Exhibit 10.1

 

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Execution Copy

 

Employment Agreement

 

This Employment Agreement (the “Agreement”) is made and entered into as of
June 24, 2017, by and between Linda Palczuk (the “Executive”) and Osiris
Therapeutics, Inc., a Maryland corporation (“Osiris” or the “Company”).

 

WHEREAS, the Company desires to employ the Executive on the terms and conditions
set forth herein; and

 

WHEREAS, the Executive desires to be employed by the Company on such terms and
conditions.

 

NOW, THEREFORE, in consideration of the mutual covenants, promises, and
obligations set forth herein, the parties agree as follows:

 

1.         Term. The Executive’s employment hereunder shall be effective as of
July 10, 2017 (the “Effective Date”).  The initial term (the “Initial Term”)
will begin on the Effective Date and continue until December 31, 2017; provided
that, on December 31, 2017 and December 31 of each year thereafter until (and
including) December 31, 2019 (each instance being a “Renewal Date”), the
Agreement shall be deemed to be automatically extended, upon the same terms and
conditions, for successive periods of one year, unless either party provides
written notice of its intention not to extend the term of the Agreement at least
30 days’ prior to the applicable Renewal Date (meaning by or before November 30
of the then-current calendar year). The period during which the Executive is
employed by the Company hereunder and this Agreement is in effect is hereinafter
referred to as the “Employment Term.”  In no event shall the Employment Term
continue past December 31, 2020, except through an amendment to this Agreement
signed by each of the Company and the Executive.

 

2.         Position and Duties.

 

2.1.                            Position. During the Employment Term, the
Executive shall serve as the President and Chief Executive Officer of the
Company, reporting to the Board of Directors of the Company (the “Board”). In
such position, the Executive shall have such duties, authority, and
responsibility as defined by the Company’s Bylaws and as shall be determined
from time to time by the Board.  The Executive will stand for election to the
Board at the next shareholders’ meeting, and if requested, will also serve as a
member of the Board or as an officer or director of any affiliate of the Company
for no additional compensation.

 

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2.2.                            Duties. During the Employment Term, the
Executive shall devote substantially all of her business time and attention to
the performance of the Executive’s duties hereunder and will not engage in any
other business, profession, or occupation for compensation or otherwise which
would conflict or interfere with the performance of such services either
directly or indirectly without the prior written consent of the Board.
Notwithstanding the foregoing, the Executive will be permitted to (a) act or
serve as a director, trustee, or committee member of any non-profit, civic, or
charitable organization, as long as such activities are disclosed in writing to
the Company’s General Counsel in accordance with the Company’s Conflict of
Interest Policy, with a copy of such notice to the Chairman of the Board, and
(b) purchase or own less than five percent (5%) of the publicly traded
securities of any corporation; provided that, such ownership represents a
passive investment and that the Executive is not a controlling person of, or a
member of a group that controls, such corporation; provided further that, the
activities described in clauses (a) and (b) do not interfere with the
performance of the Executive’s duties and responsibilities to the Company as
provided hereunder, including, but not limited to, the obligations set forth in
Section 2 hereof.

 

3.         Place of Performance. The principal place of Executive’s employment
shall be the Company’s principal executive office currently located in 7015
Albert Einstein Drive, Columbia, MD 21046; provided that, the Executive may be
required to travel on Company business during the Employment Term.

 

4.         Compensation.

 

4.1.                            Base Salary. The Company shall pay the Executive
an annual rate of base salary of at least $450,000 in periodic installments in
accordance with the Company’s customary payroll practices and applicable wage
payment laws, but no less frequently than monthly. The Executive’s base salary
shall be reviewed at least annually by each of the Board and the Compensation
Committee of the Board (the “Compensation Committee”) and may be increased in
their sole discretion. The Executive’s annual base salary, as in effect from
time to time, is hereinafter referred to as “Base Salary”.

 

4.2.                            Annual Bonus.  For each calendar year of the
Employment Term (and pro rata for the Initial Term), the Executive shall be
eligible to receive an annual performance-based cash bonus of up to 44.44% of
the Executive’s Base Salary for the relevant calendar year of the Employment
Term (the “Annual Bonus”). The amount and terms of any Annual Bonus shall be
certified by the Compensation Committee and the Board, and shall be based on the
satisfaction of the performance goals established by the Compensation Committee
and the Board in consultation with the Executive.  Beginning with calendar year
2018, the performance goals established by the Compensation Committee and the
Board in consultation with the Executive shall be established by

 

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March 31 of the calendar year to which the bonus relates.  The Board and the
Compensation Committee agree to consider in good faith an Annual Bonus of
greater than 44.44% in any year in which the established performance goals are
materially exceeded.  Except as otherwise provided in this Agreement, the
Executive must remain employed with the Company through the end of a calendar
year in order to be eligible to receive an Annual Bonus for such calendar year. 
Any Annual Bonus earned by the Executive shall be payable as soon as practicable
after the end of the applicable calendar year but not later than March 15 after
the end of such calendar year.

 

4.3.                            Equity Awards.  In consideration of the
Executive entering into this Agreement and as an inducement to join the Company,
on the Effective Date, the Company will grant the Executive an initial stock
option grant to purchase 25,000 shares of Company stock.  The exercise price
will be based on the closing stock price on the last business day prior to the
Effective Date.  These stock options will carry a ten year term and will vest
ratably over a four year period, beginning on the first annual anniversary of
the Effective Date.  These options must be exercised using the “net exercise”
(also referred to as “cashless”) method, under which (if and when Executive
elects to exercise options) the Company will withhold a number of shares (as
required to cover both the exercise price and applicable taxes) and issue the
net remaining shares in Executive’s name. All other terms and conditions of such
awards shall be governed by the terms and conditions of the Company’s equity
compensation plan and the Company’s template stock option grant agreement,
documenting this grant and related terms (consistent with the Company’s equity
compensation plan).

 

4.4.                            Long-Term Cash/Equity Incentive Plan.  Executive
will be entitled to participate in a long-term cash/equity incentive plan, to be
designed by the Compensation Committee (and subject to Board approval) and to be
effective by no later than January 1, 2018.  The Company’s Compensation
Committee will reasonably consider Executive’s input and recommendations
regarding the structure and operation of the long-term cash/equity incentive
plan, but the eventual structure and operation of the long-term cash/equity
incentive plan will remain within the sole and absolute discretion of the
Compensation Committee and the Board.  Upon adoption of the long-term
cash/equity incentive plan, Executive will be entitled to receive cash and/or
equity grants as determined by the Board and the Compensation Committee (or
pro-rata portion thereof, in the event Executive is employed only part of any
given calendar year).

 

4.5.                            Fringe Benefits and Perquisites. During the
Employment Term, the Executive shall be entitled to fringe benefits and
perquisites consistent with the practices of the Company in effect from time to
time.

 

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4.6.                            Employee Benefits. During the Employment Term,
the Executive shall be entitled to participate in the employee benefit plans,
practices, and programs maintained by the Company, as in effect from time to
time (collectively, “Employee Benefit Plans”), on a basis which is no less
favorable than is provided to other similarly situated executives of the
Company, to the extent consistent with applicable law and the terms of the
applicable Employee Benefit Plans. The Company reserves the right to amend or
cancel any Employee Benefit Plans at any time in its sole discretion, subject to
the terms of such Employee Benefit Plan and applicable law.

 

4.7.                            Paid Time-Off.  During the Employment Term, the
Executive shall be entitled to accrue paid-time-off in accordance with the
Company’s employee paid-time-off policies, as in effect from time to time, with
the exception that Executive will be entitled to accrue up to 25 days of
paid-time-off (otherwise subject to the Company’s standard rules regarding rate
of accrual use, etc.).

 

4.8.                            Business Expenses. The Executive shall be
entitled to reimbursement for all reasonable and necessary out-of-pocket
business, entertainment, and travel expenses incurred by the Executive in
connection with the performance of the Executive’s duties hereunder in
accordance with the Company’s expense reimbursement policies and procedures in
effect from time to time.  During such time as the Executive’s Base Salary is
less than $500,000, the Company agrees to provide Executive with a
fully-furnished one-bedroom apartment (including utilities) within the vicinity
of the Company’s headquarters for the Executive’s personal use, for a monthly
rent not to exceed $3,500 per month.

 

4.9.                            Indemnification.  As provided by the Company’s
Bylaws and Charter, in the event that the Executive is made a party or
threatened to be made a party to any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative or otherwise (a “Proceeding”), other
than any Proceeding initiated by the Executive or the Company related to any
contest or dispute between the Executive and the Company or any of its
affiliates with respect to this Agreement or the Executive’s employment
hereunder, by reason of the fact that the Executive is or was a director or
officer of the Company, or any affiliate of the Company, or is or was serving at
the request of the Company as a director, officer, member, employee, or agent of
another corporation or a partnership, joint venture, trust, or other enterprise,
to the maximum extent permitted by applicable law in effect from time to time,
(a) the Executive shall be indemnified by the Company in connection with any
such Proceeding, and (b) the Company shall pay or reimburse reasonable expenses
of the Executive in advance of final disposition of such Proceeding, subject to
the execution by the Executive of an undertaking in customary form in favor of
the Company which obligates the Executive to repay such expenses to the Company
if it is ultimately determined that the Executive has not met the required
standard under

 

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applicable law, or if advancement of expenses or indemnification is otherwise
prohibited by applicable law.  This Section 4.9 shall survive any expiration or
termination of this Agreement.

 

4.10.                     Clawback Provisions. Notwithstanding any other
provisions in this Agreement to the contrary, any incentive-based compensation,
or any other compensation (other than Base Salary), paid to the Executive
pursuant to this Agreement or any other agreement or arrangement with the
Company which is subject to recovery under any law, government regulation, or
stock exchange listing requirement, will be subject to such deductions and
clawback as may be required to be made pursuant to such law, government
regulation, or stock exchange listing requirement (or any policy required to be
adopted by the Company pursuant to any such law, government regulation or stock
exchange listing requirement).  For the avoidance of doubt, nothing in this
Section 4.10 shall be deemed to apply to any conduct or actions by the Company
occurring prior to the Effective Date.

 

5.         Termination of Employment. The Employment Term and the Executive’s
employment hereunder may be terminated by either the Company or the Executive at
any time and for any reason. Upon termination or non-renewal of the Executive’s
employment, the Executive shall be entitled to the compensation and benefits
described in this Section 5 and shall have no further rights to any compensation
or any other benefits from the Company or any of its affiliates.

 

5.1.                            Expiration of the Term, for Cause, or Without
Good Reason.

 

(a)                                 If the Executive’s employment is terminated
by Executive by electing non-renewal of the Agreement (in accordance with
Section 1), by the Company for Cause, or by the Executive without Good Reason,
the Executive shall be entitled to receive:

 

(i)                                     any accrued but unpaid Base Salary and
accrued but unused paid-time-off which shall be paid on the pay date with the
following payroll immediately following the Termination Date (as defined below)
in accordance with the Company’s customary payroll procedures;

 

(ii)                                  reimbursement for unreimbursed business
expenses properly incurred by the Executive, which shall be subject to and paid
in accordance with the Company’s expense reimbursement policy; and

 

(iii)                               such employee benefits (including equity
compensation), if any, to which the Executive may be entitled under the
Company’s employee benefit plans as of the Termination Date; provided that, in
no event shall the Executive be entitled to any payments in the nature of
severance or termination payments except as provided at Section 5 below.

 

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Items 5.1(a)(i) through 5.1(a)(iii) are referred to herein collectively as the
“Accrued Amounts”.

 

(b)                                 For purposes of this Agreement, “Cause”
shall mean:

 

(i)                                     the Executive’s material failure to
perform her duties (other than any such failure resulting from incapacity due to
physical or mental illness);

 

(ii)                                  the Executive’s willful or grossly
negligent failure to comply with any valid and legal directive of the Board;

 

(iii)                               the Executive’s engagement in dishonesty,
illegal conduct, or gross misconduct, which is, in each case, materially
injurious to the Company or its affiliates;

 

(iv)                              the Executive’s embezzlement,
misappropriation, or fraud, whether or not related to the Executive’s employment
with the Company;

 

(v)                                 the Executive’s conviction of or plea of
guilty or nolo contendere to a crime that constitutes a felony (or state law
equivalent) or a crime that constitutes a misdemeanor involving moral turpitude,
if such felony or other crime is work-related, materially impairs the
Executive’s ability to perform services for the Company or results in
material/reputational or financial harm to the Company or its affiliates;

 

(vi)                              Executive’s debarment or exclusion from
participating in the Federal health care programs as defined in 42 USC §
1320a-7b(f) (the “Federal health care programs”), conviction of a criminal
offense related to the provision of health care items or services, or falling
under investigation or otherwise subject to circumstances which may result in
Executive being excluded from participation in the Federal health care programs;

 

(vii)                           the Executive’s willful unauthorized disclosure
of Confidential Information (as defined below);

 

(viii)                        the Executive’s material breach of any material
obligation under this Agreement or any other written agreement between the
Executive and the Company;

 

(ix)                              any material failure by the Executive to
comply with the Company’s written policies or rules, as they may be in effect
from time to time during the Employment Term; or

 

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(x)                                 a breach of the Company’s Confidentiality,
Non-Competition, and Invention Agreement.

 

Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.

 

The Company cannot terminate the Executive’s employment for Cause pursuant to
Sections 5.1(b)(i), 5.1(b)(ii), 5.1(b)(viii), 5.1(b)(ix) or 5.1(b)(x) unless the
Company has provided written notice to the Executive of the existence of the
circumstances providing grounds for termination for Cause within 90 days of the
Board’s knowledge of initial existence of such grounds and the Executive has had
at least 30 days from the date on which such notice is provided to cure such
circumstances, to the extent such acts can be cured in the reasonable discretion
of the Board.  If the Company does not terminate the Executive’s employment for
Cause within 90 days after the Board’s knowledge of the first occurrence of the
applicable grounds, then the Company will be deemed to have waived its right to
terminate for Cause with respect to such grounds.

 

(c)                                  For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the following, in each case during
the Employment Term without the Executive’s written consent:

 

(i)                                     a material reduction in the Executive’s
authority, duties or responsibilities as Chief Executive Officer and President;

 

(ii)                                  a reduction in the Executive’s Base Salary
or a material reduction in the Executive’s Annual Bonus or overall compensation;

 

(iii)                               a relocation of the Company’s headquarters
to a location more than fifty miles from the Company’s current headquarters at
7015 Albert Einstein Drive, Columbia, MD 21046;

 

(iv)                              any material breach by the Company of any
material provision of this Agreement, or any material provision of any other
agreement between the Executive and the Company; or

 

(v)                                 the Company’s failure to obtain an agreement
from any successor to the Company to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required

 

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to perform if no succession had taken place, except where such assumption occurs
by operation of law.

 

The Executive cannot terminate her employment for Good Reason unless she has
provided written notice to the Company of the existence of the circumstances
providing grounds for termination for Good Reason within 90 days of her
knowledge of the initial existence of such grounds and the Company has had at
least 30 days from the date on which such notice is provided to cure such
circumstances. If the Executive does not terminate her employment for Good
Reason within 90 days after her knowledge of the first occurrence of the
applicable grounds, then the Executive will be deemed to have waived her right
to terminate for Good Reason with respect to such grounds.

 

5.2.                            Non-Renewal by the Company; Without Cause; for
Good Reason.

 

(a)                                 The Employment Term and the Executive’s
employment hereunder may be terminated by the Executive for Good Reason or by
the Company without Cause, or on account of the Company’s decision not to renew
the Agreement in accordance with Section 1 (including, for the avoidance of
doubt, the Company’s decision not to enter into an amendment to extend this
Agreement or enter into a new agreement with the Executive after this
Agreement’s expiration on December 31, 2020). In the event of such termination,
and subject to the Executive’s compliance with Section 6, Section 7, and
Section 8 of this Agreement and her execution of a release of claims in favor of
the Company, its affiliates and their respective officers and directors in a
customary form provided by the Company (the “Release”), the Executive shall be
entitled to receive the Accrued Amounts and the following: (i) if terminated
before the first anniversary of the Effective Date, Executive will be entitled
to (A) all Accrued Amounts, (B) six (6) months of Base Salary (and a pro-rata
portion of the Annual Bonus that the Executive would be entitled to receive if
the Executive remained at the Company through the end of the then current
calendar year) as severance and (C) such employee benefits (excluding equity
compensation but including medical and other insurance), if any, to which the
Executive may be entitled under the Company’s Employee Benefit Plans had
Executive remained an employee of the Company during the one year period
following Executive’s termination (the “Extended Benefits”); and (ii) if
terminated following the first anniversary of the Effective Date, Executive will
be entitled to (A) all Accrued Amounts, (B) twelve (12) months of Base Salary
(and a pro-rata portion of the Annual Bonus that the Executive would be entitled
to receive if the Executive remained at the Company through the end of the then
current calendar year) as severance and (C) all Extended Benefits; and (iii) if
terminated following the eighteen month anniversary of the Effective Date and
the Executive has not been awarded an Annual Bonus pursuant to Section 4.2 for
two

 

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consecutive calendar years (including 2017 if applicable) due to the failure to
achieve the performance goals established by the Compensation Committee and the
Board, Executive will be entitled to (A) all Accrued Amounts, (B) six (6) months
of Base Salary (and a pro-rata portion of the Annual Bonus that the Executive
would be entitled to receive if the Executive remained at the Company through
the end of the then current calendar year) as severance and (C) all Extended
Benefits.

 

(b)                                 Severance in the form of continuation of
Base Salary will be paid on a monthly basis, in accordance with the Company’s
ordinary payroll practices, beginning with the first payroll date following the
expiration of the revocation period set forth in the Release, with the first
such payment to include all payments that would have been made but for the
provisions of this sentence, and provided that if the consideration period for
the Release spans two calendar years, payment will be made in the second
calendar year.  Severance in the form of pro-rated Annual Bonus will be paid at
the same time as employees generally, subject to the execution and
non-revocation of the Release.  For the sake of clarity, the Executive must sign
the Release and the revocation period set forth in the Release must expire no
later than 60 days from the Executive’s Termination Date (defined herein) in
order for the Executive to be eligible for the severance in Section 5.2(a),
other than the Accrued Amounts.

 

(c)                                  The treatment of any outstanding equity
awards (if any) shall be determined in accordance with the terms of the
Company’s equity compensation plan.

 

5.3.                            Death or Disability.

 

(a)                                 The Executive’s employment hereunder shall
terminate automatically upon the Executive’s death during the Employment Term,
and the Company may terminate the Executive’s employment on account of the
Executive’s Disability.

 

(b)                                 For purposes of this Agreement, “Disability”
shall mean that the Executive is entitled to receive long-term disability
benefits under the Company’s long-term disability plan, or if there is no such
plan, the Executive’s inability, due to physical or mental incapacity, to
perform the essential functions of her job, with or without reasonable
accommodation, for one hundred twenty (120) consecutive days; provided however,
in the event that the Company temporarily replaces the Executive, or transfers
the Executive’s duties or responsibilities to another individual on account of
the Executive’s inability to perform such duties due to a mental or physical
incapacity which is, or is reasonably expected to become, a Disability, then the
Executive’s employment shall not be deemed terminated by the Company and the
Executive shall not be able to resign with Good Reason as a result thereof. Any
question as to the existence of the Executive’s Disability as to which the
Executive and the Company cannot agree shall be determined in writing by a
qualified independent

 

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physician mutually acceptable to the Executive and the Company. If the Executive
and the Company cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who shall
make such determination in writing. The determination of Disability made in
writing to the Company and the Executive shall be final and conclusive for all
purposes of this Agreement.

 

5.4.                            Notice of Termination. Any termination of the
Executive’s employment hereunder by the Company or by the Executive during the
Employment Term (other than termination pursuant to Section 5.3(a) on account of
the Executive’s death) shall be communicated by written notice of termination
(“Notice of Termination”) to the other party hereto in accordance with
Section 21. The Notice of Termination shall specify:

 

(a)                                 The termination provision of this Agreement
relied upon;

 

(b)                                 To the extent applicable, the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated; and

 

(c)                                  The applicable Termination Date.

 

5.5.                            Termination Date. The Executive’s “Termination
Date” shall be:

 

(a)                                 If the Executive’s employment hereunder
terminates on account of the Executive’s death, the date of the Executive’s
death;

 

(b)                                 If the Executive’s employment hereunder is
terminated on account of the Executive’s Disability, the date that it is
determined that the Executive has a Disability;

 

(c)                                  If the Company terminates the Executive’s
employment hereunder for Cause, the date the Notice of Termination is delivered
to the Executive;

 

(d)                                 If the Company terminates the Executive’s
employment hereunder without Cause, the date specified in the Notice of
Termination, which shall be no less than 30 days following the date on which the
Notice of Termination is delivered; provided that, the Company shall have the
option to provide the Executive with a lump sum payment equal to 30 days’ Base
Salary in lieu of such notice, which shall be paid in a lump sum on the first
payroll date following the Executive’s Termination Date and for all purposes of
this Agreement, the Executive’s Termination Date shall be the date on which such
Notice of Termination is delivered;

 

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(e)                                  If the Executive terminates her employment
hereunder with or without Good Reason, the date specified in the Executive’s
Notice of Termination, which shall be no less than 45 days following the date on
which the Notice of Termination is delivered; provided that, the Company may
waive all or any part of the 45 day notice period for no consideration by giving
written notice to the Executive and for all purposes of this Agreement, the
Executive’s Termination Date shall be the date determined by the Company; and

 

(f)                                   If the Executive’s employment hereunder
terminates because either party provides notice of non-renewal pursuant to
Section 1, the Renewal Date immediately following the date on which the
applicable party delivers notice of non-renewal.

 

Notwithstanding anything contained herein, the Termination Date shall not occur
until the date on which the Executive incurs a “separation from service” within
the meaning of Section 409A.

 

5.6.                            Resignation of All Other Positions. Upon
termination of the Executive’s employment hereunder for any reason, the
Executive shall be deemed to have resigned from all positions that the Executive
holds as an officer or member of the Board (or a committee thereof) of the
Company or any of its affiliates.

 

5.7.                            Section 280G.

 

(a)                                 If any of the payments or benefits received
or to be received by the Executive constitute “parachute payments” within the
meaning of Section 280G of the Code and would, but for this Section 5.7, be
subject to the excise tax imposed under Section 4999 of the Code (the “Excise
Tax”), then such 280G Payments shall be reduced in a manner determined by the
Company (by the minimum possible amounts) that is consistent with the
requirements of Section 409A until no amount payable to the Executive will be
subject to the Excise Tax. If two economically equivalent amounts are subject to
reduction but are payable at different times, the amounts shall be reduced (but
not below zero) on a pro rata basis.

 

(b)                                 All calculations and determinations under
this Section 5.7 shall be made by an independent accounting firm or independent
tax counsel appointed by the Company (the “Tax Counsel”) whose determinations
shall be conclusive and binding on the Company and the Executive for all
purposes. For purposes of making the calculations and determinations required by
this Section 5.7, the Tax Counsel may rely on reasonable, good faith assumptions
and approximations concerning the application of Section 280G and Section 4999
of the Code. The Company and the Executive shall furnish the Tax Counsel with
such information and documents as the Tax Counsel

 

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may reasonably request in order to make its determinations under this
Section 5.7. The Company shall bear all costs the Tax Counsel may reasonably
incur in connection with its services.

 

6.         Cooperation. The parties agree that certain matters in which the
Executive will be involved during the Employment Term may necessitate the
Executive’s cooperation in the future. Accordingly, following the termination of
the Executive’s employment for any reason, to the extent reasonably requested by
the Board, the Executive shall reasonably cooperate with the Company in
connection with matters arising out of the Executive’s service to the Company;
provided that, the Company shall make reasonable efforts to minimize disruption
of the Executive’s other activities. The Company shall reimburse the Executive
for reasonable expenses incurred in connection with such cooperation and, to the
extent that the Executive is required to spend substantial time on such matters,
the Company shall compensate the Executive at an hourly rate reasonably agreed
to by the Company and the Executive and based on the Base Salary of the
Executive in the calendar year of termination.

 

7.         Confidential Information; Non-Compete; Invention Assignment. The
Executive understands and acknowledges that during the Employment Term, she will
have access to and learn about Confidential Information, as defined in the
Company’s Confidentiality, Non-Competition, and Invention Agreement, which
Executive agrees to execute concurrent herewith and the terms of which are
incorporated herein by reference.

 

8.         Non-Disparagement. The Executive agrees and covenants that she will
not at any time make, publish or communicate to any person or entity or in any
public forum any defamatory or disparaging remarks, comments, or statements
concerning the Company or its businesses, or any of its employees, officers, and
existing and prospective customers, suppliers, investors and other associated
third parties.  This Section 8 does not, in any way, restrict or impede the
Executive from exercising protected rights to the extent that such rights cannot
be waived by agreement or from complying with any applicable law or regulation
or a valid order of a court of competent jurisdiction or an authorized
government agency, provided that such compliance does not exceed that required
by the law, regulation, or order. The Executive shall promptly provide written
notice of any such order to the Company’s General Counsel.  Nothing in this
Agreement or any other Agreement between the Executive and the Company,
restricts or prohibits the Executive from initiating communications directly
with, responding to any inquiries from, providing testimony before, providing
confidential information to, reporting possible violations of law or regulation
to, or from filing a claim or assisting with an investigation directly with a
self-regulatory authority or a government agency or entity, including the U.S.
Equal Employment Opportunity Commission, the Department of Labor, the National
Labor Relations Board, the Department of Justice, the Securities and Exchange
Commission, the Congress, and any agency Inspector General, or from making other
disclosures that are protected under the whistleblower provisions of state or
federal law or regulation.  The Executive does not need the prior

 

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authorization of the Company to engage in such conduct, and the Executive does
not need to notify the Company that the Executive has engaged in such conduct.

 

9.         Acknowledgement. The Executive acknowledges and agrees that the
services to be rendered by her to the Company are of a special and unique
character; that the Executive will obtain knowledge and skill relevant to the
Company’s industry, methods of doing business and marketing strategies by virtue
of the Executive’s employment; and that the restrictive covenants and other
terms and conditions of this Agreement (including but not limited to the
non-competition covenant incorporated by reference in Section 7) are reasonable
and reasonably necessary to protect the legitimate business interest of the
Company.

 

10.  Remedies. In the event of a breach or threatened breach by the Executive of
Section 7 or Section 8 of this Agreement, the Executive hereby consents and
agrees that the Company shall be entitled to seek, in addition to other
available remedies, a temporary or permanent injunction or other equitable
relief against such breach or threatened breach from any court of competent
jurisdiction, without the necessity of showing any actual damages or that money
damages would not afford an adequate remedy, and without the necessity of
posting any bond or other security. The aforementioned equitable relief shall be
in addition to, not in lieu of, legal remedies, monetary damages, or other
available forms of relief.

 

11.  Policies and Procedures.  Executive agrees to comply with the Company’s
policies and procedures as may be in effect or adopted or modified from time to
time, including but not limited to the Code of Business Conduct, the Code of
Conduct, the Code of Ethics for Interactions with Healthcare Professionals, the
Insider Trading Policy, the Anticorruption Policy, and the Conflicts of Interest
Policy.  Upon (a) voluntary or involuntary termination of the Executive’s
employment or (b) the Company’s request at any time during the Executive’s
employment, the Executive shall (i) provide or return to the Company any and all
Company property, whether physical or electronic, and all Company documents and
materials belonging to the Company and stored in any fashion, including but not
limited to those that constitute or contain any Confidential Information or Work
Product, that are in the possession or control of the Executive, whether they
were provided to the Executive by the Company or any of its business associates
or created by the Executive in connection with her employment by the Company;
and (ii) delete or destroy all copies of any such documents and materials not
returned to the Company that remain in the Executive’s possession or control,
including those stored on any non-Company devices, networks, storage locations,
and media in the Executive’s possession or control.  Executive acknowledges that
any changes to Company policies, procedures, employee benefits, fringe benefits,
and similar systems must be approved by the Board.

 

12.  Publicity. The Executive hereby irrevocably consents to any and all uses
and displays, by the Company and its agents, representatives and licensees, of
the Executive’s name, voice, likeness, image, appearance, and biographical
information in, on or in connection with any

 

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pictures, photographs, audio and video recordings, brochures, media, digital
images, websites, or other advertising or publicity, at any time during or after
the period of her employment by the Company, for all legitimate commercial and
business purposes of the Company (“Permitted Uses”) without further consent from
or royalty, payment, or other compensation to the Executive. The Executive
hereby forever waives and releases the Company and its directors, officers,
employees, and agents from any and all claims, actions, damages, losses, costs,
expenses, and liability of any kind, arising under any legal or equitable theory
whatsoever at any time during or after the period of her employment by the
Company, arising directly or indirectly from the Company and its agents’,
representatives’, and licensees’ exercise of their rights in connection with any
Permitted Uses.

 

13.  Governing Law; Jurisdiction and Venue. This Agreement, for all purposes,
shall be construed in accordance with the laws of the State of Maryland without
regard to conflicts of law principles. Any action or proceeding by either of the
parties to enforce this Agreement shall be brought only in a state or federal
court located in the State of Maryland. The parties hereby irrevocably submit to
the exclusive jurisdiction of such courts and waive the defense of inconvenient
forum to the maintenance of any such action or proceeding in such venue.

 

14.  Entire Agreement. Unless specifically provided herein (e.g., Sections 7 and
11), this Agreement contains all of the understandings and representations
between the Executive and the Company pertaining to the subject matter hereof
and supersedes all prior and contemporaneous understandings, agreements,
representations and warranties, both written and oral, with respect to such
subject matter. The parties mutually agree that the Agreement can be
specifically enforced in court and can be cited as evidence in legal proceedings
alleging breach of the Agreement.

 

15.  Modification and Waiver. No provision of this Agreement may be amended or
modified unless such amendment or modification is agreed to in writing and
signed by the Executive and by the Chairman of the Board. No waiver by either of
the parties of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by the other party hereto shall be
deemed a waiver of any similar or dissimilar provision or condition at the same
or any prior or subsequent time, nor shall the failure of or delay by either of
the parties in exercising any right, power, or privilege hereunder operate as a
waiver thereof to preclude any other or further exercise thereof or the exercise
of any other such right, power, or privilege, unless otherwise expressly
provided for in writing signed by both parties.

 

16.  Severability. Should any provision of this Agreement be held by a court of
competent jurisdiction to be enforceable only if modified, or if any portion of
this Agreement shall be held as unenforceable and thus stricken, such holding
shall not affect the validity of the remainder of this Agreement, the balance of
which shall continue to be binding upon the parties with any such modification
to become a part hereof and treated as though originally set forth in this
Agreement.

 

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The parties further agree that any such court is expressly authorized to modify
any such unenforceable provision of this Agreement in lieu of severing such
unenforceable provision from this Agreement in its entirety, whether by
rewriting the offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or by making such other
modifications as it deems warranted to carry out the intent and agreement of the
parties as embodied herein to the maximum extent permitted by law.

 

The parties expressly agree that this Agreement as so modified by the court
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions hereof, and if such
provision or provisions are not modified as provided above, this Agreement shall
be construed as if such invalid, illegal, or unenforceable provisions had not
been set forth herein.

 

17.  Captions. Captions and headings of the sections and paragraphs of this
Agreement are intended solely for convenience and no provision of this Agreement
is to be construed by reference to the caption or heading of any section or
paragraph.

 

18.  Counterparts. This Agreement may be executed in separate counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

 

19.  Section 409A.

 

19.1.                     General Compliance. This Agreement is intended to
comply with Section 409A or an exemption thereunder and shall be construed and
administered in accordance with Section 409A. Notwithstanding any other
provision of this Agreement, payments provided under this Agreement may only be
made upon an event and in a manner that complies with Section 409A or an
applicable exemption. Any payments under this Agreement that may be excluded
from Section 409A either as separation pay due to an involuntary separation from
service or as a short-term deferral shall be excluded from Section 409A to the
maximum extent possible. For purposes of Section 409A, each installment payment
provided under this Agreement shall be treated as a separate payment. Any
payments to be made under this Agreement upon a termination of employment shall
only be made upon a “separation from service” under Section 409A.
Notwithstanding the foregoing, the Company makes no representations that the
payments and benefits provided under this Agreement comply with Section 409A,
and in no event shall the Company be liable for all or any portion of any taxes,
penalties, interest, or other expenses that may be incurred by the Executive on
account of non-compliance with Section 409A.

 

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19.2.                     Specified Employees. Notwithstanding any other
provision of this Agreement, if any payment or benefit provided to the Executive
in connection with her termination of employment is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A and the
Executive is determined to be a “specified employee” as defined in
Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until
the first payroll date to occur following the six-month anniversary of the
Termination Date or, if earlier, on the Executive’s death (the “Specified
Employee Payment Date”). The aggregate of any payments that would otherwise have
been paid before the Specified Employee Payment Date shall be paid to the
Executive in a lump sum on the Specified Employee Payment Date and thereafter,
any remaining payments shall be paid without delay in accordance with their
original schedule.

 

19.3.                     Reimbursements. To the extent required by
Section 409A, each reimbursement or in-kind benefit provided under this
Agreement shall be provided in accordance with the following:

 

(a)                                 the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during each calendar year cannot
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year;

 

(b)                                 any reimbursement of an eligible expense
shall be paid to the Executive on or before the last day of the calendar year
following the calendar year in which the expense was incurred; and

 

(c)                                  any right to reimbursements or in-kind
benefits under this Agreement shall not be subject to liquidation or exchange
for another benefit.

 

20.  Successors and Assigns. This Agreement is personal to the Executive and
shall not be assigned by the Executive. Any purported assignment by the
Executive shall be null and void from the initial date of the purported
assignment. The Company may assign this Agreement to any successor or assign
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of the Company. This
Agreement shall inure to the benefit of the Company and permitted successors and
assigns.

 

21.  Notice. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, or by overnight carrier to the parties
at the addresses set forth below (or such other addresses as specified by the
parties by like notice):

 

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If to the Company:

 

Osiris Therapeutics, Inc.
Attention: General Counsel
7015 Albert Einstein Drive
Columbia, MD 21046

 

Copy to:
Osiris Therapeutics, Inc.
Attention: Chairman of the Board
7015 Albert Einstein Drive
Columbia, MD 21046

 

If to the Executive:

 

Linda Palczuk
318 Twin Pond Drive
West Chester, PA  19382

 

22.  Representations of the Executive. The Executive represents and warrants to
the Company that:

 

The Executive’s acceptance of employment with the Company and the performance of
her duties hereunder will not conflict with or result in a violation of, a
breach of, or a default under any contract, agreement, or understanding to which
she is a party or is otherwise bound.

 

The Executive’s acceptance of employment with the Company and the performance of
her duties hereunder will not violate any non-solicitation, non-competition, or
other similar covenant or agreement of a prior employer.

 

23.  Withholding. The Company shall have the right to withhold from any amount
payable hereunder any Federal, state, and local taxes in order for the Company
to satisfy any withholding tax obligation it may have under any applicable law
or regulation.

 

24.  Survival. Upon the expiration or other termination of this Agreement, the
respective rights and obligations of the parties hereto shall survive such
expiration or other termination to the extent necessary to carry out the
intentions of the parties under this Agreement.

 

25.  Acknowledgement of Full Understanding. THE EXECUTIVE ACKNOWLEDGES AND
AGREES THAT SHE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS
AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES

 

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THAT SHE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF
HER CHOICE BEFORE SIGNING THIS AGREEMENT.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

 

OSIRIS THERAPEUTICS, INC.

 

 

 

By:

/s/ Richard Skow

 

 

 

 

Name:

Richard Skow

 

 

 

Title:

General Counsel

 

 

EXECUTIVE

 

 

 

Signature:

/s/ Linda Palczuk

 

 

 

 

Print Name:

Linda Palczuk

 

 

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