
made on our common stock generally will be included in your income as ordinary
dividend income to the extent of our current or accumulated earnings and
profits. However, under recently enacted legislation, with respect to
noncorporate taxpayers for taxable years beginning after December 31, 2002 and
before January 1, 2009 such dividends are generally taxed at the lower
applicable capital gains rates provided certain holding period requirements are
satisfied. Distributions in excess of our current and accumulated earnings and
profits will be treated as a return of capital to the extent of your adjusted
tax basis in the common stock and thereafter as capital gain from the sale or
exchange of such common stock. Dividends received by a corporate U.S. holder may
be eligible for a dividends received deduction, subject to applicable
limitations.
SALE, EXCHANGE OR REDEMPTION OF COMMON STOCK
If you convert your notes into our common stock, then upon the sale,
exchange or redemption of our common stock, you generally will recognize capital
gain or loss equal to the difference between (i) the amount of cash and the fair
market value of any property received upon the sale or exchange and (ii) your
adjusted tax basis in the common stock. Such capital gain or loss will be
long-term capital gain or loss if your holding period in the common stock is
more than one year at the time of the sale, exchange or redemption. Long-term
capital gains recognized by certain noncorporate U.S. holders, including
individuals, will generally be subject to a reduced rate of United States
federal income tax. Your adjusted tax basis and holding period in common stock
received upon conversion of a note are determined as discussed above under
"--Sale, Exchange, Conversion or Redemption of the Notes." The deductibility of
capital losses is subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
We are required to furnish to the record holders of the notes and
common stock, other than corporations and other exempt holders, and to the IRS,
information with respect to interest on the notes and dividends paid on the
common stock.
You may be subject to backup withholding with respect to interest paid
on the notes, dividends paid on the common stock or with respect to proceeds
received from a disposition of the notes or shares of common stock. Certain
holders (including, among others, corporations and certain tax-exempt
organizations) are generally not subject to backup withholding. You will be
subject to backup withholding if you are not otherwise exempt and you
o fail to furnish your taxpayer identification number ("TIN"), which,
for an individual, is ordinarily his or her social security number;
o furnish an incorrect TIN;
35
o are notified by the IRS that you have failed to properly report
payments of interest or dividends; or
o fail to certify, under penalties of perjury, that you have furnished a
correct TIN and that the IRS has not notified you that you are subject
to backup withholding.
Backup withholding is not an additional tax but, rather, is a method
of tax collection. You generally will be entitled to credit any amounts withheld
under the backup withholding rules against your United States federal income tax
liability provided that the required information is furnished to the IRS in a
timely manner.
NON-U.S. HOLDERS
The following is a summary of the material United States federal
income tax considerations that will apply to you if you are a non-U.S. holder of
the notes or our common stock, but is not a complete analysis of all the
potential tax considerations relating thereto. For purposes of this discussion,
a "non-U.S. holder" means a beneficial owner of notes or common stock that is a
nonresident alien individual or a corporation, trust or estate that is not a
U.S. holder.
PAYMENTS OF INTEREST; CONVERSION OF NOTES
You will not be subject to the 30% United States federal withholding
tax with respect to (i) noncontingent stated cash interest on the notes, (ii)
the amount of cash delivered to you by us upon redemption or repurchase of a
note in respect of the stated principal amount and (iii) contingent interest
deemed received on a conversion of the notes, provided that:
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 Section 871(h)(3) of the Code;
o you are not a "controlled foreign corporation" with respect to which
we are, directly or indirectly, a "related person;"
o you are not a bank whose receipt of interest (including original issue
discount) on a note is described in Section 881(c)(3)(A) of the Code;
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 Section 871(h)(4)(C)(v)(I) of the Code and we are not a
"United States real property holding corporation"; and
o you provide your name and address, and certify, under penalties of
perjury, that you are not a United States person (which certification
may be made on an IRS Form W-8BEN (or successor form)), or that you
hold your notes through certain intermediaries, and you and the
intermediaries satisfy the certification requirements of applicable
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.
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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% United States federal withholding tax with respect to
payments of interest on the 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 United States income
tax treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid
on the note is not subject to withholding tax because it is effectively
connected with the conduct of a United States trade or business.
If you are engaged in a trade or business in the United States and
interest on a note is effectively connected with your conduct of that trade or
business, you will be subject to United States 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 United States 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 lower rate as may be prescribed
under an applicable United States 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.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES OR COMMON STOCK
Any gain realized by you on the sale, exchange or redemption of a note
will generally be treated as interest income generally subject to the rules
described above 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 such tax
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 United States
federal income tax unless:
o the gain is effectively connected with your conduct of a United States
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;
o you are subject to Code provisions applicable to certain United States
expatriates; 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 United States federal income tax on the net gain derived from the
sale, and if you are a corporation, then any such effectively connected gain
received by you may also, under certain circumstances, be subject to the
37
branch profits tax at a 30% rate (or such lower rate as may be prescribed under
an applicable United States income tax treaty). If you are an individual
described in the second bullet point above, you will be subject to a flat 30%
United States federal income tax on the gain derived from the sale, which may be
offset by United States 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 are currently, and do not anticipate
becoming, a United States real property holding corporation. Even if we were, or
were to become, a United States 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, dividends, if any, 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 notes, see "--U.S.
Holders--Constructive Dividends" above) will be subject to withholding of United
States federal income tax at a 30% rate, unless such rate is reduced by an
applicable United States income tax treaty. Dividends that are effectively
connected with your conduct of a trade or business in the United States are
generally subject to United States federal income tax on a net income basis and
are exempt from the 30% withholding tax (assuming compliance with certification
requirements). Any such effectively connected dividends received by a non-U.S.
holder that is a corporation may also, under various circumstances, be subject
to the branch profits tax at a 30% rate or such lower rate as may be prescribed
under an applicable United States income tax treaty.
In order to claim the benefit of a United States 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, in general, you 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 notes or common stock pursuant to a conversion, redemption or
repurchase) or with respect to the proceeds of the sale of a note or a share of
common stock within the United States or conducted through certain United
States-related financial intermediaries, if the payor receives the statement
described above under "--Non-U.S. Holders--Payments of Interest; Conversion of
Notes" and does not have actual knowledge or reason to know that you are a
United States 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 may also 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 United States federal income tax
liability provided that the required information is furnished to the IRS in a
timely manner.
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SELLING SECURITYHOLDERS
The notes were originally issued by Integra and sold by the initial
purchasers of the notes in a transaction exempt from the registration
requirements of the Securities Act of 1933 to persons reasonably believed by the
initial purchasers to be qualified institutional buyers as defined by Rule 144A
under the Securities Act of 1933. Selling securityholders, including their
transferees, pledgees or donees or their successors, may from time to time offer
and sell pursuant to this prospectus any or all of the notes and shares of
common stock into which the notes are convertible.
The following table sets forth information, as of August 2, 2004, with
respect to the selling securityholders and the principal amounts of notes
beneficially owned by each selling securityholder that may be offered pursuant
to this prospectus. The information is based on information provided by or on
behalf of the selling securityholders. The selling securityholders may offer
all, some or none of the notes or the common stock into which the notes are
convertible. Because the selling securityholders may offer all or some portion
of the notes or the common stock, we cannot estimate the amount of the notes or
the common stock that will be held by the selling securityholders upon
termination of any of these sales. In addition, the selling securityholders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information
regarding their notes in transactions exempt from the registration requirements
of the Securities Act of 1933. The percentage of notes outstanding beneficially
owned by each selling securityholder is based on $120,000,000 aggregate
principal amount of notes outstanding.
The number of shares of common stock issuable upon conversion of the
notes shown in the table below assumes conversion of the full amount of notes
held by each selling securityholder at an initial conversion rate of 29.2847
shares per $1,000 principal amount of notes and a cash payment in lieu of any
fractional shares. This conversion price is subject to adjustment in certain
events. Accordingly, the number of conversion shares may increase or decrease
from time to time. Information concerning other selling securityholders will be
set forth in prospectus supplements from time to time, if required. The number
of shares of common stock owned by the other selling securityholders or any
future transferee from any such holder assumes that they do not beneficially own
any common stock other than common stock into which the notes are convertible.
PRINCIPAL
AMOUNT OF
NOTES COMMON PERCENTAGE COMMON
BENEFICIALLY PERCENTAGE STOCK OWNED OF COMMON STOCK
OWNED AND OF NOTES PRIOR TO STOCK OFFERED
NAME OFFERED HEREBY OUTSTANDING THE OFFERING OUTSTANDING HEREBY
---- -------------- ----------- ------------ ----------- -------
Allstate Investments, LLC 1,750,000 1.46% 6,900 * 51,248
CALAMOS Convertible Growth & Income fund - 19,015,000 15.85% 0 1.93% 556,848
CALAMOS Investment Trust
CEMEX Pension Plan 115,000 * 0 * 3,367
CGNU Life Fund 475,000 * 0 * 13,910
Chrysler Corporation Master Retirement Trust 955,000 * 0 * 27,966
City of Knoxville Pension System 270,000 * 0 * 7,906
Context Convertible Arbitrage Fund, LP 900,000 * 0 * 26,356
Context Convertible Arbitrage Offshore, Ltd. 2,100,000 1.75% 0 * 61,497
Commercial Union Life Fund 595,000 * 0 * 17,424
Credit Suisse First Boston LLC 4,600,000 3.83% 0 * 134,709
DBAG London 14,000,000 11.67% 0 1.42% 409,985
Delta Air Lines Master Trust - CV 400,000 * 0 * 11,713
Delta Pilots Disability and Survivorship Trust 370,000 * 0 * 10,835
Delta Pilots Disability and Survivorship Trust - CV 195,000 * 0 * 5,710
Gasner Investors Holdings Ltd. 500,000 * 0 * 14,642
Grace Convertible Arbitrage Fund, Ltd. 3,500,000 2.91% 0 * 102,496
JP Morgan Securities, Inc. 7,500,000 6.25% 89 * 219,635
KBC Financial Products USA Inc. 512,000 * 0 * 14,993
39
PRINCIPAL
AMOUNT OF
NOTES COMMON PERCENTAGE COMMON
BENEFICIALLY PERCENTAGE STOCK OWNED OF COMMON STOCK
OWNED AND OF NOTES PRIOR TO STOCK OFFERED
NAME OFFERED HEREBY OUTSTANDING THE OFFERING OUTSTANDING HEREBY
---- -------------- ----------- ------------ ----------- -------
Kettering Medical Center Funded Depreciation Account 70,000 * 0 * 2,049
LDG Limited 1,000,000 * 0 * 29,284
Lighthouse Multi-Strategy Master Fund LP 100,000 * 0 * 2,928
Louisiana Workers' Compensation Corporation 320,000 * 0 * 9,371
Man Convertible Bond Master Fund, Ltd. 5,438,000 4.53% 0 * 159,250
McMahan Securities Co., L.P. 2,000,000 * 0 * 29,284
Microsoft Corporation 460,000 * 0 * 13,470
MLQA Convertible Securities Arbitrage LTD. 2,500,000 2.08% 0 * 73,211
Motion Picture Industry Health Plan - Active Member Fund 105,000 * 0 * 3,074
Motion Picture Industry Health Plan - Retiree Member Fund 65,000 * 0 * 1,903
Munson Medical Center Retirement Plan 55,000 * 0 * 1,610
Munson2 Healthcare Board Designated Operating Fund 45,000 * 0 * 1,317
Norwich Union Life and Pensions 945,000 * 0 * 27,674
Oakwood Assurance Company 43,000 * 0 * 1,259
Oakwood Healthcare Inc. (Pension) 135,000 * 0 * 3,953
Oakwood Healthcare Inc. Endowment 6,000 * 0 * 175
Oakwood Healthcare Inc. Funded Depreciation 75,000 * 0 * 2,196
Oakwood Healthcare Inc. OHP 11,000 * 0 * 322
OCM Convertible Trust 1,120,000 * 0 * 32,798
Partner Reinsurance Company Ltd. 335,000 * 0 * 9,810
Polaris Vega Fund L.P. 1,500,000 1.25% 0 * 43,927
Privilege Portfolio SICAV 1,855,000 1.57% 0 * 55,201
Quest Convertible Fund Ltd. 900,000 * 0 * 26,356
Qwest Occupational Health Trust 120,000 * 0 * 3,514
RBC Alternative Assets LP, Conv Arb 300,000 * 0 * 8,785
SCI Endowment Care Common Trust Fund - First Union 33,000 * 0 * 966
SCI Endowment Care Common Trust Fund - Suntrust 70,000 * 0 * 2,049
Sphinx Fund c/o TQA Investors, LCC 70,000 * 0 * 2,049
St. Thomas Trading, Ltd. 13,620,000 11.35% 0 1.38% 398,857
State Employees Retirement Fund of the State of Delaware 445,000 * 0 * 13,031
Sunrise Partners Limited Partnership 14,000,000 11.66% 0 1.42% 409,985
The California Wellness Foundation 370,000 * 0 * 10,835
The Dow Chemical Company Employee's Retirement Plan 2,400,000 2% 0 * 70,283
TQA Master Fund, Ltd. 3,431,000 2.86% 0 * 100,475
TQA Master Plus Fund, Ltd. 2,367,000 1.97% 0 * 69,316
Union Carbide Retirement Account 1,100,000 * 0 * 32,213
Univest Multi Strategy Conv Arb 300,000 * 0 * 8,785
US Bancorp Piper Jaffray 3,000,000 2.50% 0 * 87,854
Value Line Convertible Fund, Inc. 200,000 * 0 * 5,856
Victus Capital, L.P. 5,000,000 4.17% 0 * 146,423
Wachovia Securities International Ltd. 5,500,000 4.58% 0 * 161,065
WPG Convertible Arbitrage Overseas Master Fund 1,600,000 1.33% 0 * 46,855
WPG MSA Convertible Arbitrage Fund 300,000 * 0 * 8,785
Xavex Convertible Arbitrage 7 Fund c/o TQA Investors, LCC 45,000 * 0 * 1,317
Zazove Convertible Arbitrage Fund, L.P. 3,000,000 2.5% 0 * 87,854
Zazove Hedged Convertible Fund, L.P. 2,700,000 2.25% 0 * 79.068
Zazove Income Fund, L.P. 1,800,000 1.5% 0 * 52,712
Zurich Institutional Benchmarks Master Fund, Ltd. 2,000,000 1.67% 0 * 58,569
Zurich Institutional Benchmarks Master Fund, Ltd. 427,000 * 0 * 12,504
c/o TQA Investors, LCC
Total(1) 120,000,000 100.0% 12.22% 3,514,164
----------
* Less than 1%
(1) Because certain of the selling securityholders may have sold, transferred
or otherwise disposed of all or a portion of their notes in transactions exempt
from the registration requirements of the Securities Act since the date on which
they provided to us the information presented in this table, this prospectus may
not reflect the exact principal amount of notes held by each selling
securityholder on the date hereof. The maximum aggregate principal amount of
notes that may be sold pursuant to this prospectus will not exceed $120,000,000.
40
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which term includes
their transferees, pledgees or donees or their successors may sell the notes and
the common stock issuable upon conversion of the notes directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the selling
securityholders or the purchasers. These discounts, concessions or commissions
as to any particular underwriter, broker-dealer or agent may be in excess of
those customary in the types of transactions involved.
The notes or common stock issuable upon conversion of the notes may be
sold in one or more transactions at:
o fixed prices;
o prevailing market prices at the time of sale;
o prices related to the prevailing market prices;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions:
o for the common stock, on any national securities exchange or quotation
service on which our common stock may be listed or quoted at the time
of sale;
o in the over-the-counter market;
o otherwise than on such exchanges or services or in the
over-the-counter market;
o through the writing of options, whether the options are listed on an
options exchange or otherwise; or
o through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as agent on both sides of the
trade.
In connection with the sale of the notes and the common stock issuable
upon conversion of the notes or otherwise, the selling securityholders may enter
into hedging transactions with broker-dealers or other financial institutions.
These broker-dealers or financial institutions may in turn engage in short sales
of the common stock in the course of hedging the positions they assume with
selling securityholders. The selling securityholders may also sell the notes and
the common stock issuable upon conversion of the notes short and deliver these
securities to close out such short positions, or loan or pledge the notes or the
common stock issuable upon conversion of the notes to broker-dealers that in
turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale of
the notes or the common stock issuable upon conversion of the notes offered by
them hereby will be the purchase price of the notes or the common stock less
discounts and commissions, if any. Each of the selling securityholders reserves
41
the right to accept and, together with their agents from time to time, to
reject, in whole or in part, any proposed purchase of common stock to be made
directly or through agents. We will not receive any of the proceeds from this
offering.
Our outstanding common stock is listed for trading on the Nasdaq
National Market. We do not intend to list the notes for trading on any national
securities exchange and can give no assurance about the development of any
trading market for the notes.
In order to comply with the securities laws of some states, if
applicable, the notes and the common stock issuable upon conversion of the notes
may be sold in these jurisdictions only through registered or licensed brokers
or dealers.
The selling securityholders and any broker-dealers or agents that
participate in the sale of the notes and the common stock issuable upon
conversion of the notes may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933. Profits on the sale of the notes
and the common stock issuable upon conversion of the notes by selling
securityholders and any discounts, commissions or concessions received by any
broker-dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act of 1933. Selling securityholders who are
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933 will be subject to the prospectus delivery requirements
of the Securities Act of 1933. To the extent the selling securityholders may be
deemed to be "underwriters," they may be subject to statutory liabilities,
including, but not limited to, Sections 11, 12 and 17 of the Securities Act of
1933.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934 and the rules and regulations thereunder. Regulation M of the
Securities Exchange Act of 1934 may limit the timing of purchases and sales of
any of the securities by the selling securityholders and any other person. In
addition, Regulation M may restrict the ability of any person engaged in the
distribution of the securities to engage in market-making activities with
respect to the particular securities being distributed for a period of up to
five business days before the distribution.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholder and any underwriter,
broker-dealer or agent regarding the sale of the notes or common stock issuable
upon conversion of the notes by the selling securityholders.
A selling securityholder may decide not to sell any notes or the
common stock issuable upon conversion of the notes described in this prospectus.
We cannot assure holders that any selling securityholder will use this
prospectus to sell any or all of the notes or the common stock issuable upon
conversion of the notes. Any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act of 1933 may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. In
addition, a selling securityholder may transfer, devise or gift the notes and
the common stock issuable upon conversion of the notes by other means not
described in this prospectus.
With respect to a particular offering of the notes and the common
stock issuable upon conversion of the notes, to the extent required, an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part will
be prepared and will set forth the following information:
o the specific notes or common stock to be offered and sold;
o the names of the selling securityholders;
42
o the respective purchase prices and public offering prices and other
material terms of the offering;
o the names of any participating agents, broker-dealers or underwriters;
and
o any applicable commissions, discounts, concessions and other items
constituting, compensation from the selling securityholders.
We entered into the registration rights agreement for the benefit of
holders of the notes to register their notes and the common stock issuable upon
conversion of the notes under applicable federal and state securities laws under
certain circumstances and at certain times. The registration rights agreement
provides that the selling securityholders and we will indemnify each other and
our respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the notes and the common
stock issuable upon conversion of the notes, including liabilities under the
Securities Act of 1933, or will be entitled to contribution in connection with
those liabilities. We will pay all of our expenses and specified expenses
incurred by the selling securityholders incidental to the registration, offering
and sale of the notes and the common stock issuable upon conversion of the notes
to the public, but each selling securityholder will be responsible for payment
of commissions, concessions, fees and discounts of underwriters, broker-dealers
and agents.
VALIDITY OF THE SECURITIES
The validity of the notes and the shares of our common stock issuable
upon conversion of the notes have been passed upon for us by Latham & Watkins
LLP.
EXPERTS
The consolidated financial statements incorporated in this
registration statement by reference to the Annual Report on Form 10-K for the
year ended December 31, 2003 have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
43
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
$120,000,000
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
_________________
PROSPECTUS
, 2004
_________________
--------------------------------------------------------------------------------
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid in connection with the distribution of the
securities being registered are as set forth in the following table:
------------------------------------------------------------ -------------------
Securities and Exchange Commission Fee $ 9,708
------------------------------------------------------------ -------------------
*Nasdaq National Market Additional Listing Fee $ 0
------------------------------------------------------------ -------------------
*Legal Fees and Expenses $ 60,000
------------------------------------------------------------ -------------------
*Accounting Fees and Expenses $ 20,000
------------------------------------------------------------ -------------------
*Printing Expenses $ 10,000
------------------------------------------------------------ -------------------
*Miscellaneous $ 15,000
------------------------------------------------------------ -------------------
Total $ 114,708
==========
------------------------------------------------------------ -------------------
--------------
* Estimated
We will bear each of the expenses in the above table.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Officers and Directors of Integra are covered by certain provisions of
the Delaware General Corporation Law ("DGCL"), Integra's charter, bylaws and
insurance policies which serve to limit, and, in certain circumstances, to
indemnify them against, certain liabilities which they may incur in such
capacities. These various provisions are described below.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
In June 1986, Delaware enacted legislation which authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach of
directors' fiduciary duty of care. This duty of care requires that, when acting
on behalf of the corporation, directors must exercise an informed business
judgment based on all significant information reasonably available to them.
Absent the limitations now authorized by such legislation, directors are
accountable to corporations and their stockholders for monetary damages for
conduct constituting negligence or gross negligence in the exercise of their
duty of care. Although the statute does not change directors' duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. The charter limits the liability of directors to
Integra or its stockholders (in their capacity as directors but not in their
capacity as officers) to the fullest extent permitted by such legislation.
Specifically, the directors of Integra will not be personally liable for
monetary damages for breach of a director's fiduciary duty as director, except
for liability: (1) for any breach of the director's duty of loyalty to Integra
or its stockholders; (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (3) for unlawful
payments of dividends or unlawful share repurchases or redemptions as provided
in Section 174 of the DGCL; or (4) for any transaction from which the director
derived an improper personal benefit.
II-1
INDEMNIFICATION AND INSURANCE
As a Delaware corporation, Integra has the power, under specified
circumstances generally requiring the director or officer to act in good faith
and in a manner he reasonably believes to be in or not opposed to Integra's best
interests, to indemnify its directors and officers in connection with actions,
suits or proceedings brought against them by a third party or in the name of
Integra, by reason of the fact that they were or are such directors or officers,
against expenses, judgments, fines and amounts paid in settlement in connection
with any such action, suit or proceeding. Integra's bylaws generally provide for
mandatory indemnification of Integra's directors and officers to the full extent
provided by Delaware corporate law. In addition, Integra has entered into
indemnification agreements with its directors and officers which generally
provide for mandatory indemnification under circumstances for which
indemnification would otherwise be discretionary under Delaware law.
Integra intends to purchase and maintain insurance on behalf of any
person who is or was a director or officer of Integra, or is or was a director
or officer of Integra serving at the request of Integra as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not Integra would have the power or obligation to indemnify him
against such liability under the provisions of the bylaws.
II-2
ITEM 16. EXHIBITS
INDEX
4.1........................ Indenture, dated as of March 31, 2003,
between Integra LifeSciences Holdings
Corporation and Wells Fargo Bank Minnesota,
National Association, as trustee,
incorporated by reference to Exhibit 4.1 of
our Quarterly Report on Form 10-Q for the
three months ended March 31, 2003*
4.2........................
Form of 2 1/2% Convertible Senior Note due
2008 (included in Exhibit 4.1)
4.3........................ Registration Rights Agreement, dated as of
March 31, 2003, between Integra LifeSciences
Holdings Corporation and Credit Suisse First
Boston, LLC, Banc of America Securities LLC
and U.S. Bancorp Piper Jaffray Inc.*
5.1........................ Opinion of Latham & Watkins LLP*
8.1........................ Opinion Regarding Tax Matters*
12.1....................... Statement of Computation of Ratio of Earnings
to Fixed Charges*
12.1.1..................... Statement of Computation of Ratio of Earnings
to Fixed Charges**
23.1....................... Consent of PricewaterhouseCoopers LLP*
23.1.1..................... Consent of PricewaterhouseCoopers LLP**
23.2....................... Consent of WithumSmith+Brown, P.C.*
23.3....................... Consent of Latham & Watkins LLP (included in
Exhibit 5.1)
24.1....................... Power of Attorney of the Company*
25.1....................... Statement of Eligibility of Trustee on
Form T-1*
* Previously Filed
** Filed Herewith
II-3
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrants pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company has duly caused this Post Effective Amendment No. 2 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Plainsboro, State of New Jersey, on date set forth
below.
Integra LifeSciences Holdings Corporation
By: /s/ David B. Holtz
------------------------------------
David B. Holtz
Senior Vice President,
Finance and Treasurer
Date: August 3, 2004
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by each of the following persons on August 3, 2004 in
the capacities indicated.
SIGNATURE TITLE
--------- -----
*
--------------------------
Stuart M. Essig, Ph.D President, Chief Executive Officer and Director
(Principal Executive Officer)
*
--------------------------
David B. Holtz Senior Vice President, Finance and Treasurer
(Principal Financial and Accounting Officer)
*
--------------------------
Richard E. Caruso, Ph.D Chairman of the Board of Directors
*
--------------------------
Keith Bradley, Ph.D Director
*
--------------------------
David Auth Director
*
--------------------------
Neal Moszkowski Director
S-1
*
--------------------------
James M. Sullivan Director
* David B. Holtz, by signing his name hereto, does hereby sign this document on
behalf of each of the above named officers and/or directors of the Company
pursuant to the powers of attorney duly executed by such person.
By: /s/ David B. Holtz
---------------------------------------
David B. Holtz
Senior Vice President,
Finance and Treasurer
S-2
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1........................ Indenture, dated as of March 31, 2003,
between Integra LifeSciences Holdings
Corporation and Wells Fargo Bank Minnesota,
National Association, as trustee,
incorporated by reference to Exhibit 4.1 of
our Quarterly Report on Form 10-Q for the
three months ended March 31, 2003*
4.2........................ Form of 2 1/2% Convertible Senior Note due
2008 (included in Exhibit 4.1)
4.3........................ Registration Rights Agreement, dated as of
March 31, 2003, between Integra LifeSciences
Holdings Corporation and Credit Suisse First
Boston, LLC, Banc of America Securities LLC
and U.S. Bancorp Piper Jaffray Inc.*
5.1........................ Opinion of Latham & Watkins LLP*
8.1........................ Opinion Regarding Tax Matters*
12.1....................... Statement of Computation of Ratio of Earnings
to Fixed Charges*
12.1.1..................... Statement of Computation of Ratio of Earnings
to Fixed Charges**
23.1....................... Consent of PricewaterhouseCoopers LLP*
23.1.1..................... Consent of PricewaterhouseCoopers LLP**
23.2....................... Consent of WithumSmith+Brown, P.C.*
23.3....................... Consent of Latham & Watkins LLP (included in
Exhibit 5.1)
24.1....................... Power of Attorney of the Company*
25.1....................... Statement of Eligibility of Trustee on
Form T-1*
* Previously Filed
** Filed Herewith