EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of
the 11th day of September, 1998 by and between Integra LifeSciences
Corporation, a Delaware Corporation, and John B. Henneman, III ("Executive").
Background
Company desires to employ Executive, and Executive desires
to enter into the employ of Company, on the terms and conditions contained in
this Agreement. Executive will be substantially involved with Company's
operations and management and will learn trade secrets and other confidential
information relating to Company and its customers; accordingly, the
noncompetition covenant and other restrictive covenants contained in Section
15 of this Agreement constitute essential elements hereof.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein and intending to be legally bound hereby,
the parties hereto agree as follows:
Terms
1. Definitions. The following words and phrases shall have
the meanings set forth below for the purposes of this Agreement (unless the
context clearly indicates otherwise):
(a) "Base Salary" shall have the meaning set forth in
Section 5.
(b) "Board" shall mean the Board of Directors of
Company, or any successor thereto.
(c) "Caruso" shall mean Richard E. Caruso, the Chairman
of the Board and principal stockholder of Company as of the date of this
Agreement.
(d) "Cause," as determined by the Board in good faith,
shall mean Executive has --
(1) failed to perform his stated duties and not
cured such failure (if curable) within 15 days of his
receipt of written notice of the failure;
(2) breached any provision of this Agreement and
not cured such breach (if curable) within 15 days of his
receipt of written notice of the breach;
(3) demonstrated his personal dishonesty in
connection with his employment by Company;
(4) engaged in willful misconduct;
(5) engaged in a breach of fiduciary duty;
(6) willfully violated any law, rule or
regulation, or final cease-and-desist order (other than
traffic violations or similar offenses); or
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(7) engaged in other serious misconduct of such a
nature that his continued employment may reasonably be
expected to affect Company adversely.
(e) A "Change in Control" of Company shall be deemed to
have occurred:
(1) if the "beneficial ownership" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of
securities representing more than fifty percent (50%) of the
combined voting power of Company Voting Securities (as herein
defined) is acquired by any individual, entity or group (a
"Person"), other than Caruso (or any entity controlled by
Caruso), Company, any trustee or other fiduciary holding
securities under any employee benefit plan of Company or an
affiliate thereof, or any corporation owned, directly or
indirectly, by the stockholders of Company in substantially
the same proportions as their ownership of stock of Company
(for purposes of this Agreement, "Company Voting Securities"
shall mean the then outstanding voting securities of Company
entitled to vote generally in the election of directors);
provided, however, that any acquisition from Company or any
acquisition pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of paragraph (3) of this
definition shall not be a Change in Control under this
paragraph (1); or
(2) if individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by Company's stockholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(3) upon consummation by Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of
Company or the acquisition of assets or stock of another
entity (a "Business Combination"), in each case, unless
immediately following such Business Combination: (i) more
than 50% of the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"),
or (y) if applicable, a corporation which as a result of such
transaction owns Company or all or substantially all of
Company's assets either directly or through one or more
subsidiaries (the "Parent Corporation"), is represented,
directly or indirectly, by Company Voting Securities
outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which such
Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the
holders thereof is in substantially the same proportions as
their ownership, immediately prior to such Business
Combination, of the Company Voting Securities; (ii) no
Person (excluding any employee benefit plan (or related
trust) of Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 50% or more of the combined voting power of the
then outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) except to the
extent that such ownership of Company existed prior to the
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Business Combination; and (iii) at least a majority of the
members of the board of directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving
Corporation) were members of the Incumbent Board at the time
of the execution of the initial agreement, or the action of
the Board, providing for such Business Combination; or
(4) upon approval by the stockholders of Company
of a complete liquidation or dissolution of Company.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Company" shall mean Integra LifeSciences Corporation
and any corporation, partnership or other entity owned directly or indirectly,
in whole or in part, by Integra LifeSciences Corporation.
(h) "Disability" shall mean Executive's inability to
perform his duties hereunder by reason of any medically determinable physical
or mental impairment which is expected to result in death or which has lasted
or is expected to last for a continuous period of not fewer than six months.
(i) "Good Reason" shall mean:
(1) a material breach of this Agreement by Company
which is not cured by Company within 15 days of its receipt
of written notice of the breach;
(2) without Executive's express written consent,
the Board reduces Executive's Base Salary or the aggregate
fringe benefits provided to Executive (except to the extent
permitted by Section 5 or Section 6, respectively) or
substantially alters Executive's authority and/or title in a
manner reasonably construed to constitute a demotion;
provided, Executive resigns within 30 days after the
change objected to; or
(3) Company fails to obtain the assumption of this
Agreement by any successor to Company.
(j) "Principal Executive Office" shall mean Company's
principal office for executives, presently located at 105 Morgan Lane,
Plainsboro, New Jersey 08536.
(k) "Retirement" shall mean the termination of
Executive's employment with Company in accordance with the retirement policies,
including early retirement policies, generally applicable to Company's salaried
employees.
(l) "Termination Date" shall mean the date specified in
the Termination Notice.
(m) "Termination Notice" shall mean a dated notice which:
(i) indicates the specific termination provision in this Agreement relied upon
(if any); (ii) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for the termination of Executive's employment under
such provision; (iii) specifies a Termination Date; and (iv) is given in the
manner specified in Section 16(h).
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2. Employment. Company hereby employs Executive as Senior
Vice President, Chief Administrative Officer and General Counsel, and Executive
hereby agrees to accept such employment and agrees to render services to Company
in such capacity (or in such other capacity in the future as the Board may
reasonably deem equivalent to such position) on the terms and conditions set
forth in this Agreement. Executive's primary place of employment shall be at the
Principal Executive Office.
3. Term.
(a) Term and Renewal of Agreement. Unless earlier
terminated by Executive or Company as provided in Section 10 hereof, the term of
Executive's employment under this Agreement shall commence on the date of this
Agreement and terminate on December 31, 2000. Subject to subsection 3(b), this
Agreement shall be deemed automatically, without further action, to extend for
an additional year on each January 1 following December 31, 2000.
(b) Annual Review. Prior to the first January 1 renewal
date of this Agreement under subsection 3(a), and each January 1 renewal date
thereafter, the Board shall consider extending the term of this Agreement. The
term shall continue to extend in the manner set forth in subsection 3(a) unless
either the Board does not approve the extension and provides written notice to
Executive of such event, or Executive gives written notice to Company of
Executive's election not to extend the term. In either case, the written notice
shall be given not fewer than 30 days prior to any such renewal date. References
herein to the term of this Agreement shall refer both to the initial term and
successive terms.
4. Duties. Executive shall:
(a) faithfully and diligently do and perform all such
acts and duties, and furnish such services as are assigned to Executive as of
the date this Agreement is signed, and (subject to Section 1(h)(2)) such
additional or different acts, duties and services as the Board may assign in the
future; and
(b) devote his full professional time, energy, skill and
best efforts to the performance of his duties hereunder, in a manner that will
faithfully and diligently further the business and interests of Company, and
shall not be employed by or participate or engage in or in any manner be a part
of the management or operations of any business enterprise other than Company
without the prior written consent of the Chief Executive Officer, which consent
may be granted or withheld in his sole discretion; provided, however, that
notwithstanding the foregoing, Executive may continue to provide consulting
services to Neuromedical Systems, Inc. through December 31, 1999, so long as the
performance of such consulting services by Executive does not materially
interfere with his obligation pursuant to this Agreement.
5. Compensation. Company shall compensate Executive for his
services at a minimum base salary of $160,000 per year (which amount shall be
prorated for periods of less than one year) ("Base Salary"), payable in periodic
installments in accordance with Company's regular payroll practices in effect
from time to time. Executive's Base Salary may be increased from time to time in
such amounts as may be determined by the Board, but may not be decreased without
Executive's express written consent (unless the decrease is pursuant to a
general compensation reduction applicable to all, or substantially all,
executive officers of Company). In addition to his Base Salary, Executive shall
be entitled to receive such bonus payments as may be determined appropriate by
the Board.
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6. Benefit Plans. Executive shall be entitled to
participate in and receive benefits under any employee benefit plan or
stock-based plan of Company, and shall be eligible for any other plans and
benefits covering executives of Company, to the extent commensurate with his
then duties and responsibilities fixed by the Board. Company shall not make any
change in such plans or benefits which would adversely affect Executive's rights
thereunder, unless such change affects all, or substantially all, executive
officers of Company.
7. Vacation. Executive shall be entitled to paid annual
vacation in accordance with the policies established from time to time by the
Board, which shall in no event be fewer than three weeks per annum. Regardless
of what the Company's standard vacation policy may be, Executive shall not be
entitled to extra cash payments for any vacation he does not utilize.
8. Business Expenses. Company shall reimburse Executive or
otherwise pay for all reasonable expenses incurred by Executive in furtherance
of or in connection with the business of Company, including, but not limited to,
automobile and traveling expenses and all reasonable entertainment expenses,
subject to such reasonable documentation and other limitations as may be
established by the Board.
9. Disability. In the event Executive incurs a Disability,
Executive's obligation to perform services under this Agreement will terminate,
and the Board may terminate this Agreement upon written notice to Executive.
10. Termination
(a) Termination without Salary Continuation. In the
event (i) Executive terminates his employment hereunder other than for Good
Reason, or (ii) Executive's employment is terminated by Company due to his
Retirement, Disability or death, or for Cause, Executive shall have no right to
compensation or other benefits pursuant to this Agreement for any period after
his last day of active employment.
(b) Termination with Salary Continuation (No Change in
Control). Except as provided in subsection 10(c) in the event of a Change in
Control, in the event (i) Executive's employment is terminated by Company for a
reason other than Retirement, Disability, death or Cause, or (ii) Executive
terminates his employment for Good Reason, or (iii) Company shall fail to extend
this Agreement pursuant to the provisions of Section 3, then Company shall:
(1) pay Executive a severance amount equal to the
unpaid portion of Executive's Base Salary (determined without
regard to any reduction in violation of Section 5) for the
remainder of the then current term of this Agreement, but in
no event for a period of less than one year; the severance
amount shall be paid in a single sum on the first business
day of the month following the Termination Date (unless
Executive elects, in writing and on, or not later than 30
days after, the date this Agreement is executed, to receive
the severance payment divided into 24 equal monthly
installments, paid beginning on the first business day of
the month following the Termination Date); and
(2) maintain and provide to Executive, at no cost
to Executive, for a period ending at the earliest of (i) the
expiration of the then current term of this Agreement; (ii)
the date of Executive's full-time employment by another
employer; or (iii) Executive's death, continued participation
in all group insurance, life insurance,
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health and accident, disability, and other employee benefit
plans in which Executive would have been entitled to
participate had his employment with Company continued
throughout such period, provided that such participation is
not prohibited by the terms of the plan or by Company for
legal reasons.
(c) Termination with Salary Continuation (Change in
Control). Notwithstanding anything to the contrary set forth in subsection
10(b), in the event within twelve months of a Change in Control: (i) Executive
terminates his employment for Good Reason, or (ii) Executive's employment is
terminated by Company for a reason other than Retirement, Disability, death or
Cause, or (iii) Company shall fail to extend this Agreement pursuant to
Section 3, then Company shall:
(1) pay Executive a severance amount equal to
2.99 times Executive's Base Salary (determined without regard
to any reduction in violation of Section 5) as of his last
day of active employment; the severance amount shall be paid
in a single sum on the first business day of the month
following the Termination Date (unless Executive elects, in
writing and on, or not later than 30 days after, the date this
Agreement is executed, to receive the severance payment
divided into 24 equal monthly installments, paid beginning
on the first business day of the month following the
Termination Date); and
(2) maintain and provide to Executive, at no cost
to Executive, for a period ending at the earliest of (i) the
expiration of the then current term of this Agreement; (ii)
the date of Executive's full-time employment by another
employer; or (iii) Executive's death, continued participation
in all group insurance, life insurance, health and accident,
disability, and other employee benefit plans in which
Executive would have been entitled to participate had his
employment with Company continued throughout such period,
provided that such participation is not prohibited by the
terms of the plan or by Company or legal reasons.
(d) Termination Notice. Except in the event of Executive's
death, a termination under this Agreement shall be effected by means of a
Termination Notice.
11. Withholding. Company shall have the right to withhold
from all payments made pursuant to this Agreement any federal, state, or local
taxes and such other amounts as may be required by law to be withheld from such
payments.
12. Assignability. Company may assign this Agreement and
its rights and obligations hereunder in whole, but not in part, to any entity to
which Company may transfer all or substantially all of its assets, if in any
such case said entity shall expressly in writing assume all obligations of
Company hereunder as fully as if it had been originally made a party hereto.
Company may not otherwise assign this Agreement or its rights and obligations
hereunder. This Agreement is personal to Executive and his rights and duties
hereunder shall not be assigned except as expressly agreed to in writing by
Company.
13. Death of Executive. Any amounts due Executive under this
Agreement (not including any Base Salary not yet earned by Executive) unpaid as
of the date of Executive's death shall be paid in a single sum as soon as
practicable after Executive's death to Executive's surviving spouse, or if none,
to the duly appointed personal representative of his estate.
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14. Restrictive Covenants.
(a) Covenant Not to Compete. During the term of this
Agreement and for a period of two (2) years following the Termination Date,
Executive shall not directly or indirectly: (i) engage, anywhere within the
geographical areas in which Company is conducting business operations or
providing services as of the date of Executive's termination of employment, in
the tissue engineering business (the use of implantable absorbable materials,
with or without a bioactive component, to attempt to elicit a specific cellular
response in order to regenerate tissue or to impede the growth of tissue or
migration of cells) (the "Tissue Engineering Business") or any other business
the revenues of which constituted at least 30% of Company's revenues during the
six (6) month period prior to the Termination Date (together with the Tissue
Engineering Business, the "Business"); (ii) be or become a stockholder, partner,
owner, officer, director or employee or agent of, or a consultant to or give
financial or other assistance to, any person or entity engaged in the Business;
(iii) seek in competition with the business of Company to procure orders from or
do business with any customer of Company; (iv) solicit or contact with a view to
the engagement or employment by any person or entity of any person who is an
employee of Company; (v) seek to contract with or engage (in such a way as to
adversely affect or interfere with the business of Company) any person or entity
who has been contracted with or engaged to manufacture, assemble, supply or
deliver products, goods, materials or services to Company; or (vi) engage in or
participate in any effort or act to induce any of the customers, associates,
consultants, or employees of Company to take any action which might be
disadvantageous to Company; provided, however, that nothing herein shall
prohibit Executive and his affiliates from owning, as passive investors, in the
aggregate not more than 5% of the outstanding publicly traded stock of any
corporation so engaged.
(b) Confidentiality. Executive acknowledges a duty of
confidentiality owed to Company and shall not, at any time during or after his
employment by Company, retain in writing, use, divulge, furnish, or make
accessible to anyone, without the express authorization of the Board, any trade
secret, private or confidential information or knowledge of Company obtained or
acquired by him while so employed. All computer software, business cards,
telephone lists, customer lists, price lists, contract forms, catalogs, Company
books, records, files and know-how acquired while an employee of Company are
acknowledged to be the property of Company and shall not be duplicated, removed
from Company's possession or premises or made use of other than in pursuit of
Company's business or as may otherwise be required by law or any legal process,
or as is necessary in connection with any adversarial proceeding against Company
and, upon termination of employment for any reason, Executive shall deliver to
Company, without further demand, all copies thereof which are then in his
possession or under his control. No information shall be treated as
"confidential information" if it is generally available public knowledge at the
time of disclosure or use by Executive.
(c) Inventions and Improvements. Executive shall
promptly communicate to Company all ideas, discoveries and inventions which are
or may be useful to Company or its business. Executive acknowledges that all
such ideas, discoveries, inventions, and improvements which heretofore have been
or are hereafter made, conceived, or reduced to practice by him at any time
during his employment with Company heretofore or hereafter gained by him at any
time during his employment with Company are the property of Company, and
Executive hereby irrevocably assigns all such ideas, discoveries, inventions,
and improvements to Company for its sole use and benefit, without additional
compensation. The provisions of this Section 15(c) shall apply whether such
ideas, discoveries, inventions, or improvements were or are conceived, made or
gained by him alone or with others, whether during or after usual working hours,
whether on or off the job, whether applicable to matters directly or indirectly
related to Company's business interests (including potential business
interests), and whether or not within the specific realm of his duties.
Executive shall, upon request of Company, but at
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no expense to Executive, at any time during or after his employment with
Company, sign all instruments and documents reasonably requested by Company and
otherwise cooperate with Company to protect its right to such ideas,
discoveries, inventions, or improvements including applying for, obtaining, and
enforcing patents and copyrights thereon in such countries as Company shall
determine.
(d) Breach of Covenant. Any breach or violation of the
provisions in this Section 15 by Executive will result in forfeiture by
Executive and all other persons of all rights to any further payments or
benefits under this Agreement, and in such event Company shall have no further
obligation to pay any amounts related thereto. Executive expressly acknowledges
that damages alone will be an inadequate remedy for any breach or violation of
any of the provisions of this Section 15 and that Company, in addition to all
other remedies, shall be entitled as a matter of right to equitable relief,
including injunctions and specific performance, in any court of competent
jurisdiction. If any of the provisions of this Section 15 are held to be in any
respect unenforceable, then they shall be deemed to extend only over the maximum
period of time, geographic area, or range of activities as to which they may be
enforceable.
15. Miscellaneous
(a) Amendment. No provision of this Agreement may be
amended unless such amendment is signed by Executive and such officer as may
be specifically designated by the Board to sign on Company's behalf.
(b) Nature of Obligations. Nothing contained herein
shall create or require Company to create a trust of any kind to fund any
benefits which may be payable hereunder, and to the extent that Executive
acquires a right to receive benefits from Company hereunder, such right shall be
no greater than the right of any unsecured general creditor of Company.
(c) Prior Employment. Executive represents and warrants
that his acceptance of employment with Company has not breached, and the
performance of his duties hereunder will not breach, any duty owed by him to
any prior employer or other person.
(d) Headings. The Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In the event of a conflict between
a heading and the content of a Section, the content of the Section shall
control.
(e) Gender and Number. Whenever used in this Agreement,
a masculine pronoun is deemed to include the feminine and a neuter pronoun is
deemed to include both the masculine and feminine, unless the context clearly
indicates otherwise. The singular form, whenever used herein, shall mean or
include the plural form where applicable.
(f) Severability. If any provision of this Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or render
invalid or unenforceable any other provision of this Agreement and shall not
affect the application of any provision to other persons or circumstances.
(g) Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, permitted assigns, heirs, executors, and administrators.
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(h) Notice. For purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given if hand-delivered, sent by documented
overnight delivery service or by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below:
To the Company:
Integra LifeSciences Corporation
105 Morgan Lane
Plainsboro, New Jersey 08536
Attn: President
To the Executive:
John B. Henneman, III
325 Mastia Place
Ridgewood, NJ 07450
(i) Entire Agreement. This Agreement sets forth the
entire understanding of the parties and supersedes all prior agreements,
arrangements and communications, whether oral or written, pertaining to the
subject matter hereof.
(j) Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the United States where applicable and otherwise by the laws of the State of
New Jersey.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
INTEGRA LIFESCIENCES CORPORATION
By: ________________________________
Title: _____________________________
EXECUTIVE
____________________________________
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