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Item 1.01.
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Entry into a Material Definitive Agreement.
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On January 10, 2017, Derma Sciences Inc., a Delaware corporation
(the “
Company
”), entered into an Agreement and Plan of Merger (the “
Merger Agreement
”), by
and among the Company, Integra LifeSciences Holdings Corporation, a Delaware corporation (“
Integra
”), and Integra
Derma, Inc., a newly formed, indirect wholly-owned subsidiary of Integra (“
Merger Sub
”), pursuant to which Merger
Sub will commence a tender offer (the “
Offer
”) to purchase any and all of the issued and outstanding shares
of:
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(i)
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the Company’s common stock, par value $0.01 per share (the “
Company Shares
”),
at a price per Company Share of $7.00;
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(ii)
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the Company’s Series A Convertible Preferred Stock, par value $0.01 per share, of the Company
(the “
Series A Preferred Stock
”), at a price per share of Series A Preferred Stock of $32.00, which represents
the Series A Liquidation Preference per share of Series A Preferred Stock; and
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(iii)
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the Company’s Series B Convertible Preferred Stock, par value $0.01 per share, of the
Company (the “
Series B Preferred Stock
” and, together with the Series A Preferred Stock, the “
Company
Preferred Stock
”), at a price per share of Series B Preferred Stock of $48.00, which represents the Series B
Liquidation Preference per share of Series B Preferred Stock, in each case, payable net to the seller in cash, without
interest, subject to any withholding of taxes required by applicable law, on the terms and subject to the conditions set
forth in the Merger Agreement.
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Pursuant to the Merger Agreement, Merger Sub has agreed to commence
the Offer as promptly as reasonably practicable (but in no event later than 10 business days) after the date of the Merger Agreement.
The Merger Agreement provides that the Company may not solicit
or support any alterative acquisition proposals (subject to customary exceptions for the Company’s Board of Directors to
respond to unsolicited proposals or intervening events in the exercise of its fiduciary duties). In addition, in connection with
the termination of the Merger Agreement in certain circumstances, the Company will be obligated to pay a termination fee of $6,120,000
and/or reimburse Integra for up to $1,500,000 in certain expenses Integra incurred in connection with the transactions contemplated
by the Merger Agreement.
The closing of the Offer is subject to various conditions, including
there being validly tendered in the Offer (in the aggregate) and not properly withdrawn prior to the expiration of the Offer: (i)
that number of Company Shares and shares of Company Preferred Stock that equals at least a majority in voting power of the Company
Shares and shares of Company Preferred Stock then issued and outstanding, voting together as a single class, (ii) that number of
shares of Series A Preferred Stock that equals at least a majority of the shares of Series A Preferred Stock then issued and outstanding,
and (iii) that number of shares of Series B Preferred Stock that equals at least a majority of the shares of Series B Preferred
Stock then issued and outstanding.
As soon as practicable following the acceptance by Merger Sub
of the Company Shares and the Company Preferred Stock in the Offer, Merger Sub will be merged with and into the Company, with the
Company continuing as the surviving corporation (the “
Merger
”) on the terms and subject to the conditions set
forth in the Merger Agreement, with the Merger to be effected pursuant to Section 251(h) of the General Corporation Law of
the State of Delaware, as amended (the “
DGCL
”). As a result of, and at the effective time of the Merger (the
“
Effective Time
”), each Company Share or share of Company Preferred Stock not purchased in the Offer (other
than any Company Shares or Company Preferred Stock for which the holder has properly demanded the appraisal of such shares pursuant
to the DGCL) will be converted into the right to receive a cash amount, without interest, subject to any withholding of taxes required
by applicable law, equal to the applicable Offer Price (as defined in the Merger Agreement) for such Company Shares and Company
Preferred Stock.
At the Effective Time, subject to the terms and conditions set
forth in the Merger Agreement, each stock option to purchase Company Shares (an “
Option
”) and each restricted
stock unit award (an “
RSU
”) of the Company that is outstanding immediately prior to the Effective Time that
is vested as of the Effective Time in accordance with its terms, will automatically be cancelled and converted into the right to
receive a cash amount equal to the product of (i) the total number of Company Shares subject to such Option or RSU and (ii) (a)
in the case of any such Option, the excess (if any) of $7.00 (the “
Per Share Merger Consideration
”) over the
per-share exercise price of such Option, and (b) with respect to any such RSU, the Per Share Merger Consideration.
At the Effective Time, subject to the terms and conditions set
forth in the Merger Agreement, each Option and each RSU of the Company that is outstanding immediately prior to the Effective Time
that does not become vested as of the Effective Time in accordance with its terms (and that is not forfeited as of the Effective
Time in accordance with its terms), will automatically be converted into an option or restricted stock unit (as applicable) relating
to shares of Integra’s common stock and will generally be subject to the same terms and conditions as were applicable to
each such Option or RSU immediately prior to the Effective Time, the number, and (with respect to Options only) the exercise price,
of which will be determined in accordance with the adjustment mechanisms set forth in the Merger Agreement.
The Merger Agreement has been included to provide investors
and stockholders with information regarding its terms. Except for its status as a contractual document that establishes and governs
the legal relations among the parties thereto with respect to the transactions described herein, the Merger Agreement is not intended
to provide any other factual, business or operations information about the Company.
The Merger Agreement contains representations and warranties
that the parties to the Agreement made to and solely for the benefit of each other. The assertions embodied in such representations
and warranties are qualified by information contained in the confidential disclosure schedules that the Company delivered in connection
with signing the Merger Agreement. Accordingly, investors and stockholders should not rely on such representations and warranties
as characterizations of the actual state of facts or circumstances, since they were only made as of the date of the Merger Agreement
and are modified in important part by the underlying disclosure schedules. The information concerning the subject matter of such
representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be
fully reflected in the Company’s public disclosures.
Pursuant to the terms of the Merger Agreement, the Offer and
the Merger are subject to certain other customary closing conditions, including, but not limited to, the receipt of regulatory
clearances, the continued accuracy of the representations of the Company and the absence of a material adverse effect with respect
to the Company.
The foregoing description of the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to this
Current Report on Form 8-K (this “
Form 8-K
”) and is incorporated herein by reference.
Forward-Looking Statements
Statements contained in this Form 8-K that are not statements
of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such
as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,”
“could,” “estimate” or “continue” are intended to identify forward-looking statements. Readers
are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially
from any forward-looking statements that may be made herein or that are otherwise made by or on behalf of the Company. Factors
that may affect the Company's results include, but are not limited to product demand, market acceptance, impact of competitive
products and prices, product development, completion of an acquisition, the success or failure of negotiations and trade, legal,
social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results
and forward-looking statements include but are not limited to, those discussed in the Company's filings with the U.S. Securities
and Exchange Commission (the “
SEC
”).
IMPORTANT NOTICE
This information set forth above is for informational purposes
only and is not an offer to buy or the solicitation of an offer to sell any of the Company’s capital stock. The tender offer
described herein has not yet been commenced. On the commencement date of the tender offer, an offer to purchase, a letter of transmittal
and related documents will be filed with the SEC, will be mailed to stockholders of record and will also be made available for
distribution to beneficial owners of the common stock, the Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock. In addition, a solicitation/recommendation statement on Schedule 14D-9 will be filed with the SEC by the Company. The solicitation
of offers to buy the Company’s capital stock will only be made pursuant to the offer to purchase, the letter of transmittal
and related documents.
THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE,
A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 WILL CONTAIN IMPORTANT INFORMATION. STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT SUCH HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING
TENDERING THEIR SHARES.
When they are available, stockholders will be able to obtain the offer to purchase, the letter of transmittal,
the solicitation/recommendation statement and related documents without charge from the SEC’s website at www.sec.gov or by
contacting Derma Sciences at: 609-514-4744 or 214 Carnegie Center, Suite 300, Princeton, NJ 08540.