Exhibit 10.1

 

EMPLOYMENT SEPARATION AGREEMENT AND RELEASE

 

This Employment Separation Agreement and Release (the “Agreement”) is made and
entered into as of this 20th day of November, 2012 (the “Execution Date”), by
and between Osiris Therapeutics, Inc., a Maryland corporation (the “Company”),
and Stephen W. Potter (the “Executive”).  The Company and the Executive are
sometimes referred to as the “Parties” or individually as a “Party” to this
Agreement.

 

RECITALS

 

The Executive has been employed by the Company since February 2011.  His
position with the Company as of November 16, 2012 (the “Separation Date”) was
Senior Vice President of Operations and Corporate Development.

 

The Executive has submitted his resignation effective on the Separation Date and
the Company has accepted that resignation.  The Executive and the Company now
desire to confirm the resignation of Executive and set forth the terms of
severance and release.

 

NOW, THEREFORE, in consideration of the foregoing, the promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Parties, the
Parties agree as follows:

 

1.                                      Incorporation of Recitals.  The Recitals
set forth above are incorporated by reference as part of this Agreement.

 

2.                                      Separation of Employment.  The Executive
hereby confirms that he resigned from employment, as well as from all positions
with the Company or any affiliated entity, including without limitation his
position as Senior Vice President of Operations and Corporate Development, in
each case effective as of the Separation Date.  The Executive’s termination from
employment will be treated as a termination under Section 7(iii) of the
Employment Agreement dated as of February 7, 2011 (the “Employment Agreement”)
between the Executive and the Company.

 

3.                                      Severance Pay and Benefits.  The Company
shall provide the following severance benefits and make the following payments
to the Executive (the “Separation Benefits”), in addition to the other benefits
generally available to Company employees on termination of employment, in
consideration for entering into this Agreement and providing the release set
forth in Section 5.  The Executive acknowledges that the following severance pay
and benefits are in addition to anything of value to which the Executive is or
might otherwise be entitled if he did not sign this Agreement.

 

(a)                                 Severance pay in the total amount of
$140,959.08, representing six (6) months of the Executive’s base salary in
effect as of the Separation Date, to be paid within five days after the
Effective Date of this Agreement.  To the extent required by law, the Company
shall withhold from any payments due Executive under this Agreement any
applicable federal, state or local taxes and such other deductions as are
prescribed by law or Company policy;

 

(b)                                 plus all medical, life, and disability
benefits, if any, Executive had been receiving immediately preceding the
Separation Date for the a period of six months following the Separation Date.

 

4.                                      Impact on Employment Agreement/ Stock
Options and Other Rights.  Without the need for any further action on the part
of the Executive or the Company, effective on the Separation Date, the
Employment Agreement, dated February 7, 2011, between the Company and the
Executive shall terminate and be of no further force and effect.  In addition,
the Executive agrees that all rights of the Executive in and to any outstanding
stock options, warrants, restricted stock or other rights in and to equity or
other securities of the Company, whether or not exercisable (but excluding
shares of Common Stock held outright by the Executive free of restrictions other
than securities law restrictions) are terminated and the Executive waives any
and all rights thereunder or thereunto, except for the stock options for 25,000
shares of the Company’s common stock which were vested as of the Separation Date
and resulted from a grant dated February 7, 2011, which shall remain exercisable
for a period of 90-days after the Separation Date.

 

5.                                      General Release of Claims.

 

(a)                                 The Executive, for himself and his heirs,
executors, administrators and assigns, if any, and anyone purporting to claim by
or through the Executive, does hereby waive, release and forever discharge the
Company, its subsidiaries, predecessors, successors, assigns, employee benefit
plans and trusts, if any, and each of their past, present and future managers,
members, directors, officers, partners, agents, employees, attorneys,
representatives, fiduciaries, plan sponsors, administrators and trustees, if
any, (hereinafter collectively “the Company Released Parties”), of and from any
and all actions, causes of action, claims (including without limitation, any
claim for wrongful discharge or breach of contract and claims under the federal,
state or local employment discrimination laws such as Title VII of the Civil
Rights Act, the Americans with Disabilities Act, the Age Discrimination in
Employment Act and other similar laws) suits, demands, rights, damages,
accounts, judgments, wages, commissions, executions, debts, obligations,
attorneys’ fees, costs and all other liabilities of any kind or description
whatsoever, either at law or in equity, whether known or unknown, suspected or
unsuspected and whether or not based on his employment or the termination of his
employment, that the Executive now has or has had against any of the Company
Released Parties for or by reason of any cause, matter or event whatsoever,
through the date the Executive signs this Agreement.  Notwithstanding anything
to the

 

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contrary set forth in this Section, this Release shall not apply to claims
relating to the validity or enforcement of this Agreement, claims that cannot be
waived under applicable law (e.g., unemployment compensation claims), claims for
any accrued benefit under the terms of any employee benefit plan within the
meaning of the Employee Retirement Income Security Act maintained by the Company
(except that it will apply to any severance benefits that otherwise might be
payable outside of this Agreement) or claims for indemnification or defense to
which the Executive is entitled under the Certificate of Incorporation, the
Bylaws and/or any insurance policy of the Company or its subsidiaries.  Nothing
in this Agreement precludes the filing of an administrative charge with the
Equal Employment Opportunity Commission (“EEOC”) or the Executive’s ability to
testify, assist or participate in an investigation, hearing or proceeding
conducted by the EEOC, though the Executive shall not seek or accept any
personal or monetary relief should he or any other person, organization or
entity assert any such claim on his behalf.

 

(b)                                 Because the Executive is at least forty (40)
years of age, he has specific rights under the Older Workers Benefit Protection
Act (“OWBPA”), which prohibits discrimination on the basis of age.  It is the
Company’s desire and intent to make certain the Executive fully understand the
provisions and effect of this Agreement.  To that end, the Executive is
encouraged, and has been given the opportunity, to consult with legal counsel
for the purpose of reviewing the terms of this Agreement.  Also, consistent with
the provisions of the OWBPA, and as described in Section 13 of this Agreement,
the Company is providing the Executive with twenty-one (21) days in which to
consider and accept the terms of this Agreement and seven (7) days after he
signs this Agreement to revoke it.

 

(c)                                  The Company does hereby waive, release and
forever discharge the Executive, his heirs, executors, administrators and
assigns, if any (the “Executive Released Parties”), of and from any and all
actions, causes of action, claims, suits, demands, rights, damages, accounts,
judgments, wages, commissions, executions, debts, obligations, attorneys’ fees,
costs and all other liabilities of any kind or description whatsoever, either at
law or in equity, whether known or unknown, suspected or unsuspected, that the
Company now has or has had against any of the Executive Released Parties for or
by reason of any cause, matter or event whatsoever, through the date it signs
this Agreement.  Notwithstanding anything to the contrary set forth in this
Section, this Release shall not apply to claims relating to the validity or
enforcement of this Agreement, claims for reimbursement of amounts paid in
indemnification, if it is finally determined by a court of competent
jurisdiction that the Company’s indemnification of the Executive was improper
and for claims under Section 16 of the Securities Exchange Act of 1934, as
amended, or for claims under any insider trading law or to claims based on the
Executive’s intentional acts.

 

6.                                      Return of Company Property.  All
information and documents relating to the Company shall be the exclusive
property of the Company and the Executive shall use his best efforts to prevent
any publication or disclosure thereof.  By the Execution Date, the Executive
shall have delivered to the Company all Company property of any kind or
character, which shall include, but not be limited to, all Company
identification and credit cards, any Company equipment, books, keys, journals,
records, publications, files, computers and computer disks, cellular phones and
PDAs, memoranda and documents of any kind or description, or any other Company
property that may be in his possession, custody or control.

 

7.                                      Confidentiality.  Executive shall not,
directly or indirectly, disclose or permit to be known, to any person, firm or
corporation, any confidential information relating to the Company, the directors
of the Company, or any client of the Company, including, but not limited to, the
business affairs of each of the foregoing.  Such confidential information shall
include, but shall not be limited to, proprietary technology, trade secrets,
patented processes, research and development data, know-how, formulae, pricing
policies, the substance of agreements with customers and others, and
arrangements, customer lists and any other documents embodying such confidential
information; provided, however, that confidential information shall not include
any information that has become public knowledge through no fault of the
Executive.  Executive also agrees not to disclose any confidential or
proprietary information that the Company obtains from a third party and which
the Company treats as confidential or proprietary or designates as confidential,
whether or not such information is owned or developed by the Company.  All
confidential information, regardless of form, is the exclusive property of the
Company.  Executive assigns to the Company any rights to the foregoing
confidential information and any other proprietary data, inventions or other
intellectual property used or developed during the time Executive provided
services to the Company.

 

8.                                      Restrictive Covenants.

 

(a)                                 Executive acknowledges that in the course of
his employment with the Company he has become familiar with the trade secrets
of, and other confidential information concerning, the Company, and that the
Company’s ability to accomplish its purposes and to successfully pursue its
business plan and compete in the marketplace depended substantially on the
skills and expertise of the Executive.  Therefore, and in further consideration
of the compensation being paid to the Executive hereunder, the Executive agrees
that for no less than one (1) year from the Separation Date, so long as the
payments are made or have been made in accordance with this Agreement (the
“Noncompete Period”), he shall not (i) directly or indirectly own, manage,
control, participate in, consult with, render services for, or in any manner
engage in, any business competing with the Business of the Company in any
country where the Company conducts business, or plans to conduct business,
provided such plans have been communicated to Executive (a “Competing
Business”), where for purposes of this Section 8(a), the “Business” shall mean
all commercial or therapeutic use that involves mesenchymal stem cells (MSCs) or
cells substantially similar to mesenchymal stem cells, that is, a homogeneous
population of cells that can differentiate along more than one connective tissue
lineage, regardless of the source; all commercial efforts to deliver or improve
the delivery of MSCs for therapeutic purposes; all commercial efforts that would
seek to enhance the endogenous in vivo population of MSCs in the body by
pharmaceutical or chemical means; any other effort to commercially compete with
the Company to which the Executive has confidential knowledge.  (to cover
hiring, business partnerships, vendor relationships, etc.); (ii) assist others
in engaging in any Competing Business in the manner described in clause (i)
above; or (iii) induce any employee or independent contractor of the Company or
any subsidiary thereof to terminate his or her employment or relationship with
the Company or any subsidiary thereof or engage in any Competing Business or in
any way willfully interfere with the relationship between the Company and any
employee or independent contractor thereof or (iv) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Company to
cease doing business with the Company, or in any way interfere with the
relationship between any such

 

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customer, supplier, licensee or business relation and the Company.  The
ownership of not more than 5% of the stock of any entity having a class of
equity securities actively traded on a national securities exchange or on the
NASDAQ Stock Market or any minority interest in any private entity shall not be
deemed, in and of itself, to violate the prohibitions of this Section 9(a).

 

(b)                                 For a period of five (5) years after the
Execution Date, the Executive shall not disparage, deprecate, or make any
comments or take any other actions, directly or indirectly, that will reflect
adversely on the Company or its officers, directors, employees or agents or
adversely affect their business reputation or goodwill.

 

(c)                                  For a period of five (5) years after the
Execution Date, the officers and directors of the Company shall not disparage,
deprecate or make any comments or take any other actions, directly or
indirectly, that will reflect adversely on the Executive or adversely affect his
business reputation.

 

(d)                                 If any portion of the restrictions set forth
in this Section 8 should, for any reason whatsoever, be declared invalid by a
court of competent jurisdiction, the validity or enforceability of the remainder
of such restrictions shall not thereby be adversely affected.  The Executive
declares that the territorial, time limitations and scope of activities
restricted as set forth in this Section 8 are reasonable and properly required
for the adequate protection of the business of the Company.  In the event that
any such territorial, time limitation and scope of activities restricted is
deemed to be unreasonable by a court of competent jurisdiction, the Company and
the Executive agree to the reduction of the territorial, time limitation or
scope to the area or period which such court shall have deemed reasonable.
 Executive acknowledges that the covenant included in Section 8(a) above has
unique, very substantial and immeasurable value to Company, and that Executive
has sufficient assets and skills to provide a livelihood for himself while such
covenant remains in force.

 

The existence of any claim or cause of action by the Executive against the
Company shall not constitute a defense to the enforcement by the Company of the
foregoing restrictive covenants, but such claim or cause of action shall be
litigated separately.

 

9.                                      Enforcement.  It is the desire and
intent of the parties hereto that the provisions of this Agreement be
enforceable to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.  Accordingly, to
the extent that a restriction contained in this Agreement is more restrictive
than permitted by the laws of any jurisdiction where this Agreement may be
subject to review and interpretation, the terms of such restriction, for the
purpose only of the operation of such restriction in such jurisdiction, will be
the maximum restriction allowed by the laws of such jurisdiction and such
restriction will be deemed to have been revised accordingly herein.

 

10.                               Remedies; Survival.  The Parties each
acknowledge and understand that the covenants contained in Sections 7 and 8
hereof, the violation of which cannot be accurately compensated for in damages
by an action at law, are of crucial importance to the benefited Party, and that
the breach or threatened breach of any of such provisions by the other Party
would cause the benefited Party irreparable harm.  In the event of a breach or
threatened breach by the other Party of any of the provisions of Sections 7 or 8
hereof, the benefited Party will be entitled to seek an injunction restraining
the other Party from such breach.  Nothing herein contained will be construed as
prohibiting the benefited Party from pursuing any other remedies available in
law or in equity for any breach or threatened breach of this Agreement,
including without limitation, damages and an equitable accounting of all
earnings, profits and other benefits arising from such breach.

 

11.                               Cooperation.  The Executive will cooperate
with any reasonable request of the Company for assistance from the Executive in
respect of the transition of the Executive’s previous responsibilities with the
Company, through May 31, 2013 and the Executive also will cooperate with any
reasonable request of the Company to participate in the preparation for,
response to, prosecution of and/or defense of any pending, actual or threatened
litigation or governmental investigation involving the Company that involves
activities allegedly occurring while the Executive was employed by the Company.
 Such assistance will be provided with no additional compensation to Executive
from the Company and the Executive agrees to abide by all typical policies of
the Company in respect of confidentiality, non disclosure and the like in the
providing by Executive of such assistance.  The Company will, however, reimburse
the Executive for all reasonable out-of-pocket expenses he incurs as a result of
such assistance with prior approval of the Company.

 

12.                               Governing Law.  This Agreement shall be deemed
to be made in, and in all respects to be interpreted, construed and governed by
and in accordance with the laws of the State of Maryland, without giving effect
to the principles of conflicts of law under Maryland law.  The Parties shall
submit to the jurisdiction and venue of the state and federal courts located in
Maryland in the event that there is any claim of breach of this Agreement.  Both
parties hereby waive their rights to have any such claim resolved in a jury
trial.

 

13.                               Voluntary Execution by Executive.  The
Executive (a) has carefully read and understands the provisions of this
Agreement; (b) has been given the opportunity to examine this Agreement for a
period of up to 21 calendar days; and (c) is advised by the Company that he
should consult with his personal attorney before deciding whether to accept this
Agreement.  The Executive’s signature to this Agreement signifies that this
Section 13 has been complied with, and that if this Agreement is signed by the
Executive before the expiration of the 21-day consideration period, the
Executive is voluntarily waiving his right to consider the Agreement for the
entire 21-day period.  The Parties recognize that the Executive shall have seven
days after the Executive returns a signed copy of this Agreement to revoke the
Agreement by submitting a signed revocation notice to the Company.  Upon the
expiration of that seven day period; provided the Executive has not revoked this
Agreement, this Agreement shall become effective (the “Effective Date”).

 

14.                               Construction.  Captions are inserted herein
for convenience, do not constitute a part of this Agreement and shall not be
admissible for the purposes of proving the intent of the Parties.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original.

 

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15.                               Severability.  Should any provision of this
Agreement be declared and/or determined by any court to be illegal or invalid,
the validity of the remaining parts, terms or provisions shall not be affected.

 

Notice .  All notices contemplated by this Agreement shall be sent to each of
the parties as follows:

 

To:

Stephen W. Potter

 

75 Canton Ave

 

Milton, Massachusetts 02186

 

 

To:

Osiris Therapeutics, Inc.

 

7015 Albert Einstein Drive

 

Columbia, Maryland 21046

 

Attention: President

 

Unless otherwise specified herein, any Notice shall be deemed received (i) on
the date delivered, if by hand; or (ii) one business day after deposit with
FedEx or other overnight courier.  A party may, by Notice given as aforesaid,
change the person or persons and/or address or addresses for its Notices;
provided, however, that a Notice of a change of addressee or address shall only
be effective upon receipt.

 

16.                               Public Disclosure.  The Company and the
Executive shall provide each other with a reasonable opportunity to review and
provide comments to any press release or other public disclosure made by the
Company or by the Executive or a future employer of the Executive related to
this Agreement or to the employment relationship between the Company and the
Executive.

 

17.                               Binding Effect.  This Agreement shall inure to
the benefit of and be binding upon the Parties and their respective executors,
administrators, personal representatives, heirs, predecessors, successors,
assigns, directors, agents, employees, trustees and affiliates forever.

 

18.                               Entire Agreement.  This Agreement, along with
its Exhibits and the other documents referred to in this Agreement, constitutes
the entire agreement between the Parties with respect to the termination of
Executive’s employment and his severance pay and benefits and supersedes any
prior or contemporaneous written or oral agreements between the Parties with
respect thereto, including the Employment Agreement.  Each of the Parties agrees
and acknowledges that in deciding to enter into this Agreement he or it is not
relying on any statements, representations, or promises other than those
contained herein.  This Agreement may not be modified except by a writing, which
has been signed by each of the Parties.

 

19.                               Facsimile Signature.  Any signature to this
Agreement may be delivered by facsimile to the other party to this Agreement,
and such facsimile signature shall be valid execution of this Agreement and be
binding on both parties.

 

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IN WITNESS WHEREOF, and with the intention of being legally bound hereby, the
Parties have executed this Agreement as of the dates set forth below.

 

 

 

Osiris Therapeutics, Inc.

 

 

 

 

By:

/s/ C. RANDAL MILLS

 

Name:

C. Randal Mills, Ph.D.

 

Title:

President & Chief Executive Officer

 

Date Executed:    November 20, 2012

 

 

 

 

 

The Executive

 

 

 

 

By:

/s/ STEPHEN W. POTTER

 

Name:

Stephen W. Potter

 

Date Executed:    November 20, 2012

 

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