INTEGRA LIFESCIENCES HOLDINGS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
1. Purpose
The purpose of the Plan is to enhance the ability of Integra to offer
incentive compensation to Key Associates by rewarding the achievement of
corporate goals and specifically measured individual goals which are consistent
with and support the overall corporate goals of Integra. More specifically,
through this Plan, Integra intends to (i) reinforce strategically important
operational objectives; (ii) establish goals relating to revenue and
profitability; (iii) provide rewards based on achieving significant Employer,
departmental and individual goals and objectives; (iv) provide incentives that
result in behavior that is consistent with shareholders' desires of building a
stronger company with a higher potential for increased profitability; and (v)
incorporate an incentive program in the Integra overall compensation program to
help attract and retain Key Associates.
2. Definitions
(a) "Administrator" shall mean Integra's head of its human resources
department, whose duties are set forth in Section 4.
(b) "Award" shall mean the incentive award earned by a Key Associate
under the Plan for any Performance Period.
(c) "Base Salary" shall mean the Key Associate's annual base salary
rate in effect at the end of a Performance Period. Base Salary does not include
Awards under this Plan or any other short-term or long-term incentive plan;
imputed income from such programs as group-term life insurance; or non-recurring
earnings, such as moving expenses, but is based on salary earnings before
reductions for such items as deferrals under Employer-sponsored deferred
compensation plans, contributions under Code section 401(k) and contributions to
flexible spending accounts under Code section 125.
(d) "Board" shall mean Integra's Board of Directors as constituted from
time to time.
(e) "CEO" shall mean the Chief Executive Officer of Integra.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended or
any successor statute thereto.
(g) "Committee" shall mean the Compensation Committee of the Board.
(h) "Effective Date" shall mean August 11, 2006.
(i) "Employee" shall mean an employee of the Employer (including an
officer or director who is also an employee) and any individual characterized as
a "leased employee" within the meaning of Code section 414(n) who works
full-time for the Employer, but excluding any individual (i) employed in a
casual or temporary capacity (i.e., those hired for a
specific job of limited duration); (ii) whose terms of employment are
governed by a collective bargaining agreement that does not provide for
participation in this Plan; (iii) characterized as a "leased employee" within
the meaning of Code section 414 who does not work full-time for the Employer; or
(iv) classified by the Employer as a "contractor" or "consultant," no matter how
characterized by the Internal Revenue Service, other governmental agency or a
court. Any change of characterization of an individual by any court or
government agency shall have no effect upon the classification of an individual
as an Employee for purposes of this Plan, unless the Committee determines
otherwise.
(j) "Employer" shall mean Integra and any United States subsidiary of
Integra.
(k) "Integra" shall mean Integra LifeSciences Holdings Corporation.
(l) "Key Associate" for any Performance Period, shall mean (i) a Senior
Officer designated by the Committee to participate in the Plan or otherwise
included in the employee grade levels set forth in the definition of "Target
Award Percentage" (defined below), and (ii) each other Employee designated by
the Administrator to participate in the Plan; and who meets the eligibility
requirements described in Section 3 below. Notwithstanding the foregoing, no
Employees of Integra California, Inc., Miltex Holdings, Inc. (and any subsidiary
thereof) and Integra Radionics, Inc., and no member of any sales force of the
Employer who, as part of his or her compensation, receives commission payments,
shall be a "Key Associate."
(m) "Performance Goals" for any Performance Period, shall mean the
performance goals of Integra and/or the Employer, as specified by the
Administrator in consultation with Integra's Executive Committee, based on the
achievement of corporate EBITDA targets relating to Integra and/or the
Employer's operating plan and global sales. In addition, performance goals for a
Performance Period will relate to the individual Key Associate's attainment of
performance goals that are specified for such Key Employee. The Performance
Goals may be weighted as to corporate and individual goals for each Key
Associate, as determined at the beginning of the Performance Period or, if
later, at the time of the Key Associate's participation in the Plan.
(n) "Performance Period" shall mean the fiscal year of Integra or any
other period designated by the Committee with respect to which an Award may be
earned. The first Performance Period for the Plan shall be the period between
July 1, 2006 and December 31, 2006.
(o) "Plan" shall mean this Integra LifeSciences Holdings Corporation
Management Incentive Compensation Plan, as from time to time amended and in
effect.
(p) "Senior Officer" shall mean an executive office of Integra as
determined under applicable securities laws.
(q) "Target Award Percentage" shall mean with respect to any
Performance Period, the percentage of the Key Associate's Base Salary that the
Key Associate would earn as an Award for that Performance Period if the targeted
level of performance was achieved for each of the Performance Goals for that Key
Associate for the Performance Period. Unless otherwise specified prior to the
Performance Period (or, if later, at
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the time of the Key Associate's participation in the Plan), Target Award
Percentages will be based on a Key Associate's grade level as follows:
Grade Level Management Group Percent of Base Salary
<s> <c> <c>
- --------------------- ---------------------------- ---------------------------
12 SVP 16.25%
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10 Vice Presidents 13.75%
- --------------------- ---------------------------- ---------------------------
8 Director 6.25%
- --------------------- ---------------------------- ---------------------------
7 Directors/Managers 5%
- --------------------- ---------------------------- ---------------------------
6 Directors/Managers 5%
- --------------------- ---------------------------- ---------------------------
Notwithstanding the foregoing, if any Key Associate held more than one grade
level during the Performance Period, then the Committee may designate different
Target Award Percentages with respect to each grade level and the Award will be
pro-rated to reflect (to the nearest semi-monthly increment) the period during
which such Key Associate had each Target Award Percentage.
(r) "Target Award" for any Key Associate with respect to any
Performance Period, shall mean the dollar amount based on the Key Associate's
Target Award Percentage that the Key Associate would be eligible to earn as an
Award for that Performance Period.
3. Eligibility
Subject to the approval by the Administrator or the Committee, all
exempt Employees employed by an Employer in a Grade Level 6 or above position,
as of January 1 of each Performance Period, shall be eligible to participate in
the Plan. In addition, exempt Employees who are newly hired to a Grade Level 6
or above position after January 1 of a Performance Period, but prior to October
1 of such Performance Period, will, subject to the approval of the Administrator
or the Committee, be eligible to participate in the Plan for the Performance
Period of their hiring on a pro rata basis that is tied to their first day of
employment. Any exempt Employee who is either (i) promoted to a Grade Level 6 or
above position, or (ii) a participant in the Plan but is promoted to a higher
Grade Level position, in either case after January 1 of a Performance Period,
but prior to October 1 of such Performance Period, will, subject to the approval
of the Administrator or the Committee, be eligible to participate in the Plan
for the remaining portion of the Performance Period after the promotion on a pro
rata basis that is tied to the date of the promotion.
An exempt Employee who is hired into a Grade Level 6 or above position
on or after October 1 of a Performance Period shall not be eligible to
participate in the Plan for such Performance Period. An exempt Employee who is
not participating in the Plan for a Performance Period and is subsequently
promoted to a Grade Level 6 or above position on or after October 1 of a
Performance Period shall also not be eligible to participate in the Plan. An
exempt Employee who is participating in the Plan for a Performance Period and is
subsequently promoted to a higher position on or after October 1 of a
Performance Period shall continue at the participation level for the Performance
Period prior to the promotion.
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Except as otherwise provided in this Plan, any individual participating
in the Plan during a Performance Period who ceases to be an Employee during such
Performance Period shall cease to be eligible to participate in the Plan.
4. Administration
The administration of the Plan shall be consistent with the purpose and
the terms of the Plan. The Plan shall be administered by the Administrator,
subject to oversight by the Committee. The Administrator shall have full
authority to establish the rules and regulations relating to the Plan, to
interpret the Plan and those rules and regulations, to select Key Associates to
participate in the Plan, to determine each Key Associate's Target Award
Percentage, to approve all of the Awards, to decide the facts in any case
arising under the Plan and to make all other determinations, including factual
determinations, and to take all other actions necessary or appropriate for the
proper administration of the Plan, including the delegation of such authority or
power, where appropriate; provided, however, that with respect to Senior
Officers, the Committee shall have final decision-making authority. All powers
of the Administrator and of the Committee shall be executed in their sole
discretion, in the best interest of Integra, not as a fiduciary, and in keeping
with the objectives of the Plan and need not be uniform as to similarly situated
individuals. The CEO, other than with respect to himself, also has the powers of
the Administrator and of the Committee with respect to selecting Key Associates
in the Plan and determining each Key Associate's Target Award Percentage.
All Awards shall be made conditional upon the Key Associate's
acknowledgement, in writing or by acceptance of the Award, that all decisions
and determination of the Administrator shall be final and binding on the Key
Associate, his or her beneficiaries and any other person having or claiming an
interest under such Award. Awards need not be uniform as among Key Associates.
The Administrator's administration of the Plan, including all such rules and
regulations, interpretations, selections, determinations, approvals, decisions,
delegations, amendments, terminations and other actions, shall be final and
binding on Integra, the Employer and all Employees of the Employer, including,
the Key Associates and their respective beneficiaries.
5. Determination of Awards
(a) Setting Target Awards. Except as noted below for 2006, prior to the
beginning of the Performance Period (or after the beginning of the Performance
Period for any Employee who becomes newly eligible or has a promotion), the
Administrator (or, as appropriate, the Committee) shall determine the Employees
who shall be Key Associates during that Performance Period and determine each
Key Associate's Target Award Percentage, each of which shall be documented by
the Administrator. The Administrator's written records shall set forth (i) the
Key Associates during that Performance Period (which may be amended during the
Performance Period for new Key Associates), (ii) each Key Associate's Target
Award Percentage for that Performance Period, and (iii) the Performance Goal or
Goals (and how they are weighted, if applicable) for that Performance Period.
The Employer shall notify each Key Associate of the Key Associate's Target Award
Percentage and the applicable Performance Goals for the Performance Period as
soon as administratively practicable after the time the Target Award Percentage
and Performance Goals are established for such Performance Period. The
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Performance Goals that are established may be (but need not be) different each
Performance Period and different Performance Goals may be applicable to
different Key Associates. for 2006, the determination of Key Associates and the
Target Award Percentages for Employees eligible to participate in the Plan on
the Effective Date shall be made prior to the Effective Date.
(b) Earning An Award. Generally, a Key Associate earns an Award for a
Performance Period based on the level of achievement of the Performance Goals
established for that period. The amount of the Award may be increased as much as
50% above the Target Award based on the extent to which the level of achievement
of the Performance Goals exceeds the target level for that Performance Period
(to a maximum of 120% of the Target Performance Goals), as specified at the time
the Performance Goals are set for that Performance Period. An Award may also be
reduced below the Target Award to the extent the level of achievement of the
Performance Goals is below target, but at or above the minimum level for that
Performance Period, at the time the Performance Goals are established. A Key
Associate will receive no Award if the level of achievement of all Performance
Goals is below the minimum required to earn an Award for the applicable
Performance Period (i.e., 90% of the Target Performance Goals), as specified at
the time the Performance Goals are established.
6. Changes to the Target
The Administrator (or, with respect to Senior Officers, the Committee)
may at any time prior to the final determination of Awards change the Target
Award Percentage of any Key Associate or assign a different Target Award
Percentage to a Key Associate to reflect any change in the Key Associate's
responsibility level or position during the course of the Performance Period.
In addition, the Committee may at any time prior to the final
determination of Awards, change the performance measures or Performance Goals to
reflect a change in corporate capitalization, such as a stock split or stock
dividend, or a corporate transaction, such as a merger, consolidation,
separation, reorganization or partial or complete liquidation, or to equitably
reflect the occurrence of any extraordinary event, any change in applicable
accounting rules or principles, any change in Integra's or the Employer's method
of accounting, any change in applicable law, any change due to any merger,
consolidation, acquisition, reorganization, stock split, stock dividend,
combination of shares or other changes in Integra's or the Employer's corporate
structure or shares, or any other change of a similar nature.
7. Payment of Awards
After the end of the Performance Period, all financial information for
the Performance Period will be accumulated and the Audit Committee of the Board
will certify Integra's and/or the Employer's financial results for the relevant
Performance Period. After such certification, the Administrator will determine
and approve the Awards, if any, that will be paid based on the financial results
for the Performance Period, along with each Key Associates attainment of his or
her individual Performance Goals for the Performance Period. The Administrator
will announce the Awards that will be paid under the Plan for the Performance
Period to each Key Associate as soon as administratively practicable following
such approval by the Administrator. Subject to the provisions of Section 8,
payment of the Awards shall be made, in a single lump sum cash payment, as soon
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as administratively practicable following the close of such Performance Period,
but in no event later than March 15 of the calendar year following the
Performance Period; provided, however, that such payment may be delayed past
March 15 of such calendar year if the Committee determines that, as a result of
unforeseen circumstances beyond Integra's control, it is administratively
impracticable to make the payment by such date or that making the payment by
such date would jeopardize the solvency of Integra, then the payment will be
made as soon as administratively practicable after March 15.
8. Limitations on Rights to Payment of Awards
(a) Employment. No Key Associate shall have any right to receive
payment of an Award under the Plan for a Performance Period unless the Key
Associate remains in the employ of the Employer through the date of payment of
such Award; provided, however, that if a Key Associate's employment with the
Employer terminates prior to the end of the Performance Period, the
Administrator may provide that the Key Associate shall remain eligible to
receive a prorated portion of any earned Award, based on the number of days that
the Key Associate was actively employed and performed services during such
Performance Period in such circumstances as are deemed appropriate and provided,
further, however, that no Key Associate shall have the right to receive payment
of an Award under the Plan if (a) that Key Associate's employment has been
terminated prior to the end of the Performance Period, (b) that Key Associate
has an employment agreement with Employer and (c) the employment agreement
provides for a payment to the Key Associate upon his/her termination.
(b) Leaves of Absence/Partial Year of Participation. If a Key Associate
is on an authorized leave of absence during the Performance Period, or first
becomes eligible to participate in the Plan after the first day of the
Performance Period, such Key Associate shall be eligible to receive a prorated
portion of any Award that would have been earned, based on the number of days
that the Key Associate was actively employed and performed services during such
Performance Period. If payments are to be made under the Plan after a Key
Associate's death, such payments shall be made to the personal representative of
the Key Associate's estate.
(c) Accelerated Payment. Unless the Administrator determines otherwise,
in no event will payment be made to any Key Associate with respect to an Award
prior to the end of the Performance Period to which it relates.
9. Amendments
The Board or the Committee may at any time amend (in whole or in part)
this Plan. No such amendment which adversely affects any Key Associate's rights
to or interest in an Award earned prior to the date of the amendment shall be
effective unless the Key Associate shall have agreed thereto.
10. Termination
The Board or the Committee may terminate this Plan (in whole or in
part) at any time.
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11. Miscellaneous Provisions
(a) No Employment Right. This Plan is not a contract between Integra or
the Employer and the Employees or the Key Associates. Neither the establishment
of this Plan, nor any action taken hereunder, shall be construed as giving any
Employee or any Key Associate any right to be retained in the employ of Integra
or the Employer. Integra is under no obligation to continue the Plan. Nothing
contained in the Plan shall limit or affect in any manner or degree the normal
and usual powers of management, exercised by the officers and the Board or
committees thereof, to change the duties or the character of employment of any
Employee of the Employer or to remove the individual from the employment of the
Employer at any time, all of which rights and powers are expressly reserved.
(b) No Assignment. A Key Associate's right and interest under the Plan
may not be assigned or transferred, except as provided in Section 8 of the Plan
in the event of death, and any attempted assignment or transfer shall be null
and void and shall extinguish, in Integra's sole discretion, Integra's
obligation under the Plan to pay Awards with respect to the Key Associate.
(c) Unfunded Plan. The Plan shall be unfunded. Neither Integra nor any
Employer shall be required to establish any special or separate fund, or to make
any other segregation of assets, to assure payment of Awards.
(d) Withholding Taxes. The Employer shall have the right to deduct from
Awards paid any taxes or other amounts required by law to be withheld.
(e) Type of Plan. This Plan is intended solely to be an annual bonus
plan and is not intended to be a plan subject to the requirements of the
Employee Retirement Income Security Act of 1974, as amended.
(f) Governing Law. The validity, construction, interpretation and
effect of the Plan shall exclusively be governed by and determined in accordance
with the law of the State of New Jersey.
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