SCHEDULE 14A

                                 (RULE 14A-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

           PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES

                      EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[X] Preliminary Proxy Statement            [_] Confidential, For Use of the
                                               Commission Only (as permitted by
[_] Definitive Proxy Statement                 Rule 14a6(e)(2))

[_] Definitive Additional Materials

[_] Soliciting Material Under Rule 14a-12


                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION
             -------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

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    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)  Title of each class of securities to which transaction applies:

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(2)  Aggregate number of securities to which transaction applies:

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(3)  Per unit or other underlying value of transaction computed pursuant to
     Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
     calculated and state how it was determined):

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(4)  Proposed maximum aggregate value of transaction:

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(5)  Total fee paid:

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[_] Fee paid previously with preliminary materials:

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[_]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously. Identify the previous filing by registration statement number,
     or the form or schedule and the date of its filing.

(1)  Amount previously paid:

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(2)  Form, Schedule or Registration Statement No.:

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(3)  Filing Party:

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(4)  Date Filed:

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                                       2

<PAGE>


[INTEGRA LIFESCIENCES LOGO]
311C ENTERPRISE DRIVE
PLAINSBORO, NEW JERSEY 08536
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 2001

To the Stockholders of Integra LifeSciences Holdings Corporation:

     NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting (the "Meeting") of the
Stockholders of Integra LifeSciences Holdings Corporation (the "Company") will
be held as, and for the purposes, set forth below:

TIME                    9:00 a.m. on Tuesday, May 15, 2001

PLACE                   Princeton Holiday Inn
                        4355 Ridge Road at Route 1
                        Princeton, New Jersey 08540

ITEMS OF BUSINESS        1.   To elect six directors of the Company to hold
                              office as specified in the accompanying Proxy
                              Statement.

                         2.   To consider and vote upon a proposal to approve
                              and adopt the Company's 2001 Equity Incentive
                              Plan.

                         3.   To consider and vote upon a proposal to ratify and
                              approve all actions taken by the Board of
                              Directors on February 16, 2000 in connection with
                              an amendment to the Company's Certificate of
                              Designation, Rights and Preferences of Series B
                              Convertible Preferred Stock, the purpose of which
                              was to ensure that the rights and preferences of
                              the Series B Convertible Preferred Stock would be
                              substantially identical to the rights and
                              preferences of the Series C Convertible Preferred
                              Stock.

                         4.   To consider and vote upon a proposal to approve an
                              amendment to the Company's Certificate of
                              Designation, Rights and Preferences of Series B
                              Convertible Preferred Stock, the purpose of which
                              is to make certain changes to clarify the
                              numbering of certain paragraphs and internal
                              references contained therein.

                         5.   To consider and vote upon a proposal to approve an
                              amendment to the Company's Certificate of
                              Designation, Rights and Preferences of Series C
                              Convertible Preferred Stock, the purpose of which
                              is to make certain changes to clarify the
                              numbering of certain paragraphs and internal
                              references contained therein.

                         6.   To ratify the appointment of
                              PricewaterhouseCoopers LLP as the Company's
                              auditors for the current fiscal year.

                         7.   To act upon any other matters properly coming
                              before the meeting or any adjournment or
                              postponement thereof.

RECORD DATE              Holders of record of the Company's Common Stock, Series
                         B Convertible Preferred Stock and Series C Convertible
                         Preferred Stock at the close of business on April 9,
                         2001 are entitled to notice of, and to vote at, the
                         Meeting and any adjournment or postponement thereof. A
                         complete list of stockholders entitled to vote at the
                         Meeting will be available for inspection by any
                         stockholder for any purpose germane to the Meeting for
                         ten days prior to the Meeting during ordinary business
                         hours at the Company's headquarters located at 311C
                         Enterprise Drive, Plainsboro, New Jersey.

ANNUAL REPORT            The 2000 Annual Report of Integra LifeSciences
                         Holdings Corporation is being mailed simultaneously
                         herewith. The Annual Report is not to be considered
                         part of the proxy solicitation materials.

IMPORTANT                In order to avoid additional soliciting expense to the
                         Company, please MARK, SIGN, DATE and MAIL your proxy
                         PROMPTLY in the return envelope provided, even if you
                         plan to attend the Meeting. If you attend the Meeting
                         and wish to vote your shares in person, arrangements
                         will be made for you to do so. 

                                        By order of the Board of Directors,

                                        /s/John B. Henneman, III
Plainsboro, New Jersey                  John B. Henneman, III
April 20, 2001                          SECRETARY


<PAGE>


                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION
                              311C ENTERPRISE DRIVE
                          PLAINSBORO, NEW JERSEY 08536
                               ------------------
                                 PROXY STATEMENT
                               ------------------
                         ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD ON MAY 15, 2001


PURPOSE OF MEETING

            This Proxy  Statement is being  furnished to holders of common stock
("Common  Stock"),  Series B Convertible  Preferred  Stock  ("Series B Preferred
Stock") and Series C Convertible Preferred Stock ("Series C Preferred Stock" and
together with the Series B Preferred  Stock,  the "Preferred  Stock") of Integra
LifeSciences  Holdings  Corporation  (the  "Company")  in  connection  with  the
solicitation  of  proxies by the Board of  Directors  of the  Company  from such
stockholders  for use at the 2001 annual meeting of  stockholders of the Company
(the  "Meeting") to be held on Tuesday,  May 15, 2001 at 9:00 a.m. local time at
the  Princeton  Holiday Inn,  Princeton,  New Jersey and at any  adjournment  or
postponement  thereof.  This  Proxy  Statement,  the  enclosed  Notice of Annual
Meeting  of  Stockholders  and the form of  proxy  are  first  being  mailed  to
stockholders of the Company on or about April 20, 2001.

            At the  Meeting,  the  stockholders  of the Company will be asked to
consider and vote upon:

            (i)   the  election of six  directors to serve until the next annual
meeting  of  stockholders  and  until  their  successors  are duly  elected  and
qualified (see "Proposal 1. Election of Directors");

            (ii)  a Proposal  to approve  and adopt the  Company's  2001  Equity
Incentive Plan (see "Proposal 2. 2001 Equity Incentive Plan");

            (iii) a Proposal  to ratify and  approve  all  actions  taken by the
Board of Directors on February 16, 2000 in  connection  with an amendment to the
Certificate of  Designation,  Rights and  Preferences of the Company's  Series B
Preferred  Stock,  the  purpose  of which  was to  ensure  that the  rights  and
preferences of the Series B Convertible  Preferred Stock would be  substantially
identical to the rights and  preferences  of the Series C Convertible  Preferred
Stock (see  "Proposal  3.  Ratification  of February  16, 2000  Amendment to the
Certificate of  Designation,  Rights and  Preferences of the Company's  Series B
Preferred Stock");

            (iv)  a Proposal  to  approve an  amendment  to the  Certificate  of
Designation,  Rights and Preferences of the Company's  Series B Preferred Stock,
the  purpose of which is to make  certain  changes to clarify the  numbering  of
certain paragraphs and internal  references  contained therein (see "Proposal 4.
Approval of Amendment to the Certificate of Designation,  Rights and Preferences
of the Company's Series B Preferred Stock");

            (v)   a Proposal  to  approve an  amendment  to the  Certificate  of
Designation,  Rights and Preferences of the Company's  Series C Preferred Stock,
the  purpose of which is to make  certain  changes to clarify the  numbering  of
certain paragraphs and internal  references  contained therein (see "Proposal 5.
Approval of Amendment to the Certificate of Designation,  Rights and Preferences
of the Company's Series C Preferred Stock"); and

            (vi)  the ratification of the appointment of  PricewaterhouseCoopers
LLP as the  Company's  auditors  for the current  fiscal year (see  "Proposal 6.
Ratification of Auditors").


<PAGE>


            The  Board  knows  of  no  matters  that  will  be   presented   for
consideration at the Meeting other than those matters set forth in the Notice of
Annual Meeting of Stockholders.  If any other matters are properly  presented at
the Meeting or any postponement or adjournment thereof, the persons named in the
enclosed  proxy  and  acting  thereunder  will  have  authority  to vote on such
matters,  to the extent  permitted by the rules of the  Securities  and Exchange
Commission  (the  "Commission"),  in accordance with the judgment of the persons
voting such proxies.

RECORD DATE

            Only  stockholders of record as of the close of business on April 9,
2001 (the  "Record  Date")  will be  entitled  to notice of, and to vote at, the
Meeting or at any  adjournment or postponement  thereof.  As of the Record Date,
there were  outstanding  17,642,155  shares of Common Stock,  100,000  shares of
Series B Preferred Stock (which are currently  convertible into 2,617,801 shares
of Common  Stock)  and  54,000  shares of Series C  Preferred  Stock  (which are
currently  convertible into 600,000 shares of Common Stock),  which  constituted
the only outstanding securities of the Company entitled to vote.

VOTING AND REVOCABILITY OF PROXIES

            On each  matter  voted upon at the Meeting  and any  adjournment  or
postponement  thereof,  holders of Common  Stock and  Preferred  Stock will vote
together as a single class. In addition,  with respect to the Proposal to ratify
and approve all actions  taken by the Board of Directors on February 16, 2000 in
connection  with an  amendment to the  Certificate  of  Designation,  Rights and
Preferences  of the  Company's  Series B  Preferred  Stock and the  Proposal  to
approve an amendment to the Certificate of  Designation,  Rights and Preferences
of the Company's Series B Preferred Stock, the holders of the Series B Preferred
Stock are entitled to vote  separately as a class.  With respect to the Proposal
to  approve  an  amendment  to  the  Certificate  of  Designation,   Rights  and
Preferences of the Company's Series C Preferred Stock, the holders of the Series
C Preferred Stock are entitled to vote separately as a class.

            Each share of Common Stock  entitles the holder of record thereof to
one vote,  each share of Series B Preferred Stock entitles the holder thereof to
26 votes and each share of Series C Preferred  Stock entitles the holder thereof
to 11 votes.  Each stockholder may vote in person or by properly  executed proxy
on all matters  that  properly  come before the Meeting and any  adjournment  or
postponement  thereof.  The  presence,  in person or by proxy,  of  stockholders
entitled to vote a majority of the shares of Common  Stock and  Preferred  Stock
outstanding  on the Record Date will  constitute a quorum for purposes of voting
at the Meeting.  Where a separate vote by a class is required,  the presence, in
person or by proxy, of stockholders entitled to vote a majority of the shares of
such class  outstanding on the Record Date will constitute a quorum for purposes
of voting at the Meeting.

            Directors are to be elected by the  affirmative  vote of the holders
of a  plurality  of the  issued  and  outstanding  shares  of  Common  Stock and
Preferred  Stock present,  in person or by proxy, at the Meeting and entitled to
vote.  Cumulative  voting in the  election of directors  is not  permitted.  The
affirmative  vote of the  holders  of a majority  of the issued and  outstanding
shares of Common Stock and Preferred  Stock present,  in person or by proxy,  at
the  Meeting  and  entitled  to vote is  required  to approve and adopt the 2001
Equity  Incentive Plan and to ratify the  appointment of  PricewaterhouseCoopers
LLP as the Company's  auditors for the current fiscal year. The affirmative vote
of the  holders of a majority  of the  issued and  outstanding  shares of Common
Stock and Preferred  Stock entitled to vote thereon voting as a single class and
the affirmative  vote of the holders of two-thirds of the issued and outstanding
shares of Series B Preferred Stock entitled to vote thereon voting as a separate
class is  required  to ratify  and  approve  all  actions  taken by the Board of
Directors  on  February  16,  2000  in  connection  with  an  amendment  to  the
Certificate of  Designation,  Rights and  Preferences of the Company's  Series B
Preferred  Stock and to approve an amendment to the  Certificate of Designation,
Rights and Preferences of the


                                       2

<PAGE>


Company's  Series B Preferred  Stock.  The affirmative  vote of the holders of a
majority  of the issued and  outstanding  shares of Common  Stock and  Preferred
Stock entitled to vote thereon voting as a single class and the affirmative vote
of the holders of  two-thirds of the issued and  outstanding  shares of Series C
Preferred  Stock entitled to vote thereon voting as a separate class is required
to  approve  an  amendment  to  the  Certificate  of  Designation,   Rights  and
Preferences of the Company's Series C Preferred Stock.

            The enclosed proxy is being  solicited by the Board of Directors for
use in connection with the Meeting and any postponement or adjournment  thereof.
All  properly  executed  proxies  received  prior  to or at the  Meeting  or any
postponement  or  adjournment  thereof and not  revoked in the manner  described
below  will be  voted in  accordance  with the  instructions  indicated  on such
proxies. If no instructions are indicated,  such proxies will be voted "FOR" the
approval and adoption of each of the proposals set forth herein.

            If a proxy is marked as  "Withhold  Authority"  or  "Abstain" on any
matter,  or if  specific  instructions  are  given  that  no vote be cast on any
specific matter (a "Specified  Non-Vote"),  the shares represented by such proxy
will not be voted on such matter. Abstentions will be included within the number
of  shares  present  at the  Meeting  and  entitled  to  vote  for  purposes  of
determining  whether  such  matter has been  authorized,  but  nominee and other
Specified Non-Votes will not be so included.

            If a quorum  for the  Meeting is not  obtained  or, as to any one or
more  proposals,  if fewer  shares are voted in favor of the  Proposal  than the
number of shares  required for such  approval,  the Meeting may be adjourned for
the purpose of obtaining  additional  proxies or votes or for any other purpose.
At any subsequent  reconvening of the Meeting,  all proxies will be voted in the
same  manner as such  proxies  would  have been  voted at the  original  meeting
(except  for any  proxies  that have  theretofore  effectively  been  revoked or
withdrawn),  notwithstanding  that they may have been  effectively  voted on the
same or any  other  matter  at a  previous  meeting.  Proxies  voting  against a
Proposal  set forth  herein  will not be used to adjourn  the  Meeting to obtain
additional proxies or votes with respect to such proposal.

            Proxies may be revoked by those persons executing the proxies by (a)
delivering  to the  Secretary  of the Company at or before the Meeting a written
notice of revocation  bearing a later date than the proxy,  (b) duly executing a
subsequent  proxy relating to the same shares of Common Stock or Preferred Stock
and  delivering  it to the  Secretary of the Company at or before the Meeting or
(c)  attending  the Meeting  and voting in person  (although  attendance  at the
Meeting will not in and of itself constitute revocation of a proxy). Any written
notice  revoking a proxy  should be  delivered  at or prior to the  Meeting  to:
Secretary,  Integra LifeSciences  Holdings  Corporation,  311C Enterprise Drive,
Plainsboro, New Jersey 08536.

            All expenses of this  solicitation,  including the cost of preparing
and mailing this Proxy Statement,  will be borne by the Company.  In addition to
solicitation  by  use of the  mail,  proxies  may  be  solicited  by  telephone,
telegraph or personally by the directors, officers and employees of the Company,
who will  receive no extra  compensation  for their  services.  The Company will
reimburse banks, brokerage firms and other custodians,  nominees and fiduciaries
for reasonable  expenses incurred by them in sending proxy soliciting  materials
to beneficial owners of shares of Common Stock.

                                       3

<PAGE>


                        PROPOSAL 1. ELECTION OF DIRECTORS


            The Board of  Directors  has  nominated  six persons for election as
directors whose terms will expire at the 2002 Annual Meeting of Stockholders, or
when their successors are elected and qualified. The proxies cannot be voted for
a greater number of persons than the following nominees:  Keith Bradley,  Ph.D.,
Richard E. Caruso, Ph.D., Stuart M. Essig, George W. McKinney,  III, Ph.D., Neal
Moszkowski  and James M. Sullivan,  each of whom are currently  directors of the
Company.  Mr. Moszkowski is the nominee of the holders of the Company's Series B
Preferred  Stock,  who have the right to nominate one designee to the  Company's
Board of Directors so long as the original  purchasers  retain at least one half
of their initial investment in the Series B Preferred Stock.

            If any nominee  should be unable to serve as director,  an event not
now  anticipated,  it is intended  that the shares of Common Stock and Preferred
Stock  represented by proxies will be voted for the election of such  substitute
as the Board of Directors may nominate.  Set forth below is certain  information
with respect to the persons nominated as directors of the Company.

            KEITH BRADLEY,  PH.D. has been a director of the Company since 1992.
He is the  Professor  of  Management  at The City  University  Business  School,
London,  England, and a Director of Ockham Holdings plc, a London Stock Exchange
corporation.  Dr. Bradley was the founder and formerly Executive Director of the
London  School of Business  Performance  Group,  an  interdisciplinary  research
institute  which  specializes in  organizational  performance.  He has extensive
experience   as  a  consultant  to  a  variety  of  business,   government   and
international   organizations   and  has  published  widely  on  management  and
industrial  policy.  Dr.  Bradley  has served as Visiting  Professor  at Harvard
Business  School,  the UCLA Graduate School of Management and the Wharton School
of the University of  Pennsylvania.  Dr. Bradley received a Diploma in Education
from Culham  College and a Ph.D.  degree in  Economics  from the  University  of
Essex. Dr. Bradley is 56 years old.

            RICHARD E. CARUSO,  PH.D. has served as the Company's Chairman since
March 1992.  Prior to December  1997,  Dr. Caruso served as the Company's  Chief
Executive  Officer  since  March  1992  and as  the  Company's  President  since
September  1995.  From 1969 to 1992, Dr. Caruso was a principal of LFC Financial
Corporation,  a  project  finance  company,  where  he was also a  director  and
Executive Vice President.  Dr. Caruso is on the Board of Susquehanna University,
The Baum School of Art and The  Uncommon  Individual  Foundation  (Founder).  He
received a B.S.  degree from  Susquehanna  University,  an M.S.B.A.  degree from
Bucknell  University  and a Ph.D.  degree from the London  School of  Economics,
University of London (United Kingdom). Dr. Caruso is 57 years old.

            STUART M. ESSIG has served as President and Chief Executive  Officer
and as a director  of the  Company  since  December  1997.  Prior to joining the
Company, Mr. Essig supervised the medical technology practice at Goldman,  Sachs
& Co. as a  managing  director.  Mr.  Essig had ten years of broad  health  care
experience at Goldman Sachs serving as a senior merger and acquisitions  advisor
to  a  broad   range  of  domestic   and   international   medical   technology,
pharmaceutical and biotechnology clients. Mr. Essig received an A.B. degree from
the  Woodrow  Wilson  School of Public and  International  Affairs at  Princeton
University  and an M.B.A.  and a Ph.D.  degree in Financial  Economics  from the
University of Chicago,  Graduate School of Business.  Mr. Essig also serves as a
director of Vital  Signs,  Incorporated  and St. Jude Medical  Corporation.  Mr.
Essig is 39 years old.

            GEORGE W.  MCKINNEY,  III, PH.D. has served the Company as Executive
Vice President and Chief Operating Officer since May 1997 and as a member of the
Board of Directors since December 1992. Between 1997 and 1999, Dr. McKinney also
served as Vice  Chairman of the


                                       4

<PAGE>


Company's  Board of Directors.  Between 1990 and 1997, Dr. McKinney was Managing
Director of Beacon  Venture  Management  Corporation,  a venture  capital  firm.
Between 1992 and 1997, Dr. McKinney also served as President and Chief Executive
Officer of Gel  Sciences,  Inc.  and GelMed,  Inc., a privately  held  specialty
materials  firm with  development  programs in both the  industrial  and medical
products  fields.  From 1983 to 1989,  Dr.  McKinney was a Managing  Director at
American  Research &  Development,  a venture  capital  firm.  Before 1990,  Dr.
McKinney held other positions in the venture capital industry, was President and
Chief Executive Officer of American Superconductor,  Inc., and served in various
manufacturing, engineering and financial positions at Corning, Inc. Dr. McKinney
holds an B.S. in  Management  from MIT and a Ph.D.  in Strategic  Planning  from
Stanford  University.  Dr. McKinney is 57 years old. Dr.  McKinney  announced in
February  2001 that he will  step down as  Executive  Vice  President  and Chief
Operating  Officer when his employment  agreement  expires on December 31, 2001.
Dr.  McKinney plans to be available as a consultant to the Company  through June
30, 2002.

            NEAL  MOSZKOWSKI has been a director of the Company since March 1999
and is the designee of the holders of the  Company's  Series B Preferred  Stock.
Mr.  Moszkowski  has been a partner of Soros Private  Equity  Partners LLC since
August 1998 and is currently an employee of Soros Private Funds  Management LLC.
Prior  thereto,  Mr.  Moszkowski  was an  Executive  Director  of Goldman  Sachs
International  and a Vice  President  of Goldman,  Sachs & Co. in its  Principal
Investment  Area, which he joined in August 1993. He received a B.A. degree from
Amherst College and an M.B.A.  degree from Stanford  University.  Mr. Moszkowski
also serves as a director of Bluefly,  Inc. and  MedicaLogic/Medscape,  Inc. Mr.
Moszkowski is 35 years old.

            JAMES M.  SULLIVAN  has been a director of the  Company  since 1992.
Since 1986, he has held several positions with Marriott International, Inc. (and
its  predecessor,  Marriott  Corp.),  including  Vice  President  of Mergers and
Acquisitions,   and  his  current   position  of  Executive  Vice  President  of
Development  for the Lodging Group of Marriott.  From 1983 to 1986, Mr. Sullivan
was Chairman, President and Chief Executive Officer of Tenly Enterprises,  Inc.,
a privately  held company  operating  105  restaurants.  Prior to 1983,  he held
senior management positions with Marriott Corp., Harrah's  Entertainment,  Inc.,
Holiday Inns, Inc., Kentucky Fried Chicken Corp. and Heublein,  Inc. He also was
employed as a senior auditor with Arthur Andersen & Co. and currently  serves as
a director of Global Vacation Group, Inc. Mr. Sullivan received a B.S. degree in
Accounting  from Boston  College and an M.B.A.  degree  from the  University  of
Connecticut. Mr. Sullivan is 57 years old.

  THE BOARD OF DIRECTORS HEREBY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
             VOTE "FOR" THE ELECTION OF EACH NOMINEE FOR DIRECTOR.


INFORMATION CONCERNING MEETINGS AND CERTAIN COMMITTEES

            The Board of Directors held five formal meetings during 2000. During
2000, all incumbent  directors attended in person or by conference  telephone at
least  75% of the  total  number  of  meetings  of the  Board of  Directors  and
committees  of the Board on which  they  served  during  their  incumbency.  The
Company has a standing Audit Committee,  Compensation Committee and Equity Award
Committee of its Board of Directors.

            The  Audit   Committee   is  comprised   entirely  of   nonemployee,
independent  members  of the Board of  Directors  and  operates  under a written
charter  adopted by the Board of  Directors.  A copy of the Charter of the Audit
Committee  is attached as APPENDIX D. The Audit  Committee  assists the Board of
Directors in fulfilling  its  responsibilities  of ensuring  that  management is
maintaining  an  adequate  system


                                       5

<PAGE>


of internal  controls  such that there is reasonable  assurance  that assets are
safeguarded  and that  financial  reports are properly  prepared,  that there is
compliance  with  management's  policies  and  procedures,  and  that  there  is
consistent  application  of  generally  accepted  accounting  principles,  makes
recommendations to the Board of Directors regarding the selection of independent
accountants;  and reviews the results and scope of the audit and other  services
provided  by the  Company's  independent  accountants.  During  2000,  the Audit
Committee was comprised of Mr. Bradley,  Mr. Sullivan and Mr. Moszkowski and met
four times.

            The Compensation  Committee makes decisions  concerning salaries and
incentive  compensation  for employees and  consultants  of the Company.  During
2000, the  Compensation  Committee was comprised of Drs.  Bradley and Caruso and
Mr. Moszkowski and met twice.

            The Equity Award Committee makes  decisions  concerning  issuance of
stock  options and other  equity  awards to  employees  and  consultants  of the
Company and also  administers  the Company's  2000 Equity  Incentive  Plan,  the
Company's  1992,  1998 and 1999 Stock Option Plans,  the Company's 1993 and 1996
Incentive  Stock Option and  Non-Qualified  Stock Option  Plans,  the  Company's
Employee Stock Purchase Plan and Deferred  Compensation Plan (collectively,  the
"Approved  Plans")  and, if approved by the  stockholders  at the  Meeting,  the
Company's 2001 Equity  Incentive  Plan.  During 2000, the Equity Award Committee
was comprised of Dr. Bradley and Mr. Moszkowski and met four times.

COMPENSATION OF DIRECTORS

            In 2000,  the  Company  paid  $27,500 to Dr.  Caruso and granted him
options to purchase  15,000  shares of Common  Stock under the 1998 Stock Option
Plan for his  service as Chairman of the Board of  Directors.  Additionally,  in
2000, the Company granted each of its other  non-employee  directors  options to
purchase  10,000  shares of Common  Stock  under the 1998 Stock  Option  Plan as
compensation  for their service on the Board of  Directors.  The Company did not
pay any cash compensation to its other directors for their service as directors.
The Company also pays reasonable travel and  out-of-pocket  expenses incurred by
non-employee directors in connection with attendance at meetings to transact the
business of the Company or  attendance  at meetings of the Board of Directors or
any committee thereof.

                                       6

<PAGE>


                     PROPOSAL 2. 2001 EQUITY INCENTIVE PLAN

            The  Board of  Directors  believes  that an  equity  incentive  plan
enhances  the ability of the Company to attract  and retain  officers  and other
employees (collectively,  "Eligible Employees") and directors,  consultants, and
certain other non-employees (together with the Eligible Employees, the "Eligible
Individuals")  and to motivate them to exercise  their best efforts on behalf of
the Company, any subsidiary or parent of the Company (a "Related  Corporation"),
or any  affiliate  of the  Company or a Related  Corporation.  As of January 31,
2001,  there  remained  less than 350,000  shares of Common Stock  available for
grant as  equity-based  awards  under  the  Approved  Plans,  which the Board of
Directors  does not believe will be adequate to meet the  anticipated  number of
grants of equity-based awards for the upcoming year.  Accordingly,  the Board of
Directors  proposes and recommends that the  stockholders  approve the Company's
2001 Equity Incentive Plan (the "Plan"),  which the Board of Directors  approved
on February 22, 2001, subject to stockholder  approval.  Stockholder approval of
the Plan is necessary in order to preserve  full  deductibility  of  performance
based awards under the Plan.  In addition,  stockholder  approval is required in
order to grant  incentive stock options  ("ISO"),  within the meaning of Section
422 of the  Internal  Revenue Code of 1986,  as amended  (the "Code")  under the
Plan.

            The  text of the  Plan  is  attached  as  APPENDIX  A to this  Proxy
Statement. The following description of the Plan is intended merely as a summary
of its  principal  features and is qualified in its entirety by reference to the
Plan itself. On March 30, 2001, the closing price of a share of the Common Stock
on the Nasdaq National Market was $13.625.

            1.    NUMBER OF SHARES.  The total  number of shares of Common Stock
that can be delivered  under the Plan is 2,000,000.  No  individual  may receive
options  and/or  stock  appreciation  rights for more than  1,000,000  shares of
Common Stock during any calendar year under the Plan. If any award that requires
the  participant  to  exercise  it in order for  shares  of  Common  Stock to be
delivered  terminates  without  having been  exercised in full,  or if any award
payable in cash or shares of Common  Stock is paid in cash rather  than  shares,
the number of shares of Common Stock as to which such award was not exercised or
for which cash was paid will  continue to be  available  for future  awards.  In
addition,  the aggregate fair market value (determined at the time the option is
granted) of shares of Common  Stock with  respect to which ISOs are  exercisable
for the first time by any participant during a calendar year (under the Plan and
under any other ISO plan of the Company or a Related Corporation) may not exceed
$100,000. The shares of Common Stock issued under the Plan may be authorized but
unissued  shares or  reacquired  shares,  and the  Company may  purchase  shares
required for this  purpose,  from time to time,  if it deems such purchase to be
advisable.

            2.    ADMINISTRATION. The Plan will be administered by the Company's
Equity Award  Committee,  which  consists of not fewer than two directors of the
Company's  Board  of  Directors  who  are  designated  by the  entire  Board  of
Directors.  Under the Plan,  the Equity Award  Committee will have the authority
(i) to select the Eligible Individuals to be granted awards under the Plan, (ii)
to grant  awards on behalf  of the  Company,  and (iii) to set the terms of such
awards.  Currently, the members of the Equity Award Committee are Keith Bradley,
Ph.D. and Neal Moszkowski.

            3.    ELIGIBILITY.  Only  Eligible  Employees  of the  Company  or a
Related  Corporation are eligible to receive ISOs under the Plan. Other types of
awards may be granted to all Eligible Individuals.  As of the date of this Proxy
Statement,  there are  approximately  460 Eligible  Employees of the Company and
Related  Corporations  eligible to receive ISOs and  approximately  510 Eligible
Individuals  (including  Eligible  Employees) eligible to receive other types of
awards.  The  benefits  that will be  received  under the Plan by the  Company's
current executive officers, directors and all other Eligible Individuals are not
currently determinable.

                                       7

<PAGE>


            4.    TERM OF PLAN.  The Plan by its terms has no  expiration  date.
However,  no ISO may be granted under the Plan after February 21, 2011, although
ISOs outstanding on February 21, 2011 may extend beyond that date.

            5.    STOCK OPTIONS.  The Plan permits the Equity Award Committee to
grant options that qualify as ISOs under the Code, and stock options that do not
so qualify ("nonqualified stock options" or "NQSOs"). The Equity Award Committee
determines the exercise price of each option.  However, the exercise price of an
ISO may not be less than 100% of the fair  market  value of the shares of Common
Stock  on  the  date  of  grant  (110%  in  the  case  of an  ISO  granted  to a
greater-than-10%  stockholder). The exercise price of any option may not be less
than the par value of the shares.  The Equity Award Committee may not reduce the
exercise  price of an option after it is granted.  For purposes of the Plan, the
per share fair market value of the  Company's  Common Stock on the relevant date
equals the quoted closing price on such date.

            The term of each option will be fixed by the Equity Award Committee,
but may not exceed 10 years  from the date of grant.  The  maximum  term of each
option  is  reduced  to 5 years  from  the  date of  grant in the case of an ISO
granted to a stockholder  owning,  directly or indirectly,  more than 10% of the
total  combined  voting power of all classes of the  Company's  capital stock (a
"Greater-Than-10%  Stockholder").  The Equity Award  Committee will determine at
what time or times  each  option  may be  exercised;  however,  no option may be
exercisable  less  than  three  months  after  its  grant.  Options  may be made
exercisable in  installments,  and the Equity Award Committee may accelerate the
exercisability of options.

            The exercise  price of an option  granted under the Plan may be paid
in full (i) in cash or by check,  bank draft, or money order,  (ii) in shares of
Common Stock previously acquired by the participant  (subject to certain holding
period requirements),  (iii) in shares of Common Stock acquired upon exercise of
the  option,  (iv) by  delivery  of an  irrevocable  undertaking  by a broker to
deliver  promptly to the Company  sufficient funds to pay the exercise price, or
(v) by any combination of the foregoing.

            With the consent of the participants, the Equity Award Committee may
cancel any or all options and grant substitute  options therefore.  However,  no
substitute  options  shall be  granted  within  six  months  before or after the
cancellation  of any option.  Any  substitute  options shall be granted at their
then fair market  value or par value,  whichever  is greater.  The Equity  Award
Committee  may also  permit an  Optionee  to  voluntarily  surrender  all or any
portion of an option as a condition  to the grant of a new option.  The terms of
any such new option shall be set by the Equity Award  Committee  under the terms
of the Plan without regard to the terms of the surrendered option.

            6.    STOCK  APPRECIATION  RIGHTS.  The Equity Award  Committee  may
grant  stock  appreciation  rights,  either  alone or in  tandem  with  options,
entitling  the  participant  upon  exercise  to receive an amount in cash and/or
shares of Common Stock (as determined by the Equity Award  Committee),  measured
by the  increase  since the date of grant in the value of the shares  covered by
such right.  Stock  appreciation  rights  granted in tandem with options will be
exercisable  only at such times,  and to the extent,  that the related option is
exercisable  and will  terminate  upon the exercise of the related  option.  The
Equity Award  Committee  may  accelerate  the dates on which stock  appreciation
rights not granted in tandem with stock options may be exercised.

            7.    RESTRICTED  STOCK. The Equity Award Committee may grant shares
of Common Stock to participants  either with or without any required  payment by
the participant,  subject to such restrictions as the Equity Award Committee may
determine.  The Equity Award  Committee  may  accelerate  the dates on which the
restrictions  will  lapse.  Prior to the  lapse of  restrictions  on  shares  of
restricted  stock,  the participant  will have voting and dividend rights on the
shares.  Any  participant  who


                                       8

<PAGE>


makes an election  under  Section  83(b) of the Code with respect to  restricted
stock  (regarding  the  immediate  recognition  of income)  must  provide a copy
thereof to the Company  within 10 days of the filing of such  election  with the
Internal Revenue Service.

            8.    PERFORMANCE STOCK. The Equity Award Committee may grant awards
entitling  a  participant  to receive  shares of Common  Stock  without  payment
provided  certain  performance  criteria are met. In determining the performance
criteria  applicable to a grant of performance stock, the Equity Award Committee
may use one or more of the following criteria (the "Performance Criteria"):

       - return on assets;                           - return on net assets;
       - asset turnover;                             - return on equity;
       - return on capital;                          - economic value added;
       - market price appreciation                   - total stockholder return;
         of the Company's Common Stock;              - pre-tax income;
       - net income;                                 - operating profit margin;
       - earnings per share;                         - sales margin;
       - net income margin;                          - market share;
       - cash flow;                                  - sales growth;
       - inventory turnover;                         - diversity;
       - capacity utilization;                       - quality; and/or
       - increase in customer base;
       - environmental health and safety.

            The business  criteria selected by the Equity Award Committee may be
expressed in absolute terms or relative to the performance of other companies or
an  index.Any  conditions  in an award of  performance  stock  may be  waived or
modified by the Equity Award Committee at any time.

            9.    CONTRACT STOCK. The Equity Award Committee may grant shares of
Common  Stock to  participants,  conditioned  upon the  participant's  continued
provision  of services to the Company  through the date  specified in the award.
The Equity Award  Committee has  discretion to determine the number of shares of
Common  Stock to be granted and to  establish  the  contract  date on which such
shares  will be  delivered  to the  participant.  If the  participant  is  still
providing  services  to the  Company on the  contract  date,  the  Equity  Award
Committee  must  deliver the shares of Common  Stock  specified  in the award in
accordance with the terms thereof.

            10.   DIVIDEND  EQUIVALENT  RIGHTS.  The Equity Award  Committee may
grant awards that entitle the  participant  to receive a benefit in lieu of cash
dividends  that  would have been  payable  on any or all shares of Common  Stock
subject to  another  award  granted  to the  participant  had such  shares  been
outstanding.

            11.   LOANS.  The Equity Award  Committee  may authorize a loan from
the  Company to a  participant,  either on the date of or after the grant of any
award to the participant  (except that the ability of the Equity Award Committee
to  authorize  a  loan  in  connection  with  an ISO  must  be  included  in the
participant's  award  agreement  at the time of the  award).  A loan may be made
either in connection with the purchase of shares of Common Stock under the award
or with the payment of any Federal,  state,  or local income tax with respect to
income  recognized as a result of the award. The Equity Award Committee has full
authority to decide  whether to make a loan and to determine the amount,  terms,
and conditions of the loan. However,  the loan must be made on the participant's
personal,  negotiable,  demand promissory note, and the interest rate may not be
lower than the lowest rate that will avoid the  imputation of interest under the
Code.

                                       9

<PAGE>


            12.   TRANSFERABILITY.   No  ISO  granted  under  the  Plan  may  be
transferred other than by will or by the laws of descent and  distribution.  Any
other  award  may be  transferred  to the  extent  permitted  by law,  except as
otherwise provided in the award agreement.  During a participant's  lifetime, an
award requiring  exercise may be exercised only by the  participant  (or, in the
event  of  the  participant's  incapacity,  by the  person  or  persons  legally
appointed to act on the participant's behalf).

            13.   TREATMENT  OF  AWARDS  UPON  TERMINATION  OF  SERVICE.   If  a
participant's  service (as an  employee,  consultant,  director,  or  otherwise)
terminates by reason of death or disability,  all options and stock appreciation
rights then held by the participant that were not exercisable  immediately prior
to such  termination of service will terminate on that date (except as otherwise
determined  by the Equity  Award  Committee).  Any  remaining  options and stock
appreciation  rights  will  remain  exercisable  for one  year  from the date of
termination  of service  by reason of death or  disability  (or such  shorter or
longer period as the Equity Award Committee decides).  In the event of any other
termination of service,  all options and stock  appreciation  rights held by the
participant that were not exercisable  immediately  prior to such termination of
service  will  terminate on that date  (except as  otherwise  determined  by the
Equity  Award  Committee).  Any options or stock  appreciation  rights that were
exercisable  will  generally  continue to be so for 6 months (or for such longer
period  as  the   Equity   Award   Committee   decides).   Notwithstanding   the
post-termination   exercise   periods   described  above,  no  option  or  stock
appreciation right may be exercised beyond its original term.

            Except as otherwise  determined by the Equity Award Committee,  if a
participant who holds shares of restricted  stock  terminates his or her service
for any  reason,  including  death  or  disability,  prior  to the  lapse of the
restrictions,  the  participant  must  resell  to  the  Company  the  shares  of
restricted  stock for the amount paid for such  shares,  or forfeit  them to the
Company if no cash was paid. Further,  except as otherwise decided by the Equity
Award Committee, rights under a performance award and dividend equivalent rights
to which a  participant  has not become  irrevocably  entitled and rights to the
payment of contract stock will terminate upon the  participant's  termination of
service with the Company for any reason (including death or disability). Payment
of any outstanding  loan upon termination of service will depend on the terms of
the loan agreement.

            14.   ADJUSTMENTS IN SHARES; CERTAIN CORPORATE TRANSACTIONS.  In the
event of a stock dividend,  stock split, reverse split, or similar change in the
capitalization of the Company,  the Equity Award Committee will make appropriate
adjustments  to the  maximum  number  of  shares  of  Common  Stock  that may be
delivered  under the Plan,  the maximum  number of Shares with  respect to which
ISOs may be granted,  the maximum  number of Shares with  respect to which other
options or stock  appreciation  rights may be  granted,  the  exercise  price of
outstanding  awards,  and the  number of shares of Common  Stock  issuable  upon
exercise or vesting of an award.

            In the event of a "change in  control" of the Company (as defined in
the Plan), all outstanding options and any stock appreciation rights will become
fully vested and exercisable,  all awards of performance stock and dividend will
become  fully  vested,  all rights to the payment of contract  stock will become
immediately  due and  payable  and all  restrictions  will be  removed  from any
outstanding shares of restricted stock.

            In the event of a corporate  transaction (as, for example, a merger,
consolidation, or acquisition of property or stock), each outstanding award will
be assumed by the  surviving or  successor  entity.  However,  in the event of a
proposed corporate transaction,  the Equity Award Committee may terminate all or
a portion of any outstanding award if it determines that doing so is in the best
interests  of the  Company.  If so, the Equity  Award  Committee  will give each
participant  holding an option or a stock appreciation right not less than seven
days'  notice  prior to the  termination,  and any option or stock  appreciation
right that is to be so  terminated  may be  exercised  (to the extent it is then
exercisable)  before


                                       10

<PAGE>


the termination.  Further, in the event of a corporate  transaction,  the Equity
Award Committee, in its discretion, may (i) accelerate the date on which options
and stock appreciation rights become exercisable,  (ii) remove restrictions from
the  outstanding  shares of  restricted  stock,  (iii) cause the delivery of any
performance  stock, even if the associated  performance goals have not been met,
(iv) cause the payment of any dividend equivalent rights, (v) cause the delivery
of contract  stock,  even if the  contract  date has not yet passed  and/or (vi)
forgive all or any portion of a loan. In lieu of the action described above, the
Equity Award  Committee  may arrange to have the  surviving or acquiring  entity
grant the  participant  a  replacement  award  substantially  equivalent  to the
participant's existing award.

            15.   WITHHOLDING REQUIREMENTS.  The grant or exercise of awards may
be subject to tax withholding requirements.  Where shares of Common Stock may be
delivered  under an award,  the Equity  Award  Committee  may  require  that the
participant  either  remit to the  Company an amount  necessary  to satisfy  the
withholding requirements or make other satisfactory  arrangements (including, if
the Equity Award Committee so permits,  the holding back of Shares from payments
under the award).

            16.   DISCONTINUANCE, CANCELLATIONS, AMENDMENT, AND TERMINATION. The
Equity Award  Committee may at any time  discontinue  granting  awards under the
Plan.  The Board may at any time amend the Plan (and the Equity Award  Committee
may amend any  outstanding  award,  other than  lowering the  exercise  price of
options or the purchase  price of restricted  stock) for any purpose,  or may at
any time  terminate the Plan,  except that the following  amendments  may not be
made without the approval of the stockholders of the Company: (i) an increase in
the maximum  number of shares of Common  Stock with respect to which ISOs may be
granted  under the Plan,  (ii) a change in the class of  employees  eligible  to
receive ISOs under the Plan, (iii) an extension of the duration of the Plan with
respect  to ISOs,  and  (iv) any  amendment  to the Plan  requiring  stockholder
approval for purposes of the $1 million  deduction limit on  compensation  under
Section 162(m) of the Code. Further, no amendment or termination of the Plan may
adversely  affect  the  rights of any  participant  (without  the  participant's
consent) under any award previously granted.

            17.   FEDERAL INCOME TAX ASPECTS OF OPTIONS UNDER THE PLAN. Based on
the advice of counsel,  the Company  believes that, under current Federal income
tax laws and regulations,  the principal  Federal income tax consequences to the
Company and to the Eligible  Individuals  receiving ISOs and NQSOs ("Optionees")
pursuant to the Plan will be as follows. The consequences described below do not
take into account any changes to the Code or the regulations thereunder that may
occur after April 16, 2001. Nor does the following describe  alternative minimum
tax, other Federal taxes, or foreign, state or local income taxes which may vary
depending on individual circumstances and from locality to locality.

            If  an  option  qualifies  for  ISO  treatment,  the  Optionee  will
recognize no income upon grant or exercise of the option  except that the excess
at the time of exercise of the then fair market  value of the Common  Stock over
the  exercise  price  will be an  item of tax  preference  for  purposes  of the
alternative  minimum  tax.  If the  Optionee  holds the shares for more than two
years  after  grant of the option and more than one year after  exercise  of the
option , upon an Optionee's sale of his or her shares of Common Stock,  any gain
will be taxed  to the  Optionee  as  long-term  capital  gain.  If the  Optionee
disposes  of his or her shares of Common  Stock prior to the  expiration  of the
above holding period,  the Optionee  generally will recognize ordinary income in
an amount measured as the difference between the exercise price and the lower of
the fair market value of the Common Stock at the exercise date or the sale price
of the Common Stock.  Any gain  recognized  on such a disposition  of the Common
Stock in excess of the amount treated as ordinary  income will be  characterized
as capital gain. The Company will be allowed a business expense deduction to the
extent the Optionee recognizes  ordinary income,  subject to Sections 162(m) and
280G of the Code.

                                       11

<PAGE>


            An Optionee will not  recognize  any taxable  income at the time the
Optionee is granted an NQSO. However,  upon exercise of the option, the Optionee
will  recognize  ordinary  income for Federal  income tax  purposes in an amount
generally  measured  as the excess of the then fair  market  value of the Common
Stock  over  the  exercise  price,  and  the  Company  will  be  entitled  to  a
corresponding deduction at the time of exercise,  subject to Sections 83, 162(m)
and 280G of the Code.  Upon an Optionee's  sale of such shares,  any  difference
between  the sale  price  and fair  market  value of such  shares on the date of
exercise  will be treated as capital gain or loss and will qualify for long-term
capital  gain or loss  treatment if the Common Stock has been held for more than
12 months.

            Under Code Section  162(m),  in general,  income tax  deductions  of
publicly-traded  companies  may be  limited  to the  extent  total  compensation
(including base salary,  annual bonus,  stock option  exercises and nonqualified
benefits paid in 1994 and thereafter) for certain executive  officers exceeds $1
million in any one  taxable  year.  However,  under  Code  Section  162(m),  the
deduction  limit  does not  apply to  certain  "performance-based"  compensation
established by an independent  compensation  committee which conforms to certain
restrictive  conditions stated under the Code and related regulations.  The Plan
has been  structured with the intent that Awards granted under the Plan may meet
the requirements for "performance-based" compensation under Code Section 162(m).
To the extent granted at a fair market value  exercise  price,  options  granted
under the Plan are  intended  to qualify as  "performance-based"  under  Section
162(m)  of  the  Code.   Stock   appreciation   rights  will  also   qualify  as
"performance-based"  under Section 162(m) of the Code, to the extent they relate
to the increase in the market value of the Shares from the date of grant.  Other
Awards granted under the Plan may also qualify as "performance-based" under Code
Section  162(m) if they vest or are  otherwise  payable  based  solely  upon the
Performance Criteria.

            18.   REGISTRATION STATEMENT ON FORM S-8. If the Plan is approved by
the stockholders of the Company, the Company intends to file with the Commission
a  Registration  Statement  on Form S-8  relating  to the Plan to  register  the
issuance  and sale by the  Company  of the  shares of Common  Stock  that may be
issued pursuant to the Plan.

    THE BOARD OF DIRECTORS HAS ADOPTED A RESOLUTION APPROVING THE 2001 EQUITY
    INCENTIVE PLAN AND HEREBY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
           VOTE "FOR" THE APPROVAL OF THE 2001 EQUITY INCENTIVE PLAN.

                                       12

<PAGE>


             PROPOSAL 3. RATIFICATION OF FEBRUARY 16, 2000 AMENDMENT
            TO THE CERTIFICATE OF DESIGNATION, RIGHTS AND PREFERENCES
                    OF THE COMPANY'S SERIES B PREFERRED STOCK

            GENERAL.  The Board of Directors  proposes and  recommends  that the
stockholders  ratify and approve all actions  taken by the Board of Directors in
connection  with an  amendment to the  Certificate  of  Designation,  Rights and
Preferences  of the  Company's  Series B Preferred  Stock (the  "First  Series B
Amendment")  described  below.  The  purpose  of the  proposal  is to ratify the
Company's  filing of the First Series B Amendment with Secretary of State of the
State of Delaware (the "Secretary of State") without obtaining prior stockholder
approval.  The stockholders'  approval of this proposal will relate back to, and
be deemed to be effective as of, March 21, 2000, the date of such filing.

            EFFECT  OF  STOCKHOLDER  RATIFICATION.  The  Company's  Amended  and
Restated Certificate of Incorporation gives the Board of Directors the authority
to provide by a resolution filed with the Secretary of State for the issuance of
shares of preferred  stock in series,  to  establish  the number of shares to be
included in each such series and to fix the designation,  preferences and rights
of the shares of each such series as well as the qualifications, limitations and
restrictions  of each  such  series.  The  Board  of  Directors  exercised  this
authority on February  25, 1999 by approving  the  Certificate  of  Designation,
Preferences  and Rights of Series B Convertible  Preferred  Stock of the Company
(the "Original Series B  Certificate").  The Company filed the Original Series B
Certificate with the Secretary of State on March 12, 1999.

            The First  Series B Amendment  was adopted and approved by the Board
of Directors at a meeting held on February 16, 2000,  and the Company  filed the
First Series B Amendment  with the  Secretary  of State on March 21,  2000.  The
Company  did not,  however,  seek or obtain  stockholder  approval  of the First
Series  B  Amendment.   As  such,  and  absent  the   stockholder   ratification
contemplated  by this  Proposal,  the Company  believes  that the First Series B
Amendment may not have been effective  under the Delaware  Corporation  Law and,
accordingly, that the rights and preferences of the Series B Preferred Stock may
continue to be governed only by the Original  Series B  Certificate.  Due to the
minor nature of the revisions made by the First Series B Amendment,  the Company
believes that the failure of the First Series B Amendment to be validly  adopted
as described  above would have no material  effect on the rights and preferences
of any of the Company's outstanding shares of Common Stock or Preferred Stock.

            SUMMARY OF FIRST SERIES B AMENDMENT.  The text of the First Series B
Amendment is attached as APPENDIX B to this Proxy  Statement.  In addition,  the
Company  filed the First  Series B  Amendment  as Exhibit  4.2 to the  Company's
Current  Report on Form 8-K filed with the  Commission  on April 10,  2000.  The
following  description  of the First Series B Amendment is intended  merely as a
summary of its principal  features and is qualified in its entirety by reference
to the First Series B Amendment itself.

            The Board of  Directors  adopted  the First  Series B  Amendment  to
ensure that the rights and  preferences of the Series B Preferred Stock would be
substantially  identical to, and in conformity  with, the rights and preferences
of the Series C Preferred Stock. The Certificate of Designation, Preferences and
Rights of Series C  Convertible  Preferred  Stock of the Company  (the "Series C
Certificate")  was filed with the Secretary of State on March 21, 2000, the same
date that the Company filed the First Series B Amendment.

            The First Series B Amendment  changed  paragraphs  3, 4 and 9 of the
Company's Original Series B Certificate, which govern the rights and obligations
of the  holders  of  Series B  Preferred  Stock in  connection  with  dividends,
distribution of assets on liquidation and the optional  redemption of the Series

                                       13

<PAGE>


B  Preferred  Stock by the  Company.  All of the  changes  effected by the First
Series B Amendment and summarized  below were intended to conform the provisions
of the Series B Preferred Stock to the terms of the Company's Series C Preferred
Stock. The effects of the changes were as follows:

            o     DIVIDENDS.  Prior to the First Series B Amendment, the holders
of Series B  Preferred  Stock were  entitled to  receive,  out of funds  legally
available for such purpose,  annual cumulative dividends that accrue at the rate
of 10% per year, payable upon the liquidation,  dissolution or winding up of the
Company (a  "Liquidation").  Holders of Series B Preferred Stock had no right to
receive  dividends paid to holders of the Company's  Common Stock.  After giving
effect to the First  Series B Amendment,  if the Company  declares a dividend or
makes any other  distribution to the holders of the Common Stock, each holder of
a share of Series B Preferred  Stock will be  entitled to receive,  out of funds
legally  available for such  purpose,  a dividend or  distribution  in an amount
equal to the amount  such holder  would have  received if such share of Series B
Preferred Stock had been converted into Common Stock on the record date for such
dividend or distribution. The Company has never declared, and does not presently
intend to  declare,  a dividend  or  distribution  to the  holders of the Common
Stock.

            o     DISTRIBUTIONS  OF  ASSETS ON  LIQUIDATION.  Prior to the First
Series B Amendment, upon a Liquidation,  the holders of Series B Preferred Stock
were entitled to receive an amount equal to $100 per share plus, with respect to
such  share,  all  accrued  but  unpaid  dividends  thereon  (collectively,  the
"Redemption  Payment")  before any  distribution  was made to the holders of any
stock ranking junior to the Series B Preferred Stock. After giving effect to the
First Series B Amendment,  the holders of Series B Preferred  Stock are entitled
to receive  the  greater of (1) the  Redemption  Payment  and (2) the amount the
holders of the Series B Preferred  Stock  would  receive if they were to convert
each share of Series B Preferred  Stock into Common Stock  immediately  prior to
the  Liquidation.  The First  Series B  Amendment  also  deleted a clause in the
Original Series B Certificate which provided that the Redemption Payment was the
maximum amount to which the holders of Series B Preferred Stock were entitled.

            o     OPTIONAL  REDEMPTION.  The First  Series B  Amendment  did not
materially  change the rights and obligations of the Company with respect to the
optional redemption of the Series B Preferred Stock. The principal effect of the
amendment  was to clarify that the  redemption  price for the  redemption of the
Series  B  Preferred  Stock  would  be a cash  amount  per  share  equal  to the
Redemption Payment.

      THE BOARD OF DIRECTORS HEREBY RECOMMENDS THAT THE STOCKHOLDERS OF THE
      COMPANY VOTE "FOR" THE RATIFICATION OF THE FIRST SERIES B AMENDMENT.

                                       14

<PAGE>


      PROPOSAL 4. APPROVAL OF AMENDMENT TO THE CERTIFICATE OF DESIGNATION,
                     RIGHTS AND PREFERENCES OF THE COMPANY'S
                            SERIES B PREFERRED STOCK

            The Board of Directors proposes and recommends that the stockholders
approve  the  proposed  amendment  (the  "Second  Series  B  Amendment")  to the
Certificate of  Designation,  Rights and  Preferences of the Company's  Series B
Preferred Stock, as amended,  (the "Series B Certificate")  described below. The
Second  Series B Amendment was approved by the Board of Directors as of March 6,
2001, subject to approval by the stockholders at the Annual Meeting.

            If adopted,  the Second Series B Amendment  would become part of the
Series B Certificate and would govern the  designations,  rights and preferences
of the Series B Preferred Stock. If the Second Series B Amendment is approved by
the  stockholders,  it will become  effective  upon filing of a  Certificate  of
Amendment to the Series B  Certificate  as required by the Delaware  Corporation
Law. Note that the resolution authorizing the proposed Second Series B Amendment
provides  that,  at any  time  prior to the  effectiveness  of the  filing  of a
Certificate  of  Amendment to the Series B  Certificate  as required by Delaware
Corporation  Law,  the Board of  Directors  may abandon the  proposed  amendment
without  further  action  of  the   stockholders,   notwithstanding   the  prior
authorization of the proposed amendment by the stockholders.

            PROPOSED SECOND SERIES B AMENDMENT. The sole purpose  of  the Second
Series B  Amendment  is to make  certain  non-material  changes to  clarify  the
numbering of certain paragraphs and internal references  contained therein.  The
Second Series B Amendment would not make any substantive  changes to the  rights
or preferences of the Series B Preferred  Stock. The text of the Second Series B
Amendment  is  attached  as APPENDIX C to this Proxy  Statement.

      THE BOARD OF DIRECTORS HAS ADOPTED A RESOLUTION APPROVING THE SECOND
      SERIES B AMENDMENT AND HEREBY RECOMMENDS THAT THE STOCKHOLDERS OF THE
          COMPANY VOTE "FOR" APPROVAL OF THE SECOND SERIES B AMENDMENT.

                                       15

<PAGE>


      PROPOSAL 5. APPROVAL OF AMENDMENT TO THE CERTIFICATE OF DESIGNATION,
                     RIGHTS AND PREFERENCES OF THE COMPANY'S
                            SERIES C PREFERRED STOCK

            The Board of Directors proposes and recommends that the stockholders
approve the proposed  amendment (the "Series C Amendment") to the Certificate of
Designation,  Rights and Preferences of the Company's  Series C Preferred Stock,
as amended, (the "Series C Certificate") described below. The Series C Amendment
was approved by the Board of Directors as of March 6, 2001,  subject to approval
by the stockholders at the Annual Meeting.

            If adopted, the Series C Amendment would become part of the Series C
Certificate  and would govern the  designations,  rights and  preferences of the
Series  C  Preferred  Stock.  If the  Series  C  Amendment  is  approved  by the
stockholders, it will become effective upon filing of a Certificate of Amendment
to the Series C Certificate  as required by the Delaware  Corporation  Law. Note
that the resolution  authorizing the proposed Series C Amendment  provides that,
at any  time  prior to the  effectiveness  of the  filing  of a  Certificate  of
Amendment to the Series C Certificate as required by Delaware  Corporation  Law,
the Board of Directors may abandon the proposed amendment without further action
of the  stockholders,  notwithstanding  the prior  authorization of the proposed
amendment by the stockholders.

            PROPOSED  SERIES C  AMENDMENT.  The  sole  purpose  of the  Series C
Amendment is to make certain  non-material  changes to clarify the  numbering of
certain  paragraphs  and internal  references  contained  therein.  The Series C
Amendment would not make any substantive changes to the rights or preferences of
the Series C Preferred  Stock. The text of the Series C Amendment is attached as
APPENDIX C to this Proxy Statement.

     THE BOARD OF DIRECTORS HAS ADOPTED A RESOLUTION APPROVING THE SERIES C
    AMENDMENT AND HEREBY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE
                    "FOR" APPROVAL OF THE SERIES C AMENDMENT.

                                       16

<PAGE>


                      PROPOSAL 6. RATIFICATION OF AUDITORS

            The  firm of  PricewaterhouseCoopers  LLP  served  as the  Company's
independent accountants for 2000 and has been selected by the Board of Directors
to serve in the same capacity for 2001. The stockholders will be asked to ratify
this appointment at the Meeting. The ratification of independent  accountants by
the stockholders is not required by law or the Company's By-laws. Traditionally,
the Company has submitted this matter to the  stockholders  and believes that it
is good practice to continue to do so.

            Ratification of PricewaterhouseCoopers LLP as the Company's auditors
requires  the  affirmative  vote of the  holders of at least a  majority  of the
issued and outstanding  shares of Common Stock and Preferred  Stock present,  in
person or by proxy,  at the Meeting and  entitled to vote.  If a majority of the
votes  cast on  this  matter  are  not  cast in  favor  of the  ratification  of
PricewaterhouseCoopers   LLP,  the  Company  will  appoint   other   independent
accountants as soon as practicable and before the close of the 2001 year.

            During fiscal year 2000,  PricewaterhouseCoopers  LLP not only acted
as the independent  auditors for the Company,  but also rendered on their behalf
other services,  including tax and acquisition  related due diligence  services.
The following  sets forth the aggregate  fees billed or expected to be billed by
PricewaterhouseCoopers LLP to the Company:

                                   AUDIT FEES

            The  aggregate  fees   billed  by  PricewaterhouseCoopers   LLP  for
professional  services  rendered for the audit of the Company's annual financial
statements  for the fiscal year ended  December  31, 2000 and for the reviews of
the financial  statements  included in the Company's  Quarterly  Reports on Form
10-Q for that fiscal year were $268,000.

          FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

            There  were  no  fees  billed  by  PricewaterhouseCoopers   LLP  for
professional  services rendered for information  technology services relating to
financial  information  systems  design and  implementation  for the fiscal year
ended December 31, 2000.

                                 ALL OTHER FEES

            The  aggregate  fees  billed  by  PricewaterhouseCoopers   LLP   for
services rendered to the Company,  other than the services described above under
"Audit Fees" and "Financial Information Systems Design and Implementation Fees",
for the fiscal year ended December 31, 2000 were  $325,500.  These fees included
tax and acquisition related due diligence  services.  The Audit Committee of the
Board of Directors  considered the services  listed above to be compatible  with
maintaining PricewaterhouseCoopers LLP's independence.

            A  representative  of  PricewaterhouseCoopers  LLP is expected to be
present at the Annual  Meeting and will be available  to respond to  appropriate
questions. The representative will also have the opportunity to make a statement
if he or she desires to do so.

          THE BOARD OF DIRECTORS HAS ADOPTED A RESOLUTION APPROVING THE
             APPOINTMENT OF AUDITORS AND HEREBY RECOMMENDS THAT THE
           STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF
         PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S AUDITORS FOR 2001.

                                       17

<PAGE>


                             ADDITIONAL INFORMATION



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

            Section  16(a) of the  Securities  Exchange Act of 1934,  as amended
(the "Exchange Act"),  requires the Company's  directors and executive officers,
as  well  as  persons  beneficially  owning  more  than  10%  of  the  Company's
outstanding  shares of Common  Stock and  certain  other  holders of such shares
(collectively,  "Covered  Persons"),  to file with the Commission and the Nasdaq
Stock Market, within specified time periods,  initial reports of ownership,  and
subsequent  reports of changes in  ownership,  of Common  Stock and other equity
securities of the Company.

            Based  solely upon the  Company's  review of copies of such  reports
furnished  to it and  upon  representations  of  Covered  Persons  that no other
reports were  required,  to the  Company's  knowledge  all of the Section  16(a)
filing  requirements  applicable  to Covered  Persons were  complied with during
2000,  except that a statement of changes in beneficial  ownership of securities
on Form 4 was filed late by George F.  McHugh,  Senior Vice  President,  for the
purchase  and sale of Common  Stock in June 2000 and the sale of Common Stock in
December 2000.


EXECUTIVE OFFICERS

            The executive officers of the Company serve at the discretion of the
Board of Directors.  The only family  relationship  between any of the executive
officers and directors of the Company is that Mr. Holtz is the nephew of Richard
E. Caruso,  Ph.D.,  who is Chairman of the  Company's  Board of  Directors.  The
following  information indicates the position and age of the Company's executive
officers  as of the date of this proxy  statement  and their  previous  business
experience.


NAME                                AGE  POSITION
----                                ---  --------
Stuart M. Essig, Ph.D. ...........   39  President, Chief Executive Officer
                                         and Director

George W. McKinney, III, Ph.D. ...   57  Executive Vice President, Chief
                                         Operating Officer, Director

John B. Henneman, III ............   39  Senior Vice President, Chief
                                         Administrative Officer and Secretary

Judith E. O'Grady ................   50  Senior Vice President, Regulatory,
                                         Quality Assurance and Clinical Affairs

Michael D. Pierschbacher, Ph.D. ..   49  Senior Vice President Research and
                                         Development, General Manager, Corporate
                                         Research Center

David B. Holtz ...................   34  Senior Vice President, Finance and
                                         Treasurer

            STUART M. ESSIG, PH.D. - see information previously provided above
under "Proposal 1. Election of Directors".

            GEORGE W. MCKINNEY, III, PH.D. - see information previously provided
above under "Proposal 1. Election of Directors".

                                       18

<PAGE>


            JOHN B.  HENNEMAN,  III is Integra's  Senior Vice  President,  Chief
Administrative Officer and Secretary, and is responsible for the law department,
business development,  human resources and investor relations.  Mr. Henneman was
the Company's General Counsel from September 1998 until September 2000. Prior to
joining Integra in August 1998, Mr. Henneman served Neuromedical Systems,  Inc.,
a public company developer and manufacturer of in vitro diagnostic equipment, in
various  capacities  for more than four  years.  From 1994 until June 1997,  Mr.
Henneman  was Vice  President  of  Corporate  Development,  General  Counsel and
Secretary.  From June 1997 through  November  1997, he served in the  additional
capacity of interim Co-Chief  Executive Officer and from December 1997 to August
1998 Mr. Henneman was Executive Vice President,  US Operations,  and Chief Legal
Officer.  In March  1999,  Neuromedical  Systems,  Inc.  filed a petition  under
Chapter 11 of the federal  bankruptcy  laws. Mr.  Henneman  practiced law in the
Corporate Department of Latham & Watkins (Chicago,  Illinois) from 1986 to 1994.
Mr. Henneman received his A.B. (Politics) from Princeton University in 1983, and
his J.D. from the University of Michigan Law School in 1986.

            JUDITH E.  O'GRADY,  Senior Vice  President of  Regulatory  Affairs,
Quality  Assurance and Clinical  Research,  has served  Integra since 1985.  Ms.
O'Grady has worked in the areas of medical  devices and collagen  technology for
over 20 years. Prior to joining Integra, Ms. O'Grady worked for Colla-Tec, Inc.,
a Marion  Merrell Dow  Company.  During her career she has held  positions  with
Surgikos,  a  Johnson  &  Johnson  company,  and was on the  faculty  of  Boston
University  College of Nursing and Medical School. Ms. O'Grady led the team that
obtained the FDA approval for INTEGRA(R)Dermal  Regeneration Template, the first
regenerative product approved by the FDA, and has led teams responsible for more
than 100 510(K) clearances. She received her BS degree from Marquette University
and MSN in Nursing from Boston University.

            MICHAEL D.  PIERSCHBACHER,  PH.D.  joined Integra in October 1995 as
Senior Vice President, Research and Development. In May 1998 he was named Senior
Vice President and Director of the Corporate Research Center.  From June 1987 to
September 1995, Dr. Pierschbacher served as Senior Vice President and Scientific
Director of Telios Pharmaceuticals, Inc., ("Telios") which was acquired by us in
connection  with the  reorganization  of Telios under  Chapter 11 of the federal
bankruptcy  code.  He  was a  co-founder  of  Telios  in  May  1987  and  is the
co-discoverer and developer of Telios' matrix peptide technology. Before joining
Telios as a full-time  employee in October 1988, he was a staff scientist at the
Burnham  Institute  for five  years and  remained  on staff  there in an adjunct
capacity  until the end of 1997.  He  received  his  post-doctoral  training  at
Scripps  Clinical  and Research  Foundation  and at the Burnham  Institute.  Dr.
Pierschbacher  received  his  Ph.D.  in  Biochemistry  from  the  University  of
Missouri.

            DAVID B. HOLTZ joined  Integra as  Controller in 1993 and has served
as Vice  President,  Finance and Treasurer  since March 1997 and was promoted to
Senior  Vice   President,   Finance  and   Treasurer  in  February   2001.   His
responsibilities   include  managing  all  accounting  and  information  systems
functions.  Before  joining  Integra,  Mr. Holtz was an associate with Coopers &
Lybrand, L.L.P. in Philadelphia and Cono Leasing Corporation,  a private leasing
company.  He received a BS degree in Business  Administration  from  Susquehanna
University in 1989 and has been certified as a public accountant.

                                       19

<PAGE>


EXECUTIVE COMPENSATION

            The following table sets forth certain information for the Company's
last three fiscal years concerning the annual,  long-term and other compensation
of the chief  executive  officer of the Company and each of the  Company's  four
highest  paid  executive  officers  as of December  31, 2000 whose total  annual
salary  and bonus  during  2000  exceeded  $100,000  (collectively,  the  "Named
Officers"):

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                  Long-Term Compensation
                                                                                           Awards
                                                                             -----------------------------------
                                               Annual  Compensation                              Securities           
                                          --------------------------------    Restricted         Underlying           Other
Name and Principal Position                 Year      Salary      Bonus      Stock Awards(2)       Options        Compensation (1)
----------------------------------------- -------- ------------ ---------- ----------------- ----------------- -------------------
<S>                                        <C>      <C>            <C>       <C>                 <C>                <C>
Stuart M. Essig                            2000     $317,500       --        $13,515,000         520,000            $49,646
     President and Chief Executive         1999     $308,250       --             --              70,560             $1,000
     Officer                               1998     $300,000       --             --              75,000              $500
George W. McKinney, III, Ph.D.             2000     $260,000       --             --              20,000             $1,040
     Executive Vice President and Chief    1999     $240,000       --             --              38,110              $960
     Operating Officer                     1998     $240,000       --             --              38,600            $35,239
Michael D. Pierschbacher, Ph.D.            2000     $220,000       --             --              95,000             $1,045
     Senior Vice President, Research       1999     $198,000       --             --              24,560              $975
     and Development and General           1998     $198,000       --             --              25,790             $1,485
     Manager, Corporate Research Center
John B. Henneman, III (3)                  2000     $220,000       --             --              25,000             $1,050
     Senior Vice President, Chief          1999     $161,600       --             --              44,560             $1,000
     Administrative Officer and General    1998      $44,738       --             --             121,970              $500
     Counsel
Judith O'Grady                             2000     $165,000       --             --              25,000             $1,000
     Senior Vice President, Regulatory     1999     $145,000       --             --              19,670             $1,000
     Quality Assurance and Clinical        1998     $130,000       --             --              35,230              $975
     Affairs
</TABLE>


(1)   Other  than  certain  moving  expenses  reimbursed  to Mr.  Essig  and Dr.
      McKinney,  the amounts  reported in this column  consist of the  Company's
      matching  contributions to the Company's 401(k) Plan. The amounts reported
      in this  column for Mr.  Essig  during  2000  include  $48,596  for moving
      expenses  reimbursed by the Company.  The amounts  reported in this column
      for  Dr.   McKinney  during  1998  include  $34,301  for  moving  expenses
      reimbursed by the Company.

(2)   The terms of Mr. Essig's  Restricted  Units are described herein under the
      heading  "Employment  Agreements." As of December 31, 2000, Mr. Essig held
      Restricted  Units which  entitled him to receive an aggregate of 2,250,000
      shares of Common Stock. Based on the closing price of the Company's Common
      Stock on December 29, 2000 of $13.625 per share,  Mr.  Essig's  Restricted
      Units had an aggregate value of $30,656,250 as of December 31, 2000.

(3)   Mr. Henneman joined the Company in September 1998.

                                       20

<PAGE>


            The following tables set forth certain information  concerning stock
options granted to Named Officers  during 2000 and the unexercised  options held
by them at December 31, 2000.

                        OPTION GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>
                                                                                                            Potential Realizable
                                                                                                          Value at Assumed Annual
                                                                                                            Rates of Stock Price
                                                                                                          Appreciation for Option
                                                            Individual Grants                                       Term
                                 --------------------------------------------------------------------------------------------------
                                      Number of         % of Total Options
                                      Securities            Granted to      Exercise
                                  Underlying Options       Employees in     Price
Name                                 Granted (1)         Fiscal Year (2)    Per Share   Expiration Date       5%             10%
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                    <C>           <C>            <C>           <C>            <C>
Stuart M. Essig (3)                    500,000                33.3%         $11.0000       12/22/10      $3,458,920     $8,765,584
                                        20,000                 1.3%         $13.6250       12/30/06         $92,676       $210,250
George W. McKinney, III, Ph.D.          20,000                 1.3%         $13.6250       12/30/06         $92,676       $210,250
Michael D. Pierschbacher, Ph.D          75,000                 5.0%         $14.0000        3/17/06        $357,100       $810,139
                                        20,000                 1.3%         $13.6250       12/30/06         $92,676       $210,250
John B. Henneman, III                    5,000                 0.3%         $ 6.5625        1/17/06         $11,159        $25,317
                                        20,000                 1.3%         $13.6250       12/30/06         $92,676       $210,250
Judith O'Grady                           5,000                 0.3%         $11.5000        9/19/06         $19,556        $44,365
                                        20,000                 1.3%         $13.6250       12/30/06         $92,676       $210,250
</TABLE>


(1)   Such options were  granted at a price at or above fair market  value,  are
      nontransferable  and vest over a period of four years  commencing with the
      date of grant.

(2)   The Company  granted  options to  employees  to purchase an  aggregate  of
      1,498,130 shares of Common Stock during 2000.

(3)   The terms of Mr.  Essig's  option  grant to  purchase  500,000  shares are
      described herein under the heading "Employment Agreements"

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                               Number of Securities Underlying     Value of Unexercised In-the-Money
                                      Shares                  Unexercised Options At Fiscal Year                Options At
                                      Acquired      Value                     End                          Fiscal Year End (2)
                                         On       Realized   -----------------------------------------------------------------------
Name                                  Exercise       (1)        Exercisable       Nonexercisable      Exercisable     Nonexercisable
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>              <C>                <C>              <C>              <C>
Stuart M. Essig                          --          --            434,827            730,733          $3,433,190       $2,994,900
George W. McKinney, III, Ph.D.         41,422     $311,520         190,280            115,008          $1,205,558         $753,296
Michael D. Pierschbacher, Ph.D.        47,692     $313,330          41,668            127,366            $258,569         $282,945
John B. Henneman, III                    --          --             81,495            110,035            $755,212         $803,133
Judith O'Grady                           --          --             34,926             57,474            $255,247         $272,365
</TABLE>


(1)   Calculated  on the  basis  of the  fair  market  value  of the  underlying
      securities at the exercise date minus the exercise price.

(2)   In-the-money  options  are  those in which  the fair  market  value of the
      underlying  securities  exceeds  the  exercise  price of the  option.  The
      closing  price of the  Company's  Common  Stock on  December  29, 2000 was
      $13.625  per share.  Value is  calculated  on the basis of the fair market
      value of the underlying securities on December 31, 2000 minus the exercise
      price.

                                       21

<PAGE>


EMPLOYMENT AGREEMENTS

            STUART M. ESSIG,  Integra's  current  President and Chief  Executive
Officer,  entered into an Amended and  Restated  Employment  Agreement  with the
Company in  December  2000 that  extended  the term of his  employment  with the
Company as its President and Chief Executive  Officer through December 31, 2005.
The  Amended  Employment  Agreement  supersedes  Mr.  Essig's  prior  employment
agreement with the Company dated December 1997.

            Under the Amended  Employment  Agreement,  the Company  will pay Mr.
Essig an annual base salary of $325,000 for 2001 and $400,000 for 2002. For each
subsequent  year that he is  employed,  Mr.  Essig's  annual base salary will be
$400,000 plus such  increases,  if any, as may be  established  by the Company's
Board of Directors. Mr. Essig is also eligible to receive a performance bonus of
up to fifty percent  (50%) of his base salary,  based upon the  satisfaction  of
certain  performance goals established by the Company's Board of Directors.  Mr.
Essig is also entitled to life insurance equal to the lesser of (a) a $3,000,000
four-year  minimum  renewable term life  insurance  policy and (b) the four-year
minimum renewable term life policy  purchasable by the Company by paying premium
payments of $5,000 per year for such policy.  At the request of Mr.  Essig,  the
Company  will  disburse  a loan to Mr.  Essig in the  amount  of up to  $500,000
subject to certain conditions.  Mr. Essig is also entitled to participate in the
Company's  medical,  disability,  pension and other  employee  benefit plans and
programs  maintained  from time to time by the  Company  for the  benefit of its
senior  executives.  The Amended  Employment  Agreement  is for an initial  term
through  December 31, 2005 and shall  automatically  extend on December 31, 2005
and on each  subsequent  one-year  anniversary  thereof  for one year unless the
Company or Mr. Essig provides  written notice of termination at least six months
prior to the expiration of the then-current term.

            The Amended  Employment  Agreement further provides that the Company
generally will reimburse, or "gross-up," Mr. Essig on an after-tax basis for any
excise tax liability he may incur by reason of any "excess  parachute  payments"
he receives from the Company. Section 280G of the Internal Revenue Code of 1986,
as amended,  provides that if payments of compensation  that are contingent on a
change in control  exceed three times an  employee's  "base amount" (his average
annual compensation during certain prior years), they will constitute "parachute
payments,"  and the  excess of such  parachute  payments  over such base  amount
generally will constitute  "excess  parachute  payments." Such excess  parachute
payments are  nondeductible  by the employer and are subject to a 20% excise tax
payable by the employee.

            In  connection  with  the  extension  of the  term  of  Mr.  Essig's
employment pursuant to the Amended Employment Agreement, the Company granted Mr.
Essig  (i) a  non-qualified  stock  option  to  purchase  250,000  shares of the
Company's   common  stock  under  Integra's  1999  Stock  Option  Plan,  (ii)  a
non-qualified  stock option to purchase  250,000 shares of the Company's  common
stock under Integra's 2000 Equity Incentive Plan and (iii) 1,250,000 "Restricted
Units" under  Integra's 2000 Equity  Incentive Plan. Each stock option (each, an
"Option") expires on December 21, 2010 and has an exercise price equal to $11.00
per  share  (the  closing  price of the  Company's  common  stock on The  Nasdaq
National Market on December 21, 2000).  Assuming the continuation of Mr. Essig's
employment with the Company,  each Option will vest and become  exercisable with
respect to 62,500  shares on December  22, 2002 and  thereafter  with respect to
1/36th  of the  remaining  shares on the first  business  day of each  following
month.  In the event of a (i)  "change in control" of the Company (as defined in
the  Amended  Employment  Agreement)  or (ii)  the  termination  of Mr.  Essig's
employment  with the Company (a) by Integra  without  "cause" (as defined in the
Amended Employment Agreement) or (b) by Mr. Essig for "good reasons" (as defined
in the  Amended  Employment  Agreement),  the  Options  shall  vest  and  become
exercisable  immediately.  The Option  granted  pursuant to Integra's 1999 Stock
Option Plan may be


                                       22

<PAGE>


transferred  by  Mr.  Essig  to  members  of his  immediate  family,  to  trusts
established  for the  benefit  of his  immediate  family or to  partnerships  or
limited liability  companies of which the partners or members are members of his
immediate  family.  Otherwise,  the Options may not be  transferred by Mr. Essig
other than by will or by the laws of descent and distribution.

            Under a Restricted Units Agreement,  the Company issued to Mr. Essig
a fully  vested  equity-based  signing  award  bonus  in the  form of  1,250,000
restricted units (the "Restricted  Units").  Each Restricted Unit represents the
right to receive  one share of the  Company's  common  stock.  The shares of the
Company's  common stock underlying the Restricted Units ("Unit Shares") shall be
delivered  to Mr.  Essig on  January  1, 2006 if Mr.  Essig is  employed  by the
Company on December  31, 2005 or on such  earlier date as a change in control of
the Company occurs; provided, however, that Mr. Essig has the right to defer the
delivery of the Unit Shares on as many  occasions as Mr. Essig  determines  from
time to time  through,  but not beyond,  June 30,  2025.  The Unit Shares may be
delivered to Mr. Essig prior to January 1, 2006 in the event of a termination of
Mr. Essig's  employment  with the Company other than (a) for cause or (b) due to
his voluntary departure (other than for good reasons or due to disability).  If,
prior to December 31, 2005 and prior to a change of control of the Company,  (i)
Mr.  Essig's  employment  with Integra is terminated for cause or (ii) Mr. Essig
voluntarily  leaves his employment with the Company (other than for good reasons
or due to  disability),  the Unit Shares  will be  distributed  to Mr.  Essig on
January 1, 2010.

            The Company has also granted Mr. Essig registration rights requiring
the Company to file a "shelf" registration statement at Mr. Essig's request that
will provide for the  registration  and sale on a continuous or delayed basis of
the shares of Integra  common stock  underlying  the Options and the  Restricted
Units.

            GEORGE W. MCKINNEY, III, PH.D., entered into an employment agreement
with the  Company in  December  1998 to serve as the  Company's  Executive  Vice
President and Chief  Operating  Officer.  Dr.  McKinney was entitled  under that
agreement to participate and receive benefits under any employee benefit plan or
stock-based plan of the Company and was eligible for any medical, disability and
other plans and benefits  covering  executives  of the Company.  The  employment
agreement provided for an initial term expiring on December 31, 2001.

            On February 22, 2001 the Company and Dr. McKinney entered into a new
employment agreement that superseded his existing employment agreement.  The new
employment  agreement  provides  that Dr.  McKinney  will  continue  to serve as
Executive Vice President and Chief Operating  Officer until December 31, 2001 at
a salary at the rate of  $270,000  per year,  at which point he will retire from
such  position.  Thereafter,  until June 30,  2002,  Dr.  McKinney  will  remain
employed by the Company as  consultant to the President and CEO at the same rate
of salary.  On July 12, 2002, Dr. McKinney will receive a lump sum payment,  net
of applicable  taxes and other withheld items,  equal to six months of salary at
the same rate. Dr.  McKinney is generally  eligible for medical,  disability and
other  plans and  benefits  covering  executives  of the  Company  under the new
employment agreement.

            MICHAEL D. PIERSCHBACHER, PH.D. entered into an employment agreement
with  the  Company  in  December  1998 to  serve as the  Company's  Senior  Vice
President,  Research and Development  and General  Manager,  Corporate  Research
Center. The employment agreement provides for an annual salary of $240,000.  Dr.
Pierschbacher is entitled to participate and receive benefits under any employee
benefit  plan or  stock-based  plan of the Company and shall be eligible for any
medical,  disability  and other plans and benefits  covering  executives  of the
Company.  The employment agreement had an initial term through December 31, 2000
and was  automatically  extended on December 31, 2000 through December 31, 2001.
The employment  agreement will automatically  extend on December 31, 2001 and on
each  one-year  anniversary  thereof  for one year  unless  the  Company  or Dr.
Pierschbacher  provides  written notice at least 30 days prior to the expiration
of the  then-current  term.  In the event the  employment  agreement  is earlier
terminated by Dr. Pierschbacher


                                       23

<PAGE>


for good  reason or by the Company  for  reasons  other than cause,  retirement,
disability  or death,  in each case  within six months of a change in control of
the Company,  Dr.  Pierschbacher shall be entitled to receive a severance amount
equal to 2.99  times  his  then-current  annual  base  salary.  In the event the
employment  agreement is earlier  terminated  as  aforesaid  without a change in
control, Dr. Pierschbacher shall be entitled to receive a severance amount equal
to the greater of his  then-current  annual base salary or the unpaid portion of
Dr. Pierschbacher's base salary for the remainder of the then-current term.

            JOHN B. HENNEMAN,  III entered into an employment agreement with the
Company in September 1998 to serve as the Company's Senior Vice President, Chief
Administrative  Officer and General Counsel.  Effective with the hiring of a new
General Counsel for the Company in September 2000, Mr. Henneman no longer serves
as the Company's  General  Counsel.  The  employment  agreement  provides for an
annual salary of $240,000.  Mr.  Henneman is entitled to participate and receive
benefits under any employee  benefit plan or stock-based plan of the Company and
shall be eligible  for any  medical,  disability  and other  plans and  benefits
covering executives of the Company. The employment agreement had an initial term
through  December 31, 2000 and was  automatically  extended on December 31, 2000
through December 31, 2001. The employment agreement will automatically extend on
December 31, 2001 and on each one-year  anniversary  thereof for one year unless
the Company or Mr.  Henneman  provides  written notice at least 30 days prior to
the expiration of the then-current  term. In the event the employment  agreement
is earlier  terminated  by Mr.  Henneman  for good  reason or by the Company for
reasons other than cause,  retirement,  disability or death, in each case within
six months of a change in control of the Company, Mr. Henneman shall be entitled
to receive a severance amount equal to 2.99 times his  then-current  annual base
salary. In the event the employment agreement is earlier terminated as aforesaid
without a change  in  control,  Mr.  Henneman  shall be  entitled  to  receive a
severance  amount equal to the unpaid portion of Mr.  Henneman's base salary for
the  remainder of the  then-current  term,  but in no event for a period of less
than one year.

            JUDITH O'GRADY entered into an employment agreement with the Company
in December 1998 to serve as the Company's Senior Vice President for Regulatory,
Quality Assurance and Clinical Affairs. The employment agreement provides for an
annual salary of $175,000.  Ms. O'Grady is entitled to  participate  and receive
benefits under any employee  benefit plan or stock-based plan of the Company and
shall be eligible  for any  medical,  disability  and other  plans and  benefits
covering executives of the Company. The employment agreement had an initial term
through  December 31, 2000 and was  automatically  extended on December 31, 2000
through December 31, 2001. The employment agreement will automatically extend on
December 31, 2001 and on each one-year  anniversary  thereof for one year unless
the Company or Ms. O'Grady provides written notice at least 30 days prior to the
expiration of the  then-current  term. In the event the employment  agreement is
earlier  terminated by Ms. O'Grady for good reason or by the Company for reasons
other than  cause,  retirement,  disability  or death,  in each case  within six
months of a change in control of the Company,  Ms.  O'Grady shall be entitled to
receive a  severance  amount  equal to 2.99 times her  then-current  annual base
salary. In the event the employment agreement is earlier terminated as aforesaid
without  a change  in  control,  Ms.  O'Grady  shall be  entitled  to  receive a
severance amount equal to the greater of her then-current  annual base salary or
the unpaid  portion  of Ms.  O'Grady's  base  salary  for the  remainder  of the
then-current term.

                                       24

<PAGE>


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

            The Company leases its  manufacturing  facility in  Plainsboro,  New
Jersey from Plainsboro  Associates,  a New Jersey general  partnership.  Ocirne,
Inc.,  a  subsidiary  of  Cono  Industries  ("Cono"),  owns  a 50%  interest  in
Plainsboro Associates. Cono is a corporation whose stockholders are trusts whose
beneficiaries  include the children of Dr. Caruso,  the Chairman and a principal
stockholder  of the Company.  Dr. Caruso is the  President of Cono.  The Company
paid $209,848 in rent for this facility during 2000.

            During 2000, the Company signed a five year lease related to certain
production equipment, from Medicus Corporation.  The sole stockholder of Medicus
is Trust Partnership,  a Pennsylvania general partnership,  for which Dr. Caruso
is a partner and the President.  Under the terms of the lease,  the Company paid
$45,000 to Medicus Corporation during 2000.


             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

            The following  report of the  Compensation  Committee is required by
the rules of the Commission to be included in this Proxy Statement and addresses
the Company's  executive  compensation  policies for the year ended December 31,
2000. This report shall not be deemed  incorporated by reference into any filing
under the  Securities  Act,  or the  Exchange  Act,  by  virtue  of any  general
statement in such filing incorporating this Proxy Statement by reference, except
to the  extent  that  the  Company  specifically  incorporates  the  information
contained in this section by reference,  and shall not otherwise be deemed filed
under either the Securities Act or the Exchange Act.

            GENERAL.  The Company's  compensation  policies for  executives  are
intended  to further  the  interests  of the  Company  and its  stockholders  by
encouraging  growth of its business through  securing,  retaining and motivating
management  employees  of high  caliber who possess the skills  necessary to the
development and growth of the Company. The Compensation  Committee is mindful of
the need to  align  the  interests  of  management  with  the  interests  of the
Company's  stockholders.  The establishment of the Company's  equity-based plans
was designed to permit the Company to attract and retain  talented  managers and
motivate such managers to enhance  profitability  and stockholder  returns.  The
Committee  believes  that the  utilization  of  equity-based  plans  serves  the
interests of the stockholders,  especially by permitting the Company to preserve
cash for other operational purposes.

            The   Company's   compensation   package   consists  of  four  major
components: base compensation;  performance bonuses; deferred compensation;  and
stock options (and, where appropriate, restricted equity grants). Together these
elements comprise total  compensation  value. The total compensation paid to the
Company's executive officers is influenced  significantly by the need to attract
management  employees  with a high level of expertise and to motivate and retain
key executives for the long-term success of the Company and its stockholders.

            BASE  COMPENSATION.  The  Committee  establishes  annual base salary
levels for executives based on competitive data, level of experience,  position,
responsibility,  and individual and Company performance.  The Company has sought
to align base compensation levels comparable to its competitors.

            PERFORMANCE  BONUSES. The Company supplements base compensation with
awards  of  performance  bonuses  in the  form of cash  and  stock  options.  In
establishing   bonuses  for  the  fiscal  year  ended  December  31,  2000,  the
Compensation  Committee  determined  that  it  was  not in  the


                                       25

<PAGE>


Company's best interests to have a cash bonus program for  executives.  Instead,
the Committee sought to reward the efforts and achievements of certain executive
officers during this period by granting  additional options to purchase up to an
aggregate of 120,000 shares of the Company's Common Stock.

            STOCK  OPTIONS.  The  Company  has  granted  stock  options  to  its
executive management under its stock option plans. Option grants are intended to
bring the total compensation to a level that the Company believes is competitive
with amounts paid by the Company's  competitors and which will offer significant
returns if the  Company  is  successful  and,  therefore,  provides  significant
incentives  to devote  the  effort  called for by the  Company's  strategy.  The
Compensation  Committee believes that executives' interests are directly tied to
enhanced  stockholder  value.  Thus, stock options have been used to provide the
executive  management  team with a strong  incentive to perform in a manner that
will benefit the long-term success of the Company and its stockholders.

            DEFERRED  COMPENSATION  PLAN.  The Company  permits  certain  select
management and highly  compensated  employees to elect to defer up to 50 percent
of their base compensation.  The Company believes that a non-qualified  deferred
compensation  plan  enhances  the  ability of the  Company to attract and retain
certain  executive  officers and motivate them to exercise their best efforts on
behalf of the Company and its stockholders.  For fiscal year 2000, two employees
elected to defer a portion of their base compensation.

            OTHER BENEFITS. The Company makes available health care benefits and
a 401(k) plan for executive officers on terms generally available to all Company
employees.  The Committee  believes  that such benefits are  comparable to those
offered by other  companies  of similar  size.  The  amount of  perquisites,  as
determined  in  accordance  with  the  rules  of  the  Securities  and  Exchange
Commission relating to executive compensation,  did not exceed $50,000 or 10% of
the salary of any executive officer in the last fiscal year.

            CHIEF  EXECUTIVE  OFFICER  COMPENSATION.  Mr.  Essig  served  as the
Company's  President  and Chief  Executive  Officer  during 2000  pursuant to an
employment agreement.  Under Mr. Essig's employment agreement,  the Company paid
Mr.  Essig a base  salary of  $317,500 in 2000.  Mr.  Essig  waived his right to
receive a performance bonus in 2000.  Instead,  the Company granted to Mr. Essig
options  to  purchase  20,000  shares  of the  Company's Common  Stock.  For a
numerical  description  of Mr.  Essig's  compensation  in 2000,  see  "Executive
Compensation."  The  other  terms  and  conditions  of  Mr.  Essig's  employment
agreement were substantially  similar to the terms and conditions of Mr. Essig's
Amended and  Restated  Employment  Agreement,  which is described in the section
entitled "Employment  Agreements." The Amended and Restated Employment Agreement
supersedes Mr. Essig's 2000 employment agreement.

            In connection with the extension of Mr. Essig's employment  pursuant
to the Amended and Restated Employment  Agreement,  the Company also granted Mr.
Essig  (1) a  non-qualified  stock  option  to  purchase  250,000  shares of the
Company's Common  Stock  under the  Company's  1999 Stock  Option  Plan,  (2) a
non-qualified  stock option to purchase  250,000 shares of the Company's  Common
Stock  under  the  Company's  2000  Equity  Incentive  Plan  and  (3)  1,250,000
restricted  units,  each  representing  the  right to  receive  one share of the
Company's  Common Stock,  under the Company's 2000 Equity  Incentive Plan. For a
more detailed  description of these awards, see the section entitled "Employment
Agreements."  The Company  believes  that these awards are  consistent  with the
Company's  above  described  compensation  policies for executives  because they
further  align Mr.  Essig's  interests  with the  interests  of the  Company's
stockholders.

                                       26

<PAGE>


            Under Code Section  162(m),  in general,  income tax  deductions  of
publicly-traded  companies  may be  limited  to the  extent  total  compensation
(including base salary,  annual bonus,  stock option  exercises and nonqualified
benefits paid in 1994 and thereafter) for certain executive  officers exceeds $1
million  in any one  taxable  year.  However,  compensation  that  qualifies  as
"performance-based"  is  excluded  from the $1  million  limit if,  among  other
requirements the compensation is payable only upon attainment of pre-established
objective performance goals under a plan approved by stockholders.

            The  Compensation  Committee  does not  presently  expect total cash
compensation  payable as salaries and bonuses to exceed the $1 million limit for
any individual executive.  Having considered the requirements of Section 162(m),
the  Compensation  Committee  believes that stock option grants to date meet the
requirements that such grants be "performance-based" and are, therefore,  exempt
from the limitations on deductibility.  The Compensation Committee will continue
to  monitor  the  compensation   levels  potentially   payable  under  its  cash
compensation  programs,  but intends to maintain  the  flexibility  necessary to
provide  total  cash  compensation  in  line  with  competitive  practices,  the
Company's compensation philosophy and the Company's best interests.


                            The Compensation Committee of the Board of Directors

                            RICHARD E. CARUSO, PH.D.
                            KEITH BRADLEY, PH.D.
                            NEAL MOSZKOWSKI



                                       27

<PAGE>


                             AUDIT COMMITTEE REPORT

      The  following  report of the Audit  Committee is required by the rules of
the Commission to be included in this Proxy Statement.  This report shall not be
deemed  incorporated  by reference into any filing under the Securities  Act, or
the  Exchange   Act,  by  virtue  of  any  general   statement  in  such  filing
incorporating  this Proxy Statement by reference,  except to the extent that the
Company specifically  incorporates the information  contained in this section by
reference,  and shall not otherwise be deemed filed under either the  Securities
Act or the Exchange Act.

      The role of the Audit Committee is to assist the Board of Directors in its
oversight of the Company's financial  reporting process.  The Committee operates
pursuant to a Charter  that was last  amended and restated by the Board on March
30, 2001, a copy of which is attached to this Proxy Statement as APPENDIX D.

      As set forth in the Charter,  management of the Company is responsible for
the  preparation,   presentation  and  integrity  of  the  Company's   financial
statements,  the Company's  accounting  and financial  reporting  principles and
internal  controls and procedures  designed to assure compliance with accounting
standards and applicable  laws and  regulations.  The  independent  auditors are
responsible  for auditing the Company's  financial  statements and expressing an
opinion as to their conformity with generally accepted accounting principles.

      In the performance of its oversight function, the Committee has considered
and  discussed  the  audited  financial   statements  with  management  and  the
independent  auditors.  The Committee has also  discussed  with the  independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61,  COMMUNICATION WITH AUDIT COMMITTEES,  as currently in effect.  Finally,
the  Committee  has  received  the written  disclosures  and the letter from the
independent  auditors  required by independence  Standards Board Standard No. 1,
"INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES".  Management has represented to
the Committee that the Company's consolidated financial statements were prepared
in accordance with generally accepted accounting principles.

      The  members  of the  Committee  are  not  professionally  engaged  in the
practice  of  auditing  or  accounting  and are not  experts  in the  fields  of
accounting or auditing, including in respect of auditor independence. Members of
the Committee rely without independent  verification on the information provided
to them  and on the  representations  made  by  management  and the  independent
accountants.   Accordingly,  the  Committee's  oversight  does  not  provide  an
independent  basis to  determine  that  management  has  maintained  appropriate
accounting and financial  reporting  principles or appropriate  internal control
and  procedures  designed to assure  compliance  with  accounting  standards and
applicable laws and regulations.

      Furthermore,  the Committee's  considerations and discussions  referred to
above do not assure that the audit of the  Company's  financial  statements  has
been carried out in accordance with generally accepted auditing standards,  that
the financial  statements are presented in accordance  with  generally  accepted
accounting principles or that the Company's auditors are in fact "independent".

                                       28

<PAGE>


      Based upon the reports  and  discussions  described  in this  report,  and
subject to the  limitations  on the role and  responsibilities  of the Committee
referred to above and in the Charter,  the  Committee  recommended  to the Board
that the audited financial statements be included in the Company's Annual Report
on Form  10-K  for the  year  ended  December  31,  2000 to be  filed  with  the
Securities and Exchange Commission.

                                            SUBMITTED BY THE AUDIT COMMITTEE
                                            OF THE COMPANY'S BOARD OF DIRECTORS

                                            JAMES M. SULLIVAN
                                            KEITH BRADLEY
                                            NEAL MOSZKOWSKI


                                       29

<PAGE>


                             STOCK PERFORMANCE GRAPH

            The  following  line graph and table  compare,  for the period  from
December 29, 1995 through December 29, 2000, the yearly percentage change in the
cumulative  total  stockholder  return on the  Company's  Common  Stock with the
cumulative total return of companies on the Nasdaq Stock Market - U.S. Index and
the  Nasdaq  Medical  Devices,  Instruments  and  Supplies,   Manufacturers  and
Distributors  Index.  The graph assumes that the value of the  investment in the
Company's  Common Stock and the relevant index was $100 at December 29, 1995 and
that all dividends  were  reinvested.  The closing market price of the Company's
Common Stock on December 29, 2000 was $13.625 per share.


                COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
                VALUE OF INVESTMENT OF $100 ON DECEMBER 29, 1995

                              [LINE CHART OMITTED]


                      Comparison of Cumulative Total Return
                among Integra LifeSciences Holdings Corporation,
      the Nasdaq Stock Market -- U.S. Index and the Nasdaq Medical Devices,
         Instruments and Supplies, Manufacturers and Distributors Index

                              12/95    12/96    12/97    12/98    12/99    12/00
                              -----    -----    -----    -----    -----    -----
Integra LifeSciences
  Holdings Corporation         $100     $ 71     $ 68     $ 26     $ 45     $105

Nasdaq Stock Market -
  U.S. Index                   $100     $123     $151     $213     $395     $238

Nasdaq Medical Devices,
  Instruments and Supplies,
  Manufacturers and
  Distributors Index           $100     $ 94     $107     $120     $146     $151

            The  graph and  table  above  depicts  the past  performance  of the
Company's stock price. The Company neither makes nor endorses any predictions as
to future  stock  performance.  The graph and table set forth above shall not be
deemed (i) incorporated by reference into any filing under the Securities Act or
the Exchange Act by virtue of any general statement in such filing incorporating
this  Proxy  Statement  by  reference,  except to the  extent  that the  Company
specifically   incorporates  the  information   contained  in  this  section  by
reference, and (ii) filed under either the Securities Act or the Exchange Act.

                                       30

<PAGE>


PRINCIPAL STOCKHOLDERS

            The  following  table sets forth certain  information  regarding the
beneficial  ownership of Common Stock and  Preferred  Stock as of March 30, 2001
by: (a) each  person or entity  known to the  Company to own  beneficially  five
percent or more of the  outstanding  shares of Common Stock or Preferred  Stock,
based upon Company  records or  Commission  records;  (b) each of the  Company's
directors;  (c) each of the Named Officers;  and (d) all executive  officers and
directors of the Company as a group.  Each share of Series B Preferred  Stock is
currently  convertible  at the  discretion  of the holder into 26.178  shares of
Common Stock and each share of Series C Preferred Stock is currently convertible
at the discretion of the holder into 11.111 shares of Common Stock, in each case
subject to certain adjustments.  Except as otherwise indicated,  each person has
sole  voting  power  and  sole  investment  power  with  respect  to all  shares
beneficially owned by such person.


<TABLE>
<CAPTION>
                                                 COMMON STOCK            SERIES B PREFERRED        SERIES C PREFERRED
   NAME OF BENEFICIAL OWNER                 SHARES(1)      PERCENT      SHARES       PERCENT      SHARES       PERCENT
  --------------------------------------- --------------- ----------- ------------ ------------ ------------ ------------
<S>                                        <C>              <C>         <C>           <C>         <C>           <C>
   Richard E. Caruso, Ph.D                 7,301,418(2)     41.2%
   Trust Partnership                       7,179,205(3)     40.7%
   Frances C. Holtz                        7,179,205(4)     40.7%
   Quantum Industrial Partners LDC         2,955,000(5)     14.5%       75,000        75.0%       48,699        90.2%
   Union Carbide Corporation               1,575,280(6)      8.9%
   State of Wisconsin Investment Board     1,388,979(7)      7.9%
   Elan Corporation, plc                   1,100,000(8)      6.2%
   SFM Domestic Investments LLC              802,800(9)      4.4%       25,000        25.0%        5,301         9.8%
   Stuart M. Essig                           518,738(10)     2.9%
   George W. McKinney, III, Ph.D             253,378(11)     1.4%
   John B. Henneman, III                     112,800(12)      *
   Judith O'Grady                             72,229(13)      *
   Michael D. Pierschbacher, Ph.D             57,360(14)      *
   James M. Sullivan                          29,041(15)      *
   Neal Moszkowski                            20,000(16)      *
   Keith Bradley, Ph.D                           500(17)      *
   All directors and executive officers
   as a group (10 persons)                 8,411,738(18)    44.9%
</TABLE>


*     Represents beneficial ownership of less than 1%.

(1)   Shares  not  outstanding  but deemed  beneficially  owned by virtue of the
      right of an individual to acquire them within 60 days upon the exercise of
      an option or other  convertible  security are treated as  outstanding  for
      purposes  of   determining   beneficial   ownership  and  the   percentage
      beneficially owned by such individual.

(2)   Includes the 7,179,205  shares held by Trust  Partnership,  a Pennsylvania
      general  partnership  of which Dr.  Caruso is a partner and the  President
      (also  see Note 3  below).  Also  includes  23,338  shares  held by Provco
      Leasing Corporation ("Provco") of which Dr. Caruso is President. Provco is
      a  wholly-owned  subsidiary  of  Cono  Industries,   a  corporation  whose
      stockholders are trusts whose beneficiaries include Dr. Caruso's children.
      Also includes  98,875 shares  issuable upon exercise of the vested portion
      of options held by Dr. Caruso. Dr. Caruso's address is 919 Conestoga Road,
      Building 2, Suite 106, Rosemont, Pennsylvania 19010.

(3)   The partners of Trust  Partnership are Pagliacci  Trust,  Rigoletto Trust,
      Trust  for  Jonathan  Henry  Caruso,  Trust for Peter  James  Caruso  (the
      beneficiaries  of all  such  trusts  (the  "Trusts")  being  Dr.  Caruso's
      children),  Dr.  Caruso  and  Provco,  each  of  which  may be  deemed  to
      beneficially  own the  shares  held by


                                       31

<PAGE>


      Trust Partnership;  however,  such partners of Trust Partnership  disclaim
      beneficial  ownership of all such shares except to the extent  represented
      by their  respective  equity and profit  participation  interests in Trust
      Partnership.  The Trust  Partnership's  address is c/o Richard E.  Caruso,
      Ph.D., 919 Conestoga Road,  Building 2, Suite 106, Rosemont,  Pennsylvania
      19010.

(4)   Frances C. Holtz is a trustee of the  Trusts,  which  collectively  have a
      controlling  interest  in Trust  Partnership.  As such,  Ms.  Holtz may be
      deemed to beneficially own the shares held by Trust Partnership;  however,
      Ms. Holtz disclaims  beneficial  ownership of all such shares. Ms. Holtz's
      address is 8111 Marshall Avenue, Margate, New Jersey 08402.

(5)   Includes (i) 1,963,350  shares of Common Stock issuable upon conversion of
      75,000  shares of Series B  Preferred  Stock  held by  Quantum  Industrial
      Partners LDC ("QIP"),  (ii) 541,100  shares of Common Stock  issuable upon
      conversion of 48,699  shares of Series C Preferred  Stock held by QIP; and
      (iii)  270,550  shares of Common Stock  issuable upon exercise of warrants
      held  by  QIP.  The  principal  address  of QIP is at  Kaya  Flamboyan  9,
      Willemsted,  Curacao,  Netherlands Antilles. QIH Management Investor, L.P.
      ("QIHMI")  is  vested  (pursuant  to  constituent  documents  of QIP) with
      investment  discretion  with respect to the portfolio  assets held for the
      account of QIP.  Pursuant to an agreement  between  George Soros and Soros
      Fund Management LLC ("SFM"),  Mr. Soros has agreed to use his best efforts
      to cause QIH  Management,  Inc., as the sole general  partner of QIHMI, to
      act  at  the  discretion  of  SFM.  Mr.  Soros  is the  Chairman  of  SFM.
      Accordingly, each of QIHMI, QIH Management, Inc., SFM and Mr. Soros may be
      deemed the beneficial  owner of the QIP Shares.  Each has their  principal
      business  office at 888 Seventh  Avenue,  33rd Floor,  New York,  New York
      10106.

(6)   The  address  of  Union  Carbide  Corporation  is 39 Old  Ridgebury  Road,
      Danbury, Connecticut 06817.

(7)   The address of the State of Wisconsin  Investment Board is 121 East Wilson
      Street, Madison, Wisconsin 53702.

(8)   Carnrick Laboratories,  Inc. ("Carnrick") is a wholly-owned  subsidiary of
      Athena  Neurosciences,  Inc.,  which is a wholly-owned  subsidiary of Elan
      Corporation,  plc, each of which may be deemed the beneficial owner of the
      shares held by Carnrick.  The address for each of the foregoing  companies
      is c/o Elan Corporation,  plc, Lincoln House,  Lincoln Place,  Eighty Pine
      Street, Dublin 2, Ireland.

(9)   Includes (i) 654,450  shares of Common Stock  issuable upon  conversion of
      25,000 shares of Series B Preferred Stock held by SFM Domestic Investments
      LLC ("SFMDI"), (ii) 58,900 shares of Common Stock issuable upon conversion
      of 5,301 shares of Series C Preferred  Stock;  and (iii) 29,450  shares of
      Common Stock  issuable upon exercise of warrants.  The principal  business
      office of SFMDI is at 888 Seventh Avenue,  33rd Floor,  New York, New York
      10106.  George  Soros is a managing  member of SFMDI and may be deemed the
      beneficial owner of the SFMDI Shares.

(10)  Includes  500,601  shares  issuable upon exercise of the vested portion of
      options held by Mr. Essig.  Excludes Restricted Units awarded to Mr. Essig
      in 1997 and 2000 which  entitle him to receive an  aggregate  of 2,250,000
      shares of Common Stock (see "Employment Agreements"). The Restricted Units
      held by Mr.  Essig do not give him the right to acquire any shares  within
      60 days of March 30, 2001.

(11)  Includes  221,878  shares  issuable upon exercise of the vested portion of
      options held by Dr. McKinney.

(12)  Includes  99,540 shares  issuable  upon exercise of the vested  portion of
      options held by Mr. Henneman.

(13)  Includes  41,064 shares  issuable  upon exercise of the vested  portion of
      options held by Ms. O'Grady.

(14)  Includes 1,678 shares held by a revocable trust of which Dr. Pierschbacher
      is co-trustee.  Also includes  37,337 shares issuable upon exercise of the
      vested portion of options held by Dr. Pierschbacher.

(15)  Includes  25,500 shares  issuable  upon exercise of the vested  portion of
      options held by Mr. Sullivan.

(16)  Consists of 20,000 shares  issuable upon exercise of the vested portion of
      options held by Mr. Moszkowski.

(17)  Includes  500 shares  issuable  upon  exercise  of the  vested  portion of
      options held by Dr. Bradley.

(18)  See Notes 2 and 10 through 17 above.  Also includes 7,046 shares,  as well
      as 39,228 shares  issuable upon exercise of the vested portion of options,
      held by one executive  officer of the Company and/or its  subsidiaries who
      is not listed in the table.

                                       32

<PAGE>


STOCKHOLDER PROPOSALS

            The deadline for stockholders to submit  proposals  pursuant to Rule
14a-8 of the Exchange Act for  inclusion in the  Company's  proxy  statement and
form of proxy for the 2002 Annual Meeting of Stockholders (the "Annual Meeting")
is December 15,  2001.  The date after which  notice of a  stockholder  Proposal
submitted  outside  of the  processes  of  Rule  14a-8  of the  Exchange  Act is
considered  untimely is February 28, 2002. If notice of a  stockholder  Proposal
submitted outside of the processes of Rule 14a-8 of the Exchange Act is received
by the Company after February 28, 2002,  then the Company's proxy for the Annual
Meeting may confer  discretionary  authority to vote on such matter  without any
discussion of such matter in the proxy statement for the Annual Meeting.

OTHER MATTERS

            A copy of the Company's 2000 Annual Report to  Stockholders is being
mailed  simultaneously  herewith  to  stockholders  but is not to be regarded as
proxy solicitation material.



            THE COMPANY,  UPON  REQUEST,  WILL FURNISH TO RECORD AND  BENEFICIAL
HOLDERS OF ITS COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-K (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR THE
FISCAL YEAR ENDED  DECEMBER 31,  2000.  COPIES OF EXHIBITS TO THE FORM 10-K ALSO
WILL BE FURNISHED UPON REQUEST AND THE PAYMENT OF A REASONABLE FEE. ALL REQUESTS
SHOULD BE DIRECTED TO JOHN  BOSTJANCIC,  DIRECTOR OF FINANCE,  AT THE OFFICES OF
THE COMPANY SET FORTH ON PAGE ONE OF THIS PROXY STATEMENT.

                                             By order of the Board of Directors,
Plainsboro, New Jersey                       /s/John B. Henneman, III
April 20, 2001                               John B. Henneman, III
                                             SECRETARY

                                       33

<PAGE>


                                   APPENDIX A









                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION

                           2001 EQUITY INCENTIVE PLAN


                                       A1

<PAGE>


1.  PURPOSE..................................................................  1
2.  DEFINITIONS..............................................................  1
3.  ADMINISTRATION...........................................................  4
4.  EFFECTIVE DATE AND TERM OF PLAN..........................................  5
5.  SHARES SUBJECT TO THE PLAN...............................................  5
6.  ELIGIBILITY..............................................................  5
7.  TYPES OF AWARDS..........................................................  5
    7.1  Options.............................................................  5
    7.2  Stock Appreciation Rights...........................................  7
    7.3  Restricted Stock....................................................  8
    7.4  Performance Stock; Performance Goals................................  9
    7.5  Contract Stock......................................................  9
    7.6  Dividend Equivalent Rights..........................................  9
    7.7  Loans...............................................................  9
8.  EVENTS AFFECTING OUTSTANDING AWARDS.....................................  10
    8.1  Termination of Service (Other Than by Death or Disability).........  10
    8.2  Death or Disability................................................  10
    8.3  Capital Adjustments................................................  11
    8.4  Certain Corporate Transactions.....................................  11
    8.5  Exercise Upon Change in Control....................................  12
9.  AMENDMENT OR TERMINATION OF THE PLAN....................................  13
10. MISCELLANEOUS...........................................................  14
    10.1  Documentation of Awards...........................................  14
    10.2  Rights as a Stockholder...........................................  14
    10.3  Conditions on Delivery of Shares..................................  14
    10.4  Investment Purpose................................................  15
    10.5  Registration and Listing of Shares................................  15
    10.6  Compliance with Rule 16b-3........................................  15
    10.7  Tax Withholding...................................................  15
    10.8  Transferability of Awards.........................................  16
    10.9  Registration......................................................  16
    10.10 Acquisitions......................................................  16
    10.11 Replacement of Outstanding Options................................  16
    10.12 Employment Rights.................................................  16
    10.13 Indemnification of Board and Committee............................  17
    10.14 Application of Funds..............................................  17
    10.15 Governing Law.....................................................  17

                                       A2

<PAGE>


                              INTEGRA LIFESCIENCES

                              HOLDINGS CORPORATION

                           2001 EQUITY INCENTIVE PLAN


          WHEREAS, Integra LifeSciences Holdings Corporation (the "Company")
desires to have the ability to award certain equity-based benefits and/or loans
to certain Key Employees and Associates;

          NOW, THEREFORE, the Integra LifeSciences Holdings Corporation 2001
Equity Incentive Plan is hereby adopted under the following terms and
conditions:

          1.   Purpose. The Plan is intended to provide a means whereby the
Company may grant ISOs to Key Employees and may grant NQSOs, Restricted Stock,
Stock Appreciation Rights, Performance Stock, Contract Stock, Dividend
Equivalent Rights, and/or Loans to Key Employees and Associates. Thereby, the
Company expects to attract and retain such Key Employees and Associates and to
motivate them to exercise their best efforts on behalf of the Company and its
Related Corporations and any Affiliates.

          2.   Definitions

               (a)  "Affiliate" shall mean an entity in which the Company or a
Related Corporation has a 50 percent or greater equity interest.

               (b)  "Associate" shall mean a designated nonemployee director,
consultant, or other person providing services to the Company, a Related
Corporation, or an Affiliate.

               (c)  "Award" shall mean ISOs, NQSOs, Restricted Stock, Stock
Appreciation Rights, Performance Stock, Contract Stock, Dividend Equivalent
Rights, and/or Loans awarded by the Committee to a Participant.

               (d)  "Award Agreement" shall mean a written document evidencing
the grant of an Award, as described in Section 10.1.

               (e)  "Board" shall mean the Board of Directors of the Company.

               (f)  "Code" shall mean the Internal Revenue Code of 1986, as
amended.

               (g)  "Committee" shall mean the Company's Equity Award Committee,
which shall consist solely of not fewer than two directors of the Company who
shall be appointed by, and serve at the pleasure of, the Board (taking into
consideration the rules under section 16(b) of the Exchange Act and the
requirements of section 162(m) of the Code).

               (h)  "Company" shall mean Integra LifeSciences Holdings
                    Corporation, a Delaware corporation.

               (i)  "Contract Date" shall mean the date specified in the Award
Agreement on which a Participant is entitled to receive Contract Stock, provided
he or she is still providing services to the Company, a Related Corporation, or
an Affiliate on such date.

                                       A3

<PAGE>


               (j)  "Contract Stock" shall mean an Award that entitles the
recipient to receive unrestricted Shares, without payment, if the recipient is
still providing services to the Company or a Related Corporation as of a future
date specified in the Award Agreement.

               (k)  "Disability" shall mean separation from service as a result
of "permanent and total disability," as defined in section 22(e)(3) of the Code.

               (l)  "Dividend Equivalent Right" shall mean an Award that
entitles the recipient to receive a benefit in lieu of cash dividends that would
have been payable on any or all Shares subject to another Award granted to the
Participant had such Shares been outstanding.

               (m)  "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

               (n)  "Fair Market Value" shall mean the following, arrived at by
a good faith determination of the Committee:

                    (i)  if there are sales of Shares on a national securities
exchange or in an over-the-counter market on the date of grant (or on such other
date as value must be determined), then the quoted closing price on such date;
or

                    (ii) if there are no such sales of Shares on the date of
grant (or on such other date as value must be determined) but there are such
sales on dates within a reasonable period both before and after such date, the
weighted average of the quoted closing price on the nearest date before and the
nearest date after such date on which there were such sales; or

                    (iii) if actual sales are not available during a reasonable
period beginning before and ending after the date of grant (or on such other
date as value must be determined), then the mean between the bid and asked price
on such date as reported by the National Quotation Bureau; or

                    (iv) if paragraphs (i) through (iii) above are not
applicable, then such other method of determining fair market value as shall be
adopted by the Committee.

          Where the Fair Market Value of Shares is determined under paragraph
(ii) above, the average of the quoted closing prices on the nearest date before
and the nearest date after the last business day prior to the specified date
shall be weighted inversely by the respective numbers of trading days between
the dates of reported sales and such date (i.e., the valuation date), in
accordance with Treas. Reg. ss.20.2031-2(b)(1), or any successor thereto.

          (o)  "ISO" shall mean an Option which, at the time such Option is
granted under the Plan, qualifies as an incentive stock option within the
meaning of section 422 of the Code, unless the Award Agreement states that the
Option will not be treated as an ISO.


          (p) "Key  Employee"  shall mean an officer, executive, or  managerial
or nonmanagerial employee of the Company, a Related Corporation, or an
Affiliate.

          (q)  "More-Than-10-Percent Shareholder" shall mean any person who at
the time of grant owns, directly or indirectly, or is deemed to own by reason of
the attribution rules of section 424(d) of the Code, Shares possessing more than
10 percent of the total combined voting power of all classes of Shares of the
Company or of a Related Corporation.

                                       A4

<PAGE>


          (r)  "NQSO" shall mean an Option that, at the time such Option is
granted to a Participant, does not meet the definition of an ISO, whether or not
it is designated as a nonqualified stock option in the Award Agreement.

          (s)  "Option" is an Award entitling the Participant on exercise
thereof to purchase Shares at a specified exercise price.

          (t)  "Participant" shall mean a Key Employee or Associate who has been
granted an Award under the Plan.

          (u)  "Performance Stock" shall mean an Award that entitles the
recipient to receive Shares, without payment, following the attainment of
designated Performance Goals.

          (v)  "Performance Goals" shall mean goals deemed by the Committee to
be important to the success of the Company or any of its Related Corporations or
Affiliates. The Committee shall establish the specific measures for each such
goal at the time an Award of Performance Stock is granted. In creating these
measures, the Committee may use one or more of the following business criteria:
return on assets, return on net assets, asset turnover, return on equity, return
on capital, market price appreciation of Shares, economic value added, total
stockholder return, net income, pre-tax income, earnings per share, operating
profit margin, net income margin, sales margin, cash flow, market share,
inventory turnover, sales growth, capacity utilization, increase in customer
base, environmental health and safety, diversity, and/or quality. The business
criteria may be expressed in absolute terms or relative to the performance of
other companies or an index.

          (w)  "Plan" shall mean the Integra LifeSciences Holdings Corporation
2001 Equity Incentive Plan, as set forth herein and as it may be amended from
time to time.

          (x)  "Related Corporation" shall mean either a "subsidiary
corporation" of the Company, as defined in section 424(f) of the Code, or the
"parent corporation" of the Company (if any), as defined in section 424(e) of
the Code.

          (y)  "Restricted Stock" shall mean an Award that grants the recipient
at no cost (or entitles the recipient to acquire, for a purchase price to be
specified by the Committee, but in no event less than par value) Shares subject
to whatever restrictions are determined by the Committee.

          (z)  "Securities Act" shall mean the Securities Act of 1933, as
amended.

          (aa) "Shares" shall mean shares of common stock of the Company, par
value $0.01 per share.

          (bb) "Stock Appreciation Right" shall mean an Award entitling the
recipient on exercise to receive an amount, in cash or Shares or a combination
thereof (such form to be determined by the Committee), determined in whole or in
part by reference to appreciation in Share value.

          3.   Administration

          (a)  The Plan shall be administered by the Committee. Each member of
the Committee, while serving as such, shall be deemed to be acting in his or her
capacity as a director of the Company. Acts approved by a majority of the
members of the Committee at which a quorum is present, or acts without a meeting
reduced to or approved in writing by a majority of the members of the Committee,

                                       A5

<PAGE>


shall be the valid acts of the Committee. Any authority of the Committee (except
for the authority described in subsection (b)(i)-(iv) below) may be delegated to
a Plan administrator.

          (b)  The Committee shall have the authority:

               (i)  to select the Key Employees and Associates to be granted
Awards under the Plan and to grant such Awards at such time or times as it may
choose;

               (ii) to determine the type and size of each Award, including the
number of Shares subject to the Award;

               (iii) to determine the terms and conditions of each Award;

               (iv) to amend an existing Award in whole or in part (including
the extension of the exercise period for any NQSO), except that the Committee
may not (i) lower the exercise price of any Option or the purchase price of any
Restricted Stock, or (ii) without the consent of the Participant holding the
Award, take any action under this clause if such action would adversely affect
the rights of such Participant;

               (v)  to adopt, amend, and rescind rules and regulations for the
administration of the Plan;

               (vi) to interpret the Plan and decide any questions and settle
any controversies that may arise in connection with it; and

               (vii) to adopt such modifications, amendments, procedures,
sub-plans, and the like, which may be inconsistent with the provisions of the
Plan, as may be necessary to comply with the laws and regulations of other
countries in which the Company, Related Corporations, and Affiliates operate in
order to assure the viability of Awards granted under the Plan to individuals in
such other countries.

          Such determinations and actions of the Committee, and all other
determinations and actions of the Committee made or taken under authority
granted by any provision of the Plan, shall be conclusive and shall bind all
parties. Nothing in this subsection (b) shall be construed as limiting the power
of the Board or the Committee to make the adjustments described in Sections 8.3
and 8.4.

          4.   Effective Date and Term of Plan

          (a)  Effective Date. The Plan, having been adopted by the Board on
February 22, 2001, shall become effective on that date, but subject to the
approval of the stockholders of the Company pursuant to Section 9(b). Awards may
be granted under the Plan prior to such stockholder approval (but after the
Board's adoption of the Plan), subject to such stockholder approval.

          (b)  Term of Plan for ISOs. No ISO may be granted under the Plan after
February 21, 2011, but ISOs previously granted may extend beyond that date.
Awards other than ISOs may be granted after that date.

          5.   Shares Subject to the Plan. The aggregate number of Shares that
may be delivered under the Plan is 2,000,000. Further, no Key Employee shall
receive Options and/or Stock Appreciation Rights for more than 1,000,000 Shares
during any calendar year under the Plan. However, the limits in the preceding
two sentences shall be subject to the adjustment described in Section 8.3.
Shares delivered

                                       A6

<PAGE>


under the Plan may be authorized but unissued Shares or reacquired Shares, and
the Company may purchase Shares required for this purpose, from time to time, if
it deems such purchase to be advisable. If any Award that requires the
Participant to exercise it in order for Shares to be delivered terminates
without having been exercised in full, or if any Award that is payable in Shares
or cash is satisfied in cash rather than in Shares, the number of Shares as to
which such Award was not exercised or for which cash was substituted shall
continue to be available for future Awards granted under the Plan.

          6.   Eligibility. The class of individuals who shall be eligible to
receive Awards under the Plan shall be the Key Employees (including any
directors of the Company who are also officers or Key Employees) and the
Associates. More than one Award may be granted to a Key Employee or Associate
under the Plan.

          7.   Types of Awards

          7.1  Options

          (a)  Kinds of Options. Both ISOs and NQSOs may be granted by the
Committee under the Plan. However, ISOs may only be granted to Key Employees of
the Company or of a Related Corporation. NQSOs may be granted to both Key
Employees and Associates. Once an ISO has been granted, no action by the
Committee that would cause the Option to lose its status as an ISO under the
Code will be effective without the consent of the Participant holding the
Option.

          (b)  $100,000 Limit. The aggregate Fair Market Value of the Shares
with respect to which ISOs are exercisable for the first time by a Key Employee
during any calendar year (counting ISOs under this Plan and under any other
stock option plan of the Company or a Related Corporation) shall not exceed
$100,000. If an Option intended as an ISO is granted to a Key Employee and the
Option may not be treated in whole or in part as an ISO pursuant to the $100,000
limit, the Option shall be treated as an ISO to the extent it may be so treated
under the limit and as an NQSO as to the remainder. For purposes of determining
whether an ISO would cause the limit to be exceeded, ISOs shall be taken into
account in the order granted. The annual limits set forth above for ISOs shall
not apply to NQSOs.

          (c)  Exercise Price. The exercise price of an Option shall be
determined by the Committee, subject to the following:

               (i)  The exercise price of an ISO shall not be less than 100
percent (110 percent in the case of an ISO granted to a More-Than-10-Percent
Shareholder) of the Fair Market Value of the Shares subject to the Option,
determined as of the time the Option is granted.

               (ii) In no case may the exercise price paid for Shares be less
than the par value per Share.

          (d)  Term of Options. The term of each Option may not be more than 10
years (five years, in the case of an ISO granted to a More-Than-10-Percent
Shareholder) from the date the Option was granted, or such earlier date as may
be specified in the Award Agreement.

          (e)  Exercise of Options. An Option shall become exercisable at such
time or times (but not less than three months from the date of grant), and on
such conditions, as the Committee may specify. The Committee may at any time and
from time to time accelerate the time at which all or any part of the Option may
be exercised. Any exercise of an Option must be in writing, signed by the proper
person, and delivered or mailed to the Company, accompanied by (i) any other
documents required by the Committee and (ii) payment in full in accordance with
subsection (f) below for the number of Shares for which the


                                       A7

<PAGE>


Option is exercised (except that, in the case of an exercise arrangement
approved by the Committee and described in subsection (f)(iv) below, payment may
be made as soon as practicable after the exercise). Only full shares shall be
issued under the Plan, and any fractional share that might otherwise be issuable
upon exercise of an Option granted hereunder shall be forfeited.

          (f)  Payment for Shares. Shares purchased on the exercise of an Option
shall be paid for as follows:

               (i)  in cash or by check (acceptable to the Committee), bank
draft, or money order payable to the order of the Company;

               (ii) in Shares previously acquired by the Participant; provided,
however, that if such Shares were acquired through the exercise of an ISO and
are used to pay the Option price of an ISO, such Shares have been held by the
Participant for a period of not less than the holding period described in
section 422(a)(1) of the Code on the date of exercise, or if such Shares were
acquired through the exercise of an NQSO and are used to pay the Option price of
an ISO, or if such Shares were acquired through the exercise of an ISO or an
NQSO and are used to pay the Option price of an NQSO, such Shares have been held
by the Participant for such period of time as required to be considered "mature"
Shares for purposes of accounting treatment;

               (iii) in shares newly acquired by the Participant upon exercise
of such Option (which shall constitute a disqualifying disposition in the case
of ISOs);

               (iv) by delivering a properly executed notice of exercise of the
Option to the Company and a broker, with irrevocable instructions to the broker
promptly to deliver to the Company the amount of sale or loan proceeds necessary
to pay the exercise price of the Option; or

               (v)  by any combination of the above-listed forms of payment.

          In the event the Option price is paid, in whole or in part, with
Shares, the portion of the Option price so paid shall be equal to the Fair
Market Value on the date of exercise of the Option of the Shares surrendered in
payment of such Option price.

          7.2  Stock Appreciation Rights

          (a)  Grant of Stock Appreciation Rights. Stock Appreciation Rights may
be granted to a Key Employee or Associate by the Committee. Stock Appreciation
Rights may be granted in tandem with, or independently of, Options granted under
the Plan. A Stock Appreciation Right granted in tandem with an Option that is
not an ISO may be granted either at or after the time the Option is granted. A
Stock Appreciation Right granted in tandem with an ISO may be granted only at
the time the ISO is granted.

          (b)  Nature of Stock Appreciation Rights. A Stock Appreciation Right
entitles the Participant to receive, with respect to each Share as to which the
Stock Appreciation Right is exercised, the excess of the Share's Fair Market
Value on the date of exercise over its Fair Market Value on the date the Stock
Appreciation Right was granted. Such excess shall be paid in cash, Shares, or a
combination thereof, as determined by the Committee.

          (c)  Rules Applicable to Tandem Awards. When Stock Appreciation Rights
are granted in tandem with Options, the number of Stock Appreciation Rights
granted to a Participant that shall be exercisable during a specified period
shall not exceed the number of Shares that the Participant may purchase upon the
exercise of the related Option during such period. Upon the exercise of an
Option, the


                                       A8

<PAGE>


Stock Appreciation Right relating to the Shares covered by such Option will
terminate. Upon the exercise of a Stock Appreciation Right, the related Option
will terminate to the extent of an equal number of Shares. The Stock
Appreciation Right will be exercisable only at such time or times, and to the
extent, that the related Option is exercisable and will be exercisable in
accordance with the procedure required for exercise of the related Option. The
Stock Appreciation Right will be transferable only when the related Option is
transferable, and under the same conditions. A Stock Appreciation Right granted
in tandem with an ISO may be exercised only when the Fair Market Value of the
Shares subject to the ISO exceeds the exercise price of such ISO.

          (d)  Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option shall become exercisable
at such time or times, and on such conditions, as the Committee may specify in
the Award Agreement. The Committee may at any time accelerate the time at which
all or any part of the Stock Appreciation Right may be exercised. Any exercise
of an independent Stock Appreciation Right must be in writing, signed by the
proper person, and delivered or mailed to the Company, accompanied by any other
documents required by the Committee.

          7.3  Restricted Stock

          (a)  General Requirements. Restricted Stock may be issued or
transferred to a Key Employee or Associate for consideration or for no
consideration, as determined by the Committee. If for consideration, the
Participant's payment may be in cash or check (acceptable to the Committee),
bank draft, or money order payable to the order of the Company.

          (b)  Rights as a Stockholder. Unless the Committee determines
otherwise, a Key Employee or Associate who receives Restricted Stock shall have
certain rights of a stockholder with respect to the Restricted Stock, including
voting and dividend rights, subject to the restrictions described in subsection
(c) below and any other conditions imposed by the Committee at the time of
grant. Unless the Committee determines otherwise, certificates evidencing shares
of Restricted Stock will remain in the possession of the Company until such
Shares are free of all restrictions under the Plan.

          (c)  Restrictions. Except as otherwise specifically provided by the
Plan, Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered or disposed of, and if the Participant ceases to provide
services to any of the Company and its Related Corporations and Affiliates for
any reason, must be offered to the Company for purchase for the amount paid for
the Shares, or forfeited to the Company if nothing was so paid. These
restrictions will lapse at such time or times, and on such conditions, as the
Committee may specify in the Award Agreement. Upon the lapse of all
restrictions, the Shares will cease to be Restricted Stock for purposes of the
Plan. The Committee may at any time accelerate the time at which the
restrictions on all or any part of the Shares will lapse.

          (d)  Notice of Tax Election. Any Participant making an election under
section 83(b) of the Code for the immediate recognition of income attributable
to an Award of Restricted Stock must provide a copy thereof to the Company
within 10 days of the filing of such election with the Internal Revenue Service.

          7.4  Performance Stock; Performance Goals

          (a)  Grant. The Committee may grant Performance Stock to any Key
Employee or Associate, conditioned upon the meeting of designated Performance
Goals. The Committee shall determine the number of Shares of Performance Stock
to be granted.

                                       A9

<PAGE>


          (b)  Performance Period and Performance Goals. When Performance Stock
is granted, the Committee shall establish the performance period during which
performance shall be measured, the Performance Goals, and such other conditions
of the Award as the Committee deems appropriate.

          (c)  Delivery of Performance Stock. At the end of each performance
period, the Committee shall determine to what extent the Performance Goals and
other conditions of the Award have been met and the number of Shares, if any, to
be delivered with respect to the Award.

          7.5  Contract Stock

          (a)  Grant. The Committee may grant Contract Stock to any Key Employee
or Associate, conditioned upon the Participant's continued provision of services
to the Company and its Related Corporations and Affiliates through the date
specified in the Award Agreement. The Committee shall determine the number of
Shares of Contract Stock to be granted.

          (b)  Contract Date. When Contract Stock is granted, the Committee
shall establish the Contract Date on which the Contract Stock shall be delivered
to the Participant, provided the Participant is still providing services to the
Company and its Related Corporations and Affiliates on such date.

          (c)  Delivery of Contract Stock. If the Participant is still providing
services to the Company and its Related Corporations and Affiliates as of the
Contract Date, the Committee shall cause the Contract Stock to be delivered to
the Participant in accordance with the terms of the Award Agreement.

          7.6  Dividend Equivalent Rights. The Committee may provide for payment
to a Key Employee or Associate of Dividend Equivalent Rights, either currently
or in the future, or for the investment of such Dividend Equivalent Rights on
behalf of the Participant.

          7.7  Loans. The Committee may authorize a Loan from the Company to a
Key Employee or Associate, either on the date of or after the grant of any Award
to the Participant (except that the ability of the Committee to authorize a Loan
in connection with an Award of ISOs must be included in the Participant's Award
Agreement at the time of the Award). A Loan may be made either in connection
with the purchase of Shares under the Award or with the payment of any Federal,
state, and local income tax with respect to income recognized as a result of the
Award. The Committee will have full authority to decide whether to make a Loan
and to determine the amount, terms, and conditions of the Loan, whether the Loan
is to be secured or unsecured, the terms on which the Loan is to be repaid, and
the conditions, if any, under which it may be forgiven. However, the Loan will
be made on the Participant's personal, negotiable, demand promissory note, and
will bear interest at a rate not lower than the lowest rate that will avoid the
imputation of interest under section 7872 of the Code.

          8.   Events Affecting Outstanding Awards

          8.1  Termination of Service (Other Than by Death or Disability). If a
Participant ceases to provide services to the Company and its Related
Corporations and Affiliates for any reason other than death or Disability, as
the case may be, the following shall apply:

          (a)  Except as otherwise determined by the Committee, all Options and
Stock Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Participant's termination of service shall terminate at
that time. Any Options or Stock Appreciation Rights that were exercisable
immediately prior to the termination of service will continue to be exercisable
for six months (or for such longer period as the Committee may determine), and
shall


                                      A10

<PAGE>


thereupon terminate, unless the Award Agreement provides by its terms for
immediate termination or for termination in less than six months in the event of
termination of service. In no event, however, shall an Option or Stock
Appreciation Right remain exercisable beyond the latest date on which it could
have been exercised without regard to this Section. For purposes of this
subsection (a), a termination of service shall not be deemed to have resulted by
reason of a sick leave or other bona fide leave of absence approved for purposes
of the Plan by the Committee.

          (b)  Except as otherwise determined by the Committee, all Restricted
Stock held by the Participant at the time of the termination of service must be
transferred to the Company (and, in the event the certificates representing such
Restricted Stock are held by the Company, such Restricted Stock shall be so
transferred without any further action by the Participant), in accordance with
Section 7.3.

          (c)  Except as otherwise determined by the Committee, all Performance
Stock, Contract Stock, and Dividend Equivalent Rights to which the Participant
was not irrevocably entitled prior to the termination of service shall be
forfeited and the Awards canceled as of the date of such termination of service.

          (d)  Payment of any outstanding Loan upon a Participant's termination
of service shall be governed by the terms of the loan agreement entered into by
the Company and the Participant.

          8.2  Death or Disability. If a Participant dies or incurs a
Disability, the following shall apply:

          (a)  Except as otherwise determined by the Committee, all Options and
Stock Appreciation Rights held by the Participant immediately prior to death or
Disability, as the case may be, to the extent then exercisable, may be exercised
by the Participant or by the Participant's legal representative (in the case of
Disability), or by the Participant's executor or administrator or by the person
or persons to whom the Option or Stock Appreciation Right is transferred by will
or the laws of descent and distribution, at any time within the one-year period
ending with the first anniversary of the Participant's death or Disability (or
such shorter or longer period as the Committee may determine), and shall
thereupon terminate. In no event, however, shall an Option or Stock Appreciation
Right remain exercisable beyond the latest date on which it could have been
exercised without regard to this Section. Except as otherwise determined by the
Committee, all Options and Stock Appreciation Rights held by a Participant
immediately prior to death or Disability that are not then exercisable shall
terminate at the date of death or Disability.

          (b)  Except as otherwise determined by the Committee, all Restricted
Stock held by the Participant at the date of death or Disability, as the case
may be, must be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock shall be so transferred without any further action by the Participant), in
accordance with Section 7.3.

          (c)  Except as otherwise determined by the Committee, all Performance
Stock, Contract Stock, and Dividend Equivalent Rights to which the Participant
was not irrevocably entitled prior to death or Disability, as the case may be,
shall be forfeited and the Awards canceled as of the date of death or
Disability.

          (d)  Payment of any outstanding Loan upon a Participant's death or
Disability shall be governed by the terms of the loan agreement entered into by
the Company and the Participant.

                                      A11

<PAGE>


          8.3  Capital Adjustments. The number of Shares that may be delivered
under the Plan, the maximum number of Shares that may be made subject to ISOs,
and the maximum number of Shares with respect to which Options or Stock
Appreciation Rights may be granted to any Key Employee or Associate under the
Plan, all as stated in Section 5, and the number of Shares issuable upon the
exercise or vesting of outstanding Awards under the Plan (as well as the
exercise price per Share under outstanding Options), shall be proportionately
adjusted, as may be deemed appropriate by the Committee, to reflect any increase
or decrease in the number of issued Shares resulting from a subdivision
(share-split), consolidation (reverse split), stock dividend, or similar change
in the capitalization of the Company.

          8.4  Certain Corporate Transactions

          (a)  In the event of a corporate transaction (as, for example, a
merger, consolidation, acquisition of property or stock, separation,
reorganization, or liquidation), each outstanding Award shall be assumed by the
surviving or successor entity; provided, however, that in the event of a
proposed corporate transaction, the Committee may terminate all or a portion of
any outstanding Award, effective upon the closing of the corporate transaction,
if it determines that such termination is in the best interests of the Company.
If the Committee decides to terminate outstanding Options or Stock Appreciation
Rights, the Committee shall give each Participant holding an Option or Stock
Appreciation Right to be terminated not less than seven days' notice prior to
any such termination, and any Option or Stock Appreciation Right that is to be
so terminated may be exercised (if and only to the extent that it is then
exercisable) up to, and including the date immediately preceding such
termination. Further, the Committee, in its discretion, may (i) accelerate, in
whole or in part, the date on which any or all Options and Stock Appreciation
Rights become exercisable, (ii) remove the restrictions from the outstanding
Shares of Restricted Stock, (iii) cause the delivery of any Performance Stock,
even if the associated Performance Goals have not been met, (iv) cause the
delivery of any Contract Stock, even if the Contract Date has not been reached;
(v) cause the payment of any Dividend Equivalent Rights, and/or (vi) forgive all
or any portion of the principal of, or interest on, a Loan. The Committee also
may, in its discretion, change the terms of any outstanding Award to reflect any
such corporate transaction, provided that, in the case of ISOs, such change
would not constitute a "modification" under section 424(h) of the Code, unless
the Participant consents to the change.

          (b)  With respect to an outstanding Award held by a Participant who,
following the corporate transaction, will be employed by or otherwise providing
services to an entity which is a surviving or acquiring entity in such
transaction or an affiliate of such an entity, the Committee may, in lieu of the
action described in subsection (a) above, arrange to have such surviving or
acquiring entity or affiliate grant to the Participant a replacement award
which, in the judgment of the Committee, is substantially equivalent to the
Award.

          8.5  Exercise Upon Change in Control

          (a)  Notwithstanding any other provision of this Plan, all outstanding
Options and all Stock Appreciation Rights shall become fully vested and
exercisable, all Performance Stock and all Dividend Equivalent Rights shall
become fully vested, all Contract Stock shall become immediately payable, and
all restrictions shall be removed from any outstanding Shares of Restricted
Stock, upon a Change in Control.

          (b)  "Change in Control" shall mean:

               (i)  An acquisition (other than directly from the Company) of any
voting securities of the Company ("Voting Securities") by any "Person" (as such
term is used for purposes of section 13(d) or 14(d) of the Exchange Act)
immediately after which such Person has "Beneficial Ownership" (within


                                      A12

<PAGE>


the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50 percent or
more of the combined voting power of all the then outstanding Voting Securities,
other than the Company, any trustee or other fiduciary holding securities under
any employee benefit plan of the Company or an affiliate thereof, or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company;
provided, however, that any acquisition from the Company or any acquisition
pursuant to a transaction which complies with paragraph (iii)(A) and (B) below
shall not be a Change in Control under this paragraph (i);

               (ii) The individuals who, as of March 1, 2000, are members of the
Board (the "Incumbent Board") cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the shareholders, of any new director was approved by a vote of
at least two-thirds of the members of the Board who constitute Incumbent Board
members, such new directors shall for all purposes be considered as members of
the Incumbent Board as of March 1, 2000, provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest;

               (iii) consummation by the Company of a reorganization, merger, or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets or stock of another entity (a
"Business Combination"), unless immediately following such Business Combination:
(A) more than 50 percent of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of (I)
the corporation resulting from such Business Combination (the "Surviving
Corporation"), or (II) if applicable, a corporation which as a result of such
transaction owns the Company or all or substantially all of the 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; and (B) 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;

               (iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or

               (v)  acceptance by the shareholders of the Company of shares in a
share exchange if the shareholders of the Company immediately before such share
exchange do not own, directly or indirectly, immediately following such share
exchange more than 50 percent of the combined voting power of the outstanding
Voting Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.

          9.   Amendment or Termination of the Plan

                                      A13

<PAGE>


          (a)  In General. The Board, pursuant to a written resolution, may from
time to time suspend or terminate the Plan or amend it, and, except as provided
in Section 3(b)(iv), 7.1(a), and 8.4(a), the Committee may amend any outstanding
Awards in any respect whatsoever; except that, without the approval of the
shareholders (given in the manner set forth in subsection (b) below):

               (i)  no amendment may be made that would:

                    (A)  change the class of employees eligible to participate
                         in the Plan with respect to ISOs;

                    (B)  except as permitted under Section 8.3, increase the
                         maximum number of Shares with respect to which ISOs may
                         be granted under the Plan; or

                    (C)  extend the duration of the Plan under Section 4(b) with
                         respect to any ISOs granted hereunder; and

               (ii)  no   amendment   may  be  made  that  would   constitute  a
modification of the material terms of the "performance  goal" within the meaning
of Treas.  Reg.SS.1.162-27(e)(4)(vi)  or any  successor  thereto  (to the extent
compliance with section 162(m) of the Code is desired).

          Notwithstanding the foregoing, no such termination or amendment shall
materially impair the rights of any Participant holding an outstanding Award
without the consent of such Participant.

          (b)  Manner of Shareholder Approval. The approval of shareholders must
be effected by a majority of the votes cast (including abstentions, to the
extent abstentions are counted as voting under applicable state law) in a
separate vote at a duly held shareholders' meeting at which a quorum
representing a majority of all outstanding voting stock is, either in person or
by proxy, present and voting on the Plan.

          10.  Miscellaneous

          10.1 Documentation of Awards. Awards shall be evidenced by such
written Award Agreements, if any, as may be prescribed by the Committee from
time to time. Such instruments may be in the form of agreements to be executed
by both the Participant and the Company, or certificates, letters, or similar
instruments, which need not be executed by the Participant but acceptance of
which will evidence agreement to the terms thereof.

          10.2 Rights as a Stockholder. Except as specifically provided by the
Plan or an Award Agreement, the receipt of an Award shall not give a Participant
rights as a stockholder; instead, the Participant shall obtain such rights,
subject to any limitations imposed by the Plan or the Award Agreement, upon the
actual receipt of Shares.

          10.3 Conditions on Delivery of Shares. The Company shall not deliver
any Shares pursuant to the Plan or remove restrictions from Shares previously
delivered under the Plan (i) until all conditions of the Award have been
satisfied or removed, (ii) until all applicable Federal and state laws and
regulations have been complied with, and (iii) if the outstanding Shares are at
the time of such delivery listed on any stock exchange, until the Shares to be
delivered have been listed or authorized to be listed on such exchange. If an
Award is exercised by the Participant's legal representative, the Company will
be under no obligation to deliver Shares pursuant to such exercise until the
Company is satisfied as to the authority of such representative.

                                      A14

<PAGE>


          10.4 Investment Purpose. Each Award shall be granted on the condition
that the purchase or grant of Shares thereunder shall be for investment purposes
and not with a view to resale or distribution, except that in the event the
Shares subject to such Award are registered under the Securities Act, or in the
event a resale of such Shares without such registration would otherwise be
permissible, such condition shall be inoperative if in the opinion of counsel
for the Company such condition is not required under the Securities Act or any
other applicable law, regulation, or rule of any governmental agency.

          10.5 Registration and Listing of Shares. If the Company shall deem it
necessary to register under the Securities Act or any other applicable statute
any Shares purchased under this Plan, or to qualify any such Shares for an
exemption from any such statutes, the Company shall take such action at its own
expense. If Shares are listed on any national securities exchange at the time
any Shares are purchased hereunder, the Company shall make prompt application
for the listing on such national securities exchange of such Shares, at its own
expense. Purchases and grants of Shares hereunder shall be postponed as
necessary pending any such action.

          10.6 Compliance with Rule 16b-3. All elections and transactions under
this Plan by persons subject to Rule 16b-3, promulgated under section 16(b) of
the Exchange Act, or any successor to such Rule, are intended to comply with at
least one of the exemptive conditions under such Rule. The Committee shall
establish such administrative guidelines to facilitate compliance with at least
one such exemptive condition under Rule 16b-3 as the Committee may deem
necessary or appropriate.

          10.7 Tax Withholding

          (a)  Obligation to Withhold. The Company shall withhold from any cash
payment made pursuant to an Award an amount sufficient to satisfy all Federal,
state, and local withholding tax requirements (the "withholding requirements").
In the case of an Award pursuant to which Shares may be delivered, the Committee
may require that the Participant or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Committee with regard to such
requirements, prior to the delivery of any Shares.

          (b)  Election to Withhold Shares. The Committee, in its discretion,
may permit or require the Participant to satisfy the federal, state, and/or
local withholding tax, in whole or in part, by electing to have the Company
withhold Shares (or by returning previously acquired Shares to the Company);
provided, however, that the Company may limit the number of Shares withheld to
satisfy the tax withholding requirements to the extent necessary to avoid
adverse accounting consequences. Shares shall be valued, for purposes of this
subsection (b), at their Fair Market Value (determined as of the date an amount
is includible in income by the Participant (the "Determination Date"), rather
than the date of grant). If Shares acquired by the exercise of an ISO are used
to satisfy the withholding requirement described above, such Shares must have
been held by the Participant for a period of not less than the holding period
described in section 422(a)(1) of the Code as of the Determination Date. The
Committee shall adopt such withholding rules as it deems necessary to carry out
the provisions of this subsection (b).

          10.8 Transferability of Awards. No ISO may be transferred other than
by will or by the laws of descent and distribution. Any other Award may be
transferred to the extent permitted by applicable law, except as otherwise
provided in the applicable Award Agreement. During a Participant's lifetime, an
Award requiring exercise may be exercised only by the Participant (or, in the
event of the Participant's incapacity, by the person or persons legally
appointed to act on the Participant's behalf).

          10.9 Registration. If the Participant is married at the time Shares
are delivered and if the Participant so requests at such time, the certificate
or certificates for such Shares shall be registered in the name of the
Participant and the Participant's spouse, jointly, with right of survivorship.

                                      A15

<PAGE>


          10.10 Acquisitions. Notwithstanding any other provision of this Plan,
Awards may be granted hereunder in substitution for awards held by directors,
key employees, and associates of other corporations who are about to, or have,
become Key Employees or Associates as a result of a merger, consolidation,
acquisition of assets, or similar transaction by the Company or a Related
Corporation or (in the case of Awards other than ISOs) an Affiliate. The terms
of the substitute Awards so granted may vary from the terms set forth in this
Plan to such extent as the Committee may deem appropriate to conform, in whole
or in part, to the provisions of the awards in substitution for which they are
granted.

          10.11 Replacement of Outstanding Options. The Committee shall have the
authority to cancel, at any time and from time to time, with the consent of the
affected Participants, any or all outstanding Options under the Plan and to
grant in substitution therefor, but not within six months before or after such
cancellation, new Options under the Plan covering the same or a different number
of Shares but having a per share purchase price not less than the greater of par
value or 100 percent of the Fair Market Value of a Share on the new date of the
grant. The Committee may permit the voluntary surrender of all or a portion of
any Option to be conditioned upon the granting to the Participant under the Plan
of a new Option for the same or a different number of Shares as the Option
surrendered, or may require such voluntary surrender as a condition precedent to
a grant of a new Option to such Participant. Any new Option shall be exercisable
at the price, during the period, and in accordance with any other terms and
conditions specified by the Committee at the time the new Option is granted, all
determined in accordance with the provisions of the Plan without regard to the
price, period of exercise, and any other terms or conditions of the Option
surrendered.

          10.12 Employment Rights. Neither the adoption of the Plan nor the
grant of Awards will confer upon any person any right to continued employment by
the Company or any of its Related Corporations or Affiliates or affect in any
way the right of any of the foregoing to terminate an employment relationship at
any time.

          10.13 Indemnification of Board and Committee. Without limiting any
other rights of indemnification that they may have from the Company or any of
its Related Corporations or Affiliates, the members of the Board and the members
of the Committee shall be indemnified by the Company against all costs and
expenses reasonably incurred by them in connection with any claim, action, suit,
or proceeding to which they or any of them may be a party by reason of any
action taken or failure to act under, or in connection with, the Plan or any
Award granted thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action, suit,
or proceeding, except a judgment based upon a finding of willful misconduct or
recklessness on their part. Upon the making or institution of any such claim,
action, suit, or proceeding, the Board or Committee member shall notify the
Company in writing, giving the Company an opportunity, at its own expense, to
handle and defend the same before such Board or Committee member undertakes to
handle it on his or her own behalf. The provisions of this Section shall not
give members of the Board or the Committee greater rights than they would have
under the Company's by-laws or Delaware law. 


          10.14 Application of Funds. Any cash proceeds received by the Company
from the sale of Shares pursuant to Awards granted under the Plan shall be added
to the  general  funds of the  Company.  Any  Shares  received  in  payment  for
additional Shares upon exercise of an Option shall become treasury stock.

          10.15 Governing Law. Except as provided in Section 10.13, the Plan
shall be governed by the applicable Code provisions to the maximum extent
possible. Otherwise, the laws of the State of New Jersey (without reference to
the principles of conflict of laws) shall govern the operation of, and the
rights of Participants under, the Plan and Awards granted hereunder.

                                      A16

<PAGE>


                                   APPENDIX B

                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION

                        FIRST AMENDMENT TO CERTIFICATE OF
                     DESIGNATION, RIGHTS AND PREFERENCES OF
                     SERIES B CONVERTIBLE PREFERRED STOCK OF
                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION


          INTEGRA LIFESCIENCES HOLDINGS CORPORATION ("Integra"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:

          That the Board of Directors of Integra, at a meeting held on February
16, 2000, adopted a resolution proposing and declaring advisable the following
amendments to the Certificate of Designation, Rights and Preferences of Series B
Convertible Preferred Stock of Integra:

          RESOLVED, that the Certificate of Designation, Rights and Preferences
of Series B Convertible Preferred Stock of Integra Lifesciences Holdings
Corporation be amended by changing paragraphs 3, 4 and 9 thereof so that, as
amended, said paragraphs shall be and read in their entirety as follows:

          "3. Dividends.

                    (a)  The holders of Series B Convertible Preferred Stock
          shall be entitled to receive, out of funds legally available for such
          purpose, annual cumulative dividends which shall accrue at the rate of
          10% per annum, payable upon the liquidation, dissolution or winding up
          of the Corporation.

                    (b)  Dividends on each share of Series B Convertible
          Preferred Stock shall be cumulative and shall accrue from the date of
          issuance of such share of Series B Convertible Preferred Stock. The
          date on which the Corporation initially issues any share of Series B
          Convertible Preferred Stock shall be deemed to be its "Issue Date",
          regardless of the number of times of transfer of such shares is made
          on the stock records maintained by or for the Corporation and
          regardless of the number of certificates that may be issued to
          evidence such share.

                    (c)  In addition to the right to receive dividends pursuant
          to Section 3(a) above, each holder of a share of Series B Convertible
          Preferred Stock shall have the right, at any time after the Issue
          Date, if the Board of Directors of the Corporation shall declare a
          dividend or make any other distribution (including, without
          limitation, in cash or other property or assets, but excluding any
          stock split effected as a stock dividend) to holders of shares of
          Common Stock, to receive, out of funds legally available therefor, a
          dividend or distribution in an amount equal to the amount of such
          dividend or distribution receivable by a holder of the number of
          shares of Common Stock into which such share of Series B Convertible
          Preferred Stock is convertible on the record date for such dividend or
          distribution. Any such amount shall be paid to the holders of shares
          of Series B Convertible Preferred Stock at the same time such dividend
          or distribution is made to the holders of Common Stock."

                                       B1

<PAGE>


          "4. Liquidation.

                    (d)  Upon any liquidation, dissolution or winding up of the
          Corporation, whether voluntary or involuntary, in which all or
          substantially all of the consideration, if any, received by the
          Corporation or its stockholders is in cash, the holders of the shares
          of Series B Convertible Preferred Stock shall be paid, before any
          distribution or payment is made upon any stock ranking on liquidation
          junior to the Series B Convertible Preferred Stock, an amount equal to
          the greater of (i) $100 per share plus, in the case of each share, an
          amount equal to any dividends declared but unpaid thereon, through the
          date payment thereof is made available (the "Redemption Payment"), and
          (ii) the amount that the holders of the Series B Convertible Preferred
          Stock would receive if they were to convert each share of Series B
          Convertible Preferred Stock into shares of Common Stock immediately
          prior to such liquidation, dissolution or winding up (such amount
          payable with respect to one share of Series B Convertible Preferred
          Stock being sometimes referred to as the "Liquidation Payment" and
          with respect to all shares of Series B Convertible Preferred Stock
          being sometimes referred to as the "Liquidation Payments").

                    (e)  Upon any liquidation, dissolution or winding up of the
          Corporation, whether voluntary or involuntary, in which all or
          substantially all of the consideration, if any, received by the
          Corporation or its stockholders is in securities, the Corporation
          shall have the option, at its election, of paying such Liquidation
          Payments to the holders of the shares of Series B Convertible
          Preferred Stock in cash or in a preferred security of the successor
          entity having terms substantially similar to the Series B Convertible
          Preferred Stock.

                    (f)  If upon any liquidation, dissolution or winding up of
          the Corporation, whether voluntary or involuntary, the assets to be
          distributed among the holders of Series B Convertible Preferred Stock
          shall be insufficient to permit payment to the holders of Series B
          Convertible Preferred Stock of the Liquidation Payments, then the
          entire assets of the Corporation to be so distributed shall be
          distributed ratably among the holders of Series B Convertible
          Preferred Stock. Upon any liquidation, dissolution or winding up of
          the Corporation, after the holders of Series B Convertible Preferred
          Stock shall have been paid in full the Liquidation Payments
          respectively, to which they shall be entitled, the Series B
          Convertible Preferred Stock shall be automatically canceled and the
          remaining net assets of the Corporation may be distributed to the
          holders of stock ranking on liquidation junior to the Series B
          Convertible Preferred Stock.

                    (g)  Written notice of such liquidation, dissolution or
          winding up, stating a payment date, the amount of the Liquidation
          Payments and the place where said Liquidation Payments shall be
          payable, shall be delivered in person, mailed by certified or
          registered mail, return receipt requested, or sent by telecopier or
          telex, not less than 10 days prior to the payment date stated therein,
          to the holders of record of Series B Convertible Preferred Stock, such
          notice to be addressed to each such holder at its address as shown by
          the records of the Corporation.

                                       B2

<PAGE>


                    (h)  For purposes of this paragraph 4, a liquidation,
          dissolution or winding up of the Corporation shall be deemed to
          include (i) the Corporation's sale of all or substantially all of its
          assets or (ii) the merger or consolidation of the Corporation into or
          with any other corporation, in which all or substantially all of the
          consideration received by the Corporation or its stockholders in
          connection with such sale, merger or consolidation is: (x) in cash, or
          (y) in securities of the acquiring company or an affiliate thereof
          having a fair market value per share of Common Stock which is lower
          than the Conversion Price (as defined below) as last adjusted and in
          effect at the date of such liquidation, dissolution or winding up;
          provided that a liquidation, dissolution or winding up of the
          Corporation shall not include a sale, merger or consolidation in which
          all or substantially all of the consideration received by the
          Corporation or its stockholders in connection therewith is in
          securities of the acquiring company or an affiliate thereof having a
          fair market value per share of Common Stock which is equal to or
          greater than the Conversion Price as last adjusted and in effect on
          the date of such liquidation, dissolution or winding up.

                    (i)  The Series B Convertible Preferred Stock shall, with
          respect to distribution of assets and rights upon the liquidation,
          dissolution or winding up of the Corporation, rank on a parity with
          any class or series of capital stock of the Corporation hereafter
          created which expressly provides that it ranks on a parity with the
          Series B Convertible Preferred Stock with respect to distribution of
          assets and rights upon the liquidation, dissolution or winding up of
          the Corporation. The Series B Convertible Preferred Stock shall, with
          respect to distribution of assets and rights upon the liquidation,
          dissolution or winding up of the Corporation, rank senior to (i) the
          Corporation's Series A Convertible Preferred Stock, $.01 par value per
          share, and (ii) each class or series of capital stock of the
          Corporation hereafter created which does not expressly provide that it
          ranks on a parity with or senior to the Series B Convertible Preferred
          Stock with respect to distribution of assets and rights upon the
          liquidation, dissolution or winding up of the Corporation."

          "9. Optional Redemption.

                    (a)  For the purposes of this paragraph 9 the "Target Market
          Price" shall mean an amount equal to: (i) in the twelve-month period
          commencing on March 15, 2001, 2.5 times the Conversion Price as last
          adjusted and then in effect; (ii) in the twelve-month period
          commencing on March 15, 2002, 3.25 times the Conversion Price as last
          adjusted and then in effect; and (iii) in the twelve-month period
          commencing on March 15, 2003, 4 times the Conversion Price as last
          adjusted and then in effect.

                    (b)  If, at any time after March 15, 2001, for a period of
          not less than thirty (30) consecutive trading days, the average
          closing price of the Corporation's Common Stock on the principal
          securities exchange or market on which such shares are then traded has
          been equal to or greater than the Target Market Price, then the
          Corporation may, at the option of the Board of Directors of the
          Corporation, redeem from any source of funds legally available
          therefor, in whole or in part, in the manner provided herein, any or
          all whole number of shares of Series C Convertible Preferred Stock at
          any time outstanding for a


                                       B3

<PAGE>


          cash amount per share to be redeemed equal to the Redemption Payment
          as defined in paragraph 4 (the "Redemption Price").

                    (c)  Notwithstanding the foregoing, at any time and from
          time to time after March 15, 2004, the Corporation may, at the option
          of the Board of Directors of the Corporation, redeem from any source
          of funds legally available therefor, in whole or in part, in the
          manner provided herein, any or all whole number of shares of Series B
          Convertible Preferred Stock at any time outstanding for an amount per
          share to be redeemed equal to the Redemption Price."

          IN WITNESS WHEREOF, this Certificate has been executed as of this 21st
day of March, 2000, by the undersigned.


                                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION


                                    By:/s/ Stuart M. Essig
                                    -----------------------------------------
                                    Name: Stuart M. Essig
                                    Title: President

                                       B4

<PAGE>


                                   APPENDIX C
                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION

                       SECOND AMENDMENT TO CERTIFICATE OF
                     DESIGNATION, RIGHTS AND PREFERENCES OF
                 SERIES B CONVERTIBLE PREFERRED STOCK AND FIRST
                    AMENDMENT TO CERTIFICATE OF DESIGNATION,
                 RIGHTS AND PREFERENCES OF SERIES C CONVERTIBLE
                     PREFERRED STOCK OF INTEGRA LIFESCIENCES
                              HOLDINGS CORPORATION


          INTEGRA LIFESCIENCES HOLDINGS CORPORATION ("Integra"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:

          FIRST: That the Board of Directors of Integra, at a meeting held on
March 6, 2001, adopted the following resolution proposing and declaring
advisable certain amendments (the "Series B Amendment") to the Certificate of
Designation, Rights and Preferences of Series B Convertible Preferred Stock of
Integra:

          NOW, THEREFORE, BE IT RESOLVED, that this Board of Directors proposes
and hereby deems advisable that the Certificate of Designation, Rights and
Preferences of Series B Convertible Preferred Stock of Integra Lifesciences
Holdings Corporation (the "Series B Certificate"), be amended as follows:

          (1)  Amend paragraph 4 thereof so that, as amended, said paragraph
shall be and read in its entirety as follows:

          "4.  LIQUIDATION.

                    (a)  Upon any liquidation, dissolution or winding up of the
          Corporation, whether voluntary or involuntary, in which all or
          substantially all of the consideration, if any, received by the
          Corporation or its stockholders is in cash, the holders of the shares
          of Series B Convertible Preferred Stock shall be paid, before any
          distribution or payment is made upon any stock ranking on liquidation
          junior to the Series B Convertible Preferred Stock, an amount equal to
          the greater of (i) $100 per share (the "Redemption Payment") and (ii)
          the amount that the holders of the Series B Convertible Preferred
          Stock would receive if they were to convert each share of Series B
          Convertible Preferred Stock into shares of Common Stock immediately
          prior to such liquidation, dissolution or winding up (such amount
          payable with respect to one share of Series B Convertible Preferred
          Stock being sometimes referred to as the "Liquidation Payment" and
          with respect to all shares of Series B Convertible Preferred Stock
          being sometimes referred to as the "Liquidation Payments").

                    (b)  Upon any liquidation, dissolution or winding up of the
          Corporation, whether voluntary or involuntary, in which all or
          substantially all of the consideration, if any, received by the
          Corporation or its stockholders is in securities, the Corporation
          shall have the option, at its election, of paying such Liquidation
          Payments to the holders of the shares of Series B Convertible
          Preferred Stock in cash or in a preferred security of the

                                       C1

<PAGE>


          successor entity having terms substantially similar to the Series B
          Convertible Preferred Stock.

                    (c)  If upon any liquidation, dissolution or winding up of
          the Corporation, whether voluntary or involuntary, the assets to be
          distributed among the holders of Series B Convertible Preferred Stock
          shall be insufficient to permit payment to the holders of Series B
          Convertible Preferred Stock of the Liquidation Payments, then the
          entire assets of the Corporation to be so distributed shall be
          distributed ratably among the holders of Series B Convertible
          Preferred Stock. Upon any liquidation, dissolution or winding up of
          the Corporation, after the holders of Series B Convertible Preferred
          Stock shall have been paid in full the Liquidation Payments
          respectively, to which they shall be entitled, the Series B
          Convertible Preferred Stock shall be automatically canceled and the
          remaining net assets of the Corporation may be distributed to the
          holders of stock ranking on liquidation junior to the Series B
          Convertible Preferred Stock.

                    (d)  Written notice of such liquidation, dissolution or
          winding up, stating a payment date, the amount of the Liquidation
          Payments and the place where said Liquidation Payments shall be
          payable, shall be delivered in person, mailed by certified or
          registered mail, return receipt requested, or sent by telecopier or
          telex, not less than 10 days prior to the payment date stated therein,
          to the holders of record of Series B Convertible Preferred Stock, such
          notice to be addressed to each such holder at its address as shown by
          the records of the Corporation.

                    (e) For purposes of this paragraph 4, a liquidation,
          dissolution or winding up of the Corporation shall be deemed to
          include (i) the Corporation's sale of all or substantially all of its
          assets or (ii) the merger or consolidation of the Corporation into or
          with any other corporation, in which all or substantially all of the
          consideration received by the Corporation or its stockholders in
          connection with such sale, merger or consolidation is: (x) in cash, or
          (y) in securities of the acquiring company or an affiliate thereof
          having a fair market value per share of Common Stock which is lower
          than the Conversion Price (as defined below) as last adjusted and in
          effect at the date of such liquidation, dissolution or winding up;
          provided that a liquidation, dissolution or winding up of the
          Corporation shall not include a sale, merger or consolidation in which
          all or substantially all of the consideration received by the
          Corporation or its stockholders in connection therewith is in
          securities of the acquiring company or an affiliate thereof having a
          fair market value per share of Common Stock which is equal to or
          greater than the Conversion Price as last adjusted and in effect on
          the date of such liquidation, dissolution or winding up.

                    (f)  The Series B Convertible Preferred Stock shall, with
          respect to distribution of assets and rights upon the liquidation,
          dissolution or winding up of the Corporation, rank on a parity with
          any class or series of capital stock of the Corporation hereafter
          created which expressly provides that it ranks on a parity with the
          Series B Convertible Preferred Stock with respect to distribution of
          assets and rights upon the liquidation, dissolution or winding up of
          the Corporation. The Series B Convertible Preferred Stock shall, with
          respect to distribution of assets and rights upon the liquidation,
          dissolution or winding up of the Corporation, rank senior to (i) the
          Corporation's Series A Convertible Preferred Stock, $.01 par value per
          share, and (ii) each class or series of capital stock of the
          Corporation hereafter created which does not expressly provide that it
          ranks on a parity with or senior to the Series B Convertible Preferred
          Stock with respect to distribution of assets and rights upon the
          liquidation, dissolution or winding up of the Corporation.";

          (2)  Amend paragraph 9(b) thereof by replacing the phrase "Series C
Convertible Preferred Stock" that appears therein with the phrase "Series B
Convertible Preferred Stock".


          SECOND: That the Board of Directors of Integra, at a meeting held on
March 6, 2001, adopted the following resolution proposing and declaring
advisable certain amendments (the "Series C Amendment") to the Certificate of
Designation, Rights and Preferences of Series C Convertible Preferred Stock of
Integra:

          RESOLVED, that this Board of Directors proposes and hereby deems
advisable that the Certificate of Designation, Rights and Preferences of Series
C Convertible Preferred Stock of Integra LifeSciences Holdings Corporation (the
"Series C Certificate"), be amended as follows:

                                       C2

<PAGE>


          (1)  Amend paragraph 7(a) thereof by replacing the phrase "Series B
Preferred Stock" that appears therein with the phrase "Series C Convertible
Preferred Stock";

          (2)  Amend paragraph 7(b) thereof by replacing the phrase "Series B
Preferred Stock" that appears therein with the phrase "Series C Convertible
Preferred Stock".


          THIRD: That the stockholders of the Corporation, at an annual meeting
of stockholders called and held upon notice properly given in accordance with
Section 222 of the Delaware General Corporation Law, have adopted and approved
the Series B Amendment and the Series C Amendment in accordance with the
provisions of Section 212 of the Delaware General Corporation Law.


          FOURTH: That the Series B Amendment and the Series C Amendment have
been duly adopted and approved in accordance with the provisions of Section 242
of the Delaware General Corporation Law.


          IN WITNESS WHEREOF, said Integra LifeSciences Corporation has caused
this Certificate of Amendment of Certificates of Designation, Rights and
Preferences of Series B Preferred Stock and Series C Preferred Stock to be
executed by a duly authorized officer of the Corporation this 15th day of May,
2001.

                                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION
                                    By:/s/ Stuart M. Essig
                                    -----------------------------------------
                                    Name:  Stuart M. Essig
                                    Title: President

                                       C3

<PAGE>


                                   APPENDIX D

                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION

                    AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

                                     CHARTER

                                    FOREWORD

          The primary purpose of the Audit Committee (the "Committee") is to
assist the Board of Directors in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process, by providing
oversight of the financial reports and other financial information provided by
the Company to any governmental or regulatory body, the public or other users
thereof, the Company's systems of internal account and financial controls, and
the annual independent audit of the Company's financial statements.

          In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and, subject to any action of
the Board of Directors, the power to retain outside counsel, auditors or other
experts for this purpose. The Board of Directors and the Committee are in place
to represent the Company's stockholders. Accordingly, the outside auditors are
ultimately accountable to the Board of Directors and the Committee.

          The Committee charter should be reviewed by the Company's counsel and
approved by the Board of Directors. The Board of Directors and the Committee
shall review the adequacy of this charter on at least an annual basis and modify
the charter as necessary.


                                 I. COMPOSITION

A.   Committee members will be recommended by the Chairman of the Board and will
     be designated by the Board of Directors.

B.   The Committee shall consist of not less than three members of the Board who
     meet the requirements of the audit committee policy of the NASD.
     Accordingly, all of the members of the Committee will be directors:

     1.   Who have no relationship to the Company that may interfere with the
          exercise of their independence from management and the Company; and

     2.   Who are financially literate or who become financially literate within
          a reasonable period of time after appointment to the Committee. In
          addition, at least one member of the Committee will have accounting or
          related financial management expertise.

C.   Committee members will serve until the Board of Directors shall designate
     their successors.

D.   To ensure that the Committee has continuity of membership from one year to
     the next, Committee members will be appointed with the expectation that
     they will serve at least three years. The Board of Directors will use its
     best efforts to avoid the replacement of more than one member of the
     Committee at a time.

                                       D1

<PAGE>


                               II. AUTHORIZATION

A.   Regarding the Company's financial statements and the external audit of
     same, the Committee is authorized:

     1.   Subject to any action of the Board of Directors, to select, evaluate
          and, where appropriate, replace the Company's independent public
          accounting firm (or nominate the independent public accounting firm
          for stockholder approval in any proxy statement) with respect to the
          audit of the financial statements for the then current fiscal year and
          such other audit-related services as the Committee deems necessary.

     2.   To review, discuss and approve the overall scope of the external audit
          for the then current fiscal year.

     3.   To review and discuss the results of the external audit.

     4.   To review and discuss the management report of the independent public
          accounting firm regarding the external audit and the response by
          management thereto.

     5.   To review and discuss the method of evaluation by the independent
          public accounting firm of the adequacy and effectiveness of the
          accounting procedures and internal accounting controls of the Company.

     6.   To review and discuss the audited annual financial statements of the
          Company.

     7.   To review and discuss the financial statements included in any
          securities offering.

     8.   To review and discuss the quarterly financial statements of the
          Company.

     9.   To establish procedures which ensure that the Committee is advised on
          a timely basis of any breakdown in internal accounting controls or
          management fraud.

          NOTE: The Company's Chief Financial Officer will inform the Committee
          in writing of any material breakdown in internal accounting controls
          or any management fraud.

     10.  To discuss recent Financial Accounting Standards Board, Securities and
          Exchange Commission, or other regulatory pronouncements that might
          affect the Company's financial statements.

B.   The Committee shall:

     1.   request from the independent public accounting firm annually a formal
written statement delineating all relationships between the independent public
accounting firm and the Company consistent with Independence Standards Board
Standard 1;

     2.   request from the independent public accounting firm annually a formal
written statement of the fees billed for each of the following categories of
services rendered by the outside auditors: (i) the audit of the Company's annual
financial statements for the most recent fiscal year and the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year; (ii) information technology consulting services for the
most recent fiscal year, in the aggregate and by each


                                       D2

<PAGE>


service (and separately identifying fees for such services relating to financial
information systems design and implementation); and (iii) all other services
rendered by the outside auditors for the most recent fiscal year, in the
aggregate and by each service.

     3.   discuss with the independent public accounting firm any such disclosed
relationships and their impact on the independent public accounting firm's
independence; and

     4.   recommend that the Board of Directors take appropriate action to
oversee the independence of the independent public accounting firm.

C.   The function of the Audit Committee is oversight. The management of the
     Company is responsible for the preparation, presentation and integrity of
     the Company's financial statements. Management is responsible for
     maintaining appropriate accounting and financial reporting principles and
     policies and internal controls and procedures designed to assure compliance
     with accounting standards and applicable laws and regulations. The outside
     auditors are responsible for planning and carrying out a proper audit of
     the company's annual financial statements, reviews of the Company's
     quarterly financial statements prior to the filing of each quarterly report
     on Form 10-Q, and other procedures. In fulfilling their responsibilities
     hereunder, it is recognized that members of the Audit Committee are not
     fulll-time employees of the Company and are not, and do not represent
     themselves to be, accountants or auditors by profession or experts in the
     fields of accounting and auditing including in respect of auditor
     independence. As such, it is not the duty or responsibility of the Audit
     Committee or its members to conduct "field work" or other types of auditing
     or accounting reviews or procedures or to set auditor independence
     standards, and each member of the Audit Committee shall be entitled to rely
     on (i) the integrity of those persons and organizations within and outside
     the Company that from which it receives information from and, (ii) the
     accuracy of the financial and other information provided to the Audit
     Committee by such persons or organizations absent actual knowledge to the
     contrary (which shall be promptly reported to the Board of Directors) and
     (iii) representations made by management as to any information technology,
     internal audit and other non-audit services provided by the auditors to the
     Company.

D.   The Committee shall review with management and the independent public
     accounting firm the audited financial statements to be included in the
     Company's annual report on Form 10-K and review and consider with the
     independent public accounting firm the matters required to be discussed by
     Statement of Auditing Standards ("SAS") 61.

E.   As a whole, or through the Committee chair, the Committee shall review with
     the independent public accountants the Company's interim financial results
     to be included in the Company's quarterly reports to be filed with the
     Securities and Exchange Commission and the matters required to be discussed
     by SAS 61. This review will occur prior to the Company's filing of Form
     10-Q.

F.   The Committee shall prepare a report to be included in the Company's annual
     proxy statement, which states:

     1.   Whether the Committee has reviewed and discussed the Company's audited
          financial statements with management.

     2.   Whether the Committee has discussed with the independent public
          accountants the matters required to be discussed by SAS 61.

                                       D3

<PAGE>


     3.   Whether the Committee has received written disclosures and the letter
          from the independent public accountants required by Independence
          Standards Board Standard 1 and has discussed with the independent
          public accounting firm the independence of the independent public
          accounting firm.

     4.   That the Committee, based on the reviews and discussions referenced
          above, recommends to the Board of Directors that the audited financial
          statements for the last fiscal year be included in the Company's 10-K.

G.   The Committee is authorized to recommend, should it deem necessary, the
     engagement of an independent public accounting firm to provide any
     non-audit services, including the terms of the engagement, the cost thereof
     and, if such firm has also been retained to provide audit services, whether
     providing non-audit services will, in the opinion of the Committee,
     adversely affect the independence of the independent public accounting firm
     in carrying out its audit services.

H.   The Committee is authorized to encourage access to the Committee by a
     representative of the independent public accounting firm (generally the
     engagement partner), and by the Chief Financial Officer of the Company.
     Generally this is accomplished through private sessions with each of these
     persons. In addition, the Committee may have a private executive session.

     NOTE: By providing the independent public accounting firm a communication
     channel independent of management, the Committee enhances the independence
     of that firm.

I.   The Committee is authorized to review the accounting policies, procedures
     and principles adopted or continued by the management of the Company for
     the purpose of:

     1.   maintaining or establishing the books, records, accounts and internal
          accounting controls of the Company in compliance with the Foreign
          Corrupt Practices Act of 1977, and

     2.   preventing or detecting:

          a.   any improper or illegal disbursement of Company funds or property
               of value, or

          b.   the making of any arrangement on behalf of the Company which may
               provide for or result in the improper or illegal disbursement of
               funds or property of value, in order that the Company shall be in
               compliance with the Foreign Corrupt Practices Act of 1977.

J.   The Committee is authorized to establish an internal audit program and to
     review the overall scope of the internal audit program thereafter. In
     addition, the Committee is authorized to determine when it is appropriate
     to establish an internal audit department. The Committee is also authorized
     to review the overall adequacy of the internal audit function and the
     competence of the personnel engaged in such function. This may include
     reviewing staffing requirements, budgetary matters, and continuing
     professional development. The Committee must approve the hiring or
     termination of the director of the internal audit department.

K.   The Committee is authorized to conduct investigations relating to financial
     affairs, records, accounts and reports as the Committee may in its
     discretion deem necessary, or as the Board of Directors may from time to
     time request.

                                       D4

<PAGE>


L.   The Committee is authorized to discuss the quality and depth of staffing in
     the accounting, treasury and tax departments of the Company.

M.   The Committee must be advised by management when the Company is seeking a
     second opinion on a significant accounting/financial reporting issue.

N.   The Committee is authorized to review the program that monitors compliance
     with the Company's corporate code of conduct policy.

O.   The Committee is authorized to review transactions between the Company and
     members of the Board of Directors or management.

P.   The Committee is authorized to report orally its findings to the Board of
     Directors and will maintain written minutes of each Committee meeting.

                              III. INDEMNIFICATION

          In the course of their service on the Committee, Committee members may
be made a party to a legal action or other proceeding resulting in a personal
economic loss to the member. In the event of any such loss resulting from their
service on the Committee, Committee members will be indemnified by the Company
to the maximum extent provided under Delaware law or in accordance with any
indemnification agreements between the Company and such Committee members.

                                       D5

<PAGE>


                    INTEGRA LIFESCIENCES HOLDINGS CORPORATION
                              311C ENTERPRISE DRIVE
                          PLAINSBORO, NEW JERSEY 08536

         PROXY - ANNUAL MEETING OF STOCKHOLDERS - TUESDAY, MAY 15, 2001

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

          The undersigned hereby appoints Stuart M. Essig and John B. Henneman,
III as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side
hereof, all the shares of Common Stock, Series B Convertible Preferred Stock and
Series C Convertible Preferred Stock of Integra LifeSciences Holdings
Corporation (the "Company") held of record by the undersigned on April 9, 2001
at the Annual Meeting of Stockholders to be held on Tuesday, May 15, 2001 or at
any adjournment or postponement thereof.

          THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED IN FAVOR OF PROPOSALS 2 THROUGH 6; FOR ALL NOMINEES LISTED FOR ELECTION
OF DIRECTORS UNDER PROPOSAL 1; AND IN ACCORDANCE WITH THE PROXIES' JUDGMENT UPON
OTHER MATTERS PROPERLY COMING BEFORE THE MEETING AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.

                 (CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE)

     ----------------------------------------------------------------------


        |X|                 PLEASE MARK
                            YOUR VOTE
                            AS IN THIS EXAMPLE

1. ELECTION OF                FOR all nominees                WITHHOLD
   DIRECTORS                  listed (except as               AUTHORITY
   NOMINEES:                    marked to the          To vote for all nominees
   ---------                   contrary below)              listed at left.
   Keith Bradley
   Richard E. Caruso                |_|                          |_|
   Stuart M. Essig
   Neal Moszkowski
   George W. McKinney, III
   James M. Sullivan

To WITHHOLD AUTHORITY to vote for any individual nominee(s), write the nominee's
name below:

__________________________________________________      FOR    AGAINST  ABSTAIN

2.   Proposal to approve and adopt the Company's
     2001 Equity Incentive Plan                          |_|      |_|      |_|


3.   Proposal to ratify and approve all actions
     taken by the Board of Directors on February
     16, 2000 in connection with an amendment to
     the Company's Certificate of Designation,
     Rights and Preferences of Series B
     Convertible Preferred Stock, the purpose of
     which was to ensure that the rights and
     preferences of the Series B Convertible
     Preferred Stock would be substantially
     identical to the rights and preferences of
     the Series C Convertible Preferred Stock.           |_|      |_|      |_|

4.   Proposal to approve an amendment to the
     Company's Certificate of Designation, Rights
     and Preferences of Series B Convertible
     Preferred Stock, the purpose of which is to     
     make certain changes to clarify the
     numbering of certain paragraphs and
     internal references contained therein.              |_|      |_|      |_|
 
5.   Proposal to approve an amendment to the
     Company's Certificate of Designation,
     Rights and Preferences of Series C
     Convertible Preferred Stock, the purpose of
     which is to make certain changes to clarify
     the numbering of certain paragraphs and
     internal references contained therein.              |_|      |_|      |_|
        

6.   Proposal to ratify the appointment of
     PricewaterhouseCoopers LLP as the Company's
     auditors for the current fiscal year.               |_|      |_|      |_|

In their discretion, the Proxies are authorized, to the extent permitted by the
rules of the Securities and Exchange Commission, to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.

SIGNATURE (S)____________________________________    DATE_______________________
NOTE: (Executors, Administrators, etc. should give full title)
PLEASE SIGN AND RETURN THE CARD PROMPTLY USING THE ENCLOSED ENVELOPE.