EXHIBIT 10.6
TERMINATION AGREEMENT
between
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ISOTIS SA,
a company with registered offices at
Rue de Sébeillon 1-3, 1004 Lausanne, Switzerland (hereinafter
referred to as “ISOTIS” or “the
Company”)
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of the one hand,
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and
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Mr. Jacques R.
ESSINGER, Chemin des
Coullénes 54, 1090 La Croix (Lutry), Switzerland (hereinafter
referred to as “Mr. Essinger” or “The
Employee”),
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of the other hand,
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Whereas
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1.
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The parties entered into a
“Restated and Amended Employment Agreement” (the
“Employment Agreement” ) in February 2004.
The employment of Mr. Essinger with the Company started on
September 5, 1997.
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2.
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The Board of Directors of ISOTIS
has informed Mr. Essinger of its wishes to terminate the Employment
Agreement of Mr. Essinger as CEO.
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3.
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Several discussions and meetings
took place between Mr. Aart Brouwer, acting on behalf of the Board
of Directors, and Mr. Essinger. They decided by mutual
agreement to terminate the employment relationships and negotiated
the terms of the termination of Mr. Essinger’s employment
contract.
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4.
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The present contract confirms the
terms of the Agreement reached by the Parties.
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Now, it is hereby agreed as
follows:
By mutual agreement, the parties
terminate the employment agreement of Mr. Essinger as CEO of ISOTIS
with effect on June 30, 2004.
By his signature on this
Agreement, Mr. Essinger confirms that he is resigning with
immediate effect of all functions which he is exercising for ISOTIS
and all its subsidiaries and affiliated companies. He
undertakes that he will sign all the necessary documents and fully
cooperate with ISOTIS and the other Companies concerned in order to
take the necessary steps for registering his
resignation.
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The Employee will receive a gross
amount of CHF 231’751.-- (Employee’s participation to
social security charges, including but not limited to AVS, LPP, AI,
LAA, will be deducted from this amount), representing 6 (six)
months of salary corresponding to the notice period he would have
been entitled to should the employment agreement have been
terminated unilaterally by the Company. He will also receive
CHF 9’000.-- and CHF 7’500.-- by way of representation
fees and respectively transport allowance.
He will also receive a gross
amount of CHF 463’501.-- (Employee’s participations to
social security charges, including but not limited to AVS, LPP, AI,
LAA, will be deducted from this amount) representing 12 (twelve)
months of paid salary, by way of severance payment, as provided for
at Article 8.3 of the Employment Agreement.
As soon as possible after the
signature of this Agreement, the amounts to be deducted by way of
social security, insurance premiums, unemployment insurance,
pension fund premiums, etc. will be determined by ISOTIS and
notified to Mr. Essinger.
Payment by ISOTIS of the total
net remuneration due to Mr. Essinger will be made as
follows:
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payment of CHF 400’000.--
upon signature of the present Agreement; and
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payment of the balance within 10
(ten) business days after signature of this Agreement.
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It is agreed that, upon Mr.
Essinger’s written request, part of the payment of the total
remuneration due to him will be paid to the insurance company La
Bâloise, in order to increase Mr. Essinger’s
rights under his pension fund.
Employee has been awarded 617,259
ISOTIS stock options, of which to date 317,259 options with an
exercise price of CHF 1.60 (the “ Options (1.60)
”) are fully vested. The remaining 300,000 options (the
“ Options (1.28) ”) were granted at an exercise
price of CHF 1.28 and would normally vest in four annual parts of
75,000 per October 27 of the years 2004 through 2007.
Employer and Employee hereby
agree that Employee will be allowed to exercise the 317,259 Options
(1.60) at any time between now and June 30, 2005. Any Option
(1.60) which has not been exercised on or before June 30, 2005,
shall lapse automatically on July 1, 2005 without any compensation
to Employee.
Employer and Employee hereby
agree that the 300,000 Options (1.28) will vest according to the
following schedule:
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50,000 Options (1.28) to vest on
July 1, 2004
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50,000 Options (1.28) to vest on
October 1, 2004
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100,000 Options (1.28) to vest on
January 1, 2005
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100,000 Options (1.28) to vest on
April 1, 2005
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The Parties agree that any
Options (1.28) which have become vested pursuant to the schedule
above shall be exercisable for a period of 3 (three) months
starting on the vesting date (e.g. for a vesting date on July 1,
2004, the last day to exercise the option is September 30,
2004). Any Option (1.28) which has not been exercised within
such three month period shall automatically lapse upon expiry of
such period, without any compensation to Employee.
In the event where the Company is
of the opinion that the Employee is breaching a provision of this
Agreement, the Company will inform Mr. Essinger in writing of the
breach, and give him a cure period which is adequate in view of the
nature of the breach to remedy the situation. Should the
situation not have been remedied within the cure period granted to
Mr. Essinger, the Employee shall automatically forfeit any Option
(1.28) which was not vested at the time of such breach, unless
Employer decides otherwise at its sole discretion.
In the event where Employer would
be subject to a change of control, any Option (1.28) which was not
vested at the time of such change of control shall become
automatically vested as of the date of such change of
control. The three months period during which the Options
(1.28) will be exercisable shall start to run on the date of such
change of control. A change of control shall mean any event
where a third party (whether already a shareholder of Employer or
not) would acquire more than 50% of the share capital of Employer,
or in the event of a merger where Employer is not the surviving
entity, a change of control would occur if the shareholders of
Employer would own less than 50% of the share capital of the merged
entity.
The terms and provisions of the
Stock Option Agreement pursuant to which the Options (1.28) and
(1.60) have been issued and the various Awards concerning Mr.
Essinger shall remain valid for and in force, subject to the terms
and provisions contained in this Agreement, which shall prevail
over them.
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4.
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Insurance against
accidents
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Mr. Essinger confirms that he is
aware and accepts the fact that, as from the 30 th date
after the date of termination, he will no longer be insured against
the consequences of accidents by ISOTIS. The same rule will
apply in the case where Mr. Essinger is insured against the
consequences of accidents due to his functions for subsidiaries or
affiliated companies of ISOTIS.
As from July 1, 2004, Mr.
Essinger will cease being an employee and Director of ISOTIS and
any of its subsidiaries or affiliated companies.
He will accordingly be free to
take up another employment.
It is however expressively agreed
and confirmed that the provisions of Article 10 of the Employment
Agreement, “Restrictions on competition” will remain in
full force and effect.
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Mr. Essinger expressly reconfirms
that he accepts and will abide by all provisions and restrictions
provided for at above-mentioned Article 10 of the Employment
Agreement.
Mr. Essinger confirms to be fully
aware of the fact that even after the termination of his employment
contract, he will remain bound by his confidentiality duty towards
ISOTIS, all its subsidiaries and affiliated companies.
More particularly, he undertakes
not to disclose to anyone, any trade secret or any business
information in relation to ISOTIS, its subsidiaries and affiliated
companies, their directors and their employees and
clients.
Mr. Essinger undertakes to return
to the Company without keeping any photostatic copies all the
documents, information files, diskettes, etc. regarding ISOTIS, all
its subsidiaries or affiliated companies, and their clients,
which
