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SEVERANCE AGREEMENT
This severance agreement (this "Agreement") is made as of the 1st day of March
2006 by and between Integra LifeSciences Holdings Corporation, a Delaware
Corporation, and Robert D. Paltridge ("Executive").
Background
WHEREAS, this Agreement is intended to specify the financial
arrangements that the Company will provide to Executive upon Executive's
separation from employment with the Company in connection with or after a Change
in Control, as defined.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and intended 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 mean a minimum base salary of $250,000 per
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 shall be subject to
annual reviews, and may increase pursuant to such reviews, in
which case the increased Base Salary shall become the "Base
Salary."
(b) "Board" shall mean the Board of Directors of Company, or any
successor thereto.
(c) "Cause," as determined by the Board in good faith, shall mean
Executive has --
(1) failed to perform his stated duties in all material respects,
which failure continues for 15 days after his receipt of
written notice of the failure;
(2) intentionally and materially 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 a breach of fiduciary duty in connection with his
employment with the Company;
(5) engaged in willful misconduct that is materially and
demonstrably injurious to the Company or any of its
subsidiaries; or
(6) has been convicted or has entered a plea of guilty or nolo
contendere to a felony or to any other crime involving moral
turpitude which conviction or plea is materially and
demonstrably injurious to the Company or any of its
subsidiaries.
(d) 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 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 during any
period of at least 24 months 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
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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 any entity (a "Business Combination"),
in each case, unless immediately following such Business
Combination: (i) Company Voting Securities outstanding
immediately prior to such Business Combination (or if such
Company Voting Securities were converted pursuant to such
Business Combination, the shares into which such Company
Voting Securities were converted) (x) represent, directly or
indirectly, more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally
in the election of directors of the corporation resulting from
such Business Combination (the "Surviving Corporation"), or,
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") and (y) are held in
substantially the same proportions after such Business
Combination as they were immediately prior to such Business
Combination; (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
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.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
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(f) "Company" shall mean Integra LifeSciences Holdings Corporation
and any corporation, partnership or other entity owned
directly or indirectly, in whole or in part, by Integra
LifeSciences Holdings Corporation.
(g) "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.
(h) "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) during the one-year period following a Change in
Control, the relocation by the Company of the Executive's
office to a location more than forty (40) miles from
Princeton, New Jersey, or, where Executive's office is located
other than at the Company's headquarters in Plainsboro, New
Jersey, to a location more than forty (40) miles from the
location of Executive's office on the date hereof;
(3) Company fails to obtain the assumption of this Agreement
by any successor to Company; or
(4) during the one-year period following a Change in
Control, the Company, without Executive's express written
consent: (i) reduces Executive's base salary, bonus
opportunity (if applicable) or the aggregate fringe benefits
provided to Executive; or (ii) substantially alters the
Executive's authority and/or title or otherwise diminishes the
nature or status of Executive's responsibilities in a manner
reasonably construed to constitute a demotion.
(i) "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.
(j) "Termination Date" shall mean the date specified in the
Termination Notice.
(k) "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
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termination of Executive's employment under such provision;
(iii) specifies a Termination Date; and (iv) is given in the
manner specified in Section 16(i).
2. Term of Agreement. The term of this Agreement shall commence on the
date hereof as first written above and shall terminate on May 31, 2007,
provided, that, notwithstanding any decision of the Company not to extend this
Agreement, this Agreement shall continue in effect for a period of 12 months
beyond the date on which a Change in Control occurs if a Change in Control shall
have occurred during the term of this Agreement and while Executive is employed
by the Company.
3. Termination of Employment.
(a) Prior to a Change in Control. Executive's rights upon termination
of employment prior to a Change in Control shall be governed by the Company's
standard employment termination policies and practices applicable to Executive
in effect at the time of termination or, if applicable, any written employment
agreement between the Company and Executive other than this Agreement in effect
at the time of termination.
(b) After a Change in Control.
(i) From and after the date of a Change in Control during the
term of this Agreement, the Company shall not terminate Executive from
employment with the Company except as provided in this Section 3(b) or as a
result of Executive's Disability, Retirement or death.
(ii) From and after the date of a Change in Control during the
term of this Agreement, the Company shall have the right to terminate Executive
from employment with the Company at any time during the term of this Agreement
for Cause, by written notice to Executive, specifying the particulars of the
conduct of Executive forming the basis for such termination.
(iii) From and after the date of a Change in Control during the
term of this Agreement: (x) the Company shall have the right to terminate
Executive's employment without Cause, at any time; and (y) Executive shall, upon
the occurrence of such a termination by the Company without Cause, or upon the
voluntary termination of Executive's employment by Executive for Good Reason, be
entitled to receive the benefits provided in Section 4 hereof. Executive shall
evidence a voluntary termination for Good Reason by written notice to the
Company given within 60 days after the date of the occurrence of any event that
Executive knows or should reasonably have known constitutes Good Reason for
voluntary termination. Such notice need only identify Executive and set forth in
reasonable detail the facts and circumstances claimed by Executive to constitute
Good Reason. Any notice give by Executive pursuant to this Section 3 shall be
effective five business days after the date it is given by Executive.
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4. Payments Upon Termination of Employment.
(a) Termination with Salary Continuation . As consideration for the
restrictive covenants contained in Section 5, in the event that 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, then Company shall:
(i) pay Executive a severance amount equal to Executive's Base
Salary (determined without regard to any reduction that would give rise to Good
Reason) 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; and
(ii) maintain and provide to Executive, at no cost to Executive,
for a period ending at the earliest of (i) the end of the twelfth month after
the Termination Date and (ii) 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 for legal reasons.
(iii) If any payment or benefit to Executive under this
Agreement would be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code and, if, after reduction for any applicable
federal excise tax imposed by Section 4999 of the Code (the "Excise Tax") and
federal income tax imposed by the Code, Executive's net proceeds of the amounts
payable and the benefits provided under this Agreement would be less than the
amount of Executive's net proceeds resulting from the payment of the Reduced
Amount described below, after reduction for federal income taxes, then the
amount payable and the benefits provided under this Agreement shall be limited
to the Reduced Amount. The "Reduced Amount" shall be the largest amount that
could be received by Executive under this Agreement such that no amount paid to
Executive under this Agreement and any other agreement, contract or
understanding heretofore or hereafter entered into between Executive and the
Company (the "Other Agreements") and any formal or informal plan or other
arrangement heretofore or hereafter adopted by the Company for the direct or
indirect provision of compensation to Executive (including groups or classes of
participants or beneficiaries of which Executive is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for Executive (a "Benefit Plan") would be subject to the Excise Tax. In the
event the amount payable to Executive shall be limited to the Reduced Amount,
then Executive shall have the right, in Executive's sole discretion, to
designate those payments or benefits under this Agreement, any Other Agreements,
and/or any Benefit Plans, that should be reduced or eliminated so as to avoid
having the payment to Executive under this Agreement be subject to the Excise
Tax.
(iv) Notwithstanding any other provision in this Agreement to
the contrary, any payments that would constitute deferred compensation for
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purposes of (and subject to) Section 409A of the Code shall be deferred for a
period of six months following Executive's separation from service with the
Company.
(b) Other Termination. In the event Executive's employment
terminates other than as set forth in Section 4(a),
Executive's rights upon termination shall be governed by the
Company's standard employment termination policies and
practices applicable to Executive in effect at the time of
termination or, if applicable, any written employment
agreement between the Company and Executive other than this
Agreement in effect at the time of termination.
(c) Termination Notice. Except in the event of Executive's death,
a termination under this Agreement shall be effected by means
of a Termination Notice.
5. Restrictive Covenants.
(a) Covenant Not to Compete. During the term of this Agreement and
for a period of one year following the Termination Date of
Executive's employment, Executive shall not, without the
express written consent of the Company, directly or
indirectly: (I) engage, anywhere within the geographical areas
in which the 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"), neurosurgery business (the use of surgical
instruments, implants, monitoring products or disposable
products to treat the brain or central nervous system)
("Neurosurgery Business"), instrument business (general
surgical handheld instruments used for general purposes in
surgical procedures) ("Instrument Business"), reconstruction
business (bone fixation devices for foot and ankle
reconstruction procedures) ("Reconstruction Business") or in
any other line of business the revenues of which constituted
at least 50% of the Company's revenues during the six (6)
month period prior to the Termination Date (together with the
Tissue Engineering Business, Neurosurgery Business, Instrument
Business and Reconstruction 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 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
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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 and provided, further, however, that
nothing set forth in this Section 5(a) shall prohibit
Executive from becoming an employee or agent of, or consultant
to, any entity that is engaged in the Business so long as
Executive does not engage in any activities in the Business in
any capacity for said entity.
(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 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,
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without additional compensation. The provisions of this
Section 5(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
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. Executive expressly acknowledges that
damages alone will be an inadequate remedy for any breach or
violation of any of the provisions of this Section 5 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 5 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.
(e) Survivability. Executive's obligations under this Section 5
shall survive termination of this Agreement and/or termination
of Executive's employment regardless of the manner of
termination and shall be binding upon Executive's heirs,
executors, administrators and legal representatives.
6. Condition to Payment. Executive's receipt of the compensation
benefits set forth herein are expressly conditioned upon the individual's
execution of a general release satisfactory to the Company.
7. No Duty to Mitigate. Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.
8. No Set-off. Following a Change in Control, the Company's obligation
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or otherwise arising.
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9. Limitation on Obligations of Company. Executive understands that
this Agreement does not create an obligation on the Company or any other person
or entity to continue his employment or to exploit any Inventions. Executive
understands and acknowledges that his employment with the Company is for an
unspecified duration and constitutes "at-will" employment and that this
employment relationship may be terminated at any time, with or without cause,
either at my or the Company's option, with or without notice.
10. Executive Duties. Executive shall not terminate employment with the
Company without giving 30 days' prior notice to the Board, and during such
30-day period Executive will assist, as and to the extent reasonably requested
by the Company, in training the successor to Executive's position with the
Company. The provisions of this Section 10 shall not apply to any termination
(voluntary or involuntary) of the employment of Executive pursuant to Section
4(a) hereof.
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.
14. Legal Expenses. In the event of a termination pursuant to Section
4(a) hereof, the Company shall also pay to Executive all reasonable legal fees
and expenses incurred by Executive as a result of such termination of employment
(including all fees and expenses, if any, incurred by Executive in contesting or
disputing any such termination or in seeking to obtain to enforce any right or
benefit provided to Executive by this Agreement whether by arbitration or
otherwise).
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.
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(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 the Company.
(c) ERISA. For purposes of the Executive Retirement Income
Security Act of 1974, this Agreement is intended to be a
severance pay Executive welfare benefit plan, and not an
Executive pension plan, and shall be construed and
administered with that intention.
(d) 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.
(e) Headings. The Section headings contained in this Agreement are
for reference purposes only and shall not affect in any way
the meaning or interpretation or this Agreement. In the event
of a conflict between a heading and the content of a Section,
the content of the Section shall control.
(f) 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 the
feminine, unless the context clearly indicates otherwise. The
singular form, whenever used herein, shall mean or include the
plural form where applicable.
(g) 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.
(h) 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.
(i) 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
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or by certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set
forth below:
To the Company:
Integra LifeSciences Holdings Corporation
311 Enterprise Drive
Plainsboro, New Jersey 08536
Attn: President and CEO
With a copy to:
The Company's General Counsel:
To the Executive:
Robert D. Paltridge
35 Crescent Place
Matawan, NJ 07747
(j) 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.
(k) 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.
(l) IN WITNESS WHEREOF, this Agreement has been executed as of the
date first above written.
INTEGRA LIFESCIENCES EXECUTIVE
HOLDINGS CORPORATION
By: /s/ Stuart M.Essig /s/ Robert D. Paltridge
------------------- -----------------------
Its: President and Chief Executive Officer
Date: April 7, 2006 Date: February 27, 2006
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