Prepared by MerrillDirect





Exhibit
10.1


 


 


Employment Agreement


 


                This Agreement (“Agreement”)
dated February 22, 2001 and effective as of February 28, 2001 (“Effective
Date”) is by and between Integra LifeSciences Holdings Corporation, a Delaware
corporation, f/k/a Integra LifeSciences Holdings Corporation (“Integra”), and
George McKinney, Ph.D. (“McKinney”).


Background


                WHEREAS, McKinney and Integra
entered into an Employment Agreement dated December 31, 1998 (“Employment
Agreement”);


                WHEREAS, McKinney and Integra
have agreed that McKinney shall terminate his relationship with Integra
pursuant to certain terms and conditions, as set forth herein.


                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:


                1.             Prior Agreements.          
      The
Employment Agreement and all other agreements that McKinney has with Integra or
any of its affiliates, subsidiaries, predecessors-in-interest, officers or
directors, whether written or oral (collectively, the “Prior Agreements”),
shall terminate on the Effective Date of this Agreement.  This Agreement shall supersede the Prior
Agreements, and McKinney hereby agrees that he is not entitled to any
compensation under the terms of any Prior Agreements and that this Agreement
shall supersede the Prior Agreements except that certain letter dated November
15, 1999 from Stuart M. Essig, President and CEO of Integra to McKinney
regarding indemnification, a true and correct copy of which is attached hereto
as Exhibit A, provided, however, that the terms of such letter shall not apply
to actions and omissions of McKinney that take place after McKinney has ceased
serving as an officer and/or director of Integra.  Except as set forth in the previous sentence, McKinney hereby
waives any and all claims that he had, has or may have in the future against
Integra under the Prior Agreements.





                2.             Position. 
Integra hereby employs McKinney as Executive Vice President and Chief
Operating Officer at his current salary, benefits and vacation as described on
Exhibit B attached hereto (collectively, “Compensation”) until December 31,
2001, and McKinney hereby agrees to such employment and agrees to render
services to Integra in such capacity until such time.  Thereafter, McKinney shall remain on Integra’s payroll until June
30, 2002 as consultant to the President and CEO at the same Compensation,
provided, however, that (a) on June 30, 2002, McKinney’s employment with
Integra shall terminate and (b) McKinney shall be entitled to no severance or
other payments of any kind whatsoever except for a lump sum payment equivalent
to six months’ salary at the same rate of salary that is set forth on Exhibit B
(net of all applicable withholding taxes) which lump sum payment shall be payable
to him within eight business days after June 30, 2002 (the “Severance
Payment”).  Notwithstanding the
foregoing, at Integra’s option, in its sole discretion, Integra may replace
McKinney as Executive Vice President and Chief Operating Officer prior to December
31, 2001, provided, however, that, at his election, McKinney shall remain on
the Integra payroll as a consultant to the President and CEO from the date of
such replacement until June 30, 2002 at the same Compensation and shall receive
the Severance Payment within eight business days after June 30, 2002, and
provided, further, however, that if McKinney elects not to remain on the
Integra payroll after his replacement as Executive Vice President and Chief
Operating Officer, McKinney shall be entitled to receive the Severance Payment
within eight business days after the date that his employment with Integra
terminates, and, provided further, that if McKinney elects to remain on the
Integra payroll after he no longer is Executive Vice President and Chief Operating
Officer and ultimately mutually agrees with Integra to terminate his employment
with Integra on or prior to June 30, 2002, McKinney shall be entitled to
receive the Severance Payment within eight business days after the date that
his employment with Integra terminates. 
At all times after December 31, 2001, or from the date that he is
replaced as Executive Vice President and Chief Operating Officer if prior to
December 31, 2001 if McKinney has elected to remain on the Integra payroll,
McKinney shall not be required to maintain a residence in the State of New
Jersey or to be present at Integra’s principal executive offices located in
Plainsboro, New Jersey, and, after such date, McKinney shall have the right, at
his expense, to perform his work for Integra in the Boston metropolitan area or
such other location as he may select, provided, however, that McKinney shall
until June 30, 2002 make himself available to the President and CEO of Integra
at all reasonable times and agrees to travel to Integra’s sites on an as-needed
basis in order to perform his consulting duties for Integra, and provided,
further, however, that except for reasonable travel expenses and for expenses
relating to McKinney’s use of a cellular telephone on business for Integra and
telephone expenses relating to McKinney’s remote connections to the Integra
computer system based in Plainsboro, New Jersey, Integra shall not be
responsible to pay or reimburse McKinney during any period in which he is
serving as a Consultant for any costs or expenses that McKinney incurs in
maintaining his office outside Integra’s principal executive offices located in
Plainsboro, New Jersey.  In order to
receive reimbursement for the expenses set forth in this Section 2, McKinney
shall submit appropriate documentation that substantiates such expenses.


                3.             Stock Options. 
McKinney shall retain all stock options granted to him before the
Effective Date and shall not be eligible to receive any additional grants of
stock options.              All of the
stock options granted to McKinney before the Effective Date shall remain
subject to all terms and conditions provided in the plans pursuant to which
they were granted.  In addition, such
stock options shall remain vested or continue to vest, as the case may be, in
accordance with the vesting schedules provided in the stock option plans
pursuant to which they were granted, and McKinney may continue to exercise such
stock options pursuant to the terms of such stock option plans.  A schedule of the existing stock options is
appended hereto as Exhibit C.


 





                4.             Seat on Board of Directors of Integra.  Integra shall be obligated to use
reasonable
efforts to cause McKinney to continue as a member of the Board of Directors of
Integra until December 31, 2001, but the failure of the shareholders of Integra
to elect McKinney as a member of the Board of Directors of Integra shall not
constitute a breach of this Agreement by Integra.  For so long as McKinney shall serve on the Board of Directors of
Integra, McKinney shall be covered by such directors’ and officers’ liability
insurance as may be applicable to all other directors and officers of Integra.


                5.             Confidentiality. 
McKinney acknowledges that he owes a duty of confidentiality to Integra
and shall not, at any time during or after the termination of his employment by
Integra, retain in writing, use, divulge, finish, or make accessible to anyone,
without the express authorization of the board of directors of Integra, any
trade secret, private or confidential information or knowledge of Integra
obtained or acquired by him while so employed. 
All computer software, business cards, telephone lists, customer lists,
price lists, contract forms, catalogs, corporate books, records, files and
know-how acquired while an employee of Integra are acknowledged to be the
property of Integra and shall not be duplicated, removed from Integra’s
possession or premises or made use of other than in pursuit of Integra’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 Integra and,
upon termination of employment, McKinney shall deliver to Integra, 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 McKinney.


 


                6.             Inventions or Improvements.  McKinney shall promptly communicate to
Integra all ideas, discoveries and inventions which are or may be useful to
Integra or its business.  McKinney
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 Integra or gained by him
during his employment with Integra are the property of Integra, and McKinney
hereby irrevocably assigns all such ideas, discoveries, inventions and
improvements to Integra for its sole use and benefit, without additional compensation.  The provisions of this Section 6 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 relate to Integra’s business interests (including
potential business interests), and whether or not within the specific realm of
his duties.  McKinney shall, upon request
of Integra, but at no expense to McKinney, at any time during or after his
employment with Integra, sign all instruments and documents reasonably
requested by Integra and otherwise cooperate with Integra 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
Integra shall determine.


 





                7.             Covenant Not to Compete.  During the term of this Agreement and for a
period of two (2) years following the termination of McKinney’s employment,
McKinney shall not directly or indirectly: 
(i) engage, anywhere within the geographical area in which Integra is
conducting business operations or providing services as of the date of
termination of McKinney’s 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 impede the growth of tissue or migration of cells) (the “Tissue Engineering
Business”) or any  of the businesses set
forth on Exhibit D, which is attached hereto, made a part hereof and
incorporated herein by reference (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
Integra to procure orders from or do business with any customer of Integra;
(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 Integra; (v) seek to
contract with or engage (in such a way as to adversely affect or interfere with
the Business) any person or entity who has been contracted with or engaged to
manufacture, assemble, supply or deliver products, goods, materials or services
to Integra; or (vi) engage in or participate in any effort or act to induce any
of the customers, associates, consultants or employees of Integra to take any
action which might be disadvantageous to Integra; provided, however, that
nothing herein shall prohibit McKinney from owning, as a passive investor, in
the aggregate not more than five percent of the outstanding publicly traded
stock of any corporate so engaged, and provided, further, that nothing in this
Section 7 shall prevent McKinney from engaging in any activity set forth in
subsections (i) through (vi) above for an entity or person whose businesses do
not substantially compete with the Business but which might own or operate a
business that substantially competes with the Business so long as McKinney
recuses himself from engaging in any activity set forth in subsections (i)
through (vi) above for the business that 
substantially competes with the Business.  Integra hereby consents to McKinney’s joining a board of
directors of another entity after December 31, 2001, provided, however, that
such entity does not compete with the Business.


 


                8.             Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties and shall not be altered
or amended without the express written consent of both parties.


 


                9.             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, without reference to
conflict of laws principles.


 


George
McKinney


 


/s/
George McKinney          /s/ Wilma Davis


George
McKinney               Witness:  Wilma Davis


 


Integra LifeSciences
Holdings Corporation


                /s/ Stuart M. Essig

By:  Stuart M. Essig

                President and CEO





Exhibit
A


November 15, 1999 Letter
from Stuart Essig


(previously filed)





 


Exhibit B


Compensation


McKinney’s salary shall be
payable at the rate of $270,000 per year, payable on a semi-monthly basis
consistent with the manner that all other Integra employees are paid.  Except as set forth in the Agreement,
McKinney also shall be eligible for all employee benefits that Integra currently
provides all of its employees – medical, dental and vision coverage and life
and disability insurance, and McKinney shall be eligible to participate in
Integra’s 401(k) plan and in the Employee Stock Purchase Plan in accordance
with the terms of both such plans. 
McKinney shall be eligible for twenty-one days of personal time off per
year.





Exhibit C


Stock Options


	Option

  Date	Expiration

  Date	Price	Shares

  Outstanding	Shares

  Exercisable
	 	 	 	 	 
	5/21/97	5/21/02	$8.0000	50,000	45,000
	7/18/97	7/18/02	$8.0000	100,000	90,000
	12/27/97	12/27/02	$5.8750	72,084	52,481
	12/27/97	12/27/02	$5.8750	8,143	1,745
	12/31/98	12/31/04	$3.3750	9,650	0
	12/31/98	12/31/04	$3.3750	11,259	2,413
	3/29/99	3/29/05	$3.5000	3,125	0
	3/29/99	3/29/05	$3.5000	2,917	625
	12/31/99	12/31/05	$5.8750	13,015	0
	12/31/99	12/31/05	$5.8750	15,095	7,612
	12/30/00	12/30/06	$13.6250	9,148	0
	12/30/00	12/30/06	$13.6250	10,852

	0


	 	 	TOTALS	305,288	199,876




 





Exhibit D


Business


1.             Any activity with respect to
products for use in neurosurgery and neurotrauma.

2.             Any activity with respect
to products for treatment of the ears, nose and throat.

3.             Any activity with respect
to products used to treat or heal skin.