Document:

EXHIBIT 10.1

IsoTis

	
  
To:
  	
  
Pieter Wolters
  
	
  
CC:
  	
  
Kerri Luchs
  
	
  
From:
  	
  
Jacques Essigner
  
	
  
Date:
  	
  
December 31, 2003
  
	
  
Subject :
  	
  
Transfer to North American Division
  

Effective January 1, 2004 you will be transferred to the North American Division of IsoTis SA, known as IsoTis OrthoBiologics, Inc.

In consideration, of this transfer you will be entitled to the following:

	
   
  	
  
Annual Base Salary:
  	
  
$250,000
  
	
  
 
  	
  
Car Allowance:
  	
  
$500.00
  
	
  
 
  	
  
Bonus:
  	
  
TBD by the BOD Remuneration Committee
  

As such, you will be compensated via the North American Division payroll system and subject to local (California) and federal (United States) tax withholdings.  In addition, you will eligible for local benefits (medical, dental, vision & disability) in accordance with the North American Division Employee Handbook.

Please be advised that your current employment agreement between IsoTis, SA and yourself will remain in tact and as such, will be governed and enforced according to Swiss law.

Acknowledgement:

	
  
/s/ PIETER WOLTERS
  	
  
 
  	
  
February 9, 2004
  
	
  

  	
   
  	
  

  
	
  
Pieter Wolters
  	
  
 
  	
  
Date
  
	
  
 
  	
  
 
  	
  
 
  

	
  

  
	
  
Avenue   de Sévelin, 18-20
  	
  
Prof. Bronkhorstlaan 10-S
  
	
  
CH-1004   Lausanne
  	
  
NL-3723 MB Bilthoven
  
	
  
Tel:   +41 21 620 60 00
  	
  
Tel: +31 30 229 52 29
  
	
  
Fax:   +41 21 620 60 60
  	
  
Fax: +31 30 228 02 55
  

RESTATED AND AMENDED

EMPLOYMENT AGREEMENT

between

ISOTIS SA, having its registered office in Lausanne, Switzerland, hereinafter to be referred to as “the Company”.

and

Pieter WOLTERS, born in Nijmegen, domiciled at Mauritsstraat 5, 3583 HE Utrecht, The Netherlands, and relocating to 806 Cliff Drive, Laguna Beach, 92651 CA, USA, by early January 2004, “hereinafter to be referred to as: “the Employee”;

WHEREAS:

	
  
 
  	
  
•
  	
  
The Employee has been employed by IsoTis N.V.,   having its registered office in Amsterdam, in the function of Chief Financial   Officer since 1997 (contract dated September 1997), has been member of IsoTis   NV’s Statutory Management Board since mid 1998 and has acted as CEO of IsoTis   NV for part of 2002.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
•
  	
  
ISOTIS N.V. and Modex Therapeutics SA merged   effective December 2002. The Company, which has been renamed IsoTis SA, and   IsoTis N.V., together with other group companies, form the IsoTis Group.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
•
  	
  
In December 2002, the Employee has been offered and   has accepted the position of CFO and Director Business Development of the   Company, and is member of the Company’s Executive Committee, together with   the Chief Executive Officer and the Chief Operating Officer of the   Company.  He is since bound by Employment   agreements with IsoTis SA and IsoTis NV, reflecting an expected 1:2 division   of time to be spent in Switzerland respectively The Netherlands.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
•
  	
  
On October 27, 2003, the Company has acquired   effective control of GenSci Orthobiologics, Inc. based in Irvine, California,   meanwhile renamed IsoTis OrthoBiologics Inc.    The Employee has been requested by the Board and has accepted to be   relocated in Irvine per January 2004.
  

	
   
  	
  
•
  	
  
For the sake of clarity and completeness, the   Parties have agreed to restate hereby the existing Employment agreements,   which shall be terminated as of December 31, 2003.
  

Article 1 : Appointment

	
  
1.
  	
  
The Employee is Chief Financial Officer (CFO)   and Director Business Development of the Company.  He is member of the Company’s Executive Committee.  He reports to the Chief Executive Officer   and where required under regulations applicable in the US, Canada,   Switzerland or the Netherlands, to (Committee’s of) the Board.
  

Article 2 : Employment Term

	
  
2.1
  	
  
For the purpose of this Agreement, the Date of Hire   is set as December 1, 1997, the date of hire by IsoTis NV.
  
	
  
 
  	
  
 
  
	
  
2.2
  	
  
The appointment date as Chief Financial Officer of   the Company took effect on 9 December 2002 (the Start date).
  
	
   
  	
  
 
  
	
  
2.3
  	
  
The Agreement will remain in force until it is   terminated by either party by giving the other written notice as per the   terms of article 14 hereinafter.
  

Article 3 : Capacity and Duties

	
  
3.1
  	
  
The Employee shall perform all his duties according   to the job description and responsibilities attached to this Agreement as Schedule   B which forms an integral part of this Agreement.
  
	
  
 
  	
  
 
  
	
  
3.2
  	
  
The Employee wil1 devote his best effort, attention   and abilities to fulfill the business and the affairs of the Company and   shall observe instructions and guidelines issued by the Board of Directors.
  
	
  
 
  	
  
 
  
	
  
3.3
  	
  
The contents of the function of the Employee can be   changed after consultation with the Employee.
  
	
   
  	
  
 
  
	
  
3.4
  	
  
Without the prior written consent of the Company,   the Employee shall not undertake - whether or not against payment - any   additional activity for/with third parties and/for conduct business for his   own account.
  

Article 4 : Remuneration

	
  
4.1
  	
  
The Employee’s remuneration compensating its   activity is described in Schedule B to this Agreement.
  
	
  
 
  	
  
 
  
	
  
4.2
  	
  
Bonuses or other variable pay components, described   in Schedule B as revised from time to time, will be determined by the Board   of the Company and will be aligned with the Company’s policy for Executive   Committee members.
  

Article 5 : Social security and withholding tax

	
  5.1
  	
  
Under international social security regulations, the   remuneration is expected to be subject to the deduction and the withholding   of all amounts required to be deducted and withheld under applicable laws of   the United States and the state of California, be it for tax, social security   (so as contribution to pension scheme), insurance (so as invalidity,   unemployment and accident insurance) or other such purposes.
  
	
  
 
  	
  
 
  
	
  
5.2
  	
  
Should the Employee be unable to perform his duties   by reason of accident, he shall be compensated upon the terms and conditions   of the insurance policy of the Company to which reference is made. The   Employee’s contributions shall be deducted from his compensation. The payment   by the Company of the insurance contributions shall release the Company from   paying the compensation of the Employee in case of accident or illness.
  
	
  
 
  	
  
 
  
	
  
5.3
  	
  
If the Emp1oyee as expected will be covered by the   social security system of the United States under international social   security treaties, all amounts which would have been withheld if the Employee   would have been subject to Swiss social security, insurance and pension plans   as described in articles 5.1 and 5.2 will be made available to Employee to   allow for (continuation of) his social security, insurance and pension   coverage in either the US or the Netherlands.
  

Article 6: Expenses

	
  
6
  	
  
The Employee will be reimbursed, upon submission of   all relevant documentation, for normal traveling and business expenses, which   the Employee may reasonably have incurred for the benefit of the proper   performance of his duties, along guidelines of the 
  

	
  
 
  	
  
Company.  The   Employee will receive the customary Executive car allowance, cell phone and   other secondary amenities.
  

Article 7 : Business hours

	
  
7.1
  	
  
Usual business hours are from Monday until Friday   from 08.30 a.m. until 05.30 p.m.
  
	
  
 
  	
  
 
  
	
  
7.2
  	
  
Considering the Employee’s position in the Company,   the Employee shall not receive any compensation for the overtime work that   may be necessary for the sake of the Company.
  

Article 8: Holidays

	
  
8.1
  	
  
The Employee is entitled to 25 working days vacation   per annum plus all official holidays as communicated by the Company.
  
	
  
 
  	
  
 
  
	
  
8.2
  	
  
Holidays will be taken after consultation with the   Board of Directors of the Company.
  

Article 9: Illness and other absence

	
  
9.1
  	
  
If the Employee is not capable of performing his   duties due to illness or due to any other disability, he shall inform the   Company as soon as possible the first following working day before 10.00 a.m.
  

Article 10: Insurance

	
  10.1
  	
  
The Company shall insure the Employee against   professional and non-professional accidents.    The Employee shall be covered by the Company’s Directors and Officers   Liability insurance.  The Company   shall bear the costs of the insurance premiums.  Article 5.3 is reserved.
  
	
  
 
  	
  
 
  
	
  
10.2
  	
  
The Employee will be covered by IsoTis   OrthoBiologics Inc’s full package of Executive insurances, including full   health insurance for him and his family.
  

Article 11: Pension Plan

	
  
11
  	
  
The Company will participate in the Employee’s   pension scheme according to the Company’s pension plan conditions.
  

Article 12 : Inventions and intellectual property rights

	
  
12
  	
  
Inventions, regardless of their protect ability,   discoveries, products (including, but not limited to biological materials),   devises, processes, software, formulas, methods, ideas, documents, know-how   and other information, whether final or intermediary results, including but   not limited to improvements and new developments, whether developed in whole   or in part by the Employee, and all relating intellectual property rights   (such as patent rights, copyrights, or similar rights) shall belong   exclusively to the Company, without any limitation in time, in scope   (territorial or other) or of whatsoever nature.
  

Article 13 : Confidentiality

	
  
13.1
  	
  
During his employment relationship and thereafter,   except as required by applicable law or the proper performance of his duties   and responsibilities hereunder, the Employee shall not disclose to any other   person, corporation or other person, corporation or other entity, or use for   his own benefit or gain or otherwise any confidential information. The   Employee understands that this restriction shall continue to apply after his   employment relationship terminates, regardless of the reason for such   termination.
  
	
  
 
  	
  
 
  
	
  
13.2
  	
  
For purpose of this Agreement, confidential   information means any and all information such as, without limitation, data,   results, technology of or relating to the Company. It shall particularly   include, without limitation:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
the development, research, testing, production and   marketing activities of the Company;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
the products and services of the Company;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)
  	
  
patients and clinical trials;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)
  	
  
the costs, sources of supplies and strategic plans;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)
  	
  
the identity and special needs of the customers of   the Company;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vi)
  	
  
inventions, formulas, biological materials and   software;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vii)
  	
  
people and organizations with whom the Company has   business relationships and those relationships.
  

	
  
13.3
  	
  
Confidential information also includes comparable   information that the Company has received or may receive in the future of or   relating to third parties where the Company has a duty to keep such   information confidential.
  
	
  
 
  	
  
 
  
	
  13.4
  	
  
In the event the Employee would breach his   confidentiality obligation, the Company expressly reserves its rights to   claim for any damages. The Employee may also be requested to cease any   infringing activity.
  

Article 14: Notice of termination

	
  
14.1
  	
  
During the term of this Agreement each of the   parties will always be entitled to terminate this Agreement with a notice   period of 6 months.  Notice has to be   served in writing towards the end of the calendar month.
  
	
  
 
  	
  
 
  
	
  
14.2
  	
  
The employment will in any event terminate by   operation of law as per the moment that the Employee reaches his pensionable   age.
  
	
  
 
  	
  
 
  
	
  
14.3
  	
  
In case of a termination by the Company as a result   of a Change of Control (hereinafter defined) the Company will pay a severance   payment to the Employee equal to 12 months base salary including holiday   allowance, excluding further emoluments, as paid during the last 12 months of   the employment at the moment of Change of Control. Notwithstanding article   14.1, his contractual termination compensation will be deemed to include any   statutory compensation, and/or compensation provided for under a collective   bargaining agreement, if any, unless prohibited by law.
  
	
   
  	
  
 
  
	
  
14.4
  	
  
Change of Control is defined as:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
any capital reorganization, consolidation, merger or   sale of assets as a result of which or in connection with which a person,   corporation or other entity other than any of the (stock)holders of the   Company on the date of the present amendment hereof acquires (x) beneficial   ownership of more than 33% either of the voting securities of the Company, or   (y) all of the assets and properties of the Company as an entirety; or
  

	
  
 
  	
  
(ii)
  	
  
a consolidation or merger of the Company with or   into any other entity as a result of which more than 33% of the capital stock   of the Company outstanding immediately after the effective date of such   consolidation or merger is owned of record or beneficially by persons other   than the holders of the Company’s capital stock immediately prior to such   consolidation or merger in the same proportions in which such capital stock   was held immediately prior to such consolidation or merger.
  
	
   
  	
  
 
  	
  
 
  
	
  
14.5
  	
  
Article 14.3 also applies when the Employee within a   period of 12 months following the moment of Change of Control resigns for   Sufficient Reason (as defined below); “Sufficient Reason” shall mean any one   or more of the following events:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
The occurrence of a Change in Control of the Company   if the Employee’s title, reporting path, and responsibilities in the   surviving entity is of a lesser position or of proportionately decreased   responsibility, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
The failure by the Company to comply with any   material provision of this Agreement and such failure has continued for a   period of ten (10) days after written notice of such failure has been given   by Employee to the Company; or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)
  	
  
The repeated bad faith attempt by the Company to   directly or indirectly induce Employee to resign or otherwise terminate   Executive’s employment hereunder; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)
  	
  
The assignment to Employee of any duties materially   inconsistent with Employee’s status as the Company’s Chief Financial Officer   or the reduction of Employee’s authority; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)
  	
  
The reduction by the Company in Employee’s base   salary or as the same may be increased from time to time under the terms of   this Agreement; or
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(vi)
  	
  
The inducement or requirement by the Company to   reduce Employee’s professional, scientific, and/or technical standards or   ethics.
  

	
  
14.6
  	
  
Parties agree that article 14.3 provides for a   reasonable compensation for the termination of the employment agreement by   the Company in case of a Change of Control.    Parties have agreed upon a calculation of a severance payment as   mentioned in those provisions in case of a Change of Control, in order to   assure that the Employee will not be demotivated to perform to the best of   his abilities if he were to act on behalf of the Company or any of its   affiliated companies with respect to - the negotiations and preparations of -   such Change of Control.  Consequently,   aforementioned calculation does not create a precedent for a severance in   case of a termination for reasons other than Change of Control.  Should the Court of Law award a higher or   lower amount of severance, parties will adhere to this article and not claim   a higher or lower amount.
  
	
  
 
  	
  
 
  
	
  
14.7
  	
  
Before termination of the Agreement or in case of   permanent or total disability (as defined under Swiss law) before December   31, 2005, safe termination for cause (“justes motifs” according to the   Swiss Code of Obligations) by the Company, the Employee and his family shall   be entitled, before notice, if any, is given, to be repatriated at the   Company’s expense to the Netherlands, and to be re-employed by IsoTis NV or   any other Group company under Dutch labor law, before any notice of   termination is served to the Employee.    Repatriation expenses will cover travel and shipment of household   goods (i.e. cost of packaging and moving of household goods and personal   belongings, not including items like cars, boats, horses, pianos, ...) as   well as, with prior approval, reasonable living expenses up to one week at   the time of the move.
  

Article 15: Restitution upon termination

	
  
15
  	
  
Upon termination of the Agreement, the Employee   shall deliver to the Company (and not keep in his possession or deliver to   anyone else) any and all devices, biological materials, records, data, notes,   reports, proposals, lists, correspondences, specifications, drawings,   blue-prints, sketches, materials, equipment, other documents or property, or   reproductions of any aforementioned items developed by the Employee pursuant   to his employment services with the 
  

	
  
 
  	
  
Company or otherwise belonging to the Company, its   successors or assigns, or containing or constituting confidential   information.
  

Article 16: Restrictions on Competition

16.1          Competitive Activity

	
   
  	
  
Upon termination of his employment relationship with   the Company, the Employee shall refrain from competing directly or indirectly   with the Company in a field that is Competitive with the business of the   Company (the “Competitive Field”, as defined in subsection 16.2 below),   during a certain period (the “Non-Competition Period” as defined in   subsection 16.3 below), end a in a territory in which the Company is doing   business (the “Non-Competition Territory”, as defined in subsection 16.4   below).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
The Employee undertakes, in the Non-Competition   Territory and during the Non-Competition Period, not to:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
conduct any business activity in the Competitive   Field, paid or unpaid, for his own account or for the account of a third   party; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
set up any business operating the Competitive Field;   or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
hold interest in any entity operating in the   Competitive Field.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Upon termination of the employment relationship, the   Employee may request the Company’s written approval to waive such restriction   on competition. The Company’s shall be entitled to withhold its approval,   unless there are reasonable grounds to waive the restriction on competition.  Such a reasonable ground is at hand if it   is unlikely that the Employee will in his new activity need to use or cannot   avoid the use of confidential information which he acquired during the   performance of his job with the Company or any company of the IsoTis group.
  

16.2          Competitive Field

	
  
 
  	
  
For purposes of this Agreement, a business shall be   deemed to be competitive with the Company if relates to any business   activity:
  

	
  
 
  	
  
(i)
  	
  
utilizing or seeking to develop natural or synthetic   technology in the fields of orthobiology, orthopedics and/or wound care, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
in any field which the Company or any company of the   Group is currently pursuing or has pursued within the previous two years.
  

16.3          Non-Competition Period

	
  
 
  	
  
The Employee non-competition undertaking shall be   valid during a period of one year (1) as from the termination of his   employment relationship with the Company.
  

16.4          Non-Competition Territory

	
  
 
  	
  
The Employee non-competition undertaking shall be   limited to the territory of Switzerland, the Member States of the Council of   Europe, the United States and Canada.
  

16.5          Solicitation or incitation

	
  
 
  	
  
The Employee shall not, without prior written   consent of the Company, either on his own behalf or on behalf of any other   person, directly or indirectly, in any way whatsoever, solicit or incite, or   try to solicit or incite, employees or prospective employees, suppliers or   prospective suppliers, customers or prospective customers, or other individuals   involved or prospectively involved with the Company or it’s affiliated   companies, to break contracts with the Company or it’s affiliated companies,   in full or in part.  This obligation   applies during the term of this Agreement as well as during a period of two   years after termination of this Agreement.
  

16.6          Consequences of Breach

	
   
  	
  
In the event the Employee would breach this   non-competition prohibition, the Employee will promptly forfeit to the   Company a civil fine of CHF 15,000 for each breach, without prejudice for the   Company to claim full damages. The Company may also request court injunction   for immediate cessation of the Employee’s activities infringing the   non-competition prohibition.
  

Article 17 : Modifications

	
  
17
  	
  
Any modification to the present Agreement must be in   writing and signed by both parties.
  

Article 18: Conversion

	
  
18
  	
  
If any article or paragraph of this Agreement will   be declared null and void, this will not affect the validity of the rest of   this Agreement. Any paragraph so declared will be (re)negotiated in good   faith.
  

Article 19: Applicable law - Jurisdiction

	
  19.1
  	
  
This Agreement shall be governed and construed   according to the internal laws of Switzerland.
  

	
  
19.2
  	
  
All disputes, differences, controversies or claims   arising in connection with, or questions occurring under this Agreement,   shall be settled by the Court competent according to the internal laws of   Switzerland.
  

	
  
/s/ JACQUES R. ESSINGER
  	
  
 
  	
  
/s/ PIETER WOLTERS
  
	
  

  	
  
 
  	
  

  
	
  The Company
  	
  
 
  	
  
Pieter Wolters
  
	
  
Jacques R. Essinger
  	
  
 
  	
  
 
  
	
  
Chief Executive Officer
  	
  
 
  	
  
 
  

Schedule A

Job Description and Responsibilities

The Employee will be member of the Company’s Executive Committee with the following specific responsibilities:

The CFO will be responsible for:

	
  
 
  	
  
•
  	
  
Corporate finance, optimizing return on investment   by optimal funding, investment, divestment, budgeting, reporting
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
•
  	
  
Investor Relations
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
•
  	
  
Reporting and Filing, as required under the various   relevant regulations (SEC, SWX, Euronext, TSX, etc.)
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
•
  	
  
Corporate and Business Development
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
•
  	
  
Corporate “back office”, legal, insurance,   stock-options, treasury etc.
  

	
  

  
	
  
1 We did not have the relevant schedule of the existing   contracts.  Present text is inspired   from JRE ‘schedule.  To be précised   and coordinated.
  

Schedule B

Compensation Package

(amended as of December 31 2003)

I.          Annual Salary 2004:               250’000USD

II.         Bonus

	
  
•
  	
  
Bonus is based on the structure outline in the   Company/Executive Result Incentive Plans 2004, i.e., Corporate Objectives,   Division Objectives and Personal Objectives, or any other plan as approved by   the Board
  
	
   
 	
  
 
  
	
  
•
  	
  
The bonus percentage (Bonus%) based on annual gross   salary is: 30%EXHIBIT 10.2

	
  
IsoTis
  	
  
IsoTis OrthoBiologics, Inc.
  
	
  
     OrthoBiologicsTM
  	
  
 
  	
  
2 Goodyear
  
	
  
 
  	
  
 
  	
  
Irvine, CA 92618
  
	
  
 
  	
  
 
  	
  
USA
  
	
  
 
  	
  
Tel
  	
  
(949) 595.8710
  
	
  
 
  	
  
Fax
  	
  
(949) 595.8711
  
	
   
  	
  
www
  	
  
isotis.com
  

November 24, 2004

Robert J. Morocco
 4103 E. Molly Lane
 Cave Creek, AZ 85331

Dear Rob:

We are pleased to offer you a position with IsoTis OrthoBiologics, based in Irvine, California, subject to a final reference check by Korn Ferry.

Your title will be Chief Financial Officer, reporting to the CEO.  You will be part of the IsoTis group Management Team.  Your employment will begin on January 27, 2005.  

As you know, this organization brings a variety of opportunities and challenges that are expected to pay off significantly for everyone with a positive, entrepreneurial attitude who achieves outstanding results.  Our future success depends on the achievement of outstanding individual, division, and corporate results and we feel your contribution will be mutually rewarding.

This letter describes the elements of your employment and compensation, which will be further and definitely defined in an employment agreement to be finalized and signed by both parties before the end of March 2005.

COMPENSATION

IsoTis offers a five part compensation plan which consists of salary, commission, and stock options.  The following is your plan:

1. Compensation Level #1: $200,000 Annual Base Salary for 2005.

2. Compensation Level #2: 2005 Commission Structure – Bonus potential of 30% based on achievement of 100% of Corporate and Personal Objectives to be defined by the Management Team and Board in determining the 2005 budget before year end.

3. Compensation Level #3: 150,000 stock options to be granted on January 1, 2005.  Strike price for all options will be set as the 5 days average Closing price of the Company’s stock on the SWX stock exchange preceding the date of acceptance of this offer.  All options granted will vest over 4 years and will be subject to the terms and conditions of the Company’s Stock Option Plan, to be provided under separate cover.

4. Compensation Level #4: You will be eligible to receive a monthly car allowance of $500.00

- 2 -

Going forward, and subject to approval by the Board Compensation Committee, we will look at proposals for elective (partial) pay out of bonus for executives (like yourself) in stock or options.  You will participate in annual option grant rounds, if any, for executives of the company, which is at the discretion of the Board.  This will allow you to build up a position in the company’s stock which is comparable to officers in similar functions in the industry. 

In addition to the above, you and your dependants will be eligible for executive benefits, which the company generally makes available to its executives.  The Company shall provide at the Company’s expense (i) life insurance (ii) long-term disability, (iii) medical, dental, and vision care insurance for you, your spouse and children.  All benefits provided will be in accordance with the North American Division Employee Handbook. IsoTis shall waive the 90 waiting period for your medical and dental benefits; as such these benefits will be effective November 1, 2004.  Please see the attached Team Member Benefits Program Summary for a brief description of each of the benefit plans outlined above.

IsoTis OrthoBiologics, Inc is an at-will employer.  In your particular case however, as a member of the Management Team of the Company, we will stipulate in the employment agreement that, after a 90 day waiting period, a reciprocal notice period of 3 months will apply.

It is your intention to relocate to Orange County in the second quarter of 2006, and to commute until such time by flying in on Sunday evenings and flying out on Friday evenings.  In lieu of the company paying for a house hunting trip, the movement of your household goods and the transportation of you and your family from your current home in Arizona to Southern California, and closing costs on selling and buying homes, you elected to receive a “living allowance”.  Through this living allowance, the company will compensate you for weekly commuting.  The allowance will amount to $2000 per month (before taxes) and will end by June 2006.

You will be required to provide proof of your identity and authorization to work in the United States as required by federal immigration laws, if applicable.

You will be required to sign a Confidentiality Agreement, as well as the necessary tax and benefit enrolment forms.

As I have discussed with all Team Members, IsoTis policy is that it expects Team Members, both during their employment with IsoTis as well as thereafter, to maintain the confidentiality of IsoTis proprietary information.  Similarly, and for the same reasons, IsoTis expects Team Members to not disclose the proprietary information of their former employers.

This letter sets forth the entire agreement between you and IsoTis, until we will sign the final employment agreement.  Once signed by you, it will become a legally binding contract, and will supersede all prior discussions, promises, and negotiations.

Rob, we appreciate the opportunity to have people like you as part of our Management Team and we look forward to an outstanding future of mutual growth and success.

To confirm that you agree to the terms stated in this letter, please sign and date the enclosed copy of this letter and return it to me no later than November 30, 2004.  

- 3 -

I welcome you to IsoTis, and I wish you success in your employment.

Yours Sincerely,

	
  
/s/ PIETER WOLTERS
  	
  
 
  
	
  

  	
  
 
  
	
  
Pieter Wolters
  	
  
 
  
	
  
CEO
  	
  
 
  
	
  
IsoTis OrthoBiologics
  	
  
 
  

I agree to the terms stated in this letter.

	
  
 
  	
  
 
  	
  
 
  
	
  

  	
   
  	
  

  
	
  Rob Morocco
  	
   
  	
  Date

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