Document:

EXHIBIT 10.3

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

October 22, 2004

James P. Abraham
 4 Jordans Wood Circle
 San Antonio, Texas 78248

Dear Jim:

We are pleased to offer you a position with IsoTis OrthoBiologics, Inc., based in Irvine, California.

Your title will be Vice President of Sales reporting to the CEO.  Your employment will begin on October 26, 2004.  You will be part of the IsoTis group Management Team.

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 outlines of you 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 November 2004.

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: $180,000 Annual Base Salary for 2005.

2. Compensation Level #2: 2005 Commission Structure – Bonus potential of $120,000 based on achievement of 100% of US sales forecast as to be defined by the Management Team and Board in determining the 2005 budget before year end.

3. Compensation Level #3: 100,000 stock options granted on November 1, 2004.  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 -

For the remainder of 2004, your all inclusive compensation will be a salary of US$50,000..

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.

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 Vice President of the Company, we will stipulate in the employment agreement that, after a 90 day waiting period, a reciprocal notice period of 6 months will apply.

As long as your job, with the present size and organization of the company, requires you to travel for 50-60% of your time, you will not be asked to set up your primary residence in or around Irvine.  To achieve the minimum required interaction with the Management Team and various disciplines in the company, we expect you to be in the Irvine Office at least weekly on Monday (all day) and to plan travel as (cost) efficiently as possible.  You can expense up to US$1,500 per month of travel and lodging cost (commuting from San Antonio to Irvine on Sunday, hotel stay in Irvine on Sunday and, if needed, Monday), for a maximum of 2 years.  Should the company or your position change to the extent that travel requirements fall below the threshold of 50-60%, the company will be entitled to and you have expressed your willingness to relocate to Orange County.  At such time, we will reach agreement on a relocation allowance.

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

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.

Jim, 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.

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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 October 22, 2004.  I welcome you to IsoTis, and I wish you success in your employment.

Sincerely,

Pieter Wolters
 CEO
 IsoTis OrthoBiologics

I agree to the terms stated in this letter.

	
  /s/ JAMES P. ABRAHAM
  	
   
  	
  10-23-04 
  
	
  

  	
   
  	
  

  
	
  James P. Abraham
  	
   
  	
  DateEXHIBIT 10.4

AGREEMENT

 

between

 

IsoTis SA, rue de Sébeillon 1 – CH–1004 Lausanne
 (hereinafter designated “IsoTis”)

On the One Hand

and

 

Mr. James HOGAN, Chemin du Braillon 9 – CH–1095 Lutry
 (hereinafter designated the “Employee”)

On the Other Hand

WHEREAS IT WAS PREVIOUSLY AGREED THAT:

	
  
A.
  	
  
The services of Mr. James   Hogan were retained as of February 20, 2001, as Chief Operation Officer of   IsoTis;
  
	
  
 
  	
  
 
  
	
  
B.
  	
  
On December 7, 2004, IsoTis   notified the Employee that, effective December 31, 2004, it had decided to   terminate his employment contract with respect to the next contractual period   of six months;
  
	
   
  	
  
 
  
	
  
C.
  	
  
With the mutual consent of   the parties, it was agreed by means of this agreement (hereinafter designated   the “Agreement”) to terminate the work relationship effective March 31, 2005;
  
	
  
 
  	
  
 
  
	
  
D.
  	
  
The purpose of this   Agreement is to establish the terms and conditions for the termination of the   work relationship with Mr. James Hogan.
  

*     *     *

THE ABOVE MATTERS HAVING BEEN SET FORTH, THE PARTIES HERETO AGREE AS FOLLOWS:

 

Article 1

The Employee and IsoTis, by common accord, agree to terminate the work relationship between both parties effective March 31, 2005 pursuant to the covenants given in this Agreement.

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Article 2

Within 15 days following the execution of this Agreement by both parties, IsoTis shall pay the Employee a gross amount of 90,721.40 SF (ninety thousand, seven hundred and twenty-one Swiss Francs and forty centimes), an amount equivalent to the Employee’s gross salary for three months.

Moreover, at the same date, IsoTis shall pay, solely at its discretion and without in any way thereby acknowledging any liability on the part of IsoTis, a gross amount of 30,000 SF (thirty thousands Swiss Francs). All eventual social security contributions due pursuant to Swiss law or any applicable legislation as well as all eventual tax levies required pursuant to Swiss law or any applicable legislation shall be deducted from this amount of 30,000 SF.

The Employee shall be entitled to exercise, until March 31, 2006, all options vested as of March 31, 2005. All options vested as of March 31, 2005 that are not exercised by March 31, 2006 shall become null and void without any compensation for the Employee. Any options whose initially anticipated vesting date falls after Mach 31, 2005 shall not be exercised by the Employee and shall become null and void without any compensation for the Employee.

IsoTis agrees to pay to Leasplan the amount of 10,000 SF (ten thousands Swiss Francs) with respect to the transfer of the service vehicle used until now by the Employee. This payment is conditional upon the transfer of the above-mentioned vehicle leasing contract and IsoTis being thus relieved of any of its obligations towards Leaseplan regarding the said leasing contract. If, for any reason whatsoever, the leasing contract is not transferred, the Employee shall hand the vehicle over IsoTis on April 8, 2005.

Pursuant to the prior covenant given with respect thereto, IsoTis shall reimburse the Employee an amount of 5,000 EUR (five thousands Euros) within fifteen days following the execution of this Agreement.

In addition, within fifteen days following the execution of this Agreement, IsoTis shall pay the Employee the amount 2,263.55 SF (two thousand two hundred and sixty-three Swiss Francs and fifty-five centimes) as reimbursement for professional fees incurred by the Employee in connection with the performance of his work.

[The Employee will continue to receive his current salary until March 31, 2005. Payments associated with this Agreement will not change the salary payment scheduled for the end of March 2005.]

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For his part, the Employee agrees to reimburse IsoTis SA all telephone expenses incurred since January 1, 2005 as well as those related to the portable telephone given to the Employee by IsoTis.

The Employee confirms having returned to IsoTis all of the materials belonging to the Company that he received or used in the activities of his duties with respect to IsoTis.

Upon termination of the work relationship, IsoTis will provide the Employee with a work certificate regarding his activities with the Company.

Article 3

With the execution of this Agreement and in consideration for the proper performance thereof, the Employee specifically acknowledges having no other claims whatsoever (salary, thirteenth month’s salary, overtime hours, vacation time, expenses, legal or contractual indemnities, bonuses, etc.) against IsoTis or against any other company, branch or entity of the IsoTis Group in Switzerland or abroad, or against any associates thereof, or against any of the respective directors, agents, affiliated members, officials or employees thereof. If need be, the Employee waives any claim with respect to IsoTis, as well as the companies, branches or entities of the IsoTis Group and any affiliates thereof.

The parties to this Agreement therefore confirm having no claims with respect to each other for any reasons whatsoever provided the proper performance of the covenants undertaken by each of the parties pursuant to this Agreement. They therefore waive their right to bring any action or start any proceedings against each other.

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Article 4

The Employee remains bound by the confidentiality clause that he signed in his employment contract (Article 7).

The parties agree moreover to vigorously comply with the confidential nature of this Agreement. They agree not to disclose its content to any one, with the exception of any tax authorities, social security authorities or other authorities or institutions where such disclosure is required pursuant to applicable laws.

In the event that the Employee breaches this covenant, the Employee shall pay an amount of 30,000 SF (thirty thousand Swiss Francs) to IsoTis, as a penalty clause.

Article 5

This Agreement is subject to Swiss law.

In the event of a dispute, the courts of the Canton de Vaud shall have jurisdiction, with leave of appeal to the Federal Court as provided for by law.

*     *     *

	
  
Read and approved:
  	
  
 
  	
  
Read and approved:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
/s/ JIM   HOGAN
  	
  
 
  	
  
/s/ NAKISA SERRY, /s/ PIETER WOLTERS
  
	
  

  	
   
  	
  

  
	
  The Employee
  	
   
  	
  IsoTis SA
  
	
  17/03/05
  	
   
  	
   
  
	
   
  	
   
  	
   
  
	
  Lausanne, March 17, 2005
  	
   
  	
  Lausanne, March17, 2005
  

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