Document:

EXHIBIT 10.9

IsoTis

	
  
 
  	
  
Dr. James Trotman
  
	
  
 
  	
  
161 C Street # 132
  
	
  
 
  	
  
Blaine, Washington    98230
  
	
  
 
  	
  
USA
  

January 15, 2004

CONSULTANCY AGREEMENT

Dear Dr. Trotman,

ISOTIS ORTHOBIOLOGICS INC (“ISOTIS”) is pleased to note that you (“CONSULTANT”) may be interested in providing consulting services to ISOTIS relating to its business activities based on your past experience at ISOTIS.

Accordingly, ISOTIS proposes the following Agreement:

	
   
  	
  
1.
  	
  
CONSULTANT shall render consulting services to   ISOTIS as may be requested from time to time.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
2.
  	
  
CONSULTANT shall make himself available to ISOTIS   for consulting services for a one year period commencing October 27, 2003   such services to be carried out as requested from time to time by ISOTIS   through its designated representative, Jacques Essinger, CEO, and CONSULTANT   agrees to employ his best efforts to meet such requests.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
3.
  	
  
ISOTIS’ designated representatives shall be Dr.   Jacques Essinger or such other representative(s), which it may subsequently   designate in writing.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
4.
  	
  
For consulting services rendered hereunder, ISOTIS   agrees to pay CONSULTANT the sum of US$20.    Said sum shall be paid quarterly in equal instalments.  ISOTIS will also pay CONSULTANT’s   reasonable expenses, statements for which shall be submitted by CONSULTANT   periodically during the period that this Agreement remains in effect, and   ISOTIS will pay such expenses after receipt and approval thereof.  The above-noted payments are full and   complete compensation for all obligations assumed under this Agreement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
5.
  	
  
Although CONSULTANT is free to carry out other   consultative arrangements, CONSULTANT shall keep confidential any technical,   commercial and scientific
  

	
  
 
  	
  
 
  	
  
information or data which are made available to him   by ISOTIS or its affiliates, or which result from CONSULTANT’s work for   ISOTIS or its affiliates; and CONSULTANT agrees that he will not disclose the   same to third parties without ISOTIS’ prior written approval.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
6.
  	
  
The obligations of confidentiality imposed by this Agreement   shall not apply to information which CONSULTANT can show was already known to   CONSULTANT, information which is or becomes part of the public domain through   no fault of CONSULTANT, and information which is legitimately given to   CONSULTANT by a third party.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.
  	
  
CONSULTANT represents that CONSULTANT is under no   obligation which is inconsistent with this Agreement and that CONSULTANT will   not enter into any agreement with a third party, the terms of which may be   inconsistent with this Agreement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
8.
  	
  
Any notices, payments or statements to be made under   this Agreement shall be made by CONSULTANT to Jacques Essinger or to any   successor representative of ISOTIS at 2 Goodyear, Suite B, Irvine, California   92618, or at such other address later designated in writing by ISOTIS for   such purposes.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
9.
  	
  
It is understood that CONSULTANT will be servicing   under this Agreement as an independent contractor and that the relationship   of employer and employee shall not exist between ISOTIS and CONSULTANT.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
10.
  	
  
The obligations set forth in paragraphs 5 and 7   hereof shall survive the expiration or termination of this Agreement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
11.
  	
  
If acceptable to CONSULTANT, this Agreement will be   effective as of October 27, 2003 and remain in effect for a one-year period,   unless extended on a year-by-year basis by mutual agreement of the parties or   terminated earlier by mutual agreement of the parties.  By signature hereof the parties agree that   this Agreement shall supersede any prior written or oral agreements entered   into between the parties.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
12.
  	
  
The terms of this Agreement shall be governed by the   laws of the state of California.
  

If the above terms are accepted, please sign and date the duplicate copies of this letter in the spaces provided below and return one fully executed copy to ISOTIS.

	
  
 
  	
  
Very truly yours,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
ISOTIS ORTHOBIOLOGICS, INC.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
/s/ JACQUES ESSINGER
  
	
  
 
  	
  

  
	
  
 
  	
  
By
  	
  
:          Jacques   Essinger
  
	
  
 
  	
  
Title
  	
  
:          CEO
  

AGREED TO AND ACCEPTED

	
  
/s/  Dr.   James Trotman
  	
  
 
  
	
  

  	
  
 
  
	
  
Dr. James Trotman
  	
  
 
  
	
  Date: January 23, 2004EXHIBIT 10.10

ISOTIS S.A.

and

GENSCI REGENERATION SCIENCES INC.

 

ARRANGEMENT AGREEMENT

 

Effective May 31, 2003

TABLE OF CONTENTS

	
   
 	
   
 	
  
Page
  
	
  
 
  	
  
 
  	
  

  
	
  
ARTICLE 1   INTERPRETATION
  	
  
1
  
	
  
 
  	
  
 
  	
   
 
	
   
  	
  
Definitions
  	
  
1
  
	
  
 
  	
  
Gender, etc.
  	
  
11
  
	
  
 
  	
  
Headings and References to Part,   etc.
  	
  
11
  
	
  
 
  	
  
Date of Any Action
  	
  
11
  
	
  
 
  	
  
Currency
  	
  
12
  
	
  
 
  	
  
References to Statutes
  	
  
12
  
	
  
 
  	
  
References to Persons
  	
  
12
  
	
   
  	
  
Approval
  	
  
12
  
	
  
 
  	
  
Accounting Matters
  	
  
12
  
	
  
 
  	
  
Knowledge
  	
  
12
  
	
  
 
  	
  
Schedules
  	
  
12
  
	
  
 
  	
  
Approval of the TSX
  	
  
13
  
	
  
 
  	
   
 
	
  
ARTICLE 2 THE   ARRANGEMENT
  	
  
13
  
	
  
 
  	
  
 
  	
   
 
	
   
  	
  
Effective Date of Arrangement
  	
  
13
  
	
  
 
  	
  
Condition to Enter Into Agreement
  	
  
13
  
	
  
 
  	
   
 
	
  
ARTICLE 3   REPRESENTATIONS AND WARRANTIES
  	
  
14
  
	
  
 
  	
  
 
  	
   
 
	
  
 
  	
  
Representations and Warranties of   IsoTis
  	
  
14
  
	
  
 
  	
  
Representations and Warranties of   GenSci
  	
  
22
  
	
  
 
  	
  
Survival of Representations
  	
  
36
  
	
   
  	
   
 
	
  
ARTICLE 4   COVENANTS
  	
  
36
  
	
  
 
  	
  
 
  	
   
 
	
  
 
  	
  
Covenants of GenSci
  	
  
36
  
	
  
 
  	
  
Covenants Regarding   Non-Solicitation
  	
  
43
  
	
  
 
  	
  
Notice to IsoTis
  	
  
44
  
	
  
 
  	
  
Third Party Confidentiality
  	
  
45
  
	
  
 
  	
  
Notice to Representatives
  	
  
45
  
	
   
  	
  
Withdrawal of Approval
  	
  
45
  
	
  
 
  	
  
Notice by GenSci of Superior   Proposal Determination
  	
  
45
  
	
  
 
  	
  
Covenants of IsoTis
  	
  
46
  
	
  
 
  	
  
Confidentiality
  	
  
50
  
	
  
 
  	
   
 
	
  
ARTICLE 5   CONDITIONS PRECEDENT
  	
  
51
  
	
  
 
  	
  
 
  	
   
 
	
  
 
  	
  
Mutual Conditions Precedent
  	
  
51
  
	
   
  	
  
Additional Conditions Precedent to   Obligations of GenSci
  	
  
52
  
	
  
 
  	
  
Additional Conditions Precedent to   Obligations of IsoTis
  	
  
53
  
	
  
 
  	
  
Notice and Cure Provisions
  	
  
55
  
	
  
 
  	
  
Satisfaction of Conditions
  	
  
56
  
	
  
 
  	
  
Co-operation
  	
  
56
  
	
  
 
  	
  
Due Diligence by IsoTis
  	
  
56
  
	
  
 
  	
  
Due Diligence by GenSci
  	
  
57
  

- ii -

	
  
ARTICLE 6   TERMINATION AND WAIVER
  	
  
58
  
	
  
 
  	
  
 
  	
   
 
	
  
 
  	
  
Termination by IsoTis
  	
  
58
  
	
  
 
  	
  
Termination by GenSci
  	
  
58
  
	
  
 
  	
  
Termination of Agreement
  	
  
58
  
	
  
 
  	
  
Termination Date
  	
  
59
  
	
   
  	
  
Effect of Termination
  	
  
60
  
	
  
 
  	
  
Termination Fee and Liquidated   Damages
  	
  
60
  
	
  
 
  	
  
Waiver
  	
  
60
  
	
  
 
  	
  
Loan to GenSci
  	
  
61
  
	
  
 
  	
  
Effect of Loan to GenSci
  	
  
61
  
	
  
 
  	
  
Liquidated Damages
  	
  
61
  
	
  
 
  	
   
 
	
  ARTICLE 7   IMPLEMENTATION OF ARRANGEMENT AND ADDITIONAL COVENANTS
  	
  
61
  
	
  
 
  	
  
 
  	
   
 
	
  
 
  	
  
Interim Order
  	
  
61
  
	
  
 
  	
  
Plan of Arrangement
  	
  
62
  
	
  
 
  	
  
Final Order
  	
  
62
  
	
  
 
  	
  
Pre-Closing
  	
  
62
  
	
  
 
  	
  
Filing of Final Order
  	
  
63
  
	
   
  	
  
Closing
  	
  
63
  
	
  
 
  	
  
Effect of Plan of Arrangement
  	
  
63
  
	
  
 
  	
  
Purchase Price Allocation
  	
  
63
  
	
  
 
  	
  
Designation with Respect to GenSci   Licences and GenSci Trademarks
  	
  
64
  
	
  
 
  	
  
US 338 Election and Similar Issues
  	
  
64
  
	
  
 
  	
  
GenSci US Subsidiary Loans
  	
  
65
  
	
  
 
  	
  
Closing Documents Delivered by   GenSci
  	
  
65
  
	
   
  	
  
Closing Documents Delivered by   IsoTis
  	
  
66
  
	
  
 
  	
  
Settlement Agreement
  	
  
66
  
	
  
 
  	
  
IsoTis Options
  	
  
66
  
	
  
 
  	
  
Non-Compete
  	
  
66
  
	
  
 
  	
  
Transmittal Letters
  	
  
67
  
	
  
 
  	
  
Post-Closing Release of GenSci
  	
  
67
  
	
  
 
  	
  
Post Closing Indemnity in Favour of   IsoTis
  	
  
67
  
	
   
  	
   
 
	
  
ARTICLE 8 GENERAL
  	
  
68
  
	
  
 
  	
  
 
  	
   
 
	
  
 
  	
  
Notice
  	
  
68
  
	
  
 
  	
  
Amendment
  	
  
70
  
	
  
 
  	
  
Amendment Resulting from Final   Order
  	
  
70
  
	
  
 
  	
  
Binding Effect
  	
  
70
  
	
  
 
  	
  
Remedies
  	
  
70
  
	
   
  	
  
Equitable Remedies
  	
  
71
  
	
  
 
  	
  
Public Statements
  	
  
71
  
	
  
 
  	
  
Entire Agreement
  	
  
71
  
	
  
 
  	
  
Time of Essence
  	
  
71
  
	
  
 
  	
  
Severability
  	
  
71
  
	
  
 
  	
  
Counterpart Executions and   Facsimile Transmissions
  	
  
71
  

- iii -

	
  
 
  	
  Expenses
 	
  
72
  
	
  
 
  	
  Investigation
 	
  
72
  
	
  
 
  	
  Further Assurances
 	
  
72
  
	
  
 
  	
  Waiver
 	
  
72
  
	
  
 
  	
  Governing Law
 	
  
76
  

SCHEDULES:

	
  Schedule A
  	
  
–
  	
  
Plan of Arrangement under Section 252 of the Company   Act (British Columbia)
  
	
  
Schedule B
  	
  
–
  	
  
GenSci Intellectual Property
  
	
  
Schedule C
  	
  
–
  	
  
GenSci Stock Option Plan
  
	
  
Schedule D
  	
  
–
  	
  
GenSci Options and Warrants
  
	
  
Schedule E
  	
  
–
  	
  
Disclosure Exceptions of GenSci
  
	
  
Schedule F
  	
  
–
  	
  
GenSci Subsidiaries
  
	
  
Schedule G
  	
  
–
  	
  
Disclosure Exceptions of IsoTis
  
	
  Schedule H
  	
  
–
  	
  
[intentionally deleted]
  
	
  
Schedule I
  	
  
–
  	
  
Term Sheet re: Loan
  
	
  
Schedule J
  	
  
–
  	
  
IsoTis Stock Option Plan
  
	
  
Schedule K
  	
  
–
  	
  
Settlement Agreement
  
	
  
Schedule L
  	
  
–
  	
  
IsoTis Options
  
	
  
Schedule M
  	
  
–
  	
  
GenSci Material Contracts
  
	
  
Schedule N
  	
  
–
  	
  
IsoTis Option Agreement
  
	
  Schedule O
  	
  
–
  	
  
IsoTis Subsidiaries
  
	
  
Schedule P
  	
  
–
  	
  
IsoTis Intellectual Property
  
	
  
Schedule Q
  	
  
–
  	
  
IsoTis Material Contracts
  
	
  
Schedule R
  	
  
–
  	
  
GenSci US Subsidiary Financial Statements
  
	
  
Schedule S
  	
  
–
  	
  
Key GenSci Employees
  
	
  
Schedule T
  	
  
–
  	
  
GenSci US Loans
  

ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT is effective as of the 31st day of May, 2003.

BETWEEN: 

	
  
 
  	
  
ISOTIS S.A., a company   incorporated under the laws of Switzerland
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(“IsoTis”)
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
— and —
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
GENSCI REGENERATION SCIENCES INC.,   a company incorporated under the laws of the Province of British Columbia
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(“GenSci”)
  	
  
 
  

WHEREAS GenSci intends to propose to its shareholders an arrangement under Section 252 of the Company Act on the terms of the Plan of Arrangement annexed hereto as Schedule A;

AND WHEREAS each of the parties to this Agreement has agreed to participate in the Arrangement (as hereinafter defined);

NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the respective covenants and agreements hereinafter contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

Definitions

1.1                 In this Agreement and in the recitals hereto, unless there is something in the context or subject matter inconsistent therewith, the following words and phrases shall have the meanings hereinafter set out:

	
  
 
  	
  
(a)      “Acquisition Proposal” means any proposal   with respect to any merger, amalgamation, arrangement, take-over bid or sale   of assets (excluding inventory sold in the ordinary course of business)   representing more than 25% of the book value (on a consolidated basis) of   GenSci’s total assets (held directly or indirectly through GenSci   Subsidiaries) (or any lease, long-term supply agreement or other arrangement   having the same economic effect as a sale), any sale of more than 25% of the   GenSci Shares then outstanding or similar transactions involving GenSci or   any of the GenSci Subsidiaries, or a proposal to do so, excluding the   Arrangement;
  

- 2 -

	
  
 
  	
  
(b)      “AFM” means the Autoriteit Financiële   Markt;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      “Agreement” means this arrangement   agreement between IsoTis and GenSci entered into for the purpose of effecting   the Arrangement, including the Schedules hereto, as the same may be   supplemented or amended from time to time;
  
	
   
  	
  
 
  
	
  
 
  	
  
(d)      “AMEX” means American Stock Exchange   L.L.C.;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      “Applicable Law” means any domestic or   foreign statute, law (including the common law), ordinance, rule, regulation,   restriction, published and legally binding regulatory policy or guideline,   by-law (zoning or otherwise), or order or any consent, exemption, approval or   licence of any domestic or foreign Governmental Entity that applies in whole   or in part to GenSci or IsoTis or to the GenSci Subsidiaries or the IsoTis   Subsidiaries, as the context requires, or to their respective businesses,   undertakings, properties or securities and, for further certainty, includes   Applicable Securities Laws;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(f)      “Applicable Securities Laws” means   Canadian Securities Laws, Netherlands’ Securities Laws, Swiss Securities Laws   and United States Securities Laws, as are applicable in the circumstances;
  
	
  
 
  	
  
 
  
	
   
  	
  
(g)      “Arrangement” means the arrangement under   the provisions of section 252 of the Company Act, on the terms and conditions   set forth in the Plan of Arrangement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(h)      “Arrangement Resolution” means the special   resolution of GenSci Shareholders approving the Arrangement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)      “Bankruptcy Code” means title 11 of the   United States Code;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(j)      “Bankruptcy Court” means the United States   Bankruptcy Court for the Central District of California where the cases of   GenSci and GenSci US Subsidiary are pending under jointly administered case   number SA 01-20438 RA;
  
	
  
 
  	
  
 
  
	
   
  	
  
(k)      “Bankruptcy Plan” means the plan of   reorganization confirmed in the chapter 11 case of GenSci US Subsidiary (or   chapter 11 cases of GenSci and GenSci US Subsidiary as the case may be) and   associated disclosure statement of GenSci US Subsidiary;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(l)      “BioInterfaces” means BioInterfaces, Inc.   a company incorporated under the laws of California;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(m)     “Business Day” means a day which is not a   Saturday, Sunday or a civic or statutory holiday, within the meaning of the Interpretation   Act (British Columbia), in Vancouver, British Columbia, Lausanne,   Switzerland and Bilthoven, The Netherlands;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(n)      “Canadian Securities Laws” means the Securities   Act (British Columbia) and the equivalent legislation in the other   provinces and in the territories of Canada, as amended from time to time, the   rules, regulations and forms made or promulgated under any such statute, the   published policies, bulletins and notices of the regulatory authorities   administering such statutes, and the published rules and policies of the TSX;
  

- 3-

	
  
 
  	
  
(o)      “Canadian Tax Act” means the Income Tax   Act (Canada), as amended;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(p)      “CHF” means the legal currency of   Switzerland;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(q)      “Code” means the United States Internal   Revenue Code of 1986, as amended;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(r)      “Commissions” means the securities   commissions of the provinces of Canada where IsoTis will be a reporting   issuer by operation of law following the Arrangement, including British   Columbia;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(s)      “Company Act” means the Company   Act, R.S.B.C. 1996, c. 62, as amended;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(t)      “Court” means the Supreme Court of British   Columbia;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(u)      “Dissent Right” means the right to dissent   to the Arrangement described in Article 3 of the Plan of Arrangement;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)      “Dissenting Shareholder” means a GenSci   Shareholder who has exercised a Dissent Right pursuant to Article 3 of the   Plan of Arrangement and who is ultimately entitled to be paid the fair value   of the GenSci Shares held by such GenSci Shareholder;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(w)     “Effective Date” means the date on which a   certified copy of the Final Order is accepted for filing by the Registrar   giving effect to the Arrangement as evidenced by the date of the Registrar’s   stamp thereon;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(x)      “Effective Time” means 2:00 p.m.   (Vancouver time) on the Effective Date;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(y)      “Environmental Laws” means all Applicable   Laws (including the common law), relating to pollution, the protection of the   environment or public health and safety;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(z)      “Euronext” means Euronext N.V.;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(aa)    “Final Order” means the final order of the   Court approving the Plan of Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(bb)    “GenSci” means GenSci Regeneration   Sciences Inc., a company governed by the Company Act;
  
	
  
 
  	
  
 
  
	
   
  	
  
(cc)     “GenSci AIF” means the annual information   form on Form 20-F of GenSci for the year ended December 31, 2002 as filed on   SEDAR;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(dd)    “GenSci Board” means the board of   directors of GenSci;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ee)     “GenSci Business” means the business   described in Sections 4A and 4B of the GenSci AIF;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ff)     “GenSci Disclosure Documents” means
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(i)     the GenSci AIF,
  

- 4 -

	
  
 
  	
  
 
  	
  
(ii)    the annual audited   financial statements of GenSci for the year ended December 31, 2002 as filed   on SEDAR,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)   the annual report of GenSci   for the year ended December 31, 2002 as filed on SEDAR,
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(iv)    the management   information circular of GenSci dated May 15, 2003 as filed on SEDAR,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)     unaudited interim   consolidated financial statements of GenSci for the quarters following   December 31, 2002 as filed on SEDAR,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)    ll material change   reports filed by GenSci on SEDAR from December 31, 2001, and
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(vii)   all press releases filed by   GenSci on SEDAR from December 31, 2001;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(gg)     “GenSci Environmental Permits” has the   meaning ascribed to it in §0;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(hh)     “GenSci Information Circular” means the   information circular (including all appendices thereto), notice of meeting   and proxy form to be sent by GenSci to GenSci Shareholders soliciting, among   other things, approval of the Arrangement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)      “GenSci Intellectual Property” means all   Intellectual Property used in the GenSci Business and owned by GenSci and   listed in Part A of Schedule B or owned by GenSci US Subsidiary and   listed in Part B of Schedule B;
  
	
   
  	
  
 
  
	
  
 
  	
  
(jj)      “GenSci Licences” means
  
	
  
 
  	
  
 
  	
  
 
  
	 
	  
	 (i)     the Product and Technology Licensing, Equipment Lease and Purchase Option Agreement between GenSci and BioInterfaces dated January 10, 2003, and

	 	 	 
	 
	  
	 (ii)    the peptide technology licence agreement between GenSci and IATRA Life Sciences Corporation dated December 15, 2001;

	
  
 
  	
  
 
  
	
   
  	
  
(kk)    “GenSci Management Service Agreements”   mean the service agreements among GenSci, GenSci US Subsidiary and each of   James S. Trotman, Douglass C. Watson, Peter Ludlum and the consulting   agreement in the case of John F. Kay;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(ll)      “GenSci Material Contracts” means those   subsisting commitments, contracts, instruments, leases and other agreements   (including the GenSci Licences), oral or written, entered into by GenSci or   any GenSci Subsidiary, by which it is bound or to which it or its assets are   subject which have total payment obligations on the part of GenSci or any   GenSci Subsidiary which exceed US$100,000 or are for a term in excess of one   year or are otherwise material;
  
						

- 5 -

	
  
 
  	
  
(mm)  “GenSci   Meeting” means the extraordinary general meeting of GenSci   Shareholders to be held pursuant to the Interim Order for the purpose of   considering, among other things, the Arrangement Resolution, including any   adjournment or adjournments thereof;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(nn)    “GenSci Options” mean the issued and   outstanding options to acquire GenSci Shares listed in Schedule D;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(oo)    “GenSci Shares” means the issued and   outstanding common shares in the capital of GenSci;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(pp)    “GenSci Shareholder” means a Person who is   a registered holder of GenSci Shares as shown on the register of members of   GenSci;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(qq)    “GenSci Stock Option Plan” means the stock   option plan of GenSci attached hereto as Schedule C;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(rr)      “GenSci Subsidiaries” means the   subsidiaries (as that term is defined in the Company Act) of GenSci,   including GenSci US Subsidiary;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ss)     “GenSci Trademarks” means the trademarks   listed in Part A of Schedule B;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(tt)      “GenSci US Subsidiary Loans” means the   intercompany receivables payable by GenSci US Subsidiary to GenSci described   in Schedule T;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(uu)    “GenSci US Subsidiary Shares” means all of   the issued and outstanding shares of GenSci US Subsidiary;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vv)    “GenSci US Subsidiary” means GenSci OrthoBiologics,   Inc., a company incorporated under the laws of the State of Washington;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ww)  “GenSci   US Subsidiary Financial Statements” means the unconsolidated   unaudited financial statements of GenSci US Subsidiary for the year ended   December 31, 2002 and the quarter ended March 31, 2003 attached hereto as   Schedule R;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(xx)    “GenSci Warrants” mean the warrants issued   by GenSci described in Schedule D;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(yy)    “Governmental Entity” means any
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       federal,   provincial, state, regional, municipal, local or other government,   governmental or public department, central bank, court, tribunal, arbitral   body, commission, board, bureau, agency, domestic or foreign,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)     any subdivision,   agent, commission, board or authority of any of the foregoing, or
  

- 6 -

	
  
 
  	
  
 
  	
  
(iii)    any quasi-governmental   or private body exercising any regulatory, expropriation or taxing authority   under or for the account of any of the foregoing;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(zz)     “Hazardous Substance” means any pollutant,   contaminant, waste of any nature, hazardous substance, hazardous material,   toxic substance, dangerous substance or dangerous good that in relevant form   or concentration is regulated by any Environmental Law;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(aaa)   “Intellectual Property” means intellectual property of every   nature, whether registered or unregistered, including, without limitation
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(i)           all   trade-marks, service marks, trade-mark and service mark registrations,   trade-mark and service mark applications, rights under registered user   agreements, logos, trade names and other trade-mark and service mark rights,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)          all   copyrights and applications therefor, including all computer programs and   software (in both source and object code formats) and related documentation   including that which documents the design and execution of computer programs   and software, and rights to any of the foregoing,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)          all   inventions, patents, patent applications, patent rights (including any   patents issuing on such applications or rights), innovation patents and   neighbouring rights,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)          all   licenses, sub-licenses and franchises,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)          all   trade secrets and proprietary and confidential information,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)         all   industrial designs and registrations thereof and applications therefor, and
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(vii)        all   patterns, plans, designs, research data, other proprietary know-how,   processes, drawings, technology, inventions, formulae, specifications,   performance data, quality control information, unpatented blue prints, flow   sheets, equipment and parts lists, instructions, manuals, records and   procedures including testing and inspection techniques and procedures, and   all licenses and other contracts relating to any of the foregoing;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(bbb)  “Interim   Order” means the interim order of the Court providing for, among   other things, the calling and holding of the GenSci Meeting, as such order   may be amended, supplemented or varied by the Court;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ccc)   “IsoTis” means IsoTis S.A., a company incorporated under the   laws of Switzerland;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(ddd)  “IsoTis   Board” means the board of   directors of IsoTis;
  

- 7 -

	
  
 
  	
  
(eee)    “IsoTis Business” means the business   described in the IsoTis Disclosure Documents;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(fff)     “IsoTis Circular” means the information   circular (including all appendices thereto), notice of meeting and proxy form   to be sent by IsoTis for the IsoTis Meeting;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ggg)   “IsoTis Disclosure Documents” means
  

	
  
 
  	
  
 
  	
  
(i)       the   annual report of IsoTis for the year ended December 31, 2002,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      the annual   audited financial statements of IsoTis for the year ended December 31, 2002,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     the notice to the   ordinary general meeting of IsoTis Shareholders dated May 14, 2003,
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(iv)     the unaudited   interim consolidated financial statements of IsoTis for the quarters   following December 31, 2002, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)      all press   releases issued by IsoTis from December 31, 2002;
  

	
  
 
  	
  
(hhh)  “IsoTis   Environmental Permits” has the meaning ascribed to it in §0;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)     “IsoTis Exchange Shares” means the greater   of
  

	
  
 
  	
  
 
  	
  
(i)       that   number of shares in the capital of IsoTis as constituted on the Effective   Date equivalent to 29,450,169 IsoTis Shares as adjusted by §1.8 of the Plan   of Arrangement, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      the product   obtained when
  

	
  
 
  	
  
 
  	
  
 
  	
  
(A)     the quotient   obtained when the number of issued and outstanding shares in the capital of   IsoTis on the Effective Date is divided by 0.6,
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
is multiplied by
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(B)     0.4;
  

	
  
 
  	
  
(jjj)     “IsoTis Intellectual Property” means the   Intellectual Property owned or controlled in whole or in part by IsoTis or an   IsoTis Subsidiary and listed in Schedule P;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(kkk)  “IsoTis   Material Contracts” means those subsisting commitments, contracts,   instruments, leases and other agreements, oral or written, entered into by   IsoTis or any IsoTis Subsidiary, by which it is bound or to which it or its   assets are subject which have total payment obligations on the part of IsoTis   or any IsoTis Subsidiary which exceed US$100,000 or are for a term in excess   of one year or are otherwise material;
  

- 8 -

	
  
 
  	
  
(lll)      “IsoTis Meeting” means the extraordinary   general meeting of IsoTis Shareholders to be held to, among other things,   approve the issuance of a sufficient number of IsoTis Shares to effect the   Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(mmm) “IsoTis   Option” means the option granted to IsoTis by GenSci to purchase   common shares of GenSci as more particularly described in the IsoTis Option   Agreement;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(nnn)   “IsoTis Option Agreement” means the option agreement between   IsoTis and GenSci attached hereto as Schedule N;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ooo)   “IsoTis Shareholder” means a Person who is a registered   holder of IsoTis Shares as shown on the share register of IsoTis;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ppp)   “IsoTis Shares” means the shares in the capital of IsoTis as   constituted on May 31, 2003 with a nominal value of CHF 1 each;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(qqq)   “IsoTis Stock Option Plan” means the stock option plan of   IsoTis attached hereto as Schedule J;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(rrr)     “IsoTis Subsidiaries” means IsoTis N.V.,   IsoTis TE Facility B.V., IsoTis USA L.L.C. and Modex Therapeutics GmbH;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(sss)     “Loan” means the loan that may be made by   IsoTis to GenSci in accordance with the provisions of this Agreement, and   described in Schedule I;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ttt)      “Material Adverse Change”, when used in   connection with any Person, means any change, effect, event or occurrence   that is, or would reasonably be expected to be, material and adverse to the   condition (financial or otherwise), properties, assets, liabilities,   obligations (whether absolute, accrued, conditional or otherwise), tax   attributes, business, operations or results of operations or prospects of   such Person and its subsidiaries taken as a whole; provided, however, that no   Material Adverse Change shall be deemed to have occurred solely as a result   of any change in the trading price of GenSci Shares or IsoTis Shares,   respectively, that is unrelated to any change, effect, event or occurrence   materially adverse to the condition (financial or otherwise), properties,   assets, liabilities, obligations (whether absolute, accrued, conditional or   otherwise), businesses, operations or
results of operations or prospects of   such Person and its subsidiaries taken as a whole;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(uuu)   “Material Fact” has the meaning ascribed to it in the Securities   Act (British Columbia) R.S.B.C. 1996, c. 418, as amended;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vvv)   “Minority Shareholders” mean all holders of GenSci Shares   other than IsoTis and other shareholders not eligible to vote in connection   with minority approval of the Arrangement as provided for in subsection   252(8) of the Company Act;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(www) “Misrepresentation”   means
  

- 9 -

	
   
  	
  
 
  	
  
(i)      an untrue   statement of a Material Fact, or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)     an omission to   state a Material Fact that is
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)     required to be   stated, or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
(B)     necessary to   prevent a statement that is made from being false or misleading in the   circumstances in which it was made;
  

	
  
 
  	
  
(xxx)    “Nasdaq” means Nasdaq Stock Market Inc.;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(yyy)    “Netherlands’ Securities Laws” means the   Acts on the supervision of securities trade 1995 (Wet toezicht effectenverkeer 1995)   as amended from time to time, and any rules, regulations or decrees   promulgated thereunder;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(zzz)     “Non-Disclosure Agreement” means the   mutual non-disclosure agreement between IsoTis and GenSci dated March 31,   2003;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(aaaa)    “Osteotech” means Osteotech Inc.;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(bbbb)   “Pacific Corporate” means Pacific Corporate Trust Company,   GenSci’s registrar and transfer agent;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(cccc)    “Person” means any individual,   corporation, firm, partnership (including, without limitation, a limited   partnership), sole proprietorship, syndicate, joint venture, trustee, trust,   any unincorporated organization or association, any government or   instrumentality thereof and any tribunal; and pronouns have a similar   extended meaning;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(dddd)    “Plan of Arrangement” means the formal   plan of arrangement attached as Schedule A to this Agreement, and any   amendment or variation thereto made in accordance with §0 of this Agreement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(eeee)     “Purchase Price” means the IsoTis Exchange   Shares on the Effective Date;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ffff)       “Registrar” means the Registrar of   Companies pursuant to the Company Act;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(gggg)    “Release” means any spilling, leaking,   pumping, pouring, emitting, emptying, discharging, injecting, escaping,   leaching, dumping, disposing or migrating into or through the environment or   any facility, building or structure;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(hhhh)    “SEDAR” means the Canadian computer system   for the transmission, receipt, acceptance, review and dissemination of   securities filings made by Canadian public companies described in National   Instrument 13-101 and available for public view at  www.sedar.com;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iiii)        “Settlement Agreement” means the   settlement agreement between GenSci, GenSci US Subsidiary and Osteotech   attached hereto as Schedule K;
  

- 10 -

	
  
 
  	
  
(jjjj)        “Specified GenSci Event” means the   occurrence of a Material Adverse Change with respect to GenSci or any GenSci   Subsidiary or a breach by GenSci of its obligations hereunder, if by reason   thereof, after giving effect to §5.6, IsoTis would be entitled to rely on the   failure of a condition set forth in §5.4(a), §5.4(b) or §5.4(c) as a reason not to complete   the Arrangement;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(kkkk)    “Specified IsoTis Event” means the   occurrence of a Material Adverse Change with respect to IsoTis or any IsoTis   Subsidiary or a breach by IsoTis of its obligations hereunder, if by reason   thereof, after giving effect to §0, GenSci would be entitled to rely on the   failure of a condition set forth in §5.2(a), §5.2(b) or §5.2(c) as a reason not to complete   the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(llll)        “Superior Proposal” means any proposal by   a third party directly or indirectly, to acquire assets representing more   than 50% of the book value (on a consolidated basis) of GenSci’s total assets   or more than 50% of the outstanding GenSci Shares, whether by way of merger,   amalgamation, arrangement, take-over bid, sale of assets or otherwise, or a   similar transaction involving any of the GenSci Subsidiaries and that in the   good faith determination of the GenSci Board after consultation with   financial advisors and outside counsel (a) is reasonably capable of being   completed, taking into account all legal, financial, regulatory and other   aspects of such proposal and the party making such proposal, and (b) would,   if consummated in accordance with its terms, result in a transaction (x) more   favourable to the GenSci Shareholders than the transaction contemplated by   this
Agreement and (y) having a blended value per GenSci Share greater than   the per share value attributable thereto and to the IsoTis Shares received   under the Plan of Arrangement contemplated by this Agreement;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(mmmm) “Swiss   Securities Laws” means the Federal Law on Stock Exchanges and   Securities Trading (Switzerland) of March 24, 1995 supplemented by Stock   Exchange Ordinances, Circular Notices and Self Regulatory Orders, in   particular the Listing Rules of SWX of January 24, 1996, as amended from time   to time;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(nnnn)     “SWX” means the SWX Swiss Exchange;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(oooo)     “Tax Return” means any return,   declaration, report, claim for refund, or information return or statement   relating to Taxes, including any schedule or attachment thereto, and   including any amendment thereof;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(pppp)     “Taxes” means (i) all United States   federal, Canadian federal, state, provincial, local, foreign and other taxes,   duties or similar charges of any kind whatsoever and any amount assessed,   levied, charged or otherwise imposed by any Governmental Entity, including,   without limitation, all corporate franchise, income, sales, use, ad valorem,   receipts, value added, profit, license, withholding, payroll, employment,   excise, goods and services, property, net worth, capital gains, transfer,   stamp, documentary, social security, social service, environmental,   alternative minimum, occupation, recapture and other taxes, and including any   interest, penalties and additions imposed with respect to such amounts, (ii)   liability for the payment of, or otherwise in respect of, any amounts of the   type described in clause (i) as a result of being a member of an affiliated, 
  

- 11 -

	
  
 
  	
  
consolidated, combined, unitary or aggregate group,   (iii) liability for the payment of, or otherwise in respect of, any amounts   as a result of an express or implied obligation to indemnify any other person   with respect to the payment of any amounts of the types described in clause   (i) or (ii), and (iv) any assessments or reassessments in respect of any of   the foregoing;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(qqqq)     “Termination Date” means December 31,   2003;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(rrrr)       “Treasury Regulations” shall mean   regulations promulgated pursuant to the provisions of the Code;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ssss)       “TSX” means The Toronto Stock Exchange;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(tttt)        “United States Securities Laws” means the   1933 Act, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley   Act of 2002, and any other U.S. federal or state securities laws   (including those specified in Section 3(a)(47) of the Securities   Exchange Act of 1934) as well as any rules or regulations   promulgated under any of the foregoing; and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(uuuu)     “1933 Act” means the Securities Act of 1933, as   amended (United States);
  

and words and phrases used but not defined herein that are defined in the Company Act shall have the same meaning herein as in the Company Act unless the context otherwise requires.

Gender, etc.

1.2                In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

Headings and References to Part, etc.

1.3                The division of this Agreement into Parts, sections and subsections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  Reference to a Part is the part of this Agreement so referenced and § followed by a number or some combination of numbers and letter refers to the section, subsection, paragraph, subparagraph, clause or subclause of this Agreement so designated.  The word “including”, when following a general statement or term, is not to be construed as limiting the general statement or term to any specific item or matter set forth or to similar items or matters, but rather as permitting the general statement or term to refer also to all other items or matters that could reasonably fall within its broadest possible scope.

Date of Any Action

1.4                If the date on which any action is required to be taken hereunder by GenSci or IsoTis is not a Business Day in the place where the action is required to be taken, that action will be required to be taken on the next succeeding day which is a Business Day in that place.

- 12 -

Currency

1.5                Unless otherwise stated, all references in this Agreement to sums of money are expressed in lawful money of Canada.

References to Statutes

1.6                A reference to a statute includes all regulations made thereunder, all amendments to the statute or regulations in force from time to time, and every statute or regulation that supplements or supersedes such statute or regulations.

References to Persons

1.7                A reference to a Person includes any successor to that Person.

Approval

1.8                A reference to “approval”, “authorization” or “consent” means written approval, authorization or consent.

Accounting Matters

1.9                Unless otherwise stated, all accounting terms used in this Agreement in respect of GenSci shall have the meanings attributed thereto under Canadian generally accepted accounting principles and all determinations of an accounting nature in respect of GenSci required to be made shall be made in a manner consistent with Canadian generally accepted accounting principles and past practice.  Unless otherwise stated, all accounting terms used in this Agreement in respect of IsoTis shall have the meanings attributable thereto under International Accounting Standards and all determinations of an accounting nature required to be made in respect of IsoTis shall be made in a manner consistent with International Accounting Standards and past practice.

Knowledge

1.10               Each reference herein to the knowledge of a party means, unless otherwise specified, the existing knowledge of such party without inquiry.

Schedules

1.11               The following are the Schedules attached to and incorporated in this Agreement by reference and deemed to be part hereof: 

	
  
 
  	
  
Schedule A
  	
  
–
  	
  
Plan of Arrangement Under Section 252 of the Company   Act (British Columbia)
  
	
  
 
  	
  
Schedule B
  	
  
–
  	
  
GenSci Intellectual Property
  
	
  
 
  	
  
Schedule C
  	
  
–
  	
  
GenSci Stock Option Plan
  
	
   
  	
  
Schedule D
  	
  
–
  	
  
GenSci Options and Warrants
  
	
  
 
  	
  
Schedule E
  	
  
–
  	
  
Disclosure Exceptions of GenSci
  

- 13 -

	
  
 
  	
  
Schedule F
  	
  
–
  	
  
GenSci Subsidiaries
  
	
  
 
  	
  
Schedule G
  	
  
–
  	
  
Disclosure Exceptions of IsoTis
  
	
   
  	
  
Schedule H
  	
  
–
  	
  
[intentionally deleted]
  
	
  
 
  	
  
Schedule I
  	
  
–
  	
  
Term Sheet re: Loan
  
	
  
 
  	
  
Schedule J
  	
  
–
  	
  
IsoTis Stock Option Plan
  
	
  
 
  	
  
Schedule K
  	
  
–
  	
  
Settlement Agreement
  
	
  
 
  	
  
Schedule L
  	
  
–
  	
  
IsoTis Options
  
	
  
 
  	
  
Schedule M
  	
  
–
  	
  
GenSci Material Contracts
  
	
   
  	
  
Schedule N
  	
  
–
  	
  
IsoTis Option Agreement
  
	
  
 
  	
  
Schedule O
  	
  
–
  	
  
IsoTis Subsidiaries
  
	
  
 
  	
  
Schedule P
  	
  
–
  	
  
IsoTis Intellectual Property
  
	
  
 
  	
  
Schedule Q
  	
  
–
  	
  
IsoTis Material Contracts
  
	
  
 
  	
  
Schedule R
  	
  
–
  	
  
GenSci US Subsidiary Financial Statements
  
	
  
 
  	
  
Schedule S
  	
  
–
  	
  
Key GenSci Employees
  
	
   
  	
  
Schedule T
  	
  
–
  	
  
GenSci US Loans
  

Approval of the TSX

1.12               For the purposes of this Agreement, where there are references to the phrase “the approval of the TSX of the transactions contemplated by this Agreement” or similar phrases, it shall be deemed not to include any approval that may be required from the TSX to continue to list the shares of GenSci following the Effective Date or any transactions contemplated in connection with such continued listing.

ARTICLE 2

THE ARRANGEMENT

Effective Date of Arrangement

2.1                The Arrangement shall become effective on the Effective Date.

Condition to Enter Into Agreement

2.2                As a condition to IsoTis’s willingness to enter into this Agreement and make a loan to GenSci in the circumstances set out in §6.8, IsoTis has requested that GenSci agree, and GenSci has agreed, to grant the IsoTis Option to IsoTis.  In addition, as a condition to GenSci’s willingness to enter into this Agreement, GenSci has requested that IsoTis agree, and IsoTis has agreed, to make a loan to GenSci in the circumstances set out in §6.8.  Concurrently with the execution of this Agreement, IsoTis and GenSci have agreed to enter into the IsoTis Option Agreement. 

- 14 -

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of IsoTis

3.1                IsoTis hereby represents and warrants to GenSci as follows and acknowledges that GenSci is relying upon these representations and warranties in connection with the transactions contemplated herein:

	
  
 
  	
  
(a)     Organization   of IsoTis.  Each of IsoTis   and each IsoTis Subsidiary is a company duly organized, validly existing and   in good standing with respect to all filings required under Applicable Law to   maintain its corporate existence, has the corporate power to own or lease its   property and assets and to carry on its business as now conducted by it, and   IsoTis has the corporate power and authority to enter into this Agreement and   perform its obligations hereunder.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)     Enforceability.   This Agreement has been duly executed and delivered by IsoTis and constitutes   its legal, valid and binding obligation, enforceable against it in accordance   with its terms, subject to bankruptcy, insolvency and other Applicable Laws   affecting creditors’ rights generally subject to receipt of the approvals set   out in § 3.1(aa) and receipt of IsoTis Shareholder approval, and to general   principles of equity.
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)     Capitalization.  The authorized capital of IsoTis consists   of CHF 59,546,108 divided into 59,546,108 shares with a nominal value of   CHF 1 each, of which, as of the date hereof, 41,588,457 are issued and   outstanding.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)     No   Encumbrances.  The IsoTis   Shares to be issued to the GenSci Shareholders pursuant to the Arrangement   will be issued as fully paid IsoTis Shares, free and clear of all liens,   claims, charges and encumbrances.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)     Options to   Purchase Shares.  Except as   disclosed in Schedule L, and as of the date hereof, no Person has any   agreement, option, understanding or commitment (including convertible   securities, warrants or convertible obligations of any nature), for the   purchase or issue of or conversion into any of the unissued IsoTis Shares or   any unissued securities of IsoTis or an IsoTis Subsidiary and, as of the date   hereof, Schedule L accurately sets out the holders, weighted average   exercise price and average remaining term of all those options and warrants   and such other convertible securities or obligations of IsoTis and each   IsoTis Subsidiary which are outstanding.
  
	
   
  	
  
 
  
	
  
 
  	
  
(f)     Listing.  The IsoTis Shares are listed, posted and   called for trading on the Euronext and the SWX and are not listed or quoted   on any other stock exchange or trading system.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(g)     Disclosure   Filings.  IsoTis is a   reporting issuer in Switzerland and in The Netherlands, has not been the   subject of a cease trade order or investigation under the Applicable   Securities Laws, has not been the subject of any investigation by the   Euronext, the SWX or any Governmental Entity, is current with all filings   required to be 
  

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made under the Applicable Securities Laws and is not   aware of any deficiencies in the filing of any such documents or reports.
  
	
  
 
  	
  
 
  
	
   
  	
  
(h)     IsoTis   Disclosure Documents.  All   of the information and statements contained in the IsoTis Disclosure   Documents at the respective dates of such information and statements
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)          are   true and correct,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)         contain   no Misrepresentation,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)        constitute   full, true and plain disclosure of all Material Facts relating to IsoTis, its   securities and the IsoTis Subsidiaries, and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)        comply,   in all material respects, with the Applicable Securities Laws.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)       Absence of   Certain Changes or Events.    Except as publicly disclosed by IsoTis, since December 31, 2002   through the date hereof, IsoTis and each IsoTis Subsidiary has conducted its   business only in the ordinary and regular course of business consistent with   past practice and there has not occurred
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)          a   Material Adverse Change with respect to IsoTis or any IsoTis Subsidiary,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)         any   redemption, repurchase or other acquisition of IsoTis Shares by IsoTis or any   declaration, setting aside or payment of any dividend or other distribution   (whether in cash, stock or property) with respect to IsoTis Shares or any securities   of IsoTis,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)        any   material increase in or modification of the compensation payable or to become   payable by it to any of its directors or officers, or any grant to any such   director or officer of any increase in severance or termination pay,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)        any   increase in or modification of any bonus, pension, insurance or benefit   arrangement (including the granting of stock options, restricted stock awards   or stock appreciation rights) made to, for or with any of its directors or   officers,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)         any   acquisition or sale of its property or assets aggregating 10% or more of   IsoTis’s total consolidated property and assets as at December 31, 2002   other than in the ordinary and regular course of business consistent with   past practice,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)        any   entering into, amendment of, relinquishment, termination or non-renewal of   any material contract, agreement, license, franchise, environmental permit,   lease transaction, commitment or other right or obligation, other than in the   ordinary and regular course of business consistent with past practice,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vii)       any   resolution to approve a split, combination or reclassification of any of its   securities,
  
				

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(viii)      any   agreement or arrangement to take any action which, if taken prior to the date   hereof, would have made any representation or warranty set forth in this   Agreement materially untrue or incorrect as of the date when made, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ix)         any   change in its accounting methods, principles or practices.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(j)       Financial   Statements.  The financial   statements of IsoTis forming part of the IsoTis Disclosure Documents have   been prepared in accordance with International Accounting Standards, unless   otherwise indicated and present fairly the assets, liabilities (whether   accrued, absolute, contingent or otherwise) and the financial condition of   IsoTis and the IsoTis Subsidiaries on a consolidated basis as at the date   thereof and the earnings of IsoTis and the IsoTis Subsidiaries during the   periods covered by such financial statements.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(k)      No   Conflict or Violation.    Subject to receipt of the approvals set out in § 3.1(aa) and receipt   of IsoTis Shareholder approval, the execution and delivery of this Agreement   and the consummation of the Arrangement do not and will not
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)          result   in the breach or violate any term or provision of the constating documents of   IsoTis or any IsoTis Subsidiary, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)         conflict   with, result in a breach of, constitute a default under, or accelerate or   permit the acceleration of the performance required by, any agreement,   instrument, licence, permit or authority to which IsoTis or any IsoTis   Subsidiary is a party or by which it is bound or to which any property of   IsoTis or any IsoTis Subsidiary is subject or results in the creation of any   lien, charge or encumbrance upon any of the assets of IsoTis or any IsoTis   Subsidiary under any such agreement or instrument, or give to others any   material interest or rights, including rights of purchase, termination,   cancellation or acceleration, under any such agreement, instrument, licence,   permit or authority, or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)        violate   any provision of law or administrative regulation or any judicial or   administrative order, award, judgment or decree applicable to IsoTis or an   IsoTis Subsidiary,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
that would be a Material Adverse Change with respect   to IsoTis or any IsoTis Subsidiary.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(l)       Agreement   of Guarantee, Indemnification.    IsoTis and the IsoTis Subsidiaries are not a party to or bound by any   agreement of guarantee, indemnification, Tax sharing, assumption or   endorsement or any other like commitment of the obligations, liabilities   (contingent or otherwise) or indebtedness of any other Person except as   disclosed in the IsoTis Disclosure Documents or Schedule G.
  
	
  
 
  	
  
 
  
	
   
  	
  
(m)     No   Contracts or Commitments.    There are no agreements, covenants, undertakings or other commitments   of IsoTis or any IsoTis Subsidiary, including partnerships or joint ventures   of which any of them is a partner or member, under which the consummation of   the Arrangement would
  

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(i)          have   the effect of imposing restrictions or obligations on IsoTis or an IsoTis   Subsidiary materially greater than those imposed upon IsoTis or the IsoTis   Subsidiary or any such partnership or joint venture at the date hereof,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)         give   a third party a right to terminate any material agreement to which IsoTis or   an IsoTis Subsidiary or any such partnership or joint venture is a party or   to purchase any of their respective assets,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)        impose   material restrictions on the ability of IsoTis or an IsoTis Subsidiary to   carry on any business which it might choose to carry on within any   geographical area, to acquire property or dispose of its property and assets   in their entirety or to change its corporate status, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)        impose   material restrictions on the ability of IsoTis or an IsoTis Subsidiary to pay   dividends or make distributions to its shareholders or to borrow money and to   mortgage and pledge its property as security therefor.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(n)      No Brokers.  IsoTis has not agreed to pay, nor has any   IsoTis Subsidiary agreed to pay, any brokerage fees, finder’s fees, financial   advisory fees, agent’s commissions or other similar forms of compensation in   connection with this Agreement, the Arrangement or GenSci, except for the fee   payable to Asanté Partners LLC pursuant to an engagement letter dated   February 20, 2003.
  
	
   
  	
  
 
  
	
  
 
  	
  
(o)      Compliance   with Laws.  Except as   disclosed in the IsoTis Disclosure Documents or publicly disclosed by IsoTis,   IsoTis and each IsoTis Subsidiary has complied with and is not in violation   of, any Applicable Laws, orders, judgments and decrees other than   non-compliance or violations which would not, individually or in the   aggregate, be a Material Adverse Change with respect to IsoTis.  Without limiting the generality of the   foregoing, all securities of IsoTis (including all options, rights or other convertible   or exchangeable securities) have been issued in compliance in all material   respects with all Applicable Securities Laws and all securities to be issued   upon exercise of any such options, rights and other convertible or   exchangeable securities will be issued in compliance with all Applicable   Securities Laws.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(p)      Litigation.  There are no actions, suits, proceedings   or investigations commenced or threatened, or to the knowledge of IsoTis   contemplated, against or affecting IsoTis or any IsoTis Subsidiary or before   or by any Person or before any arbitrator of any kind which would prevent or   hinder the consummation of the Arrangement or which involve the possibility   of any judgment or liability which could be expected to result in a Material   Adverse Change with respect to IsoTis, except as disclosed in   Schedule G.
  
	
  
 
  	
  
 
  
	
   
  	
  
(q)      No   Insolvency.  None of IsoTis   or any IsoTis Subsidiary is an insolvent Person within the meaning of   applicable bankruptcy, insolvency or fraudulent conveyance laws and will not   become an insolvent Person as a result of the transactions contemplated by   this Agreement.  No act or proceeding   has been taken by or against IsoTis or an IsoTis Subsidiary in connection   with the dissolution, liquidation, winding up, bankruptcy or reorganization   of IsoTis or any IsoTis Subsidiary or the appointment of a trustee, 
  

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receiver, manager or other administrator of IsoTis   or an IsoTis Subsidiary or any of its assets.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(r)      Subsidiaries.  All of the outstanding shares and other   ownership interests of the IsoTis Subsidiaries are validly issued, fully paid   and non-assessable and all such shares and other ownership interests are   owned directly or indirectly by IsoTis, free and clear of all liens, claims   or encumbrances, except as set forth in Schedule G, and except as   aforesaid there are no outstanding options, rights, entitlements,   understandings or commitments (contingent or otherwise) regarding the right   to acquire any such shares or other ownership interests in any of the IsoTis   Subsidiaries.  IsoTis has disclosed in   Schedule O the names and jurisdictions of incorporation of each of the   IsoTis Subsidiaries.  IsoTis has no subsidiaries   other than the IsoTis Subsidiaries and does not at present own shares in, and   is not a party to any agreement of any nature to acquire any shares in, any
other corporation or entity and is not a party to any agreement to acquire or   lease any other business operations, except as described in the IsoTis   Disclosure Documents or Schedule O.
  
	
   
  	
  
 
  
	
  
 
  	
  
(s)      Books and   Records.  The corporate   records and minute books of IsoTis and each IsoTis Subsidiary as required to   be maintained by them under the laws of their jurisdictions of incorporation   are up to date and contain complete and accurate minutes of all meetings of   its directors and shareholders and all resolutions consented to in writing.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(t)      Title.  IsoTis and each IsoTis Subsidiary own good   and marketable title to their property and assets free and clear of any and   all mortgages, liens, pledges, charges, security interests, encumbrances,   actions, claims or demands of any nature whatsoever or howsoever arising   which would be a Material Adverse Change with respect to the property or   assets of IsoTis, except as disclosed in the IsoTis Disclosure Documents and   Schedule G hereto.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(u)      Tax   Matters.  Except as   disclosed in Schedule G, IsoTis and each IsoTis Subsidiary has duly   filed on a timely basis all Tax Returns required to be filed by it with the   appropriate Governmental Entity (and all such Tax Returns are complete and   correct and have been prepared in compliance with all applicable laws and   regulations), and has paid all Taxes (whether or not such Taxes are shown or   required to be shown on a Tax Return so filed), including all instalments on   account of Taxes for the current year, which are due and payable on or before   the date hereof; adequate provision has been made for all such amounts   payable for the current period for which Tax Returns are not yet required to   be filed; there are no agreements, waivers or other arrangements providing   for an extension of time with respect to the filing of any Tax Return by, or   payment of any Tax, governmental charge or
deficiency by or against IsoTis   and each IsoTis Subsidiary; to the best knowledge of IsoTis there are no   actions, suits, proceedings, investigations or claims commenced, threatened   or contemplated against IsoTis or any IsoTis Subsidiary in respect of Taxes   or grounds for any material claim in respect thereof, or any matters under   discussion with any Governmental Entity relating to Taxes asserted by any   such Governmental Entity.  The   transactions contemplated under this Agreement and the Plan of Arrangement   will not, at any time before or after the Effective Time, result in IsoTis,   or any IsoTis Subsidiary, having a material liability or material contingent   or future 
  

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liability for any amount or to any Person including,   without limitation, any material liability or material contingent or future liability   in respect of any Taxes or otherwise.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)      Withholding.  IsoTis and each IsoTis Subsidiary has   withheld from each payment made to all of its current and former officers,   directors and employees, and from each other payment of any nature made to   any Person, the amount of all Taxes including, but not limited to, income tax   and other deductions required to be withheld therefrom and has paid the same   to the proper tax and other receiving officers within the time required under   any Applicable Law.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(w)     Intellectual   Property.  Except as   disclosed in Schedule G
  
	
   
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        the   IsoTis Intellectual Property represents all of the patents and patent   applications filed in the name of or on behalf of IsoTis or an IsoTis   Subsidiary or wholly or partially controlled by IsoTis or an IsoTis   Subsidiary or assigned or licensed to IsoTis or an IsoTis Subsidiary at the   time of the execution of this Agreement,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)       IsoTis,   or an IsoTis Subsidiary, as the case may be, is the  record owner of certain IsoTis Intellectual Property as   evidenced by the appropriate assignment document recorded with the US Patent   and Trademark Office or other foreign patent office or other applicant   information. No rights in and to the IsoTis Intellectual Property that are   material to the IsoTis Business have been transferred, conveyed or otherwise   assigned except as identified in the agreements listed in the attached   Schedule G,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      IsoTis or   an IsoTis Subsidiary as the case may be has the right to license or   sub-license certain IsoTis Intellectual Property to third parties and has the   rights to bring actions for the infringement or misappropriation of its   rights in the IsoTis Intellectual Property,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      IsoTis, or   an IsoTis Subsidiary, as the case may be, has not expressly abandoned any   patent or patent application material to its business activities identified   as being IsoTis Intellectual Property as of the date of execution of this   Agreement and believes such patents and patent applications to be presently   pending and/or not abandoned for failure to file any document or make any   maintenance fee or annuity,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)       to the   best of IsoTis’s in-house counsel’s knowledge, there are no written claims of   patent infringement received by IsoTis’s in-house counsel regarding any   activity of IsoTis, or any threatened claims or litigation contesting the   validity or ownership of any of the IsoTis Intellectual Property, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)      there are no   royalties, honoraria, fees or other payments payable by IsoTis, or any IsoTis   Subsidiary, to any Person by reason of the ownership, use, license, sale or   disposition of any of the IsoTis Intellectual Property.
  

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(x)      Material   Contracts.  Except for the   IsoTis Material Contracts listed and described in Schedule Q or as   described in Schedule G, IsoTis and each IsoTis Subsidiary is not party   to or bound by any IsoTis Material Contract, whether oral or written, and the   contracts and agreements listed in Schedule Q are valid and subsisting,   in full force and effect and unamended, no material default exists in respect   thereof on the part of IsoTis or any such IsoTis Subsidiary or, to the best   of the knowledge of IsoTis, on the part of any of the other parties thereto,   IsoTis is not aware of any intention on the part of any of the other parties   thereto to terminate or materially alter any such contracts or agreements,   and Schedule Q lists all the present outstanding IsoTis Material   Contracts entered into by IsoTis and each IsoTis Subsidiary in the course of   carrying on the IsoTis Business
or otherwise.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(y)      True,   Complete and Correct Copies.    True, correct and complete copies of all IsoTis Material Contracts   listed in Schedule Q have been delivered to GenSci.
  
	
  
 
  	
  
 
  
	
   
  	
  
(z)       IsoTis   Board.  The IsoTis Board   has
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        determined   unanimously that the Arrangement is fair to the holders of the IsoTis Shares   and is in the best interests of IsoTis, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      determined   unanimously to recommend that the holders of the IsoTis Shares vote in favour   of the Arrangement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(aa)     Consents.  No consent, approval, order or   authorization of, or declaration or filing with, any Governmental Entity is   required to be obtained by IsoTis or any IsoTis Subsidiary in connection with   the execution and delivery of this Agreement or the consummation by IsoTis of   the transactions contemplated hereby other than
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       approval   of the SWX, Euronext and AFM, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      any other   consents, approvals, orders, authorizations, declarations or filings of or   with a Governmental Entity which, if not obtained, would not, individually or   in the aggregate, be a Material Adverse Change with respect to IsoTis.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(bb)    Environmental.  Except for any matters that, individually   or in the aggregate, would not be a Material Adverse Change with respect to   IsoTis:
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(i)       all   facilities and operations of IsoTis and the IsoTis Subsidiaries have been   conducted, and are now, in compliance with all Environmental Laws,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      IsoTis and   the IsoTis Subsidiaries are in possession of, and in compliance with, all   permits, authorizations, certificates, registrations, approvals and consents   necessary under Environmental Laws to own, lease and operate their properties   and to conduct their respective businesses as they are now being conducted or   as proposed to be conducted (collectively the “IsoTis Environmental   Permits”), and
  

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(iii)     except as set   forth in Schedule G, neither IsoTis nor any IsoTis Subsidiary is aware   of, or is subject to:
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)      any   Environmental Laws which require or may require any significant work,   repairs, construction, change in business practices or operations, or   expenditures, including capital expenditures, for facility upgrades,   environmental investigation or remediation;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(B)      any written   demand, notice or request for information with respect to the breach of or   liability under any Environmental Laws applicable to IsoTis or any IsoTis Subsidiary,   respecting
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
 
  	
  
(I)          the   use, storage, treatment, transportation or disposition (including disposal or   arranging for disposal) of Hazardous Substances, or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
(II)        the   presence, Release or discharge of Hazardous Substances; or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(C)      any actual or   proposed changes in the status, terms or conditions of any IsoTis   Environmental Permits or any renewal, modification, revocation, reissuance,   alteration, transfer or amendment of such IsoTis Environmental Permits, or   any review by, or approval of, any Governmental Entity of such IsoTis   Environmental Permits that are required in connection with the execution or   delivery of this Agreement, the consummation of the transactions contemplated   hereby or the continuation of business of IsoTis or any IsoTis Subsidiaries   following such consummation.
  
	
   
  	
  
 
  
	
  
 
  	
  
(cc)      Material   Customers.  There is no   single customer of IsoTis or any IsoTis Subsidiary, the loss of which would   be a Material Adverse Change with respect to IsoTis.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(dd)     Insurance.  IsoTis and each IsoTis Subsidiary has   policies of insurance in force as of the date hereof naming IsoTis or the   IsoTis Subsidiary, as the case may be, as an insured which, having regard to   the nature of such risk and the relative cost of obtaining insurance, IsoTis   believes are reasonable.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ee)     Licences.  Except as disclosed in Schedule G,   IsoTis and each IsoTis Subsidiary owns, possesses, or has obtained and is in   compliance with, all licences, permits, certificates, orders, grants and   other authorizations of or from any Governmental Entity necessary to conduct   its business as now conducted or as proposed to be conducted except for such   failure that would individually or in the aggregate not constitute a Material   Adverse Change with respect to IsoTis.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ff)      GenSci   Shares.  Other than as   contemplated herein or in any support agreements procured by IsoTis in   connection with the Arrangement, IsoTis does not and will not immediately   before the Effective Time beneficially own, directly or indirectly, or   exercise control or direction over any GenSci Shares.
  

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Representations and Warranties of GenSci

3.2                    GenSci hereby represents and warrants to and in favour of IsoTis as follows and acknowledges that IsoTis is relying upon such representations and warranties in connection with the transactions contemplated herein:

	
  
 
  	
  
(a)       Organization   of GenSci.  Each of GenSci   and each GenSci Subsidiary is a company duly organized, validly existing and   in good standing with respect to all filings required under Applicable Law to   maintain its corporate existence, has the corporate power to own or lease its   property and assets and to carry on its business as now conducted by it and   GenSci has the corporate power and authority to enter into this Agreement and   perform its obligations hereunder, subject to the appropriate order(s) of the   Bankruptcy Court.  Without limiting   the generality of the foregoing, GenSci US Subsidiary is in good standing under   the laws of the State of Washington and is duly qualified as a foreign   corporation and in good standing under the laws of the State of California   and each other jurisdiction wherein its ownership, lease or operation or   property or the conduct of its business requires
such qualification.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)       Enforceability.   This Agreement has been duly executed and delivered by GenSci and constitutes   its legal, valid and binding obligation, enforceable against it in accordance   with its terms, subject to bankruptcy, insolvency and other Applicable Laws   affecting creditors’ rights generally, and to general principles of equity.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)       Capitalization.  The authorized capital of GenSci consists   of 100,000,000 common shares without par value and 100,000,000 Preferred   shares without par value and, as of the date of this Agreement, there are   52,574,459 common shares issued and outstanding as fully paid and   non-assessable common shares and no preferred shares issued and outstanding.  All issued and outstanding shares of   GenSci US Subsidiary are legally and beneficially held by GenSci.  The GenSci US Subsidiary Loans are as set   out in Schedule T.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)       Options to   Purchase Shares.  Except as   described in Schedule D or Schedule E, no Person has any agreement,   option, understanding or commitment (including convertible securities,   warrants or convertible obligations of any nature) for the purchase or issue   of or conversion into any of the unissued shares of GenSci or the GenSci   Subsidiaries or any unissued securities of GenSci or the GenSci   Subsidiaries.  Schedule D   accurately sets out the holders, exercise prices, expiry dates and exchange   terms of all those options, warrants and other convertible securities which   are outstanding. Schedule C contains a true copy of the GenSci Stock   Option Plan as amended.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(e)       Listing.  Except as disclosed in Schedule E,   the GenSci Shares are listed, posted and called for trading on the TSX and   are not listed or quoted on any other stock exchange or trading system.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(f)       Disclosure   Filings.  GenSci is a   reporting issuer in British Columbia, Alberta, Ontario, Québec and the United   States and has not been the subject of a cease trade order or investigation   under Applicable Securities Laws, has not been the subject of any 
  

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investigation by the TSX or any Governmental Entity,   is current with all filings required to be made under Applicable Securities   Laws and is not aware of any deficiencies in the filing of any such documents   or reports.
  
	
   
  	
  
 
  
	
  
 
  	
  
(g)      GenSci   Disclosure Documents.  All   of the information and statements contained in the GenSci Disclosure   Documents at the respective dates of such information and statements
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        are   true and correct,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)       contain   no Misrepresentation,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      constitute   full, true and plain disclosure of all Material Facts relating to GenSci, its   securities and the GenSci Subsidiaries, and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      comply, in   all material respects, with the Applicable Securities Laws.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(h)       Absence of   Certain Changes or Events.  Except   as publicly disclosed by GenSci, since December 31, 2002 through the date   hereof GenSci and each GenSci Subsidiary has conducted its business only in   the ordinary and regular course of business consistent with past practice and   there has not occurred
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        a   Material Adverse Change with respect to GenSci or any GenSci Subsidiary,
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(ii)       any   redemption, repurchase or other acquisition of GenSci Shares by GenSci, or any   declaration, setting aside or payment of any dividend or other distribution   (whether in cash, stock or property) with respect to GenSci Shares, GenSci US   Subsidiary Shares or any securities of GenSci or any GenSci Subsidiary,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      any   material increase in or modification of the compensation payable or to become   payable by it to any of its directors or officers, or any grant to any such   director or officer of any increase in severance or termination pay,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      any increase   in or modification of any bonus, pension, insurance or benefit arrangement   (including the granting of stock options, restricted stock awards or stock   appreciation rights) made to, for or with any of its directors or officers,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)       any   acquisition or sale of its property or assets aggregating 10% or more of   GenSci’s total consolidated property and assets as at December 31, 2002   other than in the ordinary and regular course of business consistent with   past practice,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)      any   entering into, amendment of, relinquishment, termination or non-renewal of   any material contract, agreement, license, franchise, environmental permit,   lease transaction, commitment or other right or obligation, other than in the   ordinary and regular course of business consistent with past practice,
  

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(vii)     any resolution to   approve a split, combination or reclassification of any of its securities,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(viii)    any agreement or   arrangement to take any action which, if taken prior to the date hereof,   would have made any representation or warranty set forth in this Agreement   materially untrue or incorrect as of the date when made, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ix)      any change   in its accounting methods, principles or practices.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)       Financial   Statements.  The financial   statements of GenSci forming part of the GenSci Disclosure Documents have   been prepared in accordance with Canadian generally accepted accounting   principles, unless otherwise indicated and present fairly the assets,   liabilities (whether accrued, absolute, contingent or otherwise) and the   financial condition of GenSci and the GenSci Subsidiaries on a consolidated   basis as at the date thereof and the earnings of GenSci and the GenSci   Subsidiaries during the periods covered by such financial statements.  The GenSci US Subsidiary Financial   Statements attached hereto as Schedule R have been derived from   consolidated financial statements prepared in accordance with Canadian   generally accepted accounting principles, unless otherwise indicated and   present fairly the assets, liabilities (whether accrued, absolute, contingent   or otherwise) and
the financial condition of GenSci US Subsidiary on an   unconsolidated basis as at the date thereof and the earnings of GenSci US   Subsidiary during the periods covered by such financial statements.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(j)       No   Conflict or Violation.    Subject to Schedule E, and subject to the approval of the   Bankruptcy Court, the execution and delivery of this Agreement and, subject   to receipt of GenSci Shareholder approval, the approval of the Court and the   TSX, the consummation of the Arrangement do not and will not
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        result   in the breach or violate any term or provision of the constating documents of   GenSci or any GenSci Subsidiary,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)       conflict   with, result in a breach of, constitute a default under, or accelerate or   permit the acceleration of the performance required by, any agreement,   instrument, licence, permit or authority to which GenSci or any GenSci   Subsidiary is a party or by which it is bound or to which any property of   GenSci or any GenSci Subsidiary is subject (including, without limitation,   the GenSci Material Contracts, the Settlement Agreement, the GenSci Licences,   the GenSci Trademarks, the GenSci Management Services Agreements and the   GenSci US Subsidiary Loans), or result in the creation of any lien, charge or   encumbrance upon any of the assets of GenSci or any GenSci Subsidiary under   any such agreement or instrument, or give to others any material interest or   rights, including rights of purchase, termination, cancellation or   acceleration, under any such agreement, instrument, licence, permit or   authority,
or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      violate any   provision or law or administrative regulation or any judicial or   administrative order, award, judgment or decree applicable to GenSci or any   GenSci Subsidiary
  

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that would be a Material Adverse Change with respect   to GenSci or any GenSci Subsidiary.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(k)       No Change   of Control.  Except as   disclosed in Schedule E, in particular, without limiting the generality   of the foregoing, there are no “change of control” clauses in any agreements   to which GenSci or the GenSci Subsidiaries are a party.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(l)       Agreement   of Guarantee, Indemnification.    GenSci and the GenSci Subsidiaries are not a party to or bound by any   agreement of guarantee, indemnification, Tax sharing, assumption or   endorsement or any other like commitment of the obligations, liabilities   (contingent or otherwise) or indebtedness of any other Person except as   disclosed in the GenSci Disclosure Documents or in Schedule E.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(m)     No   Contracts or Commitments.    There are no agreements, covenants, undertakings or other commitments   of GenSci or a GenSci Subsidiary, including partnerships or joint ventures of   which any of them is a partner or member, under which the consummation of the   Arrangement would
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        have   the effect of imposing restrictions or obligations on GenSci or a GenSci   Subsidiary materially greater than those imposed upon GenSci or the GenSci   Subsidiary or any such partnership or joint venture at the date hereof,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      give a third   party a right to terminate any material agreement to which GenSci or a GenSci   Subsidiary or any such partnership or joint venture is a party or to purchase   any of their respective assets,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      impose   material restrictions on the ability of GenSci or a GenSci Subsidiary to   carry on any business which it might choose to carry on within any   geographical area, to acquire property or dispose of its property and assets   in their entirety or to change its corporate status, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      impose   material restrictions on the ability of GenSci or a GenSci Subsidiary to pay   any dividends or make other distributions to its shareholders or to borrow   money and to mortgage and pledge its property as security therefor.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(n)      No Brokers.  GenSci has not agreed to pay, nor has any   GenSci Subsidiary agreed to pay, any brokerage fees, finder’s fees, financial   advisory fees, agent’s commissions or other similar forms of compensation in   connection with this Agreement, except as disclosed in Schedule E.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(o)      Compliance   with Laws.  Except as   disclosed in the GenSci Disclosure Documents or publicly disclosed by GenSci,   GenSci and each GenSci Subsidiary has complied with and is not in violation   of any Applicable Laws, orders, judgments and decrees other than   non-compliance or violations which would not, individually or in the   aggregate, be a Material Adverse Change with respect to GenSci or any GenSci   Subsidiary.  Without limiting the   generality of the foregoing, all securities of GenSci and each GenSci   Subsidiary (including all options, rights or other convertible or   exchangeable securities) have been issued in compliance in all material   respects with all 
  

- 26 -

	
   
  	
  
Applicable Securities Laws and all securities to be   issued upon exercise of any such options, rights and other convertible or   exchangeable securities will be issued in compliance with all Applicable Securities   Laws.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(p)       Litigation.  There are no actions, suits, proceedings   or investigations commenced or threatened, or to the knowledge of GenSci   contemplated, against or affecting GenSci or any GenSci Subsidiary or before   or by any Person or before any arbitrator of any kind which would prevent or   hinder the consummation of the Arrangement or which involve the possibility   of any judgment or liability which could be expected to result in a Material   Adverse Change with respect to GenSci or GenSci US Subsidiary, except as   described in Schedule E.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(q)       No   Insolvency.  Except as   disclosed in Schedule E, none of GenSci or any GenSci Subsidiary is an   insolvent Person within the meaning of applicable bankruptcy, insolvency or   fraudulent conveyance laws and will not become an insolvent Person as a   result of the transactions contemplated by this Agreement.  No act or proceeding has been taken by or   against GenSci or any GenSci Subsidiary in connection with the dissolution,   liquidation, winding up, bankruptcy or reorganization of GenSci or any GenSci   Subsidiary or the appointment of a trustee, receiver, manager or other   administrator of GenSci or any GenSci Subsidiary or any of its assets,   including, without limiting the   generality of the foregoing, GenSci has not sought protection under the Bankruptcy   and Insolvency Act (Canada) or the Company Creditors Arrangement Act   (Canada), except as disclosed in
Schedule E.
  
	
   
  	
  
 
  
	
  
 
  	
  
(r)       Subsidiaries.  All of the outstanding shares and other   ownership interests of the GenSci Subsidiaries, including, without   limitation, the GenSci US Subsidiary Shares, are validly issued, fully paid   and non-assessable and all such shares and other ownership interests   (including the GenSci US Subsidiary Loans) are owned directly or indirectly   by GenSci, free and clear of all liens, claims or encumbrances, except as set   forth in Schedule E, and except as aforesaid there are no outstanding   options, rights, entitlements, understandings or commitments (contingent or   otherwise) regarding the right to acquire any such shares or other ownership   interests in any of the GenSci Subsidiaries.    GenSci has disclosed in Schedule F the names and jurisdictions of   incorporation of each of the GenSci Subsidiaries.  GenSci has no subsidiaries other than the GenSci Subsidiaries   and does
not at present own shares in, and is not a party to any agreement of   any nature to acquire any shares in, any other corporation or entity and is   not a party to any agreement to acquire or lease any other business operations,   except as described in the GenSci Disclosure Documents or   Schedule F.  At the Effective   Time, good and valid title to the GenSci US Subsidiary Shares and the GenSci   US Subsidiary Loans will pass to IsoTis, free and clear of all liens, claims   or encumbrances.  Other than this   Agreement, the GenSci US Subsidiary Loans are not subject to any agreement or   contract, and the GenSci US Subsidiary Shares are not subject to any voting   trust agreement, contract or other legally binding arrangement, including any   such agreement, contract or arrangement restricting or otherwise relating to   the voting, dividend rights or disposition of the GenSci US Subsidiary   Shares.
  

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(s)       Books and   Records.  The corporate   records and minute books of GenSci and each GenSci Subsidiary as required to   be maintained by it under the laws of its jurisdiction of incorporation are   up to date and contain complete and accurate minutes of all meetings of its   directors and shareholders and all resolutions consented to in writing.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(t)       Title.  GenSci and each GenSci Subsidiary owns   good and marketable title to its property and assets free and clear of any   and all mortgages, liens, pledges, charges, security interests, encumbrances,   actions, claims or demands of any nature whatsoever or howsoever arising   which would be a Material Adverse Change with respect to the property or   assets of it, except as disclosed in Schedule E.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(u)      Tax   Matters.  Except as   disclosed in Schedule E, GenSci and each GenSci Subsidiary has duly   filed on a timely basis all Tax Returns required to be filed by it with the   appropriate Governmental Entity (and all such Tax Returns are complete and   correct and have been prepared in compliance with all applicable laws and   regulations), and has paid all Taxes (whether or not such Taxes are shown or   required to be shown on a Tax Return so filed), including all instalments on   account of Taxes for the current year, which are due and payable on or before   the date hereof; adequate provision has been made for all such amounts   payable for the current period for which Tax Returns are not yet required to   be filed; adequate provision has been made in the GenSci US Financial   Statements for all such amounts accruing or otherwise expected or incurred to   or by GenSci US Subsidiary for the period covered
by the GenSci US Financial   Statements; all such amounts accruing or otherwise expected or incurred (net   of positive adjustments) to or by GenSci US Subsidiary for the period to the   Effective Time (and not already reflected in the GenSci US Financial   Statements) do not exceed $100,000 in the aggregate (and, in the case of   payroll taxes incurred, up to $180,000, which payroll taxes will be   substantially remitted in the normal course of business to the Effective   Time); there are no agreements, waivers or other arrangements providing for   an extension of time with respect to the filing of any Tax Return by, or   payment of any tax, governmental charge or deficiency by or against GenSci   and each GenSci Subsidiary; to the best knowledge of GenSci there are no   actions, suits, proceedings, investigations or claims commenced, threatened   or contemplated against GenSci or any GenSci Subsidiary in respect of Taxes,   or grounds for any material claim in respect thereof, or any matters under
discussion with any Governmental Entity relating to Taxes asserted by any   such Governmental Entity.  The   transactions contemplated under this Agreement and the Plan of Arrangement   will not, at any time before or after the Effective Time, result in GenSci US   Subsidiary having a material liability or material contingent or future   liability for any amount or to any Person (other than an obligation to pay   fair value to a Dissenting Shareholder as contemplated in this Agreement)   including, without limitation, any liability or contingent or future   liability in respect of any Taxes (unless such liability or contingent or   future liability would not exceed $100,000) or otherwise, provided, however,   that GenSci US Subsidiary may have potential U.S. withholding liability on   interest deemed paid on GenSci US Subsidiary Loans as a result of the   transactions contemplated under this Agreement, and provided that GenSci US   Subsidiary may recognize gain and incur Tax liability solely as a
result of   an election by IsoTis, pursuant to Section 338 of the Code (a “338 Election”)   to treat the acquisition of the GenSci US Subsidiary Shares as an acquisition   of assets for United States federal income tax 
  

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purposes and provided, additionally, that GenSci US   Subsidiary may recognize gain, and incur Tax liability, upon the purchase by   IsoTis of any assets of GenSci US Subsidiary prior to or on the Effective   Date.  In addition, and without   limiting the generality of this §3.2(u),
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        GenSci   US Subsidiary shall not be required to include in a taxable period ending   after the Effective Date taxable income attributable to income that accrued   in a prior taxable period but was not recognized in any prior taxable period   as a result of the installment method of accounting, the long-term contract   method of accounting, the cash method of accounting or Section 481 of the   Code or comparable provisions of state, local or foreign Tax law, or for any   other reason,
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(ii)       there   is no jurisdiction in which GenSci US Subsidiary joins or has joined for any   taxable period ending within the last six years, in the filing of any   consolidated, combined or unitary Tax Return,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      GenSci US   Subsidiary has not been, at any time during the five years up to and   including the Effective Date, a United States Real Property Holding   Corporation (USRPHC) as defined in Section 897(c)(2) of the Code,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      GenSci US   Subsidiary has not carried on and does not carry on business in Canada,   GenSci US Subsidiary has not rendered and does not render any services in   Canada (directly or through any agent or servant), no state of facts exists   or has existed under which it could reasonably be deemed to be carrying on   business in Canada or considered to be rendering services in Canada for   purposes of the Canadian Tax Act, and GenSci US Subsidiary has not had and   does not have a “permanent establishment” or fixed place of business in   Canada for purposes of the Canada-United States Tax Convention (1980), as   amended,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)      GenSci has no   intention or plan, pursuant to this Agreement or otherwise, to liquidate or   otherwise terminate the corporate existence of GenSci, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)      no   deficiency (or liability or contingent or future liability or accrual or   reserve in respect of Taxes) with respect to tax matters disclosed in   Schedule E, or with respect to tax matters that are or should have been   in the Tax Returns to be provided under §4.1(y), or with respect to liability   under §160 or §247 of the Canadian Tax Act or §482 of the Code or   similar provisions, or with respect to tax matters caused by or in respect of   any failure of GenSci (and/or any GenSci Subsidiary) to properly comply with   contemporaneous documentation requirements reasonably suitable with respect   to transfer pricing matters under the Canadian Tax Act or reasonably suitable   with respect to transfer pricing methodology in compliance with s. 482   and 6662  (and any related sections)   of the Code (and Treasury Regulations promulgated thereunder and any   comparable provisions
of Federal, state, provincial or local, domestic or   foreign tax law) will or could (upon the passage of time or the occurrence of   foreseeable events or otherwise), alone or in the aggregate, lead to a liability   or contingent or future liability (net of positive adjustments) for Taxes for   any Person, claim, action, suit, 
  

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proceeding, investigation in respect of Taxes for   any Person, reduction of losses or other favourable Tax attributes, or   grounds for any of the foregoing, that alone or in the aggregate could have a   financial impact or potential financial impact on GenSci US Subsidiary or on   IsoTis or any IsoTis Subsidiary (or IsoTis designate referred to in §7.9)   exceeding $100,000 in the aggregate (excepting potential U.S. withholding on   interest deemed paid on GenSci US Subsidiary Loans as a result of the   transactions contemplated under this Agreement).
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)      Withholding.   GenSci and each GenSci Subsidiary has withheld from each payment made to all   of its current and former officers, directors and employees, and from each   other payment of any nature made to any Person, the amount of all Taxes   including, but not limited to, income tax and other deductions required to be   withheld therefrom and have paid the same to the proper tax and other   receiving officers within the time required under any Applicable Law.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(w)     Intellectual   Property.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        the   GenSci Intellectual Property represents all of the patents and patent   applications filed in the name of or on behalf of GenSci or GenSci US   Subsidiary or wholly or partially controlled by GenSci or GenSci US   Subsidiary or assigned or licensed to GenSci or GenSci US Subsidiary at the   time of the execution of this Agreement,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)       GenSci   US Subsidiary or GenSci, as the case may be , is the record owner of certain   GenSci Intellectual Property as evidenced by the appropriate assignment   document recorded with the US Patent and Trademark Office or other foreign   patent office or other applicant information. No rights in and to the GenSci   Intellectual Property that are material to the GenSci Business have been   transferred, conveyed or otherwise assigned except as identified in the   agreements listed in the attached Schedule E,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      GenSci US   Subsidiary or GenSci, as the case may be, license or sub-license certain   GenSci Intellectual Property to third parties and has the rights to bring   actions for the infringement or misappropriation of the GenSci Intellectual   Property,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      GenSci US   Subsidiary or GenSci, as the case may be, has not expressly abandoned any   patent or patent application material to the GenSci Business identified as   being GenSci Intellectual Property as of the date of execution of this   Agreement and believes such patents and patent applications to be presently   pending and/or not abandoned for failure to file any document or make any   maintenance fee or annuity,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)       to the   best of GenSci’s in-house counsel’s knowledge, there are no written claims of   patent infringement received by GenSci’s in-house counsel regarding any   activity of GenSci, or any threatened claims or litigation contesting the   validity or ownership of any of the GenSci Intellectual Property, and
  

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(vi)          there   are no royalties, honoraria, fees or other payments payable by GenSci or   GenSci US Subsidiary to any Person by reason of the ownership, use, license,   sale or disposition of any of the GenSci Intellectual Property.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(x)      Settlement   Agreement.  Schedule K   is a true, complete and correct copy of the Settlement Agreement (except for   the schedules thereto, which are in draft form).  The representations of GenSci and GenSci US Subsidiary in the   Settlement Agreement in favour of Osteotech are true and correct.  GenSci and GenSci US Subsidiary provided   full, true and complete information to Osteotech (and its representatives) in   the course of negotiating and executing the Settlement Agreement with respect   to the issues contemplated thereunder. All rights and benefits of GenSci and   GenSci US Subsidiary under the Settlement Agreement (including §19 thereto)   will remain vested in GenSci and GenSci US Subsidiary following the   consummation of the Arrangement and the change of control of GenSci US   Subsidiary (without the necessity of delivering an assumption agreement in   connection with §23 of
the Settlement Agreement) and all such rights and   benefits may be assigned to a third party, provided the requirements set   forth in §23 of the Settlement Agreement are satisfied.  Upon receipt of the approval of the   Bankruptcy Court of the Settlement Agreement, it will be enforceable and   binding on the parties thereto.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(y)      Material   Contracts.  Except for the   Settlement Agreement and the GenSci Material Contracts listed in   Schedule M, GenSci and each GenSci Subsidiary is not party to or bound   by any GenSci Material Contract, whether oral or written, and the contracts   and agreements listed in Schedule M and the Settlement Agreement are   valid and subsisting, in full force and effect and unamended, no material   default exists in respect thereof on the part of GenSci or any such GenSci   Subsidiary or, to the best of the knowledge of GenSci on the part of any of   the other parties thereto.  GenSci is   not aware of any intention on the part of any of the other parties thereto to   terminate or materially alter any such contracts or agreements, and   Schedule M lists all the present outstanding GenSci Material Contracts   entered into by GenSci and each GenSci Subsidiary in the course of carrying   on the
GenSci Business or otherwise.    Other than the assignment of the GenSci Licences and the GenSci   Trademarks by GenSci to IsoTis and the amendment of the GenSci Management   Service Agreements to remove GenSci as a party, no other contract, right,   asset, agreement or consent is required to be assigned by GenSci or otherwise   executed or amended by GenSci in order for IsoTis or GenSci US Subsidiary (as   the case may be), following the Effective Date, to carry out the GenSci   Business.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(z)      True,   Complete and Correct Copies.    True, correct and complete copies of all GenSci Material Contracts   listed in Schedule M, the documentation with respect to the GenSci US   Subsidiary Loan, the GenSci Licences, the GenSci Management Services   Agreements, the GenSci Intellectual Property and the Settlement Agreement   have been delivered to IsoTis.
  

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(aa)     GenSci   Board.  The GenSci Board   has
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        determined   unanimously (by those members of the GenSci Board voting thereon) that the   Arrangement is fair to the holders of the GenSci Shares and is in the best   interests of GenSci,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)       received   written advice from Stirling Mercantile Corporation to the effect that, as of   the date of this Agreement, the Arrangement is fair from a financial point of   view to the holders of the GenSci Shares, and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      determined   unanimously (by those members of the GenSci Board voting thereon) to   recommend that the holders of the GenSci Shares vote in favour of the   Arrangement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(bb)     No Rights   Plan.  GenSci is not   subject to a shareholder rights plan or “poison pill” or similar plan.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(cc)     Consents.  No consent, approval, order or   authorization of, or declaration or filing with, any Governmental Entity is   required to be obtained by GenSci or the GenSci Subsidiaries in connection   with the execution and delivery of this Agreement or the consummation by   GenSci of the transactions contemplated hereby other than
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)        any   approvals required by the Interim Order,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)       the   approvals described in §5.1(c), §5.1(f), §5.1(g) and §5.1(h);
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)      the Final   Order,
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(iv)      any filings   required under United States “blue sky” laws, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)       any   other consents, approvals, orders, authorizations, environmental permits,   declarations or filings of or with a Governmental Entity which, if not   obtained, would not, individually or in the aggregate, be a Material Adverse   Change with respect to GenSci or GenSci US Subsidiary.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(dd)     Employment Matters.  Except as set forth in Schedule E
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       neither   GenSci nor any GenSci Subsidiary is a party to any written or oral policy,   agreement, obligation or understanding providing for severance or termination   payments to, or any employment agreement with, any of its directors or   officers,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      neither   GenSci nor any GenSci Subsidiary is a party to any collective bargaining   agreement nor subject to any application for certification or, to the   knowledge of GenSci, threatened or apparent union-organizing campaigns for   employees nor are there any current, pending or, to the knowledge of GenSci,   threatened strikes or lockouts at GenSci or any GenSci Subsidiary,
  

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(iii)      neither   GenSci nor any GenSci Subsidiary is subject to any claim for wrongful   dismissal, constructive dismissal or any other tort claim, actual or, to the   knowledge of GenSci, threatened, or any litigation, actual or, to the   knowledge of GenSci, threatened, relating to employment or termination of   employment of employees or independent contractors, and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)      GenSci and   all GenSci Subsidiaries have operated in accordance with all Applicable Laws   with respect to employment and labour, including, but not limited to,   employment and labour standards, occupational health and safety, employment   equity, pay equity, workers’ compensation, human rights and labour relations   and there are no current, pending or, to the knowledge of GenSci, threatened   proceedings before any board or tribunal with respect to any of the above   areas.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ee)    Environmental.  Except for any matters that, individually   or in the aggregate, would not be a Material Adverse Change with respect to   GenSci or any GenSci Subsidiary:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       all   facilities and operations of GenSci and the GenSci Subsidiaries have been   conducted, and are now, in compliance with all Environmental Laws,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      each of   GenSci and each GenSci Subsidiary is in possession of, and in compliance   with, all permits, authorizations, certificates, registrations, approvals and   consents necessary under Environmental Laws to own, lease and operate its   properties and to conduct its business as it is now being conducted or as   proposed to be conducted (collectively the “GenSci Environmental Permits”),   and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)    except as set forth in   Schedule E, neither GenSci nor any GenSci Subsidiary is aware of, or is   subject to:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)     any Environmental   Laws which require or may require any significant work, repairs,   construction, change in business practices or operations, or expenditures,   including capital expenditures for facility upgrades, environmental   investigation or remediation;
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(B)     any written demand   notice or request for information with respect to the breach of or liability   under any Environmental Laws applicable to GenSci or any GenSci Subsidiary or   any of their respective predecessor entities, divisions or any formerly   owned, leased or operated properties or assets of the foregoing, respecting
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
(I)          the   use, storage, treatment, transportation or disposition (including disposal or   arranging for disposal) of Hazardous Substances, or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
 
  	
  
(II)          the   presence, Release or discharge of Hazardous Substances; or
  

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(C)      any actual or   proposed changes in the status, terms or conditions of any GenSci   Environmental Permits or any renewal, modification, revocation, reissuance,   alteration, transfer or amendment of such GenSci Environmental Permits, or   any review by, or approval of, any Governmental Entity of such GenSci   Environmental Permits that are required in connection with the execution or   delivery of this Agreement, the consummation of the transactions contemplated   hereby or the continuation of business of GenSci or any GenSci Subsidiaries   following such consummation.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(ff)     Pension   and Employee Benefits.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       GenSci   has made available to IsoTis a list of all employee benefit, health, welfare,   supplemental unemployment benefit, bonus, pension, profit sharing, deferred   compensation, stock compensation, stock purchase, retirement, hospitalization   insurance, medical, dental, legal, disability and similar plans or arrangements   or practices, whether written or oral, which    are maintained by GenSci and/or a GenSci Subsidiary (collectively   referred to as the “GenSci Plans”).    Schedule M states which of the GenSci Plans constitute “employee   pension benefit plans” (as defined in section 3(2) of the United States   Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) or   “employee welfare benefit plans” (as defined in section 3(1) of ERISA).
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)     No step has been   taken, no event has occurred and no condition or circumstance exists that has   resulted in or could reasonably be expected to result in any GenSci Plan   being ordered or required to be terminated or wound up in whole or in part or   having its regulation under Applicable Laws refused or revoked, or being placed   under the administration of any trustee or receiver or regulatory authority   or being required to pay any material taxes, fees, penalties or levies under   Applicable Laws.  There are no   actions, suits, claims (other than routine claims for payment of benefits in   the ordinary course), trials, demands, investigations, arbitrations or other   proceedings which are pending or threatened in respect of any of the GenSci   Plans or their assets which individually or in the aggregate would be a   Material Adverse Change with respect to GenSci or any GenSci Subsdiary.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)    GenSci has made   available to IsoTis true, correct and complete copies of all of the GenSci   Plans as amended (or, in the case of any unwritten GenSci Plan, a description   thereof) together with all related documentation including, without   limitation, funding agreements, actuarial reports, funding and financial   information returns and statements with respect to each GenSci Plan, and   current plan summaries, booklets and personnel manuals.  GenSci has made available to IsoTis a true   and complete copy of the most recent annual report on Form 5500 filed with   the United States Internal Revenue Service with respect to each GenSci Plan   in respect of which such a report was required.
  

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(iv)     Other than as   disclosed in Schedule M, all of the GenSci Plans are and have been   established, registered, qualified, invested and administered, in all   material respects, in accordance with all Applicable Laws, and in accordance   with their terms and the terms of agreements between GenSci and/or a GenSci   Subsidiary, as the case may be, and their respective employees.  To the knowledge of GenSci, no fact or   circumstance exists that could adversely affect the existing tax status of a   GenSci Plan.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)      All   obligations of GenSci or a GenSci Subsidiary regarding the GenSci Plans have   been satisfied in all material respects.    All contributions or premiums required to be made by GenSci and/or a   GenSci Subsidiary, as the case may be, under the terms of each GenSci Plan or   by Applicable Laws have been made in a timely fashion in accordance with   Applicable Laws and the terms of the GenSci Plans.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)    Other than as set forth   in Schedule E, each GenSci Plan is fully insured or fully funded and in   good standing with such regulatory authorities as may be applicable and, as   of the date hereof, no notice of under-funding, non-compliance, failure to be   in good standing or otherwise has been received by GenSci or a GenSci   subsidiary from any such regulatory authority.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vii)    There have been no   improper withdrawals, applications or transfers of assets from any GenSci   Plan or the trusts or other funding media relating thereto that remain   outstanding and unremedied, and neither GenSci, nor any GenSci Subsidiary,   nor any of their respective agents has been in breach of any fiduciary   obligation with respect to the administration of the GenSci Plans or the   trusts or other funding media relating thereto.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(viii)   No insurance policy or any   other contract or agreement affecting any GenSci Plan requires or permits a   retroactive increase in premiums or payments due thereunder.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ix)     All GenSci Plans   intended to be tax-qualified in the United States have been the subject of determination   letters from the United States Internal Revenue Service to the effect that   such GenSci Plans are qualified and exempt from United States Federal income   taxes under sections 401(a) and 501(a), respectively, of the Code, and no   such determination letter has been revoked nor, to the knowledge of GenSci,   has revocation been threatened, nor has any such GenSci Plan been amended   since the date of its most recent determination letter or application   therefor in any respect that would adversely affect its qualification or   materially increase its costs and, to the knowledge of GenSci, nothing has   occurred since the date of such letter that could reasonably be expected to   affect the qualified status of such GenSci Plan.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(x)     Except as set forth   in Schedule E, no amount that could be received (whether in cash or   property or the vesting of property) as a result of the transactions   contemplated by this Agreement or the Arrangement by any 
  

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employee, officer or director of GenSci or any of   its affiliates who is a “disqualified individual” (as such term is defined in   proposed United States Treasury Regulation Section 1.280G-1) under any   employment, severance or termination agreement, other compensation   arrangement or GenSci Plan currently in effect will fail to be deductible for   United States federal income tax purposes by virtue of Section 280G of the   Code.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xi)     Except as set   forth in Schedule E, none of the GenSci Plans is a “multiemployer plan”   within the meaning of section 4001(a)(3) of ERISA, nor has GenSci or any   GenSci Subsidiary been obligated to contribute to any such multiemployer plan   at any time within the past five years.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xii)    Except as set forth in   Schedule E, none of the GenSci Plans provides for payment of a benefit,   the increase of a benefit amount, the payment of a contingent benefit or the   acceleration of the payment or vesting of a benefit by reason of the   execution of or the consummation of the transactions contemplated by this   Agreement or the Arrangement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(gg)    Material Customers.  There is no single customer of   GenSci US Subsidiary that accounts for more than 10% of the annual revenue of   GenSci US Subsidiary.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(hh)    Insurance.  GenSci and each GenSci Subsidiary has   policies of insurance in force as of the date hereof naming GenSci or the   GenSci Subsidiary, as the case may be, as an insured which, having regard to   the nature of such risk and the relative cost of obtaining insurance, GenSci   believes are reasonable.
  
	
   
  	
  
 
  
	
  
 
  	
  
(ii)      Licences.  GenSci and each GenSci   Subsidiary owns, possesses, or has obtained and is in compliance with, all   licences, permits, certificates, orders, grants and other authorizations of   or from any Governmental Entity necessary to conduct its business as now   conducted or as proposed to be conducted except for such failure that would   individually or in the aggregate not constitute a Material Adverse Change   with respect to GenSci or GenSci US Subsidiary.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(jj)     Registration   Rights.  No holder of securities   issued by GenSci or any GenSci Subsidiary has any right to compel GenSci or   any GenSci Subsidiary, as the case may be, to register or otherwise qualify   such securities for public sale in Canada or the United States.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(kk)   GenSci Licences, GenSci Trademarks and   GenSci Intellectual Property.    At the Effective Time good and valid title to the GenSci Licenses and   the GenSci Trademarks will pass to IsoTis, free and clear of all liens,   claims or encumbrances.  At the Effective   Time GenSci shall have transferred any and all other rights in the GenSci   Intellectual Property to GenSci US Subsidiary and/or IsoTis, free and clear   of all liens, claims and encumbrances, and following the Effective Time   GenSci shall have no rights whatsoever in the GenSci Intellectual Property.
  
	
   
  	
  
 
  
	
  
 
  	
  
(ll)     Schedules.  The information in Schedules B, C, D,   E, F, M, R, S and T is true and correct and contains no Misrepresentation.
  

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Survival of Representations

3.3                 The representations and warranties of IsoTis and GenSci contained herein shall survive the execution and delivery of this Agreement and the closing of the transactions contemplated herein.  Any investigation by a party hereto and its advisors will not mitigate, diminish or affect the representations and warranties of another party to this Agreement.

ARTICLE 4

COVENANTS

Covenants of GenSci

4.1                 IsoTis acknowledges that GenSci may be required by its duties as a debtor in possession in Chapter 11 of the Bankruptcy Code to do or not to do certain things which may constitute a breach of covenant in the following list, but GenSci acknowledges that if it breaches a covenant without receiving IsoTis’s prior written consent, there shall be consequences as set out elsewhere in this Agreement. GenSci covenants and agrees with IsoTis that, prior to the Effective Date, unless IsoTis shall agree in writing or as otherwise expressly contemplated or permitted by this Agreement:

	
  
 
  	
  
(a)       GenSci   shall, and shall cause each of the GenSci Subsidiaries to, conduct its and   their respective business only in, not take any action except in, and   maintain their respective facilities in, the usual, ordinary and regular   course of business and consistent with recent past practice;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      GenSci shall   not, and shall cause each of the GenSci Subsidiaries to not, directly or   indirectly do or permit to occur any of the following:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       issue,   sell, pledge, lease, dispose of or encumber or agree to issue, sell, pledge,   lease, dispose of or encumber (or permit any of the GenSci Subsidiaries to   issue, sell, pledge, lease, dispose of or encumber or agree to issue, sell,   pledge, lease, dispose of or encumber)
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)          any   additional shares of, or any options, warrants, calls, conversion privileges   or rights of any kind to acquire any shares of, GenSci or any of the GenSci   Subsidiaries (other than pursuant to the exercise of the GenSci Warrants or   the GenSci Options), or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(B)          except   in the ordinary course of business or pursuant to the Settlement Agreement or   the Bankruptcy Plan, any assets of GenSci or any of the GenSci Subsidiaries   including, without restriction, the GenSci Intellectual Property;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(ii)      amend or   propose to amend its memorandum or articles or the constating documents of   any of the GenSci Subsidiaries;
  

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(iii)     whether through   the GenSci Board or otherwise, accelerate the vesting of any unvested GenSci   Options or the expiry date of any GenSci Options or otherwise amend, vary or   modify the GenSci Stock Option Plan;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)     split, combine or   reclassify any outstanding securities, or declare, set aside or pay any   dividend or other distribution payable in cash, stock, property or otherwise   with respect to such securities;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)      redeem,   purchase or offer to purchase any GenSci Shares or other securities of GenSci   or any shares or other securities of the GenSci Subsidiaries;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)     reorganize,   amalgamate or merge GenSci or any of the GenSci Subsidiaries with any other   Person;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vii)    reduce the stated   capital of GenSci or any of the GenSci Subsidiaries;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(viii)   except with respect to the   sale of assets of GenSci or any GenSci Subsidiary in the ordinary and regular   course of business consistent with past practice, not sell, pledge, encumber,   lease or otherwise dispose of any material assets;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ix)     guarantee the   payment of material indebtedness or incur material indebtedness for money   borrowed or issue or sell any debt securities except in the ordinary and   regular course of business consistent with past practice;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(x)      except   pursuant to the Settlement Agreement, the Bankruptcy Plan or in the usual,   ordinary and regular course of business and consistent with past practice:   (A) satisfy or settle any claims (including claims in respect of Taxes) or   liabilities prior to the same being due, except such as have been reserved   against in the financial statements of GenSci or the GenSci US Subsidiary   Financial Statements which are, individually or in the aggregate, material;   (B) grant any waiver, exercise any option or relinquish any contractual   rights which are, individually or in the aggregate, material; or (C) enter   into any interest rate, currency or commodity swaps, hedges or other similar   financial instruments;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xi)     settle or   compromise any claim brought by any present, former or purported holder of   any of its securities in connection with the transactions contemplated by   this Agreement or the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xii)    except in the usual,   ordinary and regular course of business and consistent with past practice or   as required by Applicable Laws enter into or modify any contract, agreement,   licence, franchise, GenSci Environmental Permit, lease transaction,   commitment or other right or obligation commitment or arrangement which new   contract or series of related new contracts or modification to an existing   contract or series of related existing contracts would be a Material Adverse   Change with respect to GenSci or any GenSci Subsidiary;
  

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(xiii)   without limitation, amend or   propose to amend, or waive any rights under, the Settlement Agreement, the   GenSci Licences, the GenSci Management Services Agreements or any GenSci   Material Contract, whether or not such amendment or waiver would constitute   Material Adverse Change with respect to GenSci or any GenSci Subsidiary, nor   amend or propose to amend or waive any material rights under the Bankruptcy   Plan;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xiv)   establish, amend or renew any   employment, benefit or compensation plan, policy, agreement or arrangement   with or covering any current or former employee or director of, or   independent contractor with respect to, GenSci or any GenSci Subsidiary;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xv)    change any accounting   method, principle or practice except as required by Applicable Law;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(xvi)   make or change any tax   election, change an annual tax accounting period, adopt or change any tax   accounting method, file any amended Tax Return, enter into any closing   agreement, surrender any right to claim a refund of Taxes, consent to any   extension or waiver of the statute of limitations period applicable to any   Tax claim or assessment, or take or omit to take (other than in the ordinary   course of business or as required by law) any other action, if such election,   adoption, change, amendment, agreement, settlement, surrender, consent or   other action or omission would have the effect of either increasing the   liability of GenSci or any GenSci Subsidiary for Taxes or reducing any net   operating loss, net capital loss, investment tax credit, foreign (non-U.S.)   tax credit, charitable deduction or any other credit or tax attribute of   GenSci or any GenSci Subsidiary which could potentially be useful in respect   of
reducing Taxes, without the prior written consent of IsoTis; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xvii)  amend or propose to amend or make   any payment in respect of the GenSci US Subsidiary Loans; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)       GenSci   shall, and shall cause each of the GenSci Subsidiaries to:
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       use its   reasonable best efforts to cause its current insurance (or re-insurance)   policies not to be cancelled or terminated or any of the coverage thereunder   to lapse, unless simultaneously with such termination, cancellation or lapse,   replacement policies underwritten by insurance and re-insurance companies of   nationally recognized standing providing coverage equal to or greater than   the coverage under the cancelled, terminated or lapsed policies for   substantially similar premiums are in full force and effect; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      incur or   commit to capital expenditures prior to the Effective Date only in the   ordinary course consistent with past practice and not, in any event,   exceeding $50,000, individually or in the aggregate;
  

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(d)      GenSci shall   permit IsoTis and its officers, directors, employees, consultants and   advisers, at all reasonable times, access to the books, records and data of   GenSci and the GenSci Subsidiaries;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      GenSci shall,   and shall cause each of the GenSci Subsidiaries to, not enter into or change   the terms of any employment, consulting or severance agreement or other   similar arrangement with any of their directors, officers or any other Person   or pay any compensation to any such director, officer or other Person other   than as explicitly provided in any such agreement as disclosed in writing to   IsoTis prior to the execution hereof or as agreed in writing by IsoTis;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(f)       GenSci   shall use its reasonable best efforts, and cause each of the GenSci   Subsidiaries to use its reasonable best efforts, to preserve intact their   respective business organizations and goodwill, to preserve the GenSci   Intellectual Property and their respective rights under the GenSci Material   Contracts, the GenSci Licences, the GenSci US Subsidiary Loans and the   Settlement Agreement, to not do anything or fail to do something which could   lead to a breach under any GenSci Material Contract, the GenSci Licences, the   GenSci Management Services Agreements, the GenSci US Subsidiary Loans or the   Settlement Agreement or cause a default which would lead to an acceleration   of the amounts due to Osteotech under the Settlement Agreement, to keep   available the services of its and their officers and employees as a group and   to maintain satisfactory relationships with suppliers, distributors,   customers and
others having business relationships with them; not take any   action, or permit any of the GenSci Subsidiaries to take any action, which   would render, or which reasonably may be expected to render, any   representation or warranty made by it in this Agreement untrue at any time   prior to the Effective Date if then made; and promptly notify IsoTis orally   and in writing of any Material Adverse Change with respect to GenSci or the   GenSci Subsidiaries and of any material governmental or third party   complaints, investigations or hearings (or communications indicating that the   same may be contemplated).  GenSci   will promptly, and no later than June 6, 2003, settle the Schedules to   the Settlement Agreement with Osteotech and will not, without the approval of   IsoTis, acting reasonably, make any changes to the draft Schedules which are   attached as Schedule K;
  
	
   
  	
  
 
  
	
  
 
  	
  
(g)      GenSci shall   choose a new name unrelated to its current name or the name of any GenSci   Subsidiary for itself and the GenSci Subsidiaries (other than the GenSci US   Subsidiary) and shall ask the GenSci Shareholders to approve such names at   the GenSci Meeting to the extent such approval is required;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(h)      GenSci shall,   in a timely and expeditious manner, finalize and mail the GenSci Information   Circular on or before August 31, 2003, which circular shall contain a   recommendation of the GenSci Board that the GenSci Shareholders vote in   favour of the Arrangement at the GenSci Meeting, file the GenSci Information   Circular on SEDAR and mail the GenSci Information Circular to the GenSci   Shareholders in accordance with the Interim Order and Applicable Securities   Law;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)       except   as contemplated in this Agreement, GenSci and each GenSci Subsidiary will not   engage in any business, enterprise or other activity different from that   carried on 
  

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by it at the date of this Agreement or enter into   any transaction or incur (except in respect of obligations or liabilities to   which it is already legally subject) any obligation, expenditure or liability   other than in the ordinary course of its business, as presently conducted;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(j)       GenSci   will furnish to IsoTis such information, in addition to the information   contained in this Agreement, relating to the financial condition, business,   properties and affairs of GenSci and the GenSci Subsidiaries as may   reasonably be requested by IsoTis, which information will be true and   complete in all material respects and will not contain a Misrepresentation;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(k)      GenSci will   ensure that the information and consolidated and unconsolidated financial   statements and other information related to GenSci and the GenSci   Subsidiaries and provided by GenSci to IsoTis will be true, correct and   complete in all material respects and will not contain any Misrepresentation;
  
	
   
  	
  
 
  
	
  
 
  	
  
(l)       GenSci   shall, acting in good faith, use all reasonable efforts and proceed   diligently to
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       obtain   an order (or orders) from the Bankruptcy Court on or before July 31,   2003, in form and content satisfactory to IsoTis that either:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)          dismisses   its bankruptcy case, or
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(B)          both   (x) authorizes the IsoTis Option Agreement and (y) permits GenSci to solicit   acceptances of the Bankruptcy Plan from GenSci’s shareholders solely in   accordance with Canadian law and without reference to Bankruptcy Code section   1125 or any other provisions of the Bankruptcy Code,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      cause GenSci   US Subsidiary to obtain a final order entered by the Bankruptcy Court on or   before November 1, 2003, in a form reasonably acceptable to IsoTis,   confirming the Bankruptcy Plan, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     cause the   effective date of the Bankruptcy Plan to occur on or before November 15, 2003   but not before the Final Order;
  
	
   
  	
  
 
  
	
  
 
  	
  
(m)     60 days prior to   the date of the IsoTis Meeting, GenSci will nominate James S. Trotman, Daniel   Kollin and Darrell Elliott as directors to the IsoTis Board, such election to   be effective on the Effective Date;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(n)      GenSci will   do all such other acts and things as may be necessary or desirable in order   to give effect to the transactions contemplated by this Agreement and,   without limiting the generality of the foregoing, GenSci will
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       use its   reasonable best efforts to apply for and obtain the Interim Order on or   before July 31, 2003 and the Final Order as provided in Article 7   hereof,
  

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(ii)      use its   reasonable best efforts to obtain any necessary third party consents to   effect the assignment and transfer of the GenSci Licences and the GenSci   Trademarks, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     use its   reasonable best efforts to apply for and obtain such consents, orders or   approvals as counsel for IsoTis may advise are necessary or desirable for the   implementation of the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(o)      GenSci will   give IsoTis prompt oral and written notice of any purported execution of the   Dissent Right, withdrawals of such exercise, and any other similar   instruments delivered pursuant to the Interim Order or otherwise and received   by GenSci;
  
	
   
  	
  
 
  
	
  
 
  	
  
(p)      GenSci will   promptly notify IsoTis in writing
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       if   GenSci becomes aware that any of GenSci’s representations and warranties in   this Agreement is untrue or inaccurate in any material respect, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      if there has   been, or is reasonably expected to be, any material breach of any covenant or   agreement of GenSci contained in this Agreement,
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(q)      GenSci will   co-operate fully with IsoTis to minimize any negative tax consequences and   any regulatory requirements with respect to the Arrangement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(r)       GenSci   shall use its reasonable best efforts to hold the GenSci Meeting on or before   September 30, 2003 and solicit approval of GenSci Shareholders for the   Arrangement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(s)       GenSci   shall use all reasonable best efforts to take, or cause to be taken, all   action and to do, or cause to be done, all things necessary, proper or   advisable to consummate and make effective as promptly as is practicable the   transactions contemplated by this Agreement and the Plan of Arrangement,   including the execution and delivery of such documents as IsoTis may   reasonably require and to use its reasonable best efforts to obtain all necessary   waivers, consents and approvals and to effect all necessary registrations and   filings, including, but not limited to, approvals and filings under   Applicable Securities Laws, the TSX and submissions of information requested   by Governmental Entities;
  
	
  
 
  	
  
 
  
	
   
  	
  
(t)       GenSci   shall, forthwith after the GenSci Meeting, deliver to IsoTis certified copies   of the resolutions of GenSci Shareholders duly passed at the GenSci Meeting   approving the Arrangement and the consummation of the transactions   contemplated thereby;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(u)      GenSci shall,   concurrent with the execution hereof, deliver to IsoTis certified copies of   resolutions duly passed by the GenSci Board approving this Agreement and the   consummation of the transactions contemplated hereby;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(v)      forthwith   following the execution of this Agreement, GenSci agrees to cause the GenSci   US Subsidiary Financial Statements attached hereto as Schedule R to be   prepared 
  

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in accordance with Canadian generally accepted   accounting principles, and in the case of the December 31, 2002   statements but not the March 31, 2003 statements, audited by Ernst &   Young or another auditor designated by IsoTis, and delivered to IsoTis;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(w)     GenSci shall, or   shall cause each GenSci Subsidiary to
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       cooperate   with IsoTis, to the extent reasonably possible, if so requested, in the   completion and timely filing of any elections in accordance with the   provisions of Section 338 of the Code and the Treasury Regulations   promulgated thereunder (or any comparable provisions of state or local Tax   law);
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      timely   prepare and file with the relevant Governmental Entities all Tax Returns of   GenSci and each GenSci Subsidiary the due date for filing of which,   determined taking into account extensions, is on or before the Effective   Date.  Any Tax Return described in the   preceding sentence shall be prepared on a basis consistent with the past   practices of GenSci or each such GenSci Subsidiary, as applicable, and in a   manner that does not distort taxable income (e.g., by deferring income or   accelerating deductions);
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     reasonably   cooperate, and each shall cause their respective affiliates, officers,   employees, agents, auditors and representatives reasonably to cooperate, in   preparing and filing all Tax Returns, resolving all disputes and audits with   respect to all taxable periods relating to Taxes, and in any other matters   relating to Taxes, including by maintaining and making available to IsoTis   all books, records and other information related to Taxes;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)     terminate on or   before the Effective Date any Tax sharing agreements or arrangements between   itself and GenSci or any GenSci Subsidiary, as the case may be; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)      pay all   transfer, documentary, sales, use, registration and similar taxes (including   all applicable real estate transfer or gains taxes and stock transfer taxes)   and related fees (including any penalties, interest and additions to tax) and   Taxes incurred in connection with the sale of the GenSci US Subsidiary   Shares, the GenSci US Loans, the GenSci Trademarks and the GenSci Licences to   IsoTis or otherwise in connection with this Agreement and the transactions   contemplated hereby;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(x)      provide to   IsoTis, as soon as possible after the signing of this Agreement and in no   event fewer than 30 days prior to the Effective Date detailed information   regarding the tax bases of the assets of Genesis US Subsidiary, for United   States federal income tax purposes, as of the close of the last taxable   period ending before the Effective Date, such information to include, on a   per-item basis, the tax basis for United States federal income tax purposes   of each item of Genesis Intellectual Property, and detailed information   regarding each state, county, local, municipal or foreign jurisdiction in   which GenSci US Subsidiary files, is required to file or has been required to   file a return relating to state and local income, franchise, license, excise,   net worth, property and sales and use Taxes 
  

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or is or has been liable for any Taxes on a “nexus”   basis at any time for taxable periods ending within the last six years;
  
	
  
 
  	
  
 
  
	
   
  	
  
(y)      GenSci   shall cause GenSci US Subsidiary to deliver to IsoTis or make available to   IsoTis for inspection
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       complete   and correct copies of all material Tax Returns of GenSci US Subsidiary   relating to Taxes for all taxable periods for which the applicable statute of   limitations has not yet expired, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      complete   and correct copies of all private letter rulings, revenue agent reports,   information document requests, notices of proposed deficiencies, deficiency   notices, protests, petitions, closing agreements, settlement agreements,   pending ruling requests, and any similar documents, submitted by, received by   or agreed to by or on behalf of GenSci US Subsidiary;
  
	
  
 
  	
  
 
  
	
   
  	
  
(z)       GenSci   will use its reasonable best efforts to deliver to IsoTis (in form and   substance satisfactory to IsoTis)
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       releases   by the warrantholders in favour of IsoTis and the GenSci US Subsidiary with   respect to the GenSci Warrants,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      releases of   the GenSci US Subsidiary by GenSci and the applicable counterparties for   those GenSci Material Contracts which do not relate to the GenSci Business to   which GenSci US Subsidiary is a party that are not otherwise terminated by   GenSci; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     releases of   GenSci by the GenSci US Subsidiary and the applicable counterparties for any   agreements to which both GenSci and the GenSci US Subsidiary are parties   which relate to the GenSci Business; and
  
	
   
  	
  
 
  
	
  
 
  	
  
(aa)     forthwith   after the date hereof, GenSci shall take all reasonable steps to arrange for   putting the written advice received from Stirling Mercantile Corporation   respecting the fairness of the transactions contemplated by the Arrangement   in a form that is customary to present to the GenSci Shareholders and to the   Court.
  

Covenants Regarding Non-Solicitation

4.2                 Subject to §4.7, GenSci will not, directly or indirectly, through any officer, director, employee, representative or agent of GenSci or any of the GenSci Subsidiaries:

	
  
 
  	
  
(a)       solicit,   initiate or knowingly encourage (including by way of furnishing information   or entering into any form of agreement, arrangement or understanding) the   initiation of any inquiries or proposals regarding an Acquisition Proposal;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)       participate   in any discussions or negotiations regarding any Acquisition Proposal;
  

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(c)       withdraw   or modify in a manner adverse to IsoTis the approval of the GenSci Board of   the transactions contemplated hereby;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)       approve   or recommend any Acquisition Proposal; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)       enter   into any agreement, arrangement or understanding related to any Acquisition   Proposal.
  

Nothing in this Agreement will prevent the GenSci Board, before the issuance of the Final Order, from considering, participating in any discussions or negotiations, or entering into a confidentiality agreement and providing information pursuant to §4.4, regarding an unsolicited bona fide written Acquisition Proposal that did not arise as a result of a breach of this §4.2 and that the GenSci Board determines in good faith, after consultation with financial advisors and outside counsel, is reasonably likely to result in a Superior Proposal.  Before taking such action, the GenSci Board must receive advice of outside counsel that it is appropriate that the GenSci Board take such action in order to discharge properly its fiduciary duties.  GenSci will not consider, negotiate, accept, approve or recommend an Acquisition Proposal after the date of the issuance of the Final Order.  GenSci will, and will cause the officers, directors,
employees, representatives and agents of GenSci and the GenSci Subsidiaries to, cease immediately all discussions and negotiations being held as of the date hereof regarding any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal.

Notice to IsoTis

4.3                 GenSci will forthwith notify IsoTis, at first orally and then in writing, of any Acquisition Proposal and any inquiry that could lead to an Acquisition Proposal, or any amendments to the foregoing, or any request for non-public information relating to GenSci or any of the GenSci Subsidiaries in connection with an Acquisition Proposal or for access to the properties, books or records of GenSci or any of the GenSci Subsidiaries by any Person that informs GenSci or the GenSci Subsidiaries that it is considering making, or has made, an Acquisition Proposal.  Such notice will include a description of the material terms and conditions of any proposal, the identity of the Person making such proposal, inquiry or contact and provide such other details of the proposal, inquiry or contact as IsoTis may reasonably request.  GenSci will

	
  
 
  	
  
(a)       keep   IsoTis fully informed of the status including any change to the material   terms of any such Acquisition Proposal or inquiry, and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)       provide   to IsoTis as soon as practicable after receipt or delivery thereof with   copies of all correspondence and other written material sent or provided to   GenSci or any GenSci Subsidiary from any Person in connection with any   Acquisition Proposal sent or provided by GenSci to any Person in connection   with any Acquisition Proposal and IsoTis agrees to keep such information   confidential in accordance with the terms of the Non-Disclosure Agreement.
  

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Third Party Confidentiality

4.4                 If GenSci receives a request for material non-public information from a Person who has made an unsolicited bona fide written Acquisition Proposal and GenSci is permitted, as contemplated under the second sentence of §4.2, to negotiate the terms of such Acquisition Proposal, then, and only in such case, the GenSci Board may, subject to the execution by such Person of a confidentiality agreement containing a standstill provision substantially similar to that contained in the Non-Disclosure Agreement or such other confidentiality agreement then in effect between GenSci and IsoTis, provide such Person with access to information regarding GenSci except that the Person making the Acquisition Proposal will not be precluded under such confidentiality agreement from making the Acquisition Proposal (but not any material amendment thereto) and provided further
that GenSci sends a copy of any such confidentiality agreement to IsoTis promptly upon its execution and IsoTis is provided with a list of or copies of the information provided to such Person and immediately provided with access to similar information to which such Person was provided.

Notice to Representatives

4.5                 GenSci will use its reasonable best efforts to ensure that its officers, directors and employees and the GenSci Subsidiaries and their officers, directors and employees and any financial advisors or other advisors or representatives retained by it are aware of the provisions of §4.2, §4.3 and §4.4, and it will be responsible for any breach by its and their officers, directors, employees, financial advisors or other advisors or representatives.

Withdrawal of Approval

4.6                 Notwithstanding §4.2(c), the GenSci Board may withdraw or modify in a manner adverse to IsoTis the approval of the GenSci Board of the transactions contemplated hereby if a Specified IsoTis Event has occurred and is continuing.

Notice by GenSci of Superior Proposal Determination

4.7                 GenSci may accept, approve, recommend or enter into any agreement, understanding or arrangement in respect of a Superior Proposal if, and only if

	
  
 
  	
  
(a)      it has   provided IsoTis with a copy of the Superior Proposal document,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      ten Business   Days shall have elapsed from the later of the date IsoTis received written   notice from GenSci advising IsoTis that the GenSci Board has resolved,   subject only to compliance with this §4.7 and termination of this Agreement,   to accept, approve, recommend or enter into an agreement in respect of such   Superior Proposal, specifying the terms and conditions of such Superior   Proposal and identifying the Person making such Superior Proposal, and the   date IsoTis received a copy of such Superior Proposal, and
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(c)      it has   previously or concurrently will have
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       paid to   IsoTis the termination fee, if any, payable under §6.6, and
  

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(ii)      terminated   this Agreement pursuant to Article 6.
  

During such ten Business Day period, GenSci agrees that IsoTis will have the right, but not the obligation, to offer to amend the terms of this Agreement.  The GenSci Board will review any offer by IsoTis to amend the terms of this Agreement in good faith in order to determine, in its discretion in the exercise of its fiduciary duties, whether IsoTis’s offer upon acceptance by GenSci would result in such Superior Proposal ceasing to be a Superior Proposal.  If the GenSci Board so determines, it will enter into an amended agreement with IsoTis reflecting IsoTis’s amended proposal.  If the GenSci Board continues to believe, in good faith and after consultation with financial advisors and outside counsel, that such Superior Proposal remains a Superior Proposal and therefore rejects IsoTis’s amended proposal, GenSci may terminate this Agreement pursuant to §6.3(d); provided, however, that GenSci must concurrently pay to IsoTis the
termination fee, if any, payable to IsoTis under §6.6 and must concurrently with termination enter into a definitive agreement with respect to such Acquisition Proposal.  GenSci acknowledges and agrees that payment of the termination fee, if any, payable under §6.6 is a condition to valid termination of this Agreement under §6.3(d) and this §4.7.

GenSci also acknowledges and agrees that each successive modification of any Acquisition Proposal will constitute a new Acquisition Proposal for purposes of the requirement under §4.7(b) to initiate an additional ten Business Day notice period.

Covenants of IsoTis

4.8                 IsoTis covenants and agrees with GenSci that, prior to the Effective Date, unless GenSci shall otherwise agree in writing or as expressly contemplated or permitted by this Agreement:

	
  
 
  	
  
(a)      IsoTis shall,   and shall cause each of the IsoTis Subsidiaries to, conduct its and their   respective business only in, not take any action except in, and maintain   their respective facilities in, the usual, ordinary and regular course of   business and consistent with past practice;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      IsoTis shall   not directly or indirectly do or permit to occur any of the following which   would result in a change in the undertaking or business of IsoTis or which   would be a Material Adverse Change of IsoTis:
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       issue,   sell, pledge, lease, dispose of or encumber or agree to issue, sell, pledge,   lease, dispose of or encumber (or permit any of the IsoTis Subsidiaries to   issue, sell, pledge, lease, dispose of or encumber or agree to issue, sell,   pledge, lease, dispose of or encumber):
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)          any   additional shares of, or any options, warrants, calls, conversion privileges   or rights of any kind to acquire any shares of, IsoTis or any of the IsoTis   Subsidiaries (other than pursuant to the grant or exercise of any stock   options); or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
(B)          except   in the ordinary course of business, any assets of IsoTis or of any of the   IsoTis Subsidiaries;
  

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(ii)      amend or   propose to amend its constating documents or that of any of the IsoTis   Subsidiaries;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     except for any   reverse stock split undertaken to allow IsoTis to meet stock exchange listing   requirements, split, combine or reclassify any outstanding IsoTis Shares, or   declare, set aside or pay any dividend or other distribution payable in cash,   stock, property or otherwise with respect to the IsoTis Shares;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)     redeem, purchase   or offer to purchase (or permit any of the IsoTis Subsidiaries to redeem,   purchase or offer to purchase) any IsoTis Shares or other securities of   IsoTis;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)      reorganize,   amalgamate or merge IsoTis or any of the IsoTis Subsidiaries with any other   Person;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)     reduce the stated   capital of IsoTis or any of the IsoTis Subsidiaries;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(vii)    except with respect to   the sale of assets of IsoTis or any IsoTis Subsidiary in the ordinary and   regular course of business consistent with past practice, not sell, pledge,   encumber, lease or otherwise dispose of any material assets (other than   relating to transactions between two or more wholly-owned IsoTis Subsidiaries   or between such IsoTis Subsidiary and IsoTis);
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(viii)   guarantee the payment of   material indebtedness or incur material indebtedness for money borrowed or   issue or sell any debt securities except in the ordinary and regular course   of business consistent with past practice;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ix)     except in the   usual, ordinary and regular course of business and consistent with past   practice: (A) satisfy or settle any claims (including tax claims) or   liabilities prior to the same being due, except such as have been reserved   against in the financial statements of IsoTis or disclosed in   Schedule G, which are, individually or in the aggregate, material; (B)   grant any waiver, exercise any option or relinquish any contractual rights   which are, individually or in the aggregate, material; or (C) enter into any   interest rate, currency or commodity swaps, hedges or other similar financial   instruments;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(x)      settle or   compromise any claim brought by any present, former or purported holder of   any of its securities in connection with the transactions contemplated by   this Agreement or the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xi)     except in the   usual, ordinary and regular course of business and consistent with past   practice or as required by Applicable Laws enter into or modify (or permit   any IsoTis Subsidiary to enter into or modify) in any material respect any   contract, agreement, commitment or arrangement which new contract or series   of related new contracts or modification to an existing contract or series of   related existing contracts would be a Material Adverse Change with respect to   IsoTis;
  

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(xii)    without limitation,   amend or propose to amend, or waive any rights under, any IsoTis Material   Contract;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(xiii)   acquire or agree to acquire   (by merger, amalgamation, acquisition of stock or assets or otherwise) any   Person;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)       IsoTis   shall, and shall cause each of the IsoTis Subsidiaries to:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       use its   reasonable best efforts to cause its current insurance (or re-insurance)   policies not to be cancelled or terminated or any of the coverage thereunder   to lapse, unless simultaneously with such termination, cancellation or lapse,   replacement policies underwritten by insurance and re-insurance companies of   nationally recognized standing providing coverage equal to or greater than the   coverage under the cancelled, terminated or lapsed policies for substantially   similar premiums are in full force and effect; and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      incur or   commit to capital expenditures prior to the Effective Date only in the   ordinary course consistent with past practice;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)       IsoTis   shall permit GenSci and its respective officers, directors, employees,   consultants and advisers, at all reasonable times, access to the books,   records and data of IsoTis and the IsoTis Subsidiaries;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(e)       IsoTis   shall, and shall cause each of the IsoTis Subsidiaries to, not enter into or   change the terms of, in any material way, or vary the pay, in any material   way, with respect to any employment, consulting or severance agreement or   other similar arrangement with any of their directors or officers or pay any   compensation to any such director or officer other than as explicitly   provided in any such agreement as disclosed in writing to GenSci prior to the   execution hereof or except for changes permitted by this §4.8(e) or as agreed   in writing by GenSci acting reasonably;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(f)       IsoTis   shall use its reasonable best efforts, and cause each of the IsoTis   Subsidiaries to use its reasonable best efforts, to preserve intact their   respective business organizations and goodwill, to keep available the   services of its and their officers and employees as a group and to maintain   satisfactory relationships with suppliers, distributors, customers and others   having business relationships with them; not take any action, or permit any   of the IsoTis Subsidiaries to take any action, which would render, or which   reasonably may be expected to render, any representation or warranty made by   it in this Agreement untrue at any time prior to the Effective Date if then   made; and promptly notify GenSci orally and in writing of any Material   Adverse Change of IsoTis and of any material governmental or third party   complaints, investigations or hearings (or communications indicating that the   same
may be contemplated);
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(g)       IsoTis   shall, in a timely and expeditious manner, finalize and mail the IsoTis   Information Circular on or before September 3, 2003, which circular shall   contain a recommendation of the IsoTis Board that the IsoTis Shareholders   vote in favour of the issuance of sufficient IsoTis Shares to effect the   Arrangement and mail the IsoTis Information Circular to the IsoTis   Shareholders in accordance with Applicable Law;
  

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(h)       except   as contemplated in this Agreement, IsoTis and the IsoTis Subsidiaries will   not, until the Effective Date, engage in any business, enterprise or other   activity different from that carried on by them at the date of this Agreement   that would result in a Material Adverse Change of IsoTis or enter into any   transaction or incur (except in respect of obligations or liabilities to   which they are already legally subject) any material obligation, expenditure   or liability other than in the ordinary course of their business, as   presently conducted;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)       IsoTis   will furnish to GenSci such information, in addition to the information   contained in this Agreement, relating to the financial condition, business,   properties and affairs of IsoTis and the IsoTis Subsidiaries as may   reasonably be requested by GenSci, which information will be true and   complete in all material respects and will not contain a Misrepresentation;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(j)       IsoTis   will ensure that the information and financial statements related to IsoTis   and provided by IsoTis to GenSci for inclusion in the GenSci Information   Circular will be true, correct and complete in all material respects and will   not contain any Misrepresentation;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(k)      IsoTis will   promptly notify GenSci in writing
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       if   IsoTis becomes aware that any of IsoTis’s representations and warranties in   this Agreement is untrue or inaccurate in any material respect, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      if there has   been, or is reasonably expected to be, any material breach of any covenant or   agreement of IsoTis contained in this Agreement;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(l)        IsoTis   will co-operate fully with GenSci to minimize any negative tax consequences   with respect to the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(m)      IsoTis shall   use its reasonable best efforts to hold the IsoTis Meeting on or before   September 30, 2003 and solicit approval of IsoTis Shareholders for the   issuance of sufficient IsoTis Shares to effect the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(n)      IsoTis shall   act in good faith and co-operate with GenSci in assisting in
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(i)       the   preparation of the GenSci Information Circular for the GenSci Meeting, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      the   preparation of the applications to the Court for each of the Interim Order   and Final Order;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(o)       IsoTis   shall take such action as may be necessary to ensure that there shall not be   any impediment to the general free tradability of the IsoTis Shares to be   issued in connection with the Arrangement after the Effective Date in Canada,   subject only to any restrictions imposed under Canadian Securities Laws   relating to sales of securities from holdings of “control persons” or   “insiders”, market preparations and consideration payments;
  

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(p)       IsoTis   shall use its reasonable best efforts to cause its shares to become listed   for trading on the TSX, the Nasdaq or the AMEX within 12 months of the   Effective Date, if market conditions allow;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(q)       IsoTis   shall use its reasonable best efforts to deliver to GenSci evidence of the   approval or conditional approval of the Euronext and the SWX of the listing   on such stock exchanges of the IsoTis Shares issuable to GenSci Shareholders   pursuant to the Arrangement, subject only to compliance with the usual   requirements of such exchanges;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(r)       IsoTis   shall, concurrent with the execution hereof, deliver to GenSci certified   copies of resolutions duly passed by the IsoTis Board approving this   Agreement and the consummation of the transactions contemplated hereby and   conditionally resolving to allot for issuance the aggregate number of IsoTis   Shares that may be required to be issued in accordance with the terms of this   Agreement and the Plan of Arrangement;
  
	
   
  	
  
 
  
	
  
 
  	
  
(s)       IsoTis   shall, forthwith after the IsoTis Meeting, deliver to GenSci certified copies   of the resolutions of IsoTis Shareholders duly passed at the IsoTis Meeting   approving the issuance of sufficient IsoTis Shares to effect the Arrangement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(t)       IsoTis   shall use all reasonable best efforts to take, or cause to be taken, all   action and to do, or cause to be done, all things necessary, proper or   advisable to consummate and make effective as promptly as is practicable the   transactions contemplated by this Agreement and the Plan of Arrangement,   including the execution and delivery of such documents as GenSci may   reasonably require, and to use its reasonable best efforts to obtain all   necessary waivers, consents and approvals and to effect all necessary   registrations and filings, including, but not limited to, approvals and   filings under Applicable Securities Laws and of the TSX and submissions of   information requested by Governmental Entities; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(u)       following   the Effective Date, IsoTis will indemnify GenSci and save it harmless from   the cost of the “fair value” of GenSci Shares ultimately required to be paid   by GenSci to Dissenting Shareholders but not for any legal fees or court   costs or other expenses incurred by GenSci in determining the “fair value”,   such total amount not to exceed $2,500,000.
  

Confidentiality

4.9                 Notwithstanding anything to the contrary in this Agreement or any other relevant agreement (including the Confidentiality Agreement between GenSci and Asanté Partners LLC as of March 21, 2003), any party hereto (and any employee, representative or other agent of such party) may disclose to any and all Persons, without limitation of any kind, the United States federal tax treatment and United States federal tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure, except that

	
  
 
  	
  
(a)      this   provision shall not permit such disclosure until the earliest of
  

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(i)       the   date of the public announcement of discussions relating to the transactions,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      the date of   the public announcement of the transactions, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     the date of the   execution of an agreement (with or without conditions) to enter into the   transactions,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      tax treatment   and tax structure shall not include
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(i)       the   identity of any existing or future party (or any affiliate of such party) to   this or any related agreement, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      any specific   pricing information or other commercial terms, including the amount of any   fees, expenses, rates or payments, arising in connection with the   transactions, and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      this   provision shall not permit disclosure to the extent that nondisclosure is   necessary in order to comply with applicable securities laws.
  

Nothing herein shall in any way limit any party’s ability to consult any tax advisor (including a tax advisor independent from all other entities involved in the transactions) regarding the tax treatment or tax structure of the transactions. 

ARTICLE 5

CONDITIONS PRECEDENT

Mutual Conditions Precedent

5.1                 The respective obligations of GenSci and IsoTis to complete the transactions contemplated herein shall be subject to the satisfaction, on or before the Effective Date, of the following conditions precedent, each of which may only be waived by mutual consent of the parties:

	
  
 
  	
  
(a)      the   Arrangement, with or without amendment, and the transactions contemplated   thereby, shall have been approved by GenSci Shareholders at the GenSci   Meeting in accordance with the Interim Order;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      the issuance   of sufficient IsoTis Shares to effect the Plan of Arrangement, with or   without amendment, shall have been approved by the IsoTis Shareholders at the   IsoTis Meeting;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      the Final   Order shall have been granted by the Court, which order shall include the   Plan of Arrangement and shall opine on the fairness of the Arrangement as   required by section 3(a)(10) of the 1933 Act;
  

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(d)      there will   not be in force any order or decree restraining or enjoining the consummation   of the transactions contemplated by this Agreement and there will be no   proceeding (other than an appeal made in connection with the Arrangement), of   a judicial or administrative nature or otherwise, brought by a Governmental   Entity in progress or threatened that relates to or results from the   transactions contemplated by this Agreement that would, if successful, result   in an order or ruling that would preclude completion of the transactions   contemplated by this Agreement in accordance with the terms hereof;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      all other   consents, orders, regulations and approvals, including regulatory and   judicial approvals and orders necessary for the completion of the   transactions provided for in this Agreement and the Plan of Arrangement   (which for the purposes of this §5.1(e), and for greater certainty shall not   include the matters set forth in §5.1(a), §5.1(f) or §5.1(g)) will have been   obtained or received from the Persons and/or Governmental Entities having   jurisdiction in the circumstances;
  
	
   
  	
  
 
  
	
  
 
  	
  
(f)       GenSci   shall
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       have   obtained an order (or orders) from the Bankruptcy Court on or before July 31,   2003 (unless extended by IsoTis in its sole discretion), in form and content   satisfactory to IsoTis that either
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)          dismisses   its bankruptcy case or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
(B)          both   (x) authorizes the IsoTis Option Agreement and (y) permits GenSci to solicit   acceptances of the Bankruptcy Plan from GenSci’s shareholders solely in   accordance with Canadian law and without reference to Bankruptcy Code section   1125 or any other provisions of the Bankruptcy Code,
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      have caused   GenSci US Subsidiary to obtain a final order entered by the Bankruptcy Court   on or before November 1, 2003 (unless extended by IsoTis in its sole   discretion), in a form reasonably acceptable to IsoTis, confirming the   Bankruptcy Plan, and
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     have caused the   effective date of the Bankruptcy Plan to occur on or before November 15, 2003   (unless extended by IsoTis in its sole discretion) but not before the date of   the Final Order;
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(g)      the approval   of the TSX to the transactions contemplated by this Agreement;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(h)      the   acceptance of the Plan of Arrangement for filing by the Registrar, and
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)       this   Agreement shall not have been terminated pursuant to Article 6.
  

Additional Conditions Precedent to Obligations of GenSci

5.2                The obligation of GenSci to complete the transactions contemplated herein is subject to the satisfaction, on or before the Effective Date, of each of the following conditions, 

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which conditions are for the sole benefit of GenSci and may be waived by it in whole or in part by notice in writing to IsoTis without prejudice to the rights of GenSci to rely on any other condition:

	
  
 
  	
  
(a)      GenSci,   acting reasonably, shall be satisfied that no Material Adverse Change has   occurred with respect to IsoTis (on a consolidated basis) from the date   hereof to the Effective Date;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      each   representation and warranty of IsoTis contained in this Agreement (i) shall   have been true and correct as of the date of this Agreement and (ii) shall be   true and correct on and as of the Effective Date with the same force and   effect as if made on and as of the Effective Date except (A) in each case, or   in the aggregate, as does not constitute a Material Adverse Change with   respect to IsoTis, (B) for changes contemplated by this Agreement and (C) for   those representations and warranties which address matters only as of a   particular date (which representations shall have been true and correct   (subject to the qualifications as set forth in the preceding clause (A) as of   such particular date) (it being understood that, for purposes of determining   the accuracy of such representations and warranties, (i) all “Material   Adverse Change” qualifications and other qualifications based on the word
“material” or similar phrases contained in such representations and   warranties shall be disregarded and (ii) any update of or modification to   Schedule G made or purported to have been made after the date of this   Agreement shall be disregarded).    GenSci shall have received a certificate dated the Effective Date,   with respect to the foregoing signed on behalf of IsoTis by a senior officer   of IsoTis;
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)      each of the   covenants, acts and undertakings of IsoTis to be performed on or before the   Effective Date pursuant to the terms of this Agreement shall have been   performed in all material respects by IsoTis.
  

5.3                GenSci may not rely on the failure to satisfy any of the above conditions precedent as a basis for non-compliance by GenSci with its obligations under this Agreement if the condition precedent would have been satisfied but for a material default by GenSci in complying with its obligations hereunder.

Additional Conditions Precedent to Obligations of IsoTis

5.4                The obligation of IsoTis to complete the transactions contemplated herein is subject to the satisfaction of each of the following conditions on or before the Effective Date, which conditions are for the sole benefit of IsoTis and may be waived by it in whole or in part by notice in writing to GenSci without prejudice to the rights of IsoTis to rely on any other condition:

	
  
 
  	
  
(a)      IsoTis,   acting reasonably, shall be satisfied that no Material Adverse Change has   occurred with respect to GenSci or a GenSci Subsidiary from the date hereof   to the Effective Date;
  
	
   
  	
  
 
  
	
  
 
  	
  
(b)      each   representation and warranty of GenSci contained in this Agreement (i) shall   have been true and correct as of the date of this Agreement and (ii) shall be   true and 
  

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correct on and as of the Effective Date with the   same force and effect as if made on and as of the Effective Date except (A)   in each case, or in the aggregate, as does not constitute a Material Adverse   Change with respect to GenSci or GenSci US Subsidiary, provided however, such   Material Adverse Change qualifier shall be inapplicable with respect to   representations and warranties contained in §3.2(c), (d), (x) and (w), and   inapplicable with respect to the representations and warranties for which a   specific monetary threshold is referred to in any part or component of   §3.2(u), (B) in respect of transactions contemplated by this Agreement   (with the exception of the representations in §3.2(u)) and (C) for those   representations and warranties which address matters only as of a particular   date (which representations shall have been true and correct (subject to the qualifications   as set forth in the preceding clause (A) as of
such particular date) (it   being understood that, for purposes of determining the accuracy of such   representations and warranties, (i) all “Material Adverse Change”   qualifications and other qualifications based on the word “material” or   similar phrases contained in such representations and warranties shall be   disregarded and (ii) any update of or modification to Schedule E made or   purported to have been made after the date of this Agreement shall be   disregarded).  IsoTis shall have   received a certificate dated the Effective Date, with respect to the   foregoing signed on behalf of GenSci by a senior officer of GenSci;
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)      each of the   covenants, acts and undertakings of GenSci to be performed pursuant to the   terms of this Agreement shall have been performed in all material respects by   GenSci;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      IsoTis shall   have received all requisite regulatory approvals (including, without   limitation, of any stock exchanges or Commissions or competition tribunals   and anti-trust authorities) that are reasonably necessary to permit the   Arrangement to be completed on terms satisfactory to IsoTis, acting   reasonably;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      GenSci shall   have delivered to IsoTis (in form and content satisfactory to IsoTis) the   consents required pursuant to the “change of control” clauses in those   agreements described in Schedule E;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(f)      GenSci shall   have delivered to IsoTis (in form and content satisfactory to IsoTis) all   third party consents and instruments of transfer and assignment necessary to   effect the transfer and assignment of the GenSci Licences, the GenSci   Trademarks, the GenSci US Subsidiary Shares and the GenSci US Subsidiary   Loans to IsoTis;
  
	
   
  	
  
 
  
	
  
 
  	
  
(g)      Dissent   Rights will not have been exercised prior to the Effective Date by holders of   GenSci Shareholders representing in the aggregate 10% or more of the total   number of GenSci Shares outstanding at such time;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(h)      the   Settlement Agreement shall not have been amended without the consent of   IsoTis;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)       effective   as of the Effective Date,
  

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(i)       all of   the individuals who are actively employed by GenSci US Subsidiary as of the   date hereof shall remain so employed without having provided any notice of   resignation, and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      those   individuals listed on Schedule S shall remain employees of GenSci US   Subsidiary without having provided any notice of resignation and shall have   agreed to continue employment following the Effective Date under terms and   conditions which are satisfactory to IsoTis, acting reasonably;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(j)       the   Bankruptcy Plan shall have been approved by the Bankruptcy Court in form and   substance satisfactory to IsoTis; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(k)      written   employment agreements, or amendments to present employment agreements, with   respect to members of senior management of GenSci US Subsidiary designated by   IsoTis, including without limitation, written employment agreements with   James S. Trotman, Douglass C. Watson, Peter Ludlum and John F. Kay, shall   have been executed and delivered, in form and substance satisfactory to   IsoTis, acting reasonably.
  

5.5                IsoTis may not rely on the failure to satisfy any of the above conditions precedent as a basis for non-compliance by IsoTis with its obligations under this Agreement if the condition precedent would have been satisfied but for a material default by IsoTis in complying with its obligations hereunder.

Notice and Cure Provisions

5.6                IsoTis and GenSci will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the Effective Date, of any event or state of facts which occurrence or failure would, or would be likely to:

	
  
 
  	
  
(a)      cause any of   the representations or warranties of the other party contained herein to be   untrue or inaccurate in any material respect on the date hereof or on the   Effective Date; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      result in the   failure in any material respect to comply with or satisfy any covenant,   condition or agreement to be complied with or satisfied by the other   hereunder prior to the Effective Date.
  

Neither IsoTis nor GenSci may elect not to complete the transactions contemplated hereby pursuant to the conditions precedent contained in §5.1, §5.2 and §5.4, or exercise any termination right arising therefrom, unless forthwith and in any event prior to the filing of the Final Order for acceptance by the Registrar, IsoTis or GenSci, as the case may be, have delivered a notice to the other specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which IsoTis or GenSci, as the case may be, are asserting as the basis for the non-fulfilment of the applicable condition precedent or the exercise of the termination right, as the case may be.  If any such notice is delivered, provided that IsoTis or GenSci, as the case may be, are proceeding diligently to cure such matter, if such matter is susceptible to being cured, the other may not terminate this Agreement as a result thereof until the expiration
of a period of 30 days from such notice.  If such notice has been delivered before the date of the 

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GenSci Meeting, such meeting will be postponed until the expiry of such period.  If such notice has been delivered before the application for the Final Order or the filing of the Final Order with the Registrar occurs, such application and such filing will be postponed until the expiry of such period.  For greater certainty, in the event that such matter is cured within the time period referred to herein, this Agreement may not be terminated.

Satisfaction of Conditions

5.7                The conditions precedent set out in §5.1, §5.2 and §5.4 will be conclusively deemed to have been satisfied, waived or released when, with the agreement of IsoTis and GenSci, a certified copy of the Final Order is accepted for filing by the Registrar.

Co-operation

5.8                Each of GenSci and IsoTis will use all reasonable best efforts to satisfy each of the conditions precedent to be satisfied by it and to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable under Applicable Law, to permit the completion of the Arrangement in accordance with the provisions of this Agreement and to consummate and make effective all other transactions contemplated in this Agreement and to co-operate with each other in connection with the foregoing, including:

	
  
 
  	
  
(a)      agreeing to   those changes, modifications, amendments, additions or deletions to the   Arrangement as either party may reasonably require, provided any change,   modification, amendment, addition or deletion would not, in the reasonable   judgment of the other party, have an adverse effect on that party or its   shareholders;
  
	
   
  	
  
 
  
	
  
 
  	
  
(b)      using all   reasonable best efforts in connection with the preparation of documentation   for submission to any Governmental Entity, the TSX, the GenSci Shareholders   and the IsoTis Shareholders and keeping each other informed of any requests   or comments made by a Governmental Entity or the TSX in connection with that   documentation;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      using all   reasonable best efforts to obtain all necessary consents, approvals   (including shareholder approvals), authorizations, waivers and orders of any   Governmental Entity, the TSX and third parties as are required to be obtained   by it under Applicable Law or otherwise to complete the transactions   contemplated hereby; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      using all   reasonable best efforts to lift or rescind any injunction or restraining   order or other order which may be entered against it, which injunctions or   orders would prevent that party from completing the transactions contemplated   hereby.
  

Due Diligence by IsoTis

5.9                Forthwith following the execution of this Agreement and the receipt by IsoTis from GenSci of the following materials:

	
  
 
  	
  
(a)      the following   GenSci Material Contracts: all leases, the royalty agreement (as amended)   with Cameron Clokie, the peptide technology licence between GenSci and
  

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IATRA Life Sciences Corporation dated   December 15, 2001, and the agreements with Healthcare Trust and Health   Trust Purchasing Group L.P.;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      background   information regarding all of the GenSci Disclosure Exceptions in   Schedule E;
  
	
  
 
  	
  
 
  
	
   
  	
  
(c)      the   Distribution Agreement(s) with GenSci OCF Inc.;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      all Tax   Returns for each of GenSci and the GenSci US Subsidiary for each of the past   five years; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      proposed   amendment to Schedule E related to §3.2(w);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(the “GenSci Materials”).
  

IsoTis agrees to conduct and complete its review and consideration of the GenSci Materials as expeditiously as would be reasonable under the circumstances and, in any event, at or before 5:00 p.m. (Vancouver time) on the day which is two Business Days after receipt of all of the GenSci Due Diligence Materials (the “Due Diligence Period”).  IsoTis and GenSci agree to amend the Non-Disclosure Agreement in connection with the GenSci Materials.  GenSci agrees to provide any proposed amendment to Schedule E related to §3.2(w) within two Business Days after the execution of this Agreement.

If as a result of the review by IsoTis of the GenSci Materials, there is disclosed or revealed to IsoTis the existence of any fact, circumstance or event in connection with the matters and obligations reviewed in the GenSci Materials that is or would be materially adverse to the GenSci Business or if IsoTis in its sole discretion determines that it is not prepared to accept the amendment proposed in §5.9(e), IsoTis may, before the expiry of the Due Diligence Period, terminate its obligations under this Agreement by delivering notice to GenSci, whereupon this Agreement shall terminate and be of no further force and effect.

Due Diligence by GenSci

5.10               Forthwith following the execution of this Agreement and the receipt by GenSci from IsoTis of the following materials:

	
  
 
  	
  
(a)       the   following IsoTis Material Contracts: all leases and rental agreements, the   MIT Licence Agreement (if it was executed), the Epitech License Agreement   dated December 9, 1999 with IsoTis’s predecessor Modex and the agreement with   Twente Universiteit; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)       background   information regarding all of the IsoTis Disclosure Exceptions in Schedule G;
  
	
   
  	
  
 
  
	
  
 
  	
  
(the “IsoTis Due Diligence Materials”).
  

GenSci agrees to conduct and complete its review and consideration of the IsoTis Due Diligence Materials as expeditiously as would be reasonable under the circumstances and, in any event, at 

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or before 5:00 p.m. (Vancouver time) on the day which is two Business Days after receipt of all of the IsoTis Due Diligence Materials (the “Due Diligence Period”).  IsoTis and GenSci agree to amend the Non-Disclosure Agreement in connection with the IsoTis Due Diligence Materials.

If as a result of the review by GenSci of the IsoTis Due Diligence Materials, there is disclosed or revealed to GenSci the existence of any fact, circumstance or event in connection with the matters and obligations reviewed in the IsoTis Due Diligence Materials that is or would be materially adverse to IsoTis, GenSci may, before the expiry of the Due Diligence Period, terminate its obligations under this Agreement by delivering notice to IsoTis, whereupon this Agreement shall terminate and be of no further force and effect.

ARTICLE 6

TERMINATION AND WAIVER

Termination by IsoTis

6.1                If any condition contained in §5.1or §5.4 is not satisfied at or before the Effective Date to the satisfaction of IsoTis, then IsoTis may by notice to GenSci terminate this Agreement and the obligations of the parties hereunder except as otherwise herein provided, but without detracting from the rights of IsoTis arising from any breach by GenSci but for which the condition would have been satisfied.

Termination by GenSci

6.2                If any condition contained in §5.1 or §5.2 is not satisfied at or before the Effective Date to the satisfaction of GenSci, then GenSci may by notice to IsoTis terminate this Agreement and the obligations of the parties hereunder except as otherwise herein provided, but without detracting from the rights of GenSci arising from any breach by IsoTis but for which the condition would have been satisfied.

Termination of Agreement

6.3                This Agreement may be terminated:

	
  
 
  	
  
(a)      by the mutual   agreement of GenSci and IsoTis (without further action on the part of the   GenSci Shareholders if terminated after the holding of the GenSci Meeting or   of the IsoTis Shareholders if terminated after the holding of the IsoTis   Meeting);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      by either   GenSci or IsoTis, if any law or regulation is passed that makes consummation   of the transactions contemplated by this Agreement illegal or otherwise   prohibited or if any injunction, order or decree enjoining IsoTis or GenSci   from consummating the transactions contemplated by this Agreement is entered   and such injunction, order or decree will become final and non-appealable;
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)      by IsoTis if
  

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(i)       the   GenSci Board or any committee thereof fails to recommend, or withdraws,   modifies or changes in a manner adverse to IsoTis, its approval or   recommendation of this Agreement or the Arrangement or recommends an   Acquisition Proposal, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      through the   fault of GenSci (whether by commission or omission), this Arrangement is not,   earlier than the 14th day before the Termination Date, submitted for the   approval of the GenSci Shareholders at the GenSci Meeting,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iii)     the GenSci Board   or any committee thereof shall have approved or recommended any Acquisition   Proposal,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(iv)     GenSci shall have   entered into any letter of intent or similar document or any agreement,   contract or commitment accepting any Acquisition Proposal,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(v)       a   take-over bid relating to the GenSci Shares shall have been commenced by a   Person unaffiliated with IsoTis and GenSci shall not have sent to the GenSci   Shareholders, within ten (10) Business Days after such take-over bid is first   published, sent or given, a statement disclosing that GenSci recommends   rejection of such take-over bid, or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(vi)      GenSci (or   any of its officers or directors) shall have provided any recommendation to   the GenSci Meeting or the Court in connection with the Final Order   inconsistent with unanimous recommendation in favour of the Arrangement;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      by GenSci in   order to enter into a definitive written agreement with respect to a Superior   Proposal, subject to compliance with §4.7 and the payment of any fee required   to be paid pursuant to §6.6;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      by GenSci or   IsoTis if GenSci Shareholder approval is not obtained by reason of the   failure to obtain the required vote at the GenSci Meeting; or
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(f)       by   GenSci or IsoTis if IsoTis Shareholder approval is not obtained by reason of   the failure to obtain the required vote at the IsoTis Meeting;
  
	
  
 
  	
  
 
  
	
  
in each case, before the Effective Date.
  

Termination Date

6.4                If the Effective Date does not occur on or before the Termination Date, this Agreement will terminate; provided, however, that the right to terminate this Agreement under this §6.4 shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Effective Date to occur on or before the Termination Date and such action or failure to act constitutes a breach of this Agreement.

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Effect of Termination

6.5                If this Agreement is terminated in accordance with any of the foregoing provisions of this Article 6, no party will have any further liability to perform its obligations hereunder except as provided in §6.6 and §6.8 and as otherwise contemplated hereby, except that, subject to §6.6 and §6.9, neither the termination of this Agreement nor anything contained in this §6.5 will relieve any party from any liability for any breach by it of this Agreement, including from any inaccuracy in its representations and warranties and any non-performance by it of its covenants made herein.

Termination Fee and Liquidated Damages

6.6                The Parties recognize and acknowledge that IsoTis will, by reason of this Agreement, incur substantial out-of-pocket costs, forego other investment opportunities, create the perception in the marketplace that GenSci has appreciable value not presently perceived, and suffer damages in the event GenSci were to breach, and that it would be impracticable or extremely difficult to calculate these costs, benefits and damages.  As such, the Parties hereby agree that if:

	
  
 
  	
  
(a)      GenSci   terminates this Agreement pursuant to §6.3(d);
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      IsoTis   terminates this Agreement pursuant to §6.3(c); or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      IsoTis or   GenSci terminates this Agreement pursuant to §6.3(e); or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      IsoTis or   GenSci terminates this Agreement pursuant to §6.4 and any of the following   occur:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(i)       if   following the date hereof, a third party has announced an Acquisition   Proposal and within twelve months following the termination of this Agreement   an Acquisition Proposal is consummated, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)      if following   the date hereof, a third party has announced an Acquisition Proposal and   within twelve months following the termination of this Agreement GenSci   enters into an agreement or letter of intent providing for an Acquisition   Proposal;
  

GenSci will pay to IsoTis $500,000  in immediately available funds to an account designated by IsoTis.  Such payment will be due (i) in the case of a termination specified in §(a) above, before the termination of this Agreement, (ii) in the case of a termination specified in §(b) or §(c) above, within five Business Days after notice of termination by IsoTis or GenSci or (iii) in the case of a termination specified in §(d) above, at or before the earlier of the entering into of the agreement and the consummation of the transaction referred to therein.  GenSci will not be obligated to make more than one payment pursuant to this §6.6.

Waiver

6.7                At any time prior to the Effective Date, either party hereto may: 

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(a)      extend the   time for the performance of any of the obligations or other acts of the other   party hereto; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      waive   compliance with any of the agreements of the other party or with any   conditions to its own obligations, in each case only to the extent such   obligations, agreements and conditions are intended for its benefit.
  

Loan to GenSci

6.8                Subject to §5.6, if this Agreement is terminated because any condition contained in §5.1(b), §5.1(c), §5.1(d), §5.1(e), §5.2(b), §5.2(c) is not satisfied, or if IsoTis relies on the conditions set out in §5.4(d) as a basis for non-compliance by IsoTis with its obligations under this Agreement, and provided a Specified GenSci Event has not occurred and is continuing, then IsoTis will provide the Loan to GenSci in accordance with the terms and conditions described in Schedule I within 20 Business Days following such termination.

Effect of Loan to GenSci

6.9                For greater certainty, the parties hereto agree that if IsoTis makes the Loan to GenSci as a result of the occurrence of the termination of this Agreement as contemplated in §6.8, GenSci will have no other remedy for any breach of this Agreement by IsoTis.

Liquidated Damages

6.10              The parties acknowledge that the payment described in §6.6 and the commitment to provide the Loan described in §6.8 are a payment of liquidated damages which are a genuine pre-estimate of the damages which IsoTis or GenSci, as the case may be, will suffer or incur as a result of the event giving rise to such damages and resultant termination of this Agreement and are not penalties.  The parties irrevocably waive any right they may have to raise as a defence that any of such liquidated damages are excessive or punitive.  For greater certainty, the parties agree that the payment of the payments described in §6.6 and the commitment to provide the Loan described in §6.8 are the sole monetary remedy of the party receiving such payment or commitment, as the case may be.  Nothing herein shall preclude a party from seeking injunctive relief to
restrain any breach or threatened breach of the covenants and agreements set forth in this Agreement or otherwise to obtain specific performance of any such covenant or agreement, without the necessity of posting bond or security in connection therewith.

ARTICLE 7

IMPLEMENTATION OF ARRANGEMENT AND ADDITIONAL COVENANTS

Interim Order

7.1                The notice of motion for the application for the Interim Order shall request that the Interim Order provide:

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(a)      for the   classes of Person to whom notice is to be provided in respect of the   Arrangement and the GenSci Meeting and for the manner in which such notices   are to be provided;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      that the   GenSci Shareholders’ approval for the Arrangement shall be:
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(i)          75%   of the votes cast on the Arrangement by GenSci Shareholders in person or by   proxy at the GenSci Meeting; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(ii)          a   majority of the votes cast by Minority Shareholders present or represented by   proxy at the GenSci Meeting;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      that, in all   other respects, the terms, restrictions and conditions of the memorandum and   articles of GenSci, including quorum requirements, shall apply in respect of   the GenSci Meeting;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      for the grant   of Dissent Rights;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      the notice of   motion for the application for the Interim Order shall inform the Court that,   based on the Court’s approval of the Plan of Arrangement, GenSci and IsoTis   will rely on section 3(a)(10) of the 1933 Act for an exemption from the 1933   Act registration requirements with respect to the securities to be received   by GenSci Shareholders under the Plan of Arrangement.
  

Plan of Arrangement

7.2                The Plan of Arrangement will be on the terms set out in Schedule A to this Agreement, subject to any amendment which may be made pursuant to §8.2 of this Agreement.

Final Order

7.3                Forthwith after the GenSci Shareholders approve the Arrangement at the GenSci Meeting, GenSci shall apply for the Final Order in form and substance satisfactory to IsoTis.  The notice of motion for the application for the Final Order shall inform the Court that, based on the Court’s approval of the Plan of Arrangement, GenSci and IsoTis will rely on section 3(a)(10) of the 1933 Act for an exemption from the 1933 Act registration requirements with respect to the securities to be received by GenSci Shareholders under the Plan of Arrangement.  The notice of motion for the application for the Final Order shall also be included in the GenSci Information Circular and shall set forth the procedures that GenSci Shareholders must follow in order to attend and be heard at the hearing for the Final Order.

Pre-Closing

7.4                Unless this Agreement is terminated earlier pursuant to the provisions hereof, the parties hereto shall meet at the offices of Lang Michener, Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia at 9:00 a.m. on the 5th Business Day after the later of the date the GenSci Shareholders approve the Arrangement and the effective date of the Bankruptcy Plan (or 

- 63 -

at such other time or on such other date as they may agree) and each party shall deliver to the other party:

	
  
 
  	
  
(a)      the   documents, other than the acceptance of the Final Order and Plan of   Arrangement for filing by the Registrar, required to be delivered by it   hereunder to complete the transactions contemplated hereby, provided that   each such document, whether to be dated the Effective Date or not, shall be   held in escrow to be released upon the issuance of a Plan of Arrangement by   the Registrar; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      written   confirmation as to the satisfaction or waiver by it of the conditions in its   favour set out herein (other than the acceptance of the Final Order and Plan   of Arrangement for filing by the Registrar).
  

Filing of Final Order

7.5                On the sixth Business Day after the later of the date the GenSci Shareholders approve the Arrangement and the effective date of the Bankruptcy Plan, GenSci shall send a certified copy of the Final Order and Plan of Arrangement to the Registrar for filing pursuant to subsection 252 of theCompany Act.

Closing

7.6                The closing of the transactions contemplated herein will take place at the Effective Time on the Effective Date, or at such later date as the parties will agree, at the offices of Lang Michener, Vancouver, B.C.

Effect of Plan of Arrangement

7.7                At the Effective Time, subject to the terms and conditions of this Agreement and as contemplated by the Plan of Arrangement, GenSci will be deemed to have received the Purchase Price from IsoTis and transferred, sold and assigned to IsoTis and IsoTis will be deemed to have paid the Purchase Price to GenSci and accepted, purchased and assumed the:

	
  
 
  	
  
(a)      GenSci US   Subsidiary Shares;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      GenSci US   Subsidiary Loans;
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)      GenSci   Licences; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      the GenSci   Trademarks
  

free and clear of all liens, claims and encumbrances.

Purchase Price Allocation

7.8                Subject to the provisions of §7.10, the Purchase Price will be allocable by IsoTis and GenSci among the GenSci US Subsidiary Shares, the GenSci US Subsidiary Loans, the GenSci Trademarks and the GenSci Licences based on the relative fair market values thereof, 

- 64 -

and IsoTis and GenSci will make all commercially reasonable efforts to jointly determine such Purchase Price allocation in more detail (whether as a percentage allocation or otherwise) before the Effective Date.  IsoTis and GenSci will also allocate all or a portion of the value allocated to the GenSci US Subsidiary Shares pursuant to this §7.8 to the GenSci Intellectual Property, such allocation to be made on a per-item basis and by reference to the estimated fair market value of such GenSci Intellectual Property as of the Effective Date.

Designation with Respect to GenSci Licences and GenSci Trademarks

7.9                With respect to the acquisition of the GenSci Licenses and GenSci Trademarks, IsoTis can, at any time before the Effective Date, designate any one or more IsoTis Subsidiary, or any one or more Person owned by IsoTis (or by IsoTis and any or all IsoTis Subsidiaries, in any combination), to acquire and hold any or all of the GenSci Licenses and GenSci Trademarks, and upon such designation, the designated corporation or Person will be deemed to be an IsoTis Subsidiary for purposes of this Agreement (but not with respect to any representation, warranty, covenant or other agreement or obligation applicable to IsoTis Subsidiaries herein), and will become entitled to receive such GenSci Licenses and/or GenSci Trademarks from GenSci at the Effective Time in the place of IsoTis.

US 338 Election and Similar Issues

7.10                If IsoTis determines, by written notice provided to GenSci at least 20 Business Days before the Effective Date, that it would be advantageous to file a 338 Election in respect of GenSci US Subsidiary, or to separately acquire Intellectual Property of GenSci US, then this Agreement and the Plan of Arrangement will be amended as reasonably required by IsoTis to facilitate the making of such election (such amendment to include provision for 1% of the total consideration paid to GenSci pursuant to this Agreement to be paid in cash, and to further include provision for the value of IsoTis Exchange Shares paid to GenSci pursuant to this Agreement to be correspondingly reduced to reflect the payment of such cash) or the separate acquisition of such Intellectual Property, provided that the specific amendments required by IsoTis do not cause a Material Adverse Change to
GenSci.  If, pursuant to this §7.10, IsoTis determines that such 338 Election shall be made, GenSci and IsoTis will cooperate in the determination of the Aggregate Deemed Sales Price, as such term is defined in Treasury Regulations §1.338-4, of the assets of GenSci US Subsidiary, such Aggregate Deemed Sales Price to be computed by reference to the allocations made pursuant to §7.8 of this Agreement, and the allocation of such Aggregate Deemed Sales Price to the various assets of GenSci US Subsidiary, such determination and allocation to be made in compliance with the provisions of Section 338 of the Code and associated Treasury Regulations promulgated thereunder.  If IsoTis determines, alternatively, that certain Intellectual Property of GenSci US Subsidiary shall be separately acquired pursuant to this §7.10, such certain Intellectual Property shall be acquired for a portion of the Purchase Price equal to the amount allocated to such Intellectual Property pursuant to the
provisions of §7.8 of this Agreement, and the Purchase Price paid in consideration of the Genesis US Subsidiary Shares shall be correspondingly reduced by such amount.

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GenSci US Subsidiary Loans

7.11               If required by IsoTis by written notice provided to GenSci at least 20 Business Days before the Effective Date, GenSci will document all GenSci US Subsidiary Loans in such form as IsoTis may reasonably require (including by way of promissory note or notes), and assign or otherwise convey the GenSci US Subsidiary Loans so documented to IsoTis at the Effective Time on the terms and subject to the conditions otherwise contained in this Agreement.

Closing Documents Delivered by GenSci

7.12               On the Effective Date at the Effective Time, GenSci will cause to be delivered to IsoTis:

	
  
 
  	
  
(a)      an officer’s   certificate certifying the accuracy of the representations and warranties in   §3.2 and the fulfilment of the covenants in §4.1 as at the Effective Date;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      a legal   opinion of counsel for GenSci, reasonably satisfactory in form and substance   in all material respects to IsoTis;
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)      a certified   copy of the resolution of the GenSci Board approving this Agreement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      the minute   books and all books and records of GenSci US Subsidiary;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)       resignations   and releases in favour of GenSci US Subsidiary from those of the directors   and officers of GenSci US Subsidiary as are designated by IsoTis;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(f)       a copy   of the Final Order filed with the Registrar;
  
	
  
 
  	
  
 
  
	
   
  	
  
(g)      certificates   representing the GenSci US Subsidiary Shares, duly endorsed by GenSci for   transfer to IsoTis;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(h)      a certificate   in form and substance satisfactory to IsoTis, duly executed and acknowledged,   certifying all facts necessary to exempt the transactions contemplated hereby   from withholding pursuant to the provisions of the United States Foreign Investment in   Real Property Tax Act;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)      documents of   transfer and assignment (in form and substance satisfactory to IsoTis) of the   GenSci Licences, the GenSci Trademarks and the GenSci US Subsidiary Loans;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(j)      the consents   required pursuant to the transfer and assignment of the GenSci Licences;
  
	
  
 
  	
  
 
  
	
   
  	
  
(k)     the consents   required pursuant to the “change of control” clauses in those agreements   described in Schedule E; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(l)      such other   documents as may be requested by IsoTis acting reasonably.
  

- 66 -

Closing Documents Delivered by IsoTis

7.13              On Effective Date at the Effective Time, IsoTis will deliver to GenSci:

	
  
 
  	
  
(a)      an officer’s   certificate certifying the accuracy of the representations and warranties   under §3.1 and the fulfilment of the covenants in §4.8 as at the Effective   Date;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      evidence   satisfactory to GenSci that the persons nominated by GenSci are three of   seven directors of IsoTis;
  
	
   
  	
  
 
  
	
  
 
  	
  
(c)      a certified   copy of a resolution of the IsoTis Board approving this Agreement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(d)      a legal   opinion of counsel for IsoTis, reasonably satisfactory in form and substance   in all material respects to GenSci;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(e)      the IsoTis   Stock Option Plan; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(f)      such other   documents as may be requested by GenSci acting reasonably.
  

Settlement Agreement

7.14               After the Effective Date, IsoTis will either fund the Loan or procure that the financial obligations of GenSci in §10(b) of the Settlement Agreement are fully satisfied subject to compliance by GenSci with its obligations in the next sentence.  After the Effective Date, neither IsoTis nor GenSci will do anything or fail to do something which could lead to a breach of a term or condition under the Settlement Agreement or result in the acceleration of amounts owing to Osteotech under the Settlement Agreement.  For greater certainty, IsoTis acknowledges that no warrants of GenSci issued to IsoTis in connection with the Loan may be exercised if the Loan is funded after the Effective Date.

IsoTis Options

7.15               Forthwith following the Effective Date, IsoTis undertakes to implement a new employee stock option plan for North American employees.  This new plan will be in line with the IsoTis Stock Option Plan and be at least equivalent in all material respects to GenSci’s Stock Option Plan.  The new plan will grant stock options of equivalent value and after taking into account the Exchange Ratio to purchase IsoTis Shares to the Key Employees listed on Schedule S and to the other key employees of the GenSci US Subsidiary, with an exercise price equal to 100% of the average closing price of the IsoTis Shares on the SWX for the five trading days preceding the date of announcement of this Agreement, subject to the approval of the EuroNext and the SWX, and with new vesting terms and expiry date.  If prior to the Effective Date, IsoTis consolidates its outstanding
IsoTis Shares into a smaller number of shares, the number of new stock options will be proportionately decreased and the exercise price will be proportionately increased.

Non-Compete

	
  
7.16
  	
  
(a)
  	
  
For a period of two years after the Effective Date:
  

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(i)       GenSci   shall not, and shall cause its subsidiaries not to, engage in any business
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(A)          of   the type contemplated by the GenSci Business or conducted by GenSci US   Subsidiary (or any successor thereto) or IsoTis, or
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
(B)          in   the field of orthobiologics; and
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
(ii)      GenSci shall   not, and shall cause its subsidiaries not to, solicit or recruit any key   employee of GenSci US Subsidiary (or any successor thereto) or IsoTis.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      From and   after the Effective Date, neither GenSci nor any of its subsidiaries will use   the name “GenSci” for any purpose.
  

Transmittal Letters

7.17               As soon as possible after the Effective Date, GenSci shall cause Pacific Corporate to send (by first class mail) to each Person who was a holder of GenSci Shares immediately prior to the Effective Date at his address shown on the GenSci register of members, a transmittal letter specifying the consideration the Person is entitled to receive pursuant to the Arrangement, if any, and shall request those Persons to, and they shall, surrender for cancellation the share certificates representing their GenSci Shares held immediately prior to the Effective Date.  Pacific Corporate shall, upon receipt of properly completed transmittal letters, give notice of such to GenSci and GenSci shall cause Pacific Corporate to mail (by first class mail) the consideration due to the holder thereof as aforesaid.

Post-Closing Release of GenSci

7.18               Following the Effective Date, if the releases described in §4.1(z)(iii) have not been delivered to GenSci, IsoTis will use its reasonable best efforts to obtain the releases of GenSci by the GenSci US Subsidiary and the applicable counterparties for any agreements to which both GenSci and the GenSci US Subsidiary are parties which relate to the GenSci Business, provided such releases can reasonably be obtained by IsoTis without any expenditure of funds.  After the Effective Date, GenSci will not do anything or fail to do something which could lead to a breach of such agreements.

Post Closing Indemnity in Favour of IsoTis

7.19               Following the Effective Date, if the releases described in §4.1(z)(i) or (ii) have not been delivered to IsoTis, GenSci will indemnify and save IsoTis harmless from all cost and expense which IsoTis or the GenSci US Subsidiary incurs from the warrantholder(s) and contracting parties making any claim against IsoTis or the GenSci US Subsidiary.

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ARTICLE 8

GENERAL

Notice

8.1                All notices, requests, demands and other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended or delivered by registered or certified mail, return receipt requested, or if sent by facsimile transmission, upon receipt of oral confirmation that such transmission has been received, to the Person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such Person. The date of receipt of any such notice or other communication if delivered personally shall be deemed to be the date of delivery thereof, if sent by mail the date of receipt thereof, or if sent by facsimile transmission the date of such transmission.

	
  
 
  	
  
(a)
  	
  
if to IsoTis:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
18-20 Avenue de Sévelin
  
	
  
 
  	
  
 
  	
  
 
  	
  
1004 Lausanne
  
	
  
 
  	
  
 
  	
  
 
  	
  
Switzerland
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Attention:   Pieter Wolters
  
	
  
 
  	
  
 
  	
  
 
  	
  
                   Chief   Financial Officer
  
	
  
 
  	
  
 
  	
  
 
  	
  
Facsimile:  41 21 620 6060
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
with a copy to:
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Cravath, Swaine & Moore LLP
  
	
  
 
  	
  
 
  	
  
 
  	
  
City Point
  
	
  
 
  	
  
 
  	
  
 
  	
  
One Ropemaker Street
  
	
  
 
  	
  
 
  	
  
 
  	
  
London, United Kingdom
  
	
  
 
  	
  
 
  	
  
 
  	
  
ECY 9HR
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Attention:   Philip Boeckman
  
	
  
 
  	
  
 
  	
  
 
  	
  
Facsimile:   (44) 207 860 1150
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
and with a copy to:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
Lang Michener
  
	
  
 
  	
  
 
  	
  
 
  	
  
1500 Royal Centre
  
	
  
 
  	
  
 
  	
  
 
  	
  
1055 West Georgia Street
  
	
  
 
  	
  
 
  	
  
 
  	
  
P.O. Box 11117
  
	
  
 
  	
  
 
  	
  
 
  	
  
Vancouver, British Columbia
  
	
  
 
  	
  
 
  	
  
 
  	
  
V6E 4N7
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Attention:   Stephen D. Wortley
  
	
  
 
  	
  
 
  	
  
 
  	
  
Facsimile:   (604) 685-7084
  

- 69 -

	
  
 
  	
  
 
  	
  
and with a copy to:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
Klee, Tuchin, Bogdanoff & Stern LLP
  
	
  
 
  	
  
 
  	
  
 
  	
  
Fox Plaza
  
	
  
 
  	
  
 
  	
  
 
  	
  
2121 Avenue of the Stars, 33rd Floor
  
	
  
 
  	
  
 
  	
  
 
  	
  
Los Angeles, California 90067
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Attention:   David A. Fidler
  
	
   
  	
  
 
  	
  
 
  	
  
Facsimile:   (310) 407-9090
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
if to GenSci:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
2 Goodyear
  
	
  
 
  	
  
 
  	
  
 
  	
  
Irvine, CA 92618
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Attention:   Peter Ludlum
  
	
  
 
  	
  
 
  	
  
 
  	
  
Facsimile:   (949) 595-8710
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
with a copy to:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
McCullough O’Connor Irwin
  
	
  
 
  	
  
 
  	
  
 
  	
  
1100 - 888 Dunsmuir Street
  
	
  
 
  	
  
 
  	
  
 
  	
  
Vancouver, British Columbia
  
	
  
 
  	
  
 
  	
  
 
  	
  
V6C 3K4
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
Attention:   Jonathan McCullough
  
	
   
  	
  
 
  	
  
 
  	
  
Facsimile:   (604) 687-7099
  

Any such notice, direction or other instrument, whether delivered or transmitted by facsimile transmission, shall be deemed to have been given at the time and on the date on which it was delivered to or received in the office of the addressee, as the case may be, if delivered or transmitted prior to 5:00 p.m. (at the place of the addressee) on a Business Day or, if transmitted later than that time, at 9:00 a.m. (at the place of the addressee) on the subsequent Business Day. Either party hereto may change its address for service from time to time by notice given to the other party hereto in accordance with the foregoing. Any notice, direction or other instrument delivered under this Agreement shall be signed by one or more duly authorized officers of the party delivering it.

The delivery of any notice, direction or other instrument or a copy thereof to a party hereunder shall be deemed to constitute the representation and warranty of the party who has delivered it to the other party that such delivering party is authorized to deliver such notice, direction or other instrument at such time under this Agreement (unless the receiving party has actual knowledge to the contrary) and the receiving party shall not be required to make any inquiry to confirm such authority.

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Amendment

8.2                This Agreement may, at any time, and from time to time before and after the holding of the GenSci Meeting but not later than the Effective Date, be amended by written agreement of IsoTis and GenSci (or, in the case of a waiver, by written instrument of the party giving the waiver) without, subject to Applicable Law, further notice to or authorization on the part of GenSci Shareholders or the Court. Without limiting the generality of the foregoing, any such amendment may:

	
  
 
  	
  
(a)      change the   time for performance of any of the obligations or acts of the parties hereto;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      waive any   inaccuracies or modify any representation contained herein or in any   documents to be delivered pursuant hereto; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(c)      waive   compliance with or modify any of the covenants herein contained or waive or modify   performance of any of the obligations of the parties hereto;
  

provided that, notwithstanding the foregoing, the terms of the Arrangement and this Agreement shall not be amended in a manner prejudicial to GenSci Shareholders without the approval of such Shareholders given in the same manner as required for the approval of the Arrangement or as may be ordered by the Court.

Amendment Resulting from Final Order

8.3                This Agreement and the Arrangement may be amended in accordance with the Final Order by written agreement of IsoTis and GenSci.

Binding Effect

8.4                This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors.  Without limiting the generality of the foregoing, at IsoTis’s request, GenSci shall execute such documents as may be necessary or desirable to reaffirm this Agreement and shall ensure, for greater certainty, that GenSci’s motion to dismiss its bankruptcy case and the order granting such dismissal shall include a provision to the effect that any infirmity as to corporate powers caused by GenSci’s bankruptcy case is alleviated so as to make the this Agreement and any agreement contemplated hereunder to which GenSci is a party a binding obligation of GenSci, with effect as of May 31, 2003.

Remedies

8.5                Subject to §6.6, the parties hereto acknowledge and agree that an award of money damages would be inadequate for any breach of this Agreement by any party or its representatives and any such breach would cause the non-breaching party irreparable harm.  Accordingly, the parties hereto agree that, in the event of any breach or threatened breach of this Agreement by one of the parties, the non-breaching party will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance.  Such remedies will not be the exclusive remedies for any breach of this 

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Agreement but will be in addition to all other remedies available at law or equity to each of the parties.

Equitable Remedies

8.6                All covenants herein as to the enforceability of any covenant, agreement or document shall be qualified as to applicable bankruptcy and other laws affecting the enforcement of creditors’ rights generally and to the effect that specific performance, being an equitable remedy, may not be ordered by a court in any particular circumstances.

Public Statements

8.7                Except as required by Applicable Securities Laws, neither IsoTis nor GenSci shall make any public announcement or statement with respect to the Arrangement or this Agreement without the approval of the other party. Moreover, in any event, each party agrees to give prior notice to the other party of any public announcement relating to the Arrangement or its affairs and agrees to consult with the other party prior to issuing any such public announcement.

Entire Agreement

8.8                This Agreement: 

	
  
 
  	
  
(a)      except for   the Non-Disclosure Agreement, constitutes the entire agreement and supersedes   all other prior agreements and undertakings, both written and oral, between   GenSci and IsoTis relating to the subject matter hereof;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(b)      is not   intended to confer upon any other Person any rights or remedies; and
  
	
  
 
  	
  
 
  
	
   
  	
  
(c)      shall not be   assigned by operation of law or otherwise hereunder.
  

Time of Essence

8.9                Time shall be of the essence of this Agreement. 

Severability

8.10               If any provision of this Agreement, or the application thereof, is determined for any reason and to any extent to be invalid or unenforceable, the remainder of this Agreement and the application of such provision to other Persons and circumstances shall remain in full force and effect, provided that the legal or economic substance of the transactions contemplated hereby is not thereby affected in a manner adverse to either party.

Counterpart Executions and Facsimile Transmissions

8.11               This Agreement may be executed in counterparts, each of which when delivered (whether in originally executed form or by facsimile transmission) shall be deemed to be an original and both of which together shall constitute one and the same document.

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Expenses

8.12               Subject to §6.6, each party shall be responsible for its own expenses relating to the Arrangement including, without limitation, regulatory fees and fees of professional advisers, including legal counsel, investment bankers and auditors.

Investigation

8.13               Any investigation by a party and its advisers shall not mitigate, diminish or affect the representations and warranties of the other party contained in this Agreement or any document or certificate given pursuant thereto.

Further Assurances

8.14               The parties will do all such further acts and things and will execute such further documents and agreements as may be necessary to give effect to the terms and conditions of this Agreement.

Waiver

8.15               Any waiver or release of any of the provisions of this Agreement, to be effective, must be in writing executed by the party granting the same.

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Governing Law

8.16                This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

	
  
ISOTIS S.A.
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
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Authorized Signatory
  	
  
 
  
	
   
  	
  
 
  	
  
 
  
	
  
Per:
  	
  
 
  	
  
 
  
	
  
 
  	
  

  	
  
 
  
	
  
 
  	
  
Authorized Signatory
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
GENSCI REGENERATION SCIENCES   INC.
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
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