Exhibit 10.1
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
January 31, 2007 (the “Effective Date”) by and between IsoTis, Inc. (the
“Company” or “IsoTis”) and _______________________ (“Employee”).
     WHEREAS, the Employee has been employed by the Company and its affiliates
since                         ;
     WHEREAS, the Company and Employee (the “Parties”) wish to set forth in
writing the terms on which Employee will be employed by the Company as of the
Effective Date;
     THEREFORE, the Parties agree as follows:

1.   EMPLOYMENT

     The Company hereby employs Employee and Employee hereby accepts employment
as the Company’s                          reporting directly to
                        , beginning on the Effective Date upon the terms and
conditions set forth below.

2.   TERM

     2.1 Term. The term of this Agreement shall commence on the Effective Date
and shall continue on the terms and conditions set forth below until Employee’s
employment is terminated as provided in Section 5 (the “Term”).

3.   COMPENSATION

     3.1 Base Compensation. Employee shall be paid a salary at the annual rate
of $                        (the “Base Compensation”). The Base Compensation
shall be reviewed at least annually, and may be increased, but not decreased. In
the event that the Base Compensation is increased, the new salary shall be the
Base Compensation for purposes of this Agreement thereafter.
     3.2 Bonus Compensation. The Compensation Committee of the Board of
Directors of the Company (the “Compensation Committee”), or its designee, shall
review Employee’s performance on an annual basis and, after due consideration of
any recommendation by the Compensation Committee, the Board of Directors shall
cause the Company to award Employee a cash bonus (a) for 2007, subject to the
terms and conditions of the Company’s bonus program, in an amount up to
                         (          %) of the Base Compensation paid to Employee
in 2007, based upon Employee’s achieving objectives as set forth in the bonus
program in effect at such time to time, and (b) for 2008 and subsequent years,
in accordance with the terms and based upon the objects set forth in the bonus
program for such year. The bonus shall be paid in no event later than March 15
of the year following the year for which the bonus is awarded.

 

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     3.3 Benefits. Employee shall be entitled to participate in all pension,
401(k) and other employee plans and benefits, including without limitation,
medical, dental, vision, life insurance and long term disability plans, in
accordance with the terms of such plans or policies as they may be in effect
from time to time.
     3.4 Automobile Allowance. The Company shall provide Employee with an
automobile allowance of five hundred ($500) dollars per month during the term of
Employee’s employment hereunder, in lieu of reimbursement for automobile
expenses actually incurred.
     3.5 Method of Payment. The monetary compensation payable and any benefits
due to Employee hereunder may be paid or provided in whole or in part when due,
from time to time, by the Company and/or its respective parents, subsidiaries
and affiliates, but shall at all times remain the responsibility of the Company.

4.   POSITION AND DUTIES

      4.1 Position or Duties. Employee shall hold the position of
                         of the Company and shall have such duties consistent
with this Agreement as assigned to him from time to time by
                        . Employee will do and perform all services, acts or
things necessary or advisable to manage and conduct                         
functions of the Company. Unless the Parties otherwise agree in writing, prior
to Employee’s termination in accordance with this Agreement, Employee will
perform the services he is required to perform in accordance with the terms of
this Agreement, reporting directly to the                         .
     4.2 Devotion of Time and Effort. Employee shall use Employee’s good faith
best efforts and judgment in performing Employee’s duties as required hereunder
and to act in the best interests of the Company. Employee shall devote all of
Employee’s business time, attention and energies to the business of the Company.
     4.3 Other Activities. Employee may engage in other activities for
Employee’s own account while employed hereunder, including without limitation,
charitable, community and other business activities, provided that in the
judgment of the Board of Directors of the Company (the “Board”) such other
activities do not materially interfere with the performance of Employee’s duties
hereunder, and do not violate Sections 6 and 7. With regard to any other
businesses or activities, Employee shall notify the Board of all such activities
and shall not begin such activities until Employee receives written approval
from the Board, which shall not be unreasonably withheld, conditioned or
delayed. This restriction shall not apply to Employee’s passive investment in
less than one (1) percent of the publicly traded securities of a publicly traded
entity.
     4.4 Paid Time Off. Employee shall be entitled to twenty (20) days of paid
time off (“PTO”) annually during the term, and otherwise subject to the
Company’s policies concerning accrual, use and scheduling of paid time off, as
such policies may be in effect from time to time.

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     4.5 Business Expenses. Employee shall be entitled to reimbursement of
reasonable business expenses in accordance with Company policies, as they may be
in effect from time to time.

5.   TERMINATION

     5.1 Due to Death. Employee’s employment shall terminate as of the date of
Employee’s death.
     5.2 Due to Disability. The Company may terminate Employee’s employment due
to Employee’s Disability, upon written notice to Employee. For purposes of this
Agreement, the term “Disability” shall mean a physical or mental incapacity as a
result of which Employee becomes unable to continue to perform the essential
functions of the job with or without accommodation hereunder for six consecutive
calendar months or for shorter periods aggregating 125 business days in any
12 month period, or, if this provision is inconsistent with any applicable law,
to the extent not prohibited by law.
     5.3 By the Company Without “Cause”. The Company may terminate Employee’s
employment without “Cause” as defined in Section 5.5 below, at any time upon not
less than 30 and not more than 45 days written notice to Employee.
     5.4 By Employee Without “Good Reason”. Employee may terminate Employee’s
employment hereunder without Good Reason, as defined in Section 5.6 below, at
any time upon not less than 30 and not more than 45 days written notice (the
“Notice Period”) to the Company. During the Notice Period, Employee shall
continue to perform Employee’s duties hereunder and shall not accept any other
employment.
     5.5 By The Company For Cause. The Company may terminate Employee’s
employment for Cause at any time, upon written notice to Employee. For purposes
of this Agreement, “Cause” shall mean:
          (a) Employee’s conviction of or plea of nolo contender to a felony or
any crime involving moral turpitude;
          (b) Employee’s commission of any act of theft, embezzlement or
misappropriation against the Company;
          (c) Employee’s failure to substantially perform Employee’s duties
hereunder (other than such failure resulting from Employee’s incapacity due to
physical or mental illness), which failure is not remedied within thirty
(30) days after written demand for substantial performance is delivered by the
Company which specifically identifies the manner in which the Company believes
that Employee has not substantially performed Employee’s duties; or
          (d) Employee’s material breach of his obligations under this
Agreement, which breach is not remedied within thirty (30) days after written
notice is delivered by the Company which specifically identifies the breach that
the Company believes has occurred.

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     5.6 By Employee For Good Reason. Employee may terminate Employee’s
employment for Good Reason upon not less than 30 nor more than 45 days prior
written notice to the Company. For purposes of this Agreement, “Good Reason”
shall mean:
          (a) the Company’s material breach of the salary and benefit
obligations hereunder, and either such breach or action is incurable or
irreversible, or, if curable or reversible, has not been cured or reversed
within fifteen (15) days following receipt of written notice by Employee to the
Company of such breach by the Company; or
          (b) any of the following actions without Employee’s prior written
consent:
     (i) a material reduction in the authority of Employee;
     (ii) an adverse change in Employee’s title;
     (iii) Employee’s primary reporting relationship being changed such that
Employee no longer reports to the Board of the Company; or
     (iv) a relocation of Employee’s primary office to a location more than 80
miles from Irvine, California.
Employee shall be deemed to have waived Employee’s right to terminate for “good
reason” with respect to a breach or action described in Section 5.6(b) if
Employee does not notify the Company in writing of such breach or action within
fifteen (15) days of his actual knowledge of such breach or action.
     The fact that the Company becomes a subsidiary of another entity, or that
the Company’s status changes from publicly-traded to privately-held, shall not,
by itself, constitute Good Reason.
     5.7 Severance Payment.
          (a) No Severance Upon Termination Pursuant to Sections 5.1, 5.4 or
5.5.
     In the event Employee’s employment terminates pursuant to Sections 5.1
(Death), 5.4 (By Employee Without Good Reason), or 5.5 (By the Company For
Cause), Employee (or Employee’s estate, as applicable) shall have the right to
receive Employee’s compensation as otherwise provided under this Agreement
through the Date of Termination. Employee (or Employee’s estate, as applicable)
shall have no further right to receive compensation, benefits or other
consideration from the Company, and Employee (or Employee’s estate, as
applicable) shall not be entitled to any severance payments or benefits, except
as required by applicable law.
     The “Date of Termination” shall be: in the case of termination under
Section 5.1, the date of employee’s death, or in the case of termination under
Sections 5.2 through 5.6, the date specified in the notice required by
Sections 5.2 through 5.6, respectively.
          (b) Severance Upon Termination Pursuant to Sections 5.2, 5.3 or 5.6

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     In the event that Employee’s employment is terminated pursuant to
Sections 5.2 (Due to Disability), 5.3 (By the Company Without Cause), or 5.6 (By
Employee For Good Reason), Employee shall (unless Employee is incapable due to
physical or mental illness) continue to render services to the Company pursuant
to this Agreement until the Date of Termination and shall continue to receive
compensation, as provided in this Agreement, through the Date of Termination.
Thereafter, Employee shall be entitled to the payments and benefits as set forth
in subsections (i) through (iii) below provided that a general release of claims
in the form acceptable to the Company (the “Release”) has been signed, delivered
to the Company by Employee and becomes irrevocable, and Employee is not in
material breach of any of the provisions of this Agreement that survive
termination of this Agreement.
     (i) Severance Payment. On the thirtieth day following Employee’s separation
from service with the Company and/or its Affiliates within the meaning of
Section 409A(a)(2)(A)(i) of the Internal Revenue Code and the regulations
thereunder (the “Separation from Service”), the Company shall pay Employee, as a
single cash severance payment, the sum of (i)       times Employee’s highest
monthly Base Compensation paid hereunder plus (ii)      times the Average Annual
Bonus, subject to the limitations set forth in Schedule A (collectively, the
“Severance Amount”).
     Notwithstanding Schedule A, in the event the Company terminates Employee’s
employment Without Cause pursuant to Section 5.3 or Employee terminates
employment for Good Reason following a Change in Control pursuant to
Section 5.6, Employee shall be eligible for 100% of the Severance Amount.
     The “Average Annual Bonus” shall mean: the average of the annual merit
bonuses paid to the Employee during the twenty-four month period immediately
preceding the Employee’s termination of employment; provided, however, that if
Employee has not been employed through the date of an award of any annual merit
bonus, the target bonus for the bonus year in which the termination occurs shall
be used as the average annual bonus, or if Employee has been eligible to
participate in only one bonus period during the twenty-four month period
immediately preceding the Employee’s Date of Termination, period, the bonus
awarded for that bonus period shall be used as the average annual bonus.
     (ii) Vesting of Equity Awards. Unvested options or restricted stock of the
Company held by the Employee shall immediately vest in accordance with
Schedule A (“Vesting”).
     Notwithstanding Schedule A, in the event of a Change in Control as defined
in Section 5.8, 100% of the unvested options or restricted stock of the Company
then held by the Employee shall vest.
     The options and restricted stock grants that vest as set forth above shall
be immediately exercisable and will continue to be exercisable for three months
after the Date of Termination subject to the maximum term of the option, after
which time they will terminate. If less than one hundred (100) percent of the
options and/or restricted stock will vest, the earlier granted options and/or
restricted stock shall vest.

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     In the event that Employee does not timely sign and deliver to the Company
the Release, or Employee revokes the Release, on the thirtieth (30th) day
following the Date of Termination: (1) all unexercised options vested pursuant
to this Section 5.7(b) shall be cancelled; (2) with respect to any options
exercised, Employee shall pay to the Company an amount equal to the difference
between the exercise price and the closing price of such shares on the date of
exercise multiplied by the number of shares subject to the options exercised;
and (3) with respect to any restricted shares, Employee shall pay to the Company
an amount equal to the closing price of such shares on the Date of Termination
multiplied by the number of restricted shares vested pursuant to this
Section 5.7(b).
     (iii) Benefits. On the thirtieth day following Employee’s Separation from
Service, the Company shall pay Employee, as a single cash severance payment, an
amount equal to 18 times the portion of the monthly COBRA premium in effect as
of the Date of Termination equal to the difference between such monthly COBRA
premium and Employee’s monthly contribution towards health care benefits
immediately prior to the Date of Termination (the “Severance Benefits”).
The timing of the payments required by subsections (i) and (iii) may be delayed
in accordance with Subject to Section 5.10(b).
          5.8 Change in Control.
          For purposes of Section 5.7(b) of this Agreement, a “Change in
Control” shall mean the occurrence of any of the following events:
               (a) the individuals constituting the Board as of the Effective
Date (the “Incumbent Board”) cease for any reason to constitute at least
two-thirds (2/3rds) of the Board; provided, however, that if the election, or
nomination for election by the Company’s stockholders, of any new director was
approved by a vote of at least two-thirds (2/3rds) of the Incumbent Board, such
new director shall be considered a member of the Incumbent Board; or
               (b) an acquisition of any voting securities of the Company (the
“Voting Securities”) by any “person” (as the term “person” is used for purposes
of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)) immediately after which such person has “beneficial
ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
(“Beneficial Ownership”) of thirty five (35) percent or more of the combined
voting power of the Company’s then outstanding Voting Securities; or
               (c) approval by the stockholders of the Company of:
     (i) a merger, consolidation, share exchange or reorganization involving the
Company, unless
     (A) the stockholders of the Company, immediately before such merger,
consolidation, share exchange or reorganization, own, directly or indirectly
immediately following such merger, consolidation, share exchange or

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reorganization, at least sixty-five (65) percent of the combined voting power of
the outstanding voting securities of the corporation that is the successor in
such merger, consolidation, share exchange or reorganization (the “Surviving
Company”) in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation, share exchange or
reorganization; provided, however, that a merger, consolidation, share exchange
or reorganization of the Company shall not constitute a Change in Control if
such merger, consolidation, share exchange or reorganization of the Company is
approved by the Board and is recommended by the Employee to the Board for its
approval; and
     (B) the individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such merger,
consolidation, share exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the Surviving Company; or
     (ii) a complete liquidation or dissolution of the Company; or
     (iii) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.

5.9   Excise Tax Gross Up.

     If any payment or benefit received or to be received by Employee in
connection with any change in control of the Company or termination of
Employee’s employment other than by the Company for Cause or by Employee for
Good Reason (whether payable pursuant to the terms of this Agreement, a stock
option plan or any other plan or arrangement with the Company) (the “Total
Payments”) will be subject to the excise tax imposed by Section 4999 of the
Code, as amended, the Company will pay to the Employee, within thirty days of
any payments giving rise to excise tax, an additional amount (the “gross-up
payment”) equal to the excise tax on the Total Payments. For purposes of
determining whether any of the Total Payments would not be deductible by the
Company and would be subject to the excise tax, and the amount of such excise
tax, (1) Total Payments will be treated as “parachute payments” within the
meaning of Section 280G(b)(2) of the Code, and all parachute payments in excess
of the base amount within the meaning of Section 280G(b)(3) will be treated as
subject to the excise tax unless, in the opinion of tax counsel selected by the
Company’s independent auditors prior to the change in control and acceptable to
the Employee, such Total Payments (in whole or in part) are not parachute
payments, or such parachute payments in excess of the base amount (in whole or
in part) are otherwise not subject to the excise tax, and (2) the value of any
non-cash benefits or any deferred payment will be determined by the Company’s
independent auditors in accordance with Sections 280G(d)(3) and (4) of the Code.
If the excise tax is subsequently determined to be less than the amount
originally taken into account hereunder, the Employee will repay to the Company,
when such reduction in excise tax is finally determined, the portion of the
gross-up payment attributable to such reduction. If the excise tax is determined
to exceed the amount originally taken into account hereunder (including by
reason of any payment, the existence or amount of which cannot be determined at
the time of the gross-up payment), the Company will

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make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) when such excess if finally determined.
     5.10 Compliance With Internal Revenue Code Section 409A.
          (a) Short-Term Deferral Exemption. This Agreement is not intended to
provide for any deferral of compensation subject to Code Section 409A and,
accordingly, the benefits provided pursuant to this Agreement are intended to be
paid not later than the later of: (i) the 15th day of the third month following
Employee’s first taxable year in which such benefit is no longer subject to a
substantial risk of forfeiture, and (ii) the 15th day of the third month
following first taxable year of the Company in which such benefit is no longer
subject to a substantial risk of forfeiture, as determined in accordance with
Code Section 409A and any Treasury Regulations and other guidance issued
thereunder. The date determined under this subsection is referred to as the
“Short-Term Deferral Date.”
          (b) Compliance with Code Section 409A. Notwithstanding anything to the
contrary herein, in the event that any benefits provided pursuant to this
Agreement is not actually or constructively received by the Employee on or
before the Short-Term Deferral Date or is not otherwise exempt from or complaint
with Code Section 409A, to the extent such benefit constitutes a deferral of
compensation subject to Code Section 409A, then: (i) subject to clause (ii),
such benefit shall be paid upon Employee’s “Separation from Service,” and
(ii) if Employee is a “specified employee,” as defined in Code
Section 409A(a)(2)(B)(i), with respect to the Company and its affiliates, such
benefit shall be paid upon the date which is six months after the date of
Employee’s “Separation from Service” (or, if earlier, the date of Employee’s
death). In the event that any benefit provided for in this agreement is subject
to this subsection, such benefit shall be paid on the 60th day following the
payment date determined under this subsection, and shall be made subject to the
requirements of Section 5.7.

6.   CONFIDENTIALITY

     During the Term, Employee will have access to and become acquainted with
various information relating to the Company’s business operations, including
customer (meaning a broker or borrower) lists, customer files, marketing data,
business plans, strategies, employee lists, contracts, financial records and
accounts, projections and budgets, and similar information. Employee agrees that
to the extent such information is not generally known to or available to the
public and/or the industry, and gives the Company an advantage over competitors
who do not know of or use such information, such information and documents
constitute “Confidential Information” of the Company. Employee further agrees
that any documents relating to the business of the Company, whether they are
prepared by Employee or come into Employee’s possession in any other way, are
owned by the Company, shall remain the exclusive property of the Company, and
must be returned to the Company upon termination of employment. Employee shall
not use any Confidential Information of the Company, directly or indirectly, for
Employee’s own benefit, or the benefit of any person or entity other than the
Company, nor shall Employee disclose Confidential Information to any person or
entity other than the Company and its employees, either during the Term or at
any time thereafter, except as may be appropriate for Employee to perform his
duties as an employee, officer and/or director, directly or indirectly, of the
Company. In the event Employee violates this provision during any period in
which he is

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receiving severance under Section 5.7 of this Agreement, in addition to any
other remedies the Company may have, the Company may terminate the Severance
Payments, Vesting and Severance Benefits under Section 5.7.

7.   NON-SOLICITATION/NON-COMPETITION

     7.1 Non-Solicitation. For a period of one year following the date
Employee’s employment hereunder is terminated, Employee shall not solicit or
induce any of the Company’s employees, agents or independent contractors to end
their relationship with the Company, or recruit, solicit or otherwise induce any
such person to perform services for Employee, or any other person, firm or
company. The restrictions set forth in this Section 7 shall not apply if
Employee’s employment is terminated pursuant to Section 5.3 or 5.6.
     7.2 Non-Competition. Employee acknowledges that IsoTis does business
throughout the world. During the Term, and, if Employee is receiving severance
under Section 5.7 of this Agreement, for the one-year period after the Term,
Employee shall not, directly or indirectly, serve as an employee, consultant,
officer, director, lender, investor, shareholder, partner, manager or member of
any person or entity, or own or act as a sole proprietor of a business that
engages in the production of demineralized bone matrix products or similar
business, or other businesses that the Company enters into while Employee is
employed by Isotis, during that period in any County of the State of California
or any of the States of the United States of America, other than the Company or
its affiliates, or as approved in advance in writing by the Board. In the event
Employee violates this provision during any period in which he is receiving
severance under Section 5.7 of this Agreement, in addition to any other remedies
the Company may have, the Company may terminate unpaid Severance Payments and/or
Severance Benefits under Section 5.7 and may cancel any options or restricted
stock vested under Section 5.7. Employee acknowledges that these restrictions
shall not prevent or unduly restrict Employee from practicing his profession, or
cause him economic hardship.

8.   ARBITRATION AGREEMENT

     8.1 Claims Subject to Arbitration. Any controversy, dispute or claim
between Employee and the Company, or its parents, subsidiaries, affiliates and
any of their officers, directors, agents or other employees, shall be resolved
by binding arbitration, at the request of either party.
     The arbitrability of any controversy, dispute or claim under this policy
shall be determined by application of the substantive provisions of the Federal
Arbitration Act (9 U.S.C. sections 1 and 2) and by application of the procedural
provisions of the California Arbitration Act, except as provided herein.
Arbitration shall be the exclusive method for resolving any dispute and all
remedies available from a court of competent jurisdiction shall be available;
provided, however, that either party may request provisional relief from a court
of competent jurisdiction, as provided in California Code of Civil Procedure
Section 1281.8, if such relief is not available in a timely fashion through
arbitration.
     The claims which are to be arbitrated include, but are not limited to any
Claim arising out of or relating to this Agreement or the employment
relationship between Employee and the

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Company, claims for wages and other compensation, claims for breach of contract
(express or implied), claims for violation of public policy, wrongful
termination, tort claims, claims for unlawful discrimination and/or harassment
(including, but not limited to, race, religious creed, color, national origin,
ancestry, physical disability, mental disability, gender identity or expression,
medical condition, marital status, age, pregnancy, sex or sexual orientation) to
the extent allowed by law, and claims for violation of any federal, state, or
other government law, statute, regulation, or ordinance, except for claims for
workers’ compensation and unemployment insurance benefits. This Agreement shall
not be interpreted to provide for arbitration of any dispute that does not
constitute a claim recognized under applicable law.
     8.2 Selection of Arbitrator. The Employee and the Company will select a
single neutral arbitrator by mutual agreement. If the Employee and the Company
are unable to agree on a neutral arbitrator within thirty (30) days of a demand
for arbitration, either party may elect to obtain a list of arbitrators from the
Judicial Arbitration and Mediation Service (“JAMS”) or the American Arbitration
Association (“AAA”), and the arbitrator shall be selected by alternate striking
of names from the list until a single arbitrator remains. The party initiating
the arbitration shall be the first to strike a name.
     8.3 Demand for Arbitration. The demand for arbitration must be in writing
and must be made by the aggrieved party within the statute of limitations period
provided under applicable State and/or Federal law for the particular claim(s).
Failure to make a written demand within the applicable statutory period
constitutes a waiver of the right to assert that claim in any forum.
     8.4 Location of Arbitration. Arbitration proceedings will be held in Orange
County, California.
     8.5 Choice of Law. The arbitrator shall apply applicable State and/or
Federal substantive law to determine issues of liability and damages regarding
all claims to be arbitrated, and shall apply the California Evidence Code to the
proceeding.
     8.6 Discovery. The parties shall be entitled to conduct reasonable
discovery and the arbitrator shall have the authority to determine what
constitutes reasonable discovery. The arbitrator shall hear motions for summary
judgment/adjudication as provided in the California Code of Civil Procedure.
     8.7 Written Opinion and Award. Within thirty days following the hearing and
the submission of the matter to the arbitrator, the arbitrator shall issue a
written opinion and award which shall be signed and dated. The arbitrator’s
award shall decide all issues submitted by the parties, and the arbitrator may
not decide any issue not submitted. The opinion and award shall include factual
findings and the reasons upon which the decision is based. The arbitrator shall
be permitted to award only those remedies in law or equity which are requested
by the parties and allowed by law.
     8.8 Costs of Arbitration. The cost of the arbitrator and other incidental
costs of arbitration that would not be incurred in a court proceeding shall be
borne by the Company. The parties shall each bear their own costs and attorneys’
fees in any arbitration proceeding, provided, however, that the arbitrator shall
have the authority to require either party to pay the

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costs and attorneys’ fees of the other party to the extent permitted under
applicable federal or state law, as a part of any remedy that may be ordered.
     8.9 Waiver of Right to Jury. Both the Company and Employee understands that
by using arbitration to resolve disputes they are giving up any right that they
may have to a judge or jury trial with regard to all issues concerning
employment or otherwise covered by this Section 8.

9.   GENERAL PROVISIONS

     9.1 Assignment; Binding Effect. Neither the Company nor Employee may
assign, delegate or otherwise transfer this Agreement or any of their respective
rights or obligations hereunder without the prior written consent of the other
party. Any attempted prohibited assignment or delegation shall be void. This
Agreement shall be binding upon and inure to the benefit of any permitted
successors or assigns of the parties and the heirs, executors, administrators
and/or personal representatives of Employee.
     9.2 Notices. All notices, requests, demands and other communications that
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:

      If to the Company:  
IsoTis, Inc.
   
2 Goodyear
   
Irvine, CA 92618
   
Attention: Chairman of the Board
   
Facsimile: (949) 595-8717
   
 
If to Employee:  
 
   
c/o IsoTis, Inc.
   
2 Goodyear
   
Irvine, CA 92618
   
Facsimile: (949) 595-8717

     Any party may change its address for the purpose of this Section 9.2 by
giving the other party written notice of its new address in the manner set forth
above.
     9.3 Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and supersedes all prior
and contemporaneous agreements with respect to the subject matter hereof,
including, without limitation, the employment agreement between Employee and
IsoTis S.A., which was assigned to the Company; provided, however, that this
Agreement shall supplement, not supersede, any prior agreements to the extent
such agreements concern Confidential Information, Trade Secrets or other
intellectual property of the Company, and any conflicts or inconsistencies
between such

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agreements concerning Confidential Information, Trade Secrets or other
intellectual property of the Company shall be resolved so that the provision
providing greater rights to the Company shall prevail.
     9.4 Amendments; Waivers. This Agreement may be amended or modified, and any
of the terms and covenants may be waived, only by a written instrument executed
by the parties hereto, or, in the case of a waiver, by the party waiving
compliance. Any waiver by any party in any one or more instances of any term or
covenant contained in this Agreement shall neither be deemed to be nor construed
as a further or continuing waiver of any such term or covenant of this
Agreement.
     9.5 Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.
     9.6 Attorney’s Fees. If any legal action, arbitration or other proceeding,
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach or default in connection with any of the provisions of this
Agreement, each of the parties hereto shall be responsible for payment of their
own attorneys’ fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding with respect to such claims, except as otherwise provided in
Section 8.
     9.7 Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
     9.8 Non-Disparagement. During Employee’s employment and thereafter for a
period of one year, Employee agrees to represent the Company in a positive light
and not to disparage or in any other way communicate to any person or entity any
negative information or opinion concerning the Company, its parents,
subsidiaries and affiliates, or any of their partners, members, shareholders,
officers, directors, employees or agents, or any of them. This provision shall
not prohibit Employee from making any statements or taking any actions required
by law, or reporting any actions or inactions Employee believes to be unlawful.
This provision shall not be interpreted to require or encourage Employee to make
any misrepresentations.
     9.9 Return of Property. Upon termination of Employee’s employment, Employee
shall return to the Company any and all company property, materials, or
equipment in Employee’s possession, including, without limitation, Company
property described in Section 6.
     9.10 Cooperation. During Employee’s employment with the Company and
thereafter for a period of one year, Employee agrees, at Company’s sole expense,
to cooperate with

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Employer and Employer’s agents, accountants and attorneys concerning any matter
with which Employee was involved during Employee’s employment. Such cooperation
shall include, but not be limited to, providing information to, meeting with and
reviewing documents provided by Employer and Employer’s agents, accountants and
attorneys during normal business hours or other mutually agreeable hours upon
reasonable notice and to make himself/herself available for depositions and
hearings, if necessary and upon reasonable notice. If Employee’s cooperation is
required after the termination of Employee’s employment, the Company shall
reimburse Employee for any out of pocket expenses incurred in and any wages lost
by Employee for time spent performing Employee’s obligations hereunder.
     9.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
     9.12 Headings. The headings contained in this Agreement are provided solely
for the Parties’ convenience and shall not be deemed to alter the meaning of the
text of the Agreement.
     9.13 Survival. Sections 6 through 9 shall survive the termination of this
Agreement.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
THE COMPANY:
IsoTis Inc,
a Delaware corporation

     
 
   
By:
  Date
Its:
   
 
   
EMPLOYEE:
   
 
   
 
   

  Date

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Schedule A

              Percentage of       Severance Amount,       Unvested Options or  
    Restricted Stock       Vesting for which       Employee is   Date of
Termination   Eligible  
Less than 90 days of Continuous Service 1
    0 %
At least 90 days, but less than 1 year, of Continuous Service
    20 %
At least 1 year, but less than 2 years, of Continuous Service
    30 %
At least 2 years, but less than 3 years, of Continuous Service
    50 %
At least 3 years, but less than 4 years, of Continuous Service
    70 %
At least 4 years, but less than 5 years, of Continuous Service
    90 %
5 or more years of Continuous Service
    100 %

 

1   The Employee’s Continuous Service shall be measured from the date on which
Employee became employed by IsoTis, Inc., its predecessors or affiliates,
including, without limitation, IsoTis S.A., through the Date of Termination, if
there has been no break in active service other than an approved vacation, sick,
family, medical, disability or pregnancy leave. Where there has been any other
break in active service, periods of employment prior to the break in service
shall not be counted towards the period of Continuous Service.

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Schedule to Exhibit 10.1

                                              Employed                          
  with the                     Named       Company and   Initial   Duties  
Maximum         Executive   Principal   its Affiliates   Base   Assigned   Bonus
for       Severance Officer   Position   Since   Salary ($)   by/Reporting to  
2007   Additional Benefits   Payment
Pieter Wolters
  President & Chief
Executive Officer   1997 and served as President and CEO since July 1, 2002   $
330,000     The Board of Directors of the Company     50 %(1)   The Company
shall continue to pay for certain continuations and additions to the custom
pension and disability policies for 2007   24 times his highest monthly base,
plus 1.0 times his average annual bonus
Robert J. Morocco
  Senior
Vice-President
Chief Financial
Officer   January 27, 2005   $ 212,000     The President and CEO     30 %(1)  
N/A   18 times his highest monthly base salary plus 0.75 times his average
annual bonus
Alan Donze
  Senior Vice President of Sales   February 21, 2006   $ 200,000     The
President and CEO   $150,000(2)   N/A   18 times his highest monthly base salary
plus 0.75 times his average annual bonus(3)
John F. Kay(4)
  Chief Scientific
Officer   October 1, 2003   $ 240,000 (5)   The President and CEO     30 %(1)  
N/A   12 times his highest monthly base salary plus 0.5 times his average annual
bonus
Kathryn
Liljestrand(4)
  Vice President of Marketing   August 1, 2005   $ 182,875     The President and
CEO     30 %(1)   N/A   12 times her highest monthly base salary plus 0.5 times
her average annual bonus
Karon Morell(4)
  Vice President of Regulatory Affairs and Quality Assurance   May 8, 2006   $
175,000     The President and CEO     30 %(1)   N/A   12 times her highest
monthly base salary plus 0.5 times he average annual bonus
Jim Poser(6)
  Senior Vice President of Research and Development   July 15, 2006   $ 240,000
    The President and CEO     30 %(1)   N/A   18 times his highest monthly base
salary plus 0.75 times his average annual bonus
Gene Reu
  Senior Vice President of Operations   August 23, 2006   $ 230,000     The
President and CEO     30 %(1)   N/A   18 times his highest monthly base salary
plus 0.75 times his average annual bonus

(1)   The bonus amount is calculated as a percent of the employee’s base salary
and ranges from a minimum of 0% up to the above-stated maximum.   (2)   For
2007, $120,000 of Mr. Donze’s bonus is determined by objectives set forth in
accordance with our bonus program while the remaining $30,000 is determined in
the sole discretion of the President and Chief Executive Officer.     (3)   If
Mr. Donze’s employment is terminated on or before February 21, 2008 (except for
cause), the severance amount shall be $120,000, subject to limitations set forth
in schedule A of the form of employment agreement.   (4)   The employment
agreements with Dr. Kay, Ms. Liljestrand and Ms. Morell do not include Section
5.9 of the Form of Employment Agreement.   (5)   Dr. Kay’s base salary will
increase to $250,000 beginning April 1, 2007.   (6)   Dr. Poser’s has the
following exclusion to the non-compete provision in Section 7.2 of the Form of
Employment Agreement: “Notwithstanding the foregoing, Employee may engage in the
development of products to 1) control renal stone formation through
physiological modulation of electrolytes, and 2) treat herniated spinal discs
through the use of medical devices or agents that exert their influence through
physical-chemical means. This work will be performed in collaboration with
Professor Paul Brown (Penn StateUniversity) and Articular Engineering LLC.”