Document:

exv4w2

 

Exhibit 4.2

EXECUTION COPY

     AMENDMENT NO. 19 AND WAIVER dated as of June 29, 2007 (this
“Amendment”), to the Second Lien Credit Agreement dated as of July 29,
2004, among THERMADYNE INDUSTRIES, INC., a Delaware corporation
(“Industries”), THERMAL DYNAMICS CORPORATION, a Delaware corporation
(“Dynamics”), TWECO PRODUCTS, INC., a Delaware corporation (successor in
interest to Thermal Arc, Inc., “Tweco”), VICTOR EQUIPMENT COMPANY, a
Delaware corporation (“Victor”), C & G SYSTEMS, INC., an Illinois
corporation (“C & G”), STOODY COMPANY, a Delaware corporation (“Stoody”),
PROTIP CORPORATION, a Missouri corporation (“ProTip”), THERMADYNE
INTERNATIONAL CORP., a Delaware corporation (“International” and, together
with ProTip, Stoody, C & G, Victor, Tweco, Dynamics and Industries, the
“Borrowers”), the Guarantors party thereto, the Lenders from time to time
party thereto and CREDIT SUISSE, as administrative agent (in such
capacity, the “Administrative Agent”) and as collateral agent (in such
capacity, the “Collateral Agent”) (as amended by Amendment No. 1 and
Agreement effective as of September 30, 2004, by Amendment No. 2 and
Joinder Agreement dated as of November 22, 2004, by Amendment No. 3 and
Consent dated as of January 3, 2005, by Amendment No. 4 dated as of March
16, 2005, by Amendment No. 5 dated as of March 30, 2005, by Amendment No.
6 dated as of March 31, 2005, by Amendment No. 7 dated as of July 1, 2005,
by Amendment No. 8 dated as of August 8, 2005, by Amendment No. 9 dated as
of October 7, 2005, by Amendment No. 10 and Agreement dated as of November
7, 2005, by Amendment No. 11 and Agreement dated as of December 29, 2005,
by Amendment No. 12, Waiver and Consent dated as of March 9, 2006, by
Amendment No. 13 and Agreement dated as of April 5, 2006, by Amendment No.
14 and Consent dated as of May 9, 2006, by Amendment No. 15 dated as of
June 20, 2006, by Amendment No. 16, Waiver and Agreement dated as of July
21, 2006, by Amendment No. 17 and Agreement dated as of January 30, 2007,
and by Amendment No. 18, Limited Waiver and Consent dated as of March 29,
2007, the “Credit Agreement”).

     A. Pursuant to the Credit Agreement, the Lenders have made loans to the Borrowers.

     B. The Borrowers have informed the Administrative Agent that they intend (i) to amend and
restate the First Lien Credit Agreement (the “First Lien Amendment”) to, among other things,
increase the Revolving Loan Commitment (as defined therein), and (ii) to make borrowings under the
First Lien Credit Agreement on the Amendment Effective Date (as defined below) and to use the
proceeds of such borrowings to, among other things, prepay in full the Loans held by GSO Special
Situations Fund LP (“GSO”,

 

 

 2

and such payment, the “GSO Prepayment”) in an aggregate principal amount of $14,000,000,
together with accrued interest thereon, and to pay fees and expenses incurred in connection with
the foregoing.

     C. In connection with the foregoing, the Borrowers have requested that the Administrative
Agent and the Lenders agree to (i) amend and waive certain provisions of the Credit Agreement and
(ii) authorize the Administrative Agent to enter into an amendment (the “Intercreditor Amendment”)
to the Intercreditor Agreement to increase the Maximum First Lien Principal Amount (as defined
therein) thereunder.

     D. The Lenders are willing so to amend the Credit Agreement and to waive certain provisions
thereof and to authorize the Administrative Agent to enter into the Intercreditor Amendment as set
forth herein.

     E. Capitalized terms used but not defined herein shall have the meanings assigned to them in
the Credit Agreement.

     Accordingly, in consideration of the mutual agreements herein contained and other good and
valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties
hereto agree as follows:

     SECTION 1. Waiver; Authorization; GSO Prepayment. (a) The Lenders hereby waive compliance
with the provisions of Section 2.16 of the Credit Agreement to the extent (but only to the extent)
necessary to permit the making of the GSO Prepayment on a non-pro rata basis to GSO and not to any
other Lender.

     (b) The Lenders hereby authorize and direct the Administrative Agent to enter into the
Intercreditor Amendment.

     (c) On the Amendment Effective Date, Borrowers shall make, through the Administrative Agent,
the GSO Prepayment.

     SECTION 2. Amendments. (a) The definition of the term “Applicable Percentage” set forth in
Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as
follows:

          ““Applicable Percentage” shall mean (i) with respect to any Eurodollar Loan, 2.75% and (ii)
with respect to any ABR Loan, 1.75%.”

     (b) The definition of the term “EBITDA” is hereby amended by (i) inserting immediately after
clause (c)(viii) thereof the words “and (ix) any non-cash loss resulting from a revaluation of any
interest rate swap”, (ii) deleting the word “and” at the end of clause (8) thereof and (iii)
deleting the period at the end of clause (9) thereof and substituting therefore the following: “;
and (10) any write off of previously deferred financing charges incurred in connection with this
Agreement or the First Lien Credit Agreement. For the measuring periods ending June 30, 2007 and
September 30, 2007, EBITDA shall be calculated as follows: (a) for the measuring period ending June
30, 2007, EBITDA shall equal the actual amounts thereof for the period from January 1,

 

3

2007 through June 30, 2007 multiplied by 2.0 and (b) for the measuring period ending September 30,
2007, EBITDA shall equal the actual amounts thereof for the period from January 1, 2007 through
September 30, 2007 multiplied by 1.33.”

     (c) The definition of the term “Leverage Ratio” set forth in Section 1.01 of the Credit
Agreement is hereby amended by inserting the words “, less Subordinated Debt” after the words “as
of any date of determination” at the end of clause (a) thereof.

     (d) The definition of the term “Maturity Date” set forth in Section 1.01 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:

          ““Maturity Date” shall mean November 7, 2010.”

     (e) Section 2.11(b) of the Credit Agreement is hereby amended by deleting the proviso at the
end thereof and inserting the following in its place:

          “provided, however, that optional prepayments of Loans made on or prior to November 30, 2008
shall be accompanied by a prepayment fee in an amount (expressed as a percentage of the principal
amount of the Loans to be prepaid) equal to 1.0%; provided further that no such fee shall be
payable after November 30, 2007, upon a termination of the Loans and payment in full of the
Obligations in conjunction with a Change of Control.”

     (f) Section 6.02(i) of the Credit Agreement is hereby amended by (x) deleting the number
“$6,700,000” thereof and inserting “$5,000,000 in its place” and (y) inserting the following
proviso at the end thereof:

          “provided further that to the extent a portion of the $5,000,000 basket amount is invested in
Thermadyne Victor Ltda. that portion of the basket amount may be restored to the extent of cash
received by any Borrower constituting proceeds of the sale of assets or stock of Thermadyne Victor
Ltda.;”

     (g) Section 6.02(n) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

          “[Intentionally Omitted]”

     (h) Section 6.03(b) of the Credit Agreement is hereby amended by (i) deleting from clause (v)
thereof the words “(as determined by the Administrative Agent in its sole discretion)”, (ii)
deleting the word “and” at the end of clause (iv) thereof and (iii) deleting the period at the end
of clause (v) thereof and substituting therefore the following:

          “; (vi) voluntary prepayments of the High Yield Notes at any time during a fiscal year after
the mandatory prepayment of the High Yield Notes for that fiscal year (as described in clause (v)
above) has been paid; provided that the following conditions shall be met: (x) no Event of Default
shall have occurred and be continuing both before and after giving effect to such prepayment, (y)
after giving effect to any such prepayment the average daily Borrowing Availability, as determined
by the First Lien Agent, shall have been not less than $15,000,000 (with all trade payables being
paid current other than those being contested in the ordinary course of business) during the 30-day
period

 

4

immediately prior to such payment and (z) Borrowers shall deliver to the Administrative Agent
projections demonstrating that the average daily Borrowing Availability shall not be less than
$15,000,000 (with all trade payables being paid current) during the 30-day period after the date of
such voluntary prepayment; and (vii) mandatory prepayments of the High Yield Notes with proceeds of
Asset Dispositions, as defined in, and to the extent required by Section 4.06 of the Indenture
Agreement.”

     (i) Section 6.10 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

          “SECTION 6.10. Senior Leverage Ratio. Holdings and its Subsidiaries, on a consolidated basis
at the end of each Fiscal Quarter, shall not permit the Leverage Ratio as of the last day of that
Fiscal Quarter and for the 12-month period then ended to be more than 3.00.”

     (j) Section 10.11 of the credit agreement is hereby amended and restated in its entirety to
read as follows:

          “SECTION 10.11. Section 956 of the IRC. If the Obligations incurred hereunder by any
Guarantor that is a Foreign Subsidiary would result in adverse tax liabilities under Section 956 of
the IRC (or any similar statute) for Borrowers or the other Credit Parties (as demonstrated by
Borrowers in a manner reasonably satisfactory to Administrative Agent), at Borrowers’ request, the
Administrative Agent shall take one or more of the following actions, as requested, (a) release the
Collateral Agent’s Liens on such Foreign Subsidiary’s assets, (b) reduce the pledge of such Foreign
Subsidiary’s stock to 65% of its voting Stock, (c) release such Foreign Subsidiary from its
Guaranty of the Obligations and (e) make such other amendments or modifications to this Agreement
as are mutually agreed upon by Required Lenders and the Borrowers to reflect the foregoing
(collectively, a “956 Discharge”); provided that after giving affect to such 956 Discharge (x) no
Event of Default shall have occurred, (y) the average daily Borrowing Availability (as defined in
the First Lien Credit Agreement) shall have been not be less than $15,000,000 (with all trade
payables being paid current other than those being contested in the ordinary course of business)
during the 30-day period immediately prior to such 956 Discharge, and (z) Borrowers shall deliver
to the Administrative Agent projections demonstrating that the average daily Borrowing Availability
shall not be less than $15,000,000 (with all trade payables being paid currently) for the 30-day
period after the date of such 956 Discharge.”

     SECTION 3. Representations and Warranties. To induce the other parties hereto to enter into
this Amendment, the Credit Parties represent and warrant to each of the Lenders, the Administrative
Agent and the Collateral Agent, that, after giving effect to this Amendment, (a) the
representations and warranties set forth in Article III of the Credit Agreement are true and
correct in all material respects on and as of the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date, and (b) no Default or Event of
Default has occurred and is continuing.

     SECTION 4. Effectiveness. This Amendment shall become effective as of the date set forth
above on the date (the “Amendment Effective Date”) on which the Administrative Agent shall have
received:

 

5

     (a) counterparts of this Amendment that, when taken together, bear the signatures of the
Borrowers, the Lenders and the Administrative Agent;

     (b) a copy of a fully executed and delivered First Lien Amendment, in form and substance
reasonably satisfactory to the Administrative Agent;

     (c) a copy of a fully executed and delivered Intercreditor Amendment, in form and substance
reasonably satisfactory to the Administrative Agent;

     (d) payment in full of all fees and other amounts due and payable on or prior to such date
hereunder or under any other Loan Document; and

     (e) such legal opinions, board resolutions and other certificates and documentation as shall
be reasonably requested by the Lenders.

     SECTION 5. Effect of Amendment. Except as expressly set forth herein, this Amendment shall
not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the
rights and remedies of the Lenders, the Administrative Agent or the Collateral Agent under the
Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and
shall continue in full force and effect. Nothing herein shall be deemed to entitle any Credit
Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Credit Agreement or any other
Loan Document in similar or different circumstances. This Amendment shall apply and be effective
only with respect to the provisions of the Credit Agreement specifically referred to herein. After
the date hereof, any reference to the Credit Agreement shall mean the Credit Agreement, as modified
hereby. This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement
and the other Loan Documents.

     SECTION 6. Counterparts. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute but one and the
same contract. Delivery of an executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

     SECTION 7. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

     SECTION 8. Headings. The headings of this Amendment are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.

     SECTION 9. Expenses. The Borrowers agree to reimburse the Administrative Agent for all
out-of-pocket expenses in connection with this Amendment, including the

 

6

reasonable fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the
Administrative Agent.

     SECTION 10. Reaffirmation. Each of the Guarantors hereby acknowledges receipt and notice of,
and consents to the terms of, this Amendment, and affirms and confirms its guarantee of the
Obligations and, if applicable, the pledge of and/or grant of a security interest in its assets as
Collateral to secure the Obligations, all as provided in the Collateral Documents as originally
executed, and acknowledges and agrees that such guarantee, pledge and/or grant of security interest
continue in full force and effect in respect of, and to secure, the Obligations under the Credit
Agreement, as amended hereby, and the other Loan Documents.

 

     IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed and
delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 	 
	 	 	THERMADYNE INDUSTRIES, INC.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	THERMAL DYNAMICS CORPORATION,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	TWECO PRODUCTS, INC.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	VICTOR EQUIPMENT COMPANY,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	C & G SYSTEMS, INC.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	STOODY COMPANY,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel

 

 

	 	 	 	 	 
	 	 	PROTIP CORPORATION,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	THERMADYNE INTERNATIONAL
CORP.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	THERMADYNE HOLDINGS CORPORATION,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	MECO HOLDING COMPANY,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	C&G SYSTEMS HOLDING, INC.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	CIGWELD PTY LTD.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel

 

 

	 	 	 	 	 
	 	 	DUXTECH PTY LTD.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	QUETACK PTY, LTD.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	QUETALA PTY, LTD.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	THERMADYNE AUSTRALIA PTY
LTD.,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	THERMADYNE INDUSTRIES
LIMITED,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel
	 
	 	 	 	 
	 	 	THERMADYNE WELDING
PRODUCTS CANADA LIMITED,
	 
	 	 	 	 
	 

	 	by	 	/s/ Patricia S. Williams
	 

	 	 	 	 
	 

	 	 	 	Name: Patricia S. Williams
	 

	 	 	 	Title: Vice President, Secretary
& General Counsel

 

 

	 	 	 	 	 
	 	 	CREDIT SUISSE, CAYMAN
ISLANDS BRANCH, as
Administrative Agent and
Collateral Agent,
	 
	 	 	 	 
	 

	 	by	 	/s/ Brian T. Caldwell
	 

	 	 	 	 
	 

	 	 	 	Name: Brian T. Caldwell
	 

	 	 	 	Title: Director
	 
	 	 	 	 
	 

	 	by	 	/s/ Shaheen Malik
	 

	 	 	 	 
	 

	 	 	 	Name: Shaheen Malik
	 

	 	 	 	Title: Associate

 

 

	 	 	 	 	 
	 	 	NORTHWOODS CAPITAL IV, LIMITED, 

 as a Lender,
	 
	 	 	 	 
	 	 	By: Angelo, Gordon &
Co., L.P., as Collateral
Manager,
	 
	 	 	 	 
	 

	 	by	 	/s/ Bruce Martin
	 

	 	 	 	 
	 

	 	 	 	Name: Bruce Martin
	 

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	NORTHWOODS CAPITAL V, LIMITED, 

 as a Lender,
	 
	 	 	 	 
	 	 	By: Angelo, Gordon &
Co., L.P., as Collateral
Manager,
	 
	 	 	 	 
	 

	 	by	 	/s/ Bruce Martin
	 

	 	 	 	 
	 

	 	 	 	Name: Bruce Martin
	 

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	NORTHWOODS CAPITAL VI, LIMITED,

 as a Lender,
	 
	 	 	 	 
	 	 	By: Angelo, Gordon &
Co., L.P., as Collateral
Manager,
	 
	 	 	 	 
	 

	 	by	 	/s/ Bruce Martin
	 

	 	 	 	 
	 

	 	 	 	Name: Bruce Martin
	 

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	NORTHWOODS CAPITAL VII, LIMITED, 

 as a Lender,
	 
	 	 	 	 
	 	 	By: Angelo, Gordon &
Co., L.P., as Collateral
Manager,
	 
	 	 	 	 
	 

	 	by	 	/s/ Bruce Martin
	 

	 	 	 	 
	 

	 	 	 	Name: Bruce Martin
	 

	 	 	 	Title: Managing Director

 

 

	 	 	 	 	 
	 	 	GSO SPECIAL SITUATIONS FUND LP, as a Lender,
	 
	 	 	 	 
	 

	 	by	 	/s/ George Fan
	 

	 	 	 	 
	 

	 	 	 	Name: George Fan
	 

	 	 	 	Title: Chief Legal Officerexv10w1

 

Exhibit 10.1

SEPARATION AND GENERAL RELEASE AGREEMENT

     This Separation and General Release Agreement (this “Agreement”) is being entered into as of
this 29 day of June 2007 (the “Date of this Agreement”), by and between IsoTis, Inc., a Delaware
corporation (the “Company”), and Kathryn Liljestrand, an individual (“Employee”) (each of the
Company and Employee is sometimes hereinafter referred to individually as a “Party” and
collectively as the “Parties”), with respect to the following facts.

     WHEREAS, Employee and IsoTis SA were the parties to that certain Employment Agreement (the
“2006 Employment Agreement”) dated as of May 17, 2006, and Employee’s position with IsoTis SA was
Vice President of Sales.

     WHEREAS, the Company acquired IsoTis SA in or about January 2007.

     WHEREAS, Employee and the Company are the parties to that certain Employment Agreement dated
as of January 31, 2007, as amended by that certain Amendment to Employment Agreement dated as of
February 22, 2007 (the “Amendment”) (collectively, the “2007 Employment Agreement” and with the
superseded 2006 Employment Agreement, the “Employment Agreements”).

     WHEREAS, Employee is currently employed by the Company as Vice President of Marketing (the
“Position”).

     WHEREAS, the Parties wish to terminate their employment relationship subject to the terms and
conditions set forth below.

     WHEREFORE in consideration of the foregoing premises and the terms and conditions set forth
below, the Parties agree as follows:

     1. Termination.

          a. Termination Date. Employee hereby resigns from the Position and her employment with the
Company as of July 31, 2007 (the “Termination Date”); Employee shall continue to receive salary at
an annual rate of $182,875 (the “Salary”) through the Termination Date. Between the Date of this
Agreement and July 31, 2007, Employee shall not report to work, unless requested to do so, but
shall be available by telephone during regular business hours, upon reasonable request to assist in
the transition of her responsibilities. Except as otherwise provided for in this Agreement, the
rights and obligations of Employee and the Company under the Employment Agreements shall terminate
on the Termination Date and shall have no further force or effect after the Termination Date.

          b. In lieu of any compensation, benefits or severance under the Employment Agreements, the
Company and Employee agree as follows:

 

 

               (1) Consistent with Section 5.7(b)(i) of the 2007 Employment Agreement, on July 31,
2007, the
Company shall pay to Employee $91,437.50, less applicable withholding, which represents 50 percent
of the Salary, as provided in Section 5.7(b)(i) of the 2007 Employment Agreement;

               (2) Consistent with Section 5.7(b)(i) the 2007 Employment Agreement, on July 31,
2007, the
Company shall pay to Employee $18,228.25, less applicable withholding, which represents 50 percent
of the Average Annual Bonus;

               (3) Consistent with Section 5.7(b)(iii) of the Employment Agreement, on July 31,
2007, the
Company shall pay Employee, $17,394.12, less applicable withholding, which represents 18 times the
portion of the monthly COBRA premium in effect as of the Termination equal Date equal to the
difference between such monthly COBRA premium and Employee’s monthly contribution towards health
care benefits immediately prior to the Termination Date;

               (4) Consistent with Section 5.7(b)(ii) of the 2007 Employment Agreement, on July 31,
2007, 50
percent of any stock options or restricted stock grants held by Employee that are unvested as of
that date shall be vested, as provided in Section 5.7(b)(ii) of the 2007 Employment Agreement;

               (5) In the event that there is a Change in Control, as defined in Section 5.8 of the 2007
Employment Agreement, of the Company on or before July 31, 2007, in lieu of the payments provided
in Sections 1.b.(1) and (2), and the vesting provided in Section 1.b.(4) below, Employee shall
receive a payment equal to the Salary plus the Average Annual bonus, and shall vest in all unvested
stock options or restricted stock. It is understood by the Parties that the following does not
constitute a Change in Control: (a) an announcement of a proposed change in the membership of the
Board of Directors that would constitute a Change in Control under Section 5.8(a) of the 2007
Employment Agreement, but which has not yet occurred; (b) an announcement of the proposed
acquisition of the voting securities of the Company that would constitute a Change in Control under
Section 5.8(b) of the 2007 Employment Agreement, but which has not been closed; and/or (c) an
announcement of an event that would constitute a Change in Control under Section 5.8(c) of the 2007
Employment Agreement if approved by the Company’s Stockholders, but which has not yet been approved
by the Stockholders.

          c. No Future Compensation or Benefits. Except as provided for in this Agreement,
Employee understands and agrees that she is giving up any right or claim to further compensation
from the Company, and that she has no further rights, and the Company has no further obligations
under the Employment Agreements.

          d. Announcements. Employee and the Company agree that the Company will release an
internal announcement of Employee’s departure from the Company and external announcements as
required by law and/or as it deems appropriate for business purposes on the Date of this Agreement
or thereafter. With regard to the circumstances of Employee’s departure, the announcements shall
state that Employee resigned her employment with the Company and her resignation was accepted. To
the extent required by law, the Company shall report the terms of separation.

 

 

     2. Releases by Employee.

          a. Employee Release. In exchange for the consideration set forth in this Agreement,
Employee does hereby release and forever discharge the “Company Releasees” herein, consisting of
the Company, its parent, subsidiary and affiliate corporations, and each of their respective past
and present parents, subsidiaries, affiliates, associates, owners, members, stockholders,
predecessors, successors, assigns, employees, agents, directors, officers, partners,
representatives, lawyers, and all persons acting by, through, under, or in concert with them, or
any of them, of and from any and all manner of claims or causes of action, in law or in equity, of
any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), that
Employee now has or may hereafter have against the Company Releasees by reason of any and all acts,
omissions, events or facts occurring or existing prior to the date hereof. The Claims released
hereunder include, without limitation, any alleged breach of any express or implied agreement
(including, without limitation, the Employment Agreements); any alleged torts or other alleged
legal restrictions relating to Employee’s employment by the Company and the termination thereof;
and any alleged violation of any federal, state or local statute or ordinance including, without
limitation, Title VII of the Civil Rights Act of 1964, as amended, 42 USC Section 2000, et
seq.; Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et
seq.; Age Discrimination in Employment Act, as amended, 29 USC Section 621, et
seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.;
Civil Rights Act of 1866, and Civil Rights Act of 1991; 42 USC Section 1981, et
seq.; Equal Pay Act, as amended, 29 USC Section 206(d); regulations of the Office of
Federal Contract Compliance, 41 CFR Section 60, et seq.; The Family and Medical
Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of
1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security
Act, as amended, 29 U.S.C. § 1001 et seq.; and the California Fair Employment and
Housing Act, California Government Code Section 12940, et seq. This release shall
not apply to the Company’s obligations under this Agreement or to the Company’s obligations under
applicable law, including, without limitation, California Labor Code Section 2802, to indemnify,
defend, and hold Employee harmless from and against any claims asserted by any person or entity
against Employee arising from or related to Employee’s employment with the Company.

          b. Unknown Claims.

               Employee acknowledges that Employee is familiar with the provisions of California Civil Code
Section 1542, which provides as follows:

“A general release does not extend to claims which the creditor does not
know or suspect to exist in his or her favor at the time of executing the
release, which, if known by him or her must have materially affected his or
her settlement with the debtor.”

Employee, being aware of said code section, hereby expressly waives any rights Employee may have
thereunder, as well as under any other statutes or common law principles of similar effect.

 

 

          c. Older Worker’s Benefit Protection Act.

     Employee agrees and expressly acknowledges that this Agreement includes a waiver and release
of all claims which she has or may have under the Age Discrimination in Employment Act of 1967, as
amended, 29 U.S.C. § 621, et seq. (“ADEA”). The following terms and conditions
apply to and are part of the waiver and release of the ADEA claims under this Agreement:

     (1) This paragraph, and this Agreement are written in a manner calculated to be
understood by Employee.

     (2) The waiver and release of claims under the ADEA contained in this Agreement does
not cover rights or claims that may arise after the date on which she signs this Release.

     (3) The Agreement provides for consideration in addition to anything of value to which
Employee is already entitled.

     (4) Employee has been advised to consult an attorney before signing this Agreement.

     (5) Employee has been granted twenty-one (21) days after she is presented with this
Agreement to decide whether or not to sign this Agreement. If she executes this Agreement
prior to the expiration of such period, Employee does so voluntarily and after having had
the opportunity to consult with an attorney, and hereby waives the remainder of the
twenty-one (21) day period.

     (6) Employee has the right to revoke this general release within seven (7) days of
signing this Agreement. In the event this general release is revoked, Employee understands
that this Agreement will be null and void, and she will not be entitled to any compensation
or benefits under this Agreement.

     Ifs he wishes to revoke this Agreement, Employee shall deliver written notice stating his
intent to revoke this Agreement to Pieter Wolters, President and Chief Executive Officer, at the
offices of the Company on or before 5:00 p.m. on the Seventh (7th) Day after the date on
which she signs this Agreement.

          d. No Assignment. Employee represents and warrants to the Company Releasees
that there has been no assignment or other transfer of any interest in any Claim that the
Employee may have against the Company Releasees, or any of them. Employee agrees to
indemnify and hold harmless the Company Releasees from any liability, claims, demands,
damages, costs, expenses and attorneys’ fees incurred as a result of any person asserting
such assignment or transfer of any right or claims under any such assignment or transfer
from Employee.

          e. No Actions. Employee agrees that if Employee hereafter commences, joins
in, or in any manner seeks relief through any suit arising out of, based

 

 

upon, or relating to any of the Claims released hereunder or in any manner asserts
against the Company Releasees any of the Claims released hereunder, then Employee will pay
to the Company Releasees against whom such claim(s) is asserted, in addition to any other
damages caused thereby, all attorneys’ fees incurred by such Company Releasees in defending
or otherwise responding to said suit or Claim. Provided, however, that Employee shall not
be obligated to pay the Company Releasees’ attorney’s fees to the extent such fees are
attributable to claims under the Age Discrimination in Employment Act or a challenge to the
validity of the release of claims under the Age Discrimination in Employment Act

     3. No Admission. Employee and the Company further understand and agree that neither
the payment of money nor the execution of this Agreement, including the release provided for in
Section 2, shall constitute or be construed as an admission of any liability whatsoever by either
Party.

     4. Severability. The provisions of this Agreement are severable, and if any part of
this Agreement is found to be unenforceable, the other paragraphs (or portions thereof) shall
remain fully valid and enforceable.

     5. No Encouragement of Actions. Employee agrees that she will not assist any person
or entity in bringing or pursuing legal action against the Company, its agents, successors,
representatives, employees and related and/or affiliated companies, based on events occurring prior
to the Termination Date; provided, however, that this Section 5 shall not apply to any legal action
arising from or related to this Agreement or to any conduct compelled by or pursuant to applicable
law, nor shall it prohibit, in any way, Employee from responding to a subpoena or taking any other
action required by law..

     6. No Disparagement By Employee. Employee shall not make, or cause to be made, any
untrue statements to any person or entity that disparage, are inimical to, or damage the reputation
of, the Company, its officers, directors, employees, or agents; provided that, if a legitimate
inquiry is made to Employee, she may state that he formerly was associated with the Company,
identify her association and responsibilities and give the dates of her association.

     7. No Disparagement by the Company. The Company shall not make, or cause to be made
any untrue statements to any person or entity that disparage, are inimical to, or damage the
reputation of Employee. Following Employee’s departure from the Company, the Company shall
instruct its executive employees to advise any third parties requesting Employee by name that
Employee is no longer with the Company and to provide the appropriate contact information for
Employee.

     8. Confidential Information. Employee’s obligations under Section 6 of the 2007
Employment Agreement with respect to Confidential Information of the Company shall remain in full
force and effect and shall survive the termination of the Employment Agreements.

     9. Company Property. Employee agrees to search his/her home, office and all other
storage areas for all property owned by the Company and to return all Company equipment to the
Company on or before the Termination Date.

 

 

     10. Choice of Law and Venue. The Parties acknowledge and agree that this Agreement
shall be interpreted in accordance with California law. Any actions arising out of or relating to
this Agreement or Employee’s service with the Company shall be filed in either the Superior Court
of the State of California for the County of Orange, or the Federal District Court for the Central
District of California, unless subject to arbitration, in which case they shall be filed in
accordance with the Parties’ arbitration agreement. 

     11. Sole and Entire Agreement. This Agreement represents the sole and entire
agreement among the Parties and supersedes all prior agreements (including, without limitation, the
Employment Agreement), negotiations, and discussions between the Parties hereto and/or their
respective counsel, excluding any agreements concerning arbitration of disputes, confidentiality,
trade secret information, or assignment of intellectual property rights. Any agreement amending or
superseding this Agreement must be in writing, signed by duly authorized representatives of the
Parties, specifically reference this Agreement; and state the intent of the Parties to amend or
supersede this Agreement.

     12. Arbitration. The Parties hereby agree to submit any claim or dispute arising out
of or relating to the terms of this Agreement to private and confidential arbitration by a single
neutral arbitrator. Subject to the terms of this Section, the arbitration proceedings shall be
governed by the rules of the Judicial Arbitration and Mediation Service (“JAMS”) applicable to
employment disputes as they may be in effect from time to time, and shall take place in Orange
County, California. The arbitrator shall be appointed by agreement of the Parties hereto or, if no
agreement can be reached, by the JAMS pursuant to its rules. The decision of the arbitrator shall
be rendered in writing and be final and binding on all Parties to this Agreement, and judgment
thereon may be entered in any court having jurisdiction. The arbitrator’s fees and/or any other
fees payable to JAMS shall be shared in accordance with the rules of JAMS; provided, however, that
Employee shall not be required to pay any such fees that are unique to arbitration and/or would
exceed the cost of filing the same claim(s) in a court of competent jurisdiction, and any shortfall
shall be borne by the Company. The Parties shall each bear their own attorneys’ fees, witness
expenses, expert fees and other costs, except to the extent they may be awarded otherwise by the
arbitrator in accordance with applicable law. This arbitration procedure is intended to be the sole
and exclusive method of resolving any claim between the Parties, and each of the Parties hereby
waives any right to a jury trial with respect to such claims.

     13. Headings. The headings in this Agreement are provided solely for the Parties’
convenience, and are not intended to be part of, nor to affect or alter the interpretation or
meaning of this Agreement.

     14. Construction of Agreement. Both Parties have been represented by, or had the
opportunity to be represented by counsel in connection with this Agreement. Any rule of
construction to the effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.

     15. Counterparts. For the convenience of the Parties hereto, this Agreement may be
executed in any number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same agreement.

 

 

     16. Authority to Execute this Agreement. The person or persons executing this
Agreement on behalf of a Party warrants and represents that he or she has the authority to execute
this Agreement on behalf of the Party and has the authority to bind that Party to the performance
of its obligations hereunder.

[Remainder of Page Intentionally Left Blank]

 

 

     IN WITNESS WHEREOF, the parties have entered into this Separate and General Release Agreement
as of the date first set forth above.

	 	 	 	 	 	 	 
	 	 	“COMPANY”
	 
	 	 	 	 	 	 
	 	 	IsoTis, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pieter Wolters	 	 
	 

	 	 	 	 	 	 
	 	 	Name: CEO	 	 
	 	 	Title: Pieter Wolters	 	 
	 
	 	 	 	 	 	 
	 	 	“EMPLOYEE”	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Kathryn Liljestrand      6/29/07	 	 
	 	 	 	 	 
	 	 	Kathryn Liljestrand

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