Exhibit 10.1


 


MANUFACTURING
AGREEMENT


 


THIS
MANUFACTURING AGREEMENT (the “Agreement”) is made and entered
into as of July 24, 2008 (the “Effective Date”), by and between Osiris
Therapeutics, Inc. (“Osiris”), a Delaware corporation, and NuVasive, Inc.
(“NuVasive”), a Delaware corporation.


 


RECITALS


 


WHEREAS,
Osiris and NuVasive are parties to that certain Asset Purchase Agreement, dated
May 8, 2008 (the “Asset Purchase Agreement”), pursuant to which Osiris
sold, and NuVasive purchased, technology related to manufacturing the Osteocel
product line (as more specifically set forth therein); and


 


WHEREAS,
NuVasive and Osiris desire to herein set forth an arrangement whereby Osiris
shall manufacture and deliver to NuVasive, and NuVasive shall purchase, the
Product (as defined below).


 


NOW,
THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:


 


ARTICLE
1

DEFINED TERMS


 


As used herein, certain
capitalized terms shall have the meanings ascribed to them as provided below:


 


1.1. “AATB” means the
American Association of Tissue Banks.


 


1.2. “Action” shall have
the meaning as such term is defined in Section 6.3 of this Agreement.


 


1.3. “Affiliate” means,
with respect to a party, any person or entity which, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such party.


 


1.4. “Certificate of
Analysis” means, for each Lot produced, a document prepared by Osiris setting
forth the measured and observable characteristics of Product from the Lot,
confirming that such Lot meets the Specifications, certifying that such Lot was
manufactured and released in accordance with applicable Laws and cGTP.


 


1.5. “cGTP” means current
Good Tissue Practice as defined in FDA rules and regulations, including
the United States regulations set forth at 21 CFR Parts 1270 and 1271, subparts
C and D, as in effect and as may be amended or replaced by the FDA from time to
time.


 


1.6. “Confidential
Information” means information which is disclosed by a party (the “Disclosing
Party”) to the other party (the “Receiving Party”) in whatever media, and is
marked, identified or otherwise acknowledged to be confidential at the time of
disclosure; provided that information shall not be deemed “Confidential
Information” which is (a) publicly known, through no fault of the
Receiving Party, (b) received by the Receiving Party from a source having
the right to


 


1

















 


disclose such
information, (c) known by the Receiving Party prior to disclosure of such
information, or (d) independently developed by the Receiving Party without
use of the Disclosing Party’s information. Notwithstanding the foregoing and
for the avoidance of doubt, the Confidential Information of NuVasive includes
all Licensed Technology, whether or not marked, identified or otherwise
acknowledged to be confidential and whether or not known or developed by
Osiris, and the use and disclosure of Licensed Technology by Osiris (as the
Receiving Party hereunder) shall be subject to Section 8.3.


 


1.7. “CPI” shall mean the
“Price Index for all Urban Consumers, U.S. city average, all items, for the
then immediately preceding 12-month period” as published by the US Government.


 


1.8. “Damages” shall have
the meaning as such term is defined in Section 6.1 of this Agreement.


 


1.9. “Deliver” or “Delivery”
with respect to Product means, and shall take place upon, the transfer of
possession of Product to a carrier, FCA the Facility (Incoterms 2000).


 


1.10. “Donor” means a
human tissue donor.


 


1.11. “Donor Tissue”
means human musculoskeletal tissue, including bone and connective tissue.


 


1.12. “Excess Quantities”
shall have the meaning as such term is defined in Section 3.3 of this
Agreement.


 


1.13. “Executives” shall
have the meaning as such term is defined in Section 9.8 of this Agreement.


 


1.14. “Facility” means
the facility at which Osiris or its subcontractors set forth on
Schedule 3.11, or otherwise approved by NuVasive in accordance with Section 3.11,
will Process Product under this Agreement.


 


1.15. “FDA” means the
U.S. Food and Drug Administration, and any successor or replacement agency
thereto.


 


1.16. “Inventions” shall
have the meaning as such term is defined in Section 8.2 of this Agreement.


 


1.17. “Latent Defect”
means any defect in any Lot or other shipment of Product that could not
reasonably be found by the exercise of ordinary care in an initial physical
inspection by NuVasive, such as, but not limited to, the presence of a
contaminant or Osiris’ failure to Process Product in accordance with cGTP.


 


1.18. “Laws” means all
laws, rules, regulations, ordinances, standards and guidelines that apply to
the Processing of Product or the performance of either party’s obligations
under this Agreement, as the context requires under this Agreement, including,
without limitation, the Public Health Service Act, 42 U.S.C. §201  et seq
.., the United States National Organ Transplant Act, Title 21 of the Code of
Federal Regulations Parts 1270 and 1271, Human Cells, Tissues, and Cellular and
Tissue Based Products, other rules, regulations or standards promulgated by the
FDA or any other applicable governmental agency, and of the AATB, as each may
be amended from time to time.


 


2

















 


1.19. “Licensed
Technology” means the intellectual property (including patents and patents
pending of NuVasive), methods, technology, and know-how owned or licensed by
NuVasive and used in, held for use in, intended for use in, related to or
necessary for Processing the Product. Licensed Technology shall include all
Transferred Technology as defined in and purchased by NuVasive under the Asset
Purchase Agreement.


 


1.20. “Lot” means the
Product, Processed in accordance with the Specifications, resulting from a
single production run, traceable to a single source Donor.


 


1.21. “Lot Records” means
manufacturing, packaging and test records, donor suitability determination
documentation, cleaning, labeling and “sterilization” processes documentation
and documentation relating to Processing and release of each Lot, including
exception documentation, deviations/discrepancies, raw data or data worksheets
and additional documentation generated and/or processed as part of the
production record of the related Lot.


 


1.22. “Minimum
Performance Level” shall have the meaning as such term is defined in Section 3.3
of this Agreement.


 


1.23. “NuVasive
Indemnitee” shall have the meaning as such term is defined in Section 6.1
of this Agreement.


 


1.24. “NuVasive
Responsible Party” shall have the meaning as such term is defined in Section 6.2
of this Agreement.


 


1.25. “Order” shall have
the meaning as such term is defined in Section 3.2 of this Agreement.


 


1.26. “Osiris Indemnitee”
shall have the meaning as such term is defined in Section 6.2 of this
Agreement.


 


1.27. “Osiris Product
Warranty” shall have the meaning as such term is defined in Section 3.7 of
this Agreement.


 


1.28. “Osiris Responsible
Party” shall have the meaning as such term is defined in Section 6.1 of
this Agreement.


 


1.29. “Parties” shall
mean Osiris and NuVasive; “Party” shall mean Osiris or NuVasive,


 


1.30. “Process” or “Processing”
shall mean any or all of the acts of manufacturing (including procuring
materials, Donor Tissue and Donors suitability for determination, for
manufacturing), handling, storing, analyzing, testing, packaging, labeling and
preparing for shipment Product by Osiris pursuant to this Agreement.


 


1.31. “Product” means
osteobiologic allograft material containing cancellous bone (which contains
viable mesenchymal stem cells) Processed by Osiris using the Licensed
Technology and meeting the Specifications attached hereto as Exhibit A,
and which has passed all required inspections and testing and has been released
for distribution for human implantation.


 


1.32. “Product Fees”
shall have the meaning as such term is defined in Section 4.1.


 


3

















 


1.33. “Product-Related
Inspection” shall have the meaning as such term is defined in Section 5.1
of this Agreement.


 


1.34. “Product Withdrawal”
shall have the meaning as such term is defined in Section 5.7 of this
Agreement.


 


1.35. “Publication” shall
have the meaning as such term is defined in Section 8.4 of this Agreement.


 


1.36. “Specifications”
means the Product specifications set forth in Exhibit A attached hereto,
as the same may be amended in accordance with this Agreement.


 


1.37. “Term” shall have
the meaning as such term is defined in Section 7.1 of this Agreement.


 


ARTICLE
2

PROCUREMENT AND SUPPLY OF DONORS


 


Donor Procurement
Obligations. Osiris shall use its commercially reasonable
best efforts to procure Donor Tissue as necessary to meet the Minimum
Performance Levels and to Process Product in accordance with the terms of this
Agreement.


 


ARTICLE
3

MANUFACTURING OF PRODUCT; TECHNOLOGY LICENSE


 


3.1. Manufacturing
Obligations. Osiris shall Process for and supply to NuVasive Product in
accordance with the terms of this Agreement. Osiris shall Process and supply
the Product to NuVasive hereunder in conformity with the Specifications and in
compliance with cGTP and all applicable Laws. If either party seeks a change to
the Specifications or there is a change in applicable Laws that would
necessitate a change in the Specifications, the parties will meet and confer in
good faith to determine whether and what changes (if any) should be made
thereto. Any and all amendments or modifications in the Specifications must be
agreed upon in writing by both parties.


 


3.2. Forecasting and
Orders. On or before sixty (60) days prior to each calendar quarter,
NuVasive shall provide to Osiris a binding order (“Order”) for the quantity and
size of Product to be delivered by Osiris to NuVasive in the following calendar
quarter. Each Order shall be in writing, and shall specify the quantity of
units of Product by size, the brand name of each unit of Product ordered, the
requested Delivery date(s), the destination shipping address(es), and the
Product Fees therefor. Osiris shall be required to supply to NuVasive all such
quantities of Product as NuVasive orders pursuant to such Orders in accordance
with the Product unit sizes and brand names specified in such Orders and shall
use its commercially reasonable best efforts to conform to the requested
Delivery date(s) set forth in such Orders, provided in each case such
Orders do not exceed the Minimum Performance Levels during the applicable
periods set forth in Section 3.3 below. Osiris shall deliver the Product
to NuVasive pursuant to the Orders, subject to available Product being released
for transplantation; provided, that the Parties understand and agree the final
Delivery dates for Orders may vary from the requested dates based upon Donor
Tissue procurement.


 


4

















 


3.3. Performance
Levels.


 


3.3.1. Minimum
Performance Levels. Osiris shall use its commercially reasonable best
efforts to Deliver Product to NuVasive at least in the quantities set forth
below during the applicable periods (“Minimum Performance Levels”) and shall
Deliver any such Product according to Product unit size and brand name
specifications established by NuVasive and set forth in each Order. NuVasive
shall provide Orders to purchase from Osiris Product in quantities of at least
the Minimum Performance Level for the applicable period.


 


	
   

  	
   

  	
  Minimum Performance

  	
   

  
	
  Applicable Period

  	
   

  	
  Level Delivered (cc)

  	
   

  
	
  Effective Date
  to April 15, 2009

  	
   

  	
  125,000

  	
   

  
	
  April 16,
  2009 to eighteen (18) months following the Technology Closing Date (as
  defined in the Asset Purchase Agreement)

  	
   

  	
  125,000

  	
   

  



 


3.3.2. Additional
Product. Osiris shall have the right, in its discretion, to Process and
Deliver Product hereunder in quantities that exceed NuVasive’s Orders (the “Excess
Quantities”), provided that Osiris gives advance written notice to NuVasive of
its intent to Process and Deliver the Excess Quantities. Following receipt of
such written notice, the Parties shall discuss and attempt in good faith to
reach agreement on the unit sizes of the Excess Quantities. If the parties are
unable to reach agreement on the unit sizes of any Excess Quantities within ten
(10) days from the notice, Osiris shall Process and Deliver to NuVasive
unit sizes of such Excess Quantities in the same proportion as the unit sizes
of Product set forth in NuVasive’s most recent Order. Subject to the notice and
sizing provisions immediately above, in addition to NuVasive’s requirement to
purchase from Osiris Product in quantities of at least the Minimum Performance
Level (provided that Osiris and/or its subcontractors Processes at least such
quantities) for the applicable period, NuVasive shall purchase from Osiris the
Excess Quantities that Osiris Processes in accordance with this Agreement
during the Term; provided, however, that NuVasive shall have no obligation
hereunder to purchase Product in quantities greater than  ***  cubic centimeters, and the Delivery and
purchase of such greater quantities of Product, if any, shall be by mutual
written agreement of both parties. For all Product Processed hereunder, Osiris
shall provide NuVasive with a monthly forecast of projected Product
manufacturing quantities for such month.


 


3.4. Shipment and
Delivery. All Product shall be shipped to NuVasive or NuVasive’s customers
as directed by NuVasive using a shipping company designated by NuVasive. Osiris
shall tender Product for Delivery, FCA the Facility, in accordance with the
Specifications and addressed to the shipping address specified by NuVasive in
the Orders or to such other address as NuVasive may provide to Osiris in
writing in advance of any Delivery. NuVasive shall provide Osiris with standard
shipping instructions prior to the first requested shipping date hereunder;
thereafter, such shipping instructions may be changed upon written notice given
to Osiris by NuVasive. Osiris shall not Deliver any Product prior to completion
of quality control and release testing by Osiris. NuVasive shall be responsible
for all shipping and insurance charges and risk of loss associated with the
shipment of Product hereunder (from and after Delivery), provided that Osiris
has complied with


 






	
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5

















 


the shipping instructions
of NuVasive and that the Product is tendered for Delivery in accordance with
the Specifications. Title to Product shall pass to NuVasive upon Delivery of
Product to the carrier selected by NuVasive.


 


3.5. Quality Control;
Release Testing; Documentation. Osiris shall be responsible for quality
control tests to ensure that each Lot conforms to the Specifications and is
produced in accordance with applicable Laws and cGTP, and Osiris shall be
responsible for all release testing. All quality control test results and
release testing and other documents related to quality control and quality
assurance and copies thereof shall be made available to NuVasive at Osiris’s
offices upon written request of NuVasive. Such information is considered
NuVasive’s Confidential Information in accordance with this Agreement and shall
be transferred to NuVasive upon the termination of this Agreement. Any testing
performed by or on behalf of Osiris (including tests to confirm that each Lot
meets the Specifications) shall be performed at Osiris’s sole cost and expense
and may be used by NuVasive for final release of each Lot without additional
testing by NuVasive; provided, however, that NuVasive may conduct its own
release testing of each Lot in its discretion. NuVasive (in its sole
discretion) shall determine the form and substance of any release testing
information that is submitted to any regulatory authority. At the time of
Delivery of each Lot, Osiris shall send to NuVasive a signed Certificate of
Analysis with respect to such Lot. Within thirty (30) days following the
Delivery of each Lot, Osiris shall provide NuVasive with properly completed
copies of Lot Records for such Lot prepared in accordance with the
Specifications and applicable Laws.


 


3.6. Rejection and
Cure. Upon receipt of each shipment of Product, NuVasive or its customers
shall perform an initial physical inspection of such Product and review any
related documentation. If any Product (including without limitation any
documentation related thereto) fails, in whole or in part, to conform to the
applicable Specifications and the terms hereof, or if any Product is not
Processed in accordance with cGTP or applicable Laws, then NuVasive shall have
the right to reject such nonconforming Product. NuVasive shall give written
notice to Osiris of its rejection hereunder as soon as possible, but no more
than thirty (30) days after NuVasive’s or its customer’s receipt of such
shipment, specifying the grounds for such rejection. If at any time thereafter
NuVasive discovers a Latent Defect, NuVasive shall give written notice to
Osiris of its rejection hereunder as soon as possible, but no more than ninety
(90) days after NuVasive’s receipt of the Product, specifying the grounds
for such rejection. The nonconforming Product shall be held for Osiris’s
disposition, or shall be returned to Osiris, in each case at Osiris’s expense,
as directed by Osiris. Osiris shall use commercially reasonable best efforts to
correct the root cause of the nonconformance in order to comply with the
requirements of the applicable Specification. In addition, Osiris shall, at its
expense, promptly replace each nonconforming Product with conforming Product.


 


3.7. Warranty.
With respect to Product supplied hereunder, Osiris warrants (“Osiris Product
Warranty”) that the (a) Product shall conform with the applicable
Specifications therefor, shall be free from defects in materials or workmanship,
and shall not be adulterated, misbranded, contaminated, tampered with or
otherwise altered or mishandled while in the custody and control of Osiris; and
(b) Product shall be Processed in accordance with the applicable
Specifications, and in compliance with cGTP and all applicable Laws. Osiris
hereby represents, warrants and covenants that it will not, and has not,
employed or otherwise used in any capacity the services of any person debarred
under Section 21 U.S.C. 335a in performing any portion of the Processing
of Product. EXCEPT AS PROVIDED HEREIN, OSIRIS MAKES NO OTHER WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCT, INCLUDING, WITHOUT LIMITATION,
ANY


 


6

















 


WARRANTY OF
MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.


 


3.8. Packaging;
Labeling; Marketing. Osiris shall package and label the Product according
to the Specifications and in compliance with cGTP and all applicable Laws,
rules, regulations, and/or standards. Product supplied to NuVasive shall be
labeled as determined by NuVasive, provided that NuVasive shall provide Osiris
with at least thirty (30) days prior written notice of any labeling
changes (including, but not limited to, brand names), and Osiris shall be entitled
to recover, and NuVasive shall be responsible to pay to Osiris, all reasonable
out of pocket costs that Osiris incurs associated with such labeling change.
Each unit of Product shall have a unique identification number.


 


3.9. Regulatory
Approvals. Product is currently regulated under 21 CFR parts 1270 and 1271
as a human cellular and tissue based tissue product. NuVasive shall obtain at
its expense all regulatory approval by the FDA or other regulatory authority
necessary or required for the distribution, sale and marketing of Product under
current Laws as of the Effective Date. At NuVasive’s request during the Term,
Osiris will assist NuVasive in preparing the portions of NuVasive’s regulatory
filings that pertain to Processing and will make appropriate Osiris personnel
reasonably available for meetings with regulatory authorities relating to
Processing, provided that all such regulatory filings shall be the sole and
exclusive property of NuVasive and NuVasive shall have sole authority and
responsibility with respect to contacts and communications with regulatory
authorities relating to the Product. In the event of changes in applicable
Laws, or significant regulatory differences in foreign countries where NuVasive
distributes Product, the Parties shall cooperate to determine what actions, if
any, are required to meet any new or foreign regulations and shall negotiate in
good faith changes to this Agreement including but not limited to, changes to
Orders, Product Fees and Minimum Performance Levels to reflect any change in
Product manufacturing costs. No change in Product-specific manufacturing
processes, test methods, or other procedures or documentation relating to
Processing shall be implemented by Osiris unless and until the parties have
agreed in writing to such change.


 


3.10. Technology
License. NuVasive hereby grants to Osiris during the Term, for the sole
purpose of performing its duties and fulfilling its obligations under this Article 3,
a non-exclusive and non-transferable license, without a right to sublicense, to
use the Licensed Technology solely to the extent necessary to Process the
Product under the terms and conditions of this Agreement. Notwithstanding the
foregoing, NuVasive hereby consents to the sublicense by Osiris of the Licensed
Technology to the Persons listed on  Schedule 3.11  solely to the extent necessary for such
subcontractor to provide processing services to Osiris, provided that the terms
of any such sublicense arrangement shall either be pursuant to (i) the
terms of those Contracts between Seller and such Persons which are identified
on  Schedule 3.11  hereto as such Contracts are in effect on the
date hereof or (ii) require the prior written consent of NuVasive, which
consent shall not be unreasonably withheld.


 


3.11. Subcontracting.
Except as provided on Schedule 3.11, Osiris shall not assign,
subcontract, or delegate any of its responsibilities under this Agreement
without the prior written consent of NuVasive, which consent may be granted or
withheld in NuVasive’s sole discretion. Such subcontractors shall be subject to
confidentiality obligations at least as stringent, when taken as a whole, as
provided in this Agreement. No subcontractor may further subcontract any
responsibilities under this Agreement without the prior written consent of
NuVasive, which consent may be granted or withheld in NuVasive’s sole
discretion. Any approved subcontractor shall be


 


7

















 


subject to all of the
terms and conditions applicable to Osiris under this Agreement. Osiris shall be
responsible, and shall remain liable, for the performance of all of its
obligations under this Agreement and for any breach by any subcontractor
thereof. NuVasive shall have the right to audit and inspect all subcontractors
with whom Osiris may enter into agreements in the performance of its
responsibilities under this Agreement. Such audit and inspection rights shall
be substantially similar to the rights of NuVasive to audit and inspect Osiris
under this Agreement.


 


ARTICLE
4

FEES


 


4.1. Product Fees.
NuVasive shall pay to Osiris $ *** per cubic centimeter of Product (“Product Fees”) Delivered to
NuVasive and that is not timely rejected by NuVasive pursuant to Section 3.6
above. All payments due hereunder shall be made in U.S. dollars, without
set-off or counterclaim. For the avoidance of doubt, NuVasive shall be
responsible for paying to Osiris the Product Fee for all conforming Product
that is Delivered to NuVasive as a replacement of Product rejected in
accordance with Section 3.6 to the extent that payment for such Product
was not previously made.


 


4.2. Adjustments to
Product Fees. The Product Fees shall be escalated on January 1, 2009
by the then current increase in CPI. Adjustments to Product Fees shall be
effective January 1st  and shall apply
to all shipments of Product made on or after January 1st.


 


4.3. Billing.
NuVasive shall pay to Osiris the Product Fees within thirty (30) days of
Delivery of the conforming Product. In the event NuVasive fails to pay in
accordance with this Section 4.3, Osiris may, in addition to any other
remedies available to it, assess interest at a rate of one and one-half percent
(1.5%) per month on all unpaid amounts.


 


4.4. Taxes. All
payments required under this Agreement are exclusive of any applicable federal,
state and local taxes. Each of the Parties shall be responsible for the payment
of taxes and other assessments for which it is liable under Laws.


 


ARTICLE
5

ADDITIONAL OBLIGATIONS


 


5.1. Inspections.
Upon reasonable prior written notice, NuVasive may, at its expense, audit
Osiris during normal business hours for quality control and assurance,
compliance with Laws, cGTP, and other applicable regulations or standards, and
the terms hereof, and otherwise inspect facilities and records, each as related
to the Processing of Product hereunder; provided, however, that such audits and
inspections may be conducted no more than twice during the Term hereof, other
than “for cause” audits, which NuVasive shall be entitled to conduct as
necessary to address specific quality problems relating to Product, as well as
in preparation for regulatory filings and in response to regulatory authority
requirements. Any corrective action mutually agreed upon by the parties in
response to NuVasive’s audit or inspection shall be implemented by Osiris, at
Osiris’ expense, prior to filling new or outstanding Orders. Osiris hereby
agrees to advise NuVasive promptly (and, in any event, within thirty-six
(36) hours) of any proposed or unannounced visit or inspection by any agent
of a regulatory authority to the Facility where such visit or inspection is
specifically related to the Product or its Processing (a “Product-Related
Inspection”). Osiris agrees to permit, to the extent reasonably practical, one
or more qualified representative(s) of NuVasive to be present during a


 






	
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Product-Related Inspection
if requested by NuVasive. If NuVasive is not present during a Product-Related
Inspection, Osiris shall promptly provide a summary report of the results of
the Product-Related inspection to NuVasive. Osiris shall promptly notify
NuVasive of the results of any inspection, comments, responses or notices
received from the FDA, AATB, or other applicable regulatory authorities, which
relate to the Processing of Product hereunder. With respect to the forgoing,
each Party shall provide the other Party at such other Party’s request with
copies of any notices or correspondence from or to such regulatory authorities
that directly relate to Product. Such notices and correspondence are considered
Confidential Information in accordance with this Agreement. The Parties will
cooperate in the development and review of responses that are required to be
submitted to any regulatory authority relating to the Processing of Product
prior to submission to the regulatory authority.


 


5.2. Records; Safety.
Osiris shall maintain accurate and complete records of its procurement,
Processing and supply of Product hereunder for the longer of five (5) years
after shipment of any such Product, or the period of time required by
applicable Laws, regulations and/or standards, whichever is greater. No records
required by this Agreement shall be discarded by Osiris without specific prior
written notification of Osiris’ intent to discard to NuVasive. Those records
(or copies of those records) that Osiris is unwilling to retain will be
transferred to NuVasive for storage. Osiris shall promptly (and, in any event,
within twenty four (24) hours) notify NuVasive of any information of which
it becomes aware concerning Product supplied to NuVasive. Any such notification
will include all related information in reasonable detail. Upon such
notification, the parties shall consult with each other in an effort to arrive
at a mutually acceptable procedure for taking appropriate action; provided,
however, that nothing contained herein shall be construed as restricting the
right of either party to make a timely report of such matter to any regulatory
authority or take other action that it deems to be appropriate or required by
applicable Laws.


 


5.3. Regulatory
Compliance. With respect to each Party’s performance under this Agreement,
Osiris and NuVasive shall each comply with all applicable Laws, regulations,
and standards.


 


5.4. AATB
Accreditation. The Parties agree that Osiris is actively pursuing AATB
accreditation, and that NuVasive shall continue to perform its obligations
under this Agreement despite the pendency of such AATB accreditation for so
long as Osiris is using reasonable commercial efforts to obtain such
accreditation. Once obtained, Osiris agrees to maintain its accreditation with
the AATB and should Osiris’ accreditation lapse at any time or for any reason,
it shall promptly communicate to the NuVasive the reasons for such lapse and
the actions taken to cure the loss of AATB accreditation. In the event that
Osiris fails to cure such loss within six months, notwithstanding any provision
to the contrary contained in this Agreement, NuVasive shall be immediately and
forever relieved of any obligation to order Product or to pay any fees with
respect thereto and shall have the right to cancel or amend, without liability,
any Orders then pending; provided, however, NuVasive shall pay the Product Fees
for all Orders shipped as long as such Orders are filled with Product Processed
while Osiris was accredited.


 


5.5. Complaints.
Osiris hereby agrees to advise NuVasive promptly (and, in any event, within
thirty-six (36) hours) of any complaint information (including adverse
event information) Osiris receives relating to Product. Osiris will assist
NuVasive in investigating and resolving all complaints and adverse events
related to the Processing of Product. NuVasive will be responsible for
evaluating and investigating complaints and the Parties will cooperate in
preparing communications to any regulatory authorities regarding Product
complaints or adverse events.


 


9

















 


Osiris will take any
corrective actions agreed to by the parties to avoid future occurrences of
Product complaints or adverse events related to the Processing of the Product.


 


5.6. Product Tracking.
NuVasive shall be responsible for maintaining trackability for all Products
provided by Osiris. Tracking records shall be maintained by NuVasive in
accordance with all applicable Laws.


 


5.7. Product
Withdrawal. In the event Osiris or NuVasive believes it may be necessary to
conduct a recall, field correction, market withdrawal, stock recovery, or other
similar action with respect to Product (a “Product Withdrawal”), NuVasive shall
make all decisions as to such Product Withdrawal and Osiris shall cooperate with
NuVasive in any Product Withdrawal. NuVasive shall bear all costs in connection
with any such Product Withdrawal and NuVasive shall reimburse Osiris for all
reasonable out-of-pocket expenses incurred by Osiris in connection with any
such Product Withdrawal; provided, however, that if such Product Withdrawal is
attributable to any breach, misrepresentation or non-fulfillment of any
covenant, agreement, representation or warranty made or to be performed by
Osiris under the Asset Purchase Agreement or this Agreement (including, without
limitation, the failure of any Product supplied hereunder to meet the Osiris
Product Warranty) or to the negligent act or omission or willful misconduct of
Osiris, Osiris shall reimburse NuVasive for all costs reasonably incurred by
NuVasive in connection with any such Product Withdrawal.


 


ARTICLE
6

INDEMNIFICATION AND INSURANCE


 


6.1. Osiris’s
Indemnity Obligations. Osiris shall defend, indemnify and hold harmless
NuVasive, its Affiliates and their respective successors and permitted assigns
(the “NuVasive Indemnitees”) from and against any and all losses, liabilities,
claims, actions, proceedings, damages and expenses (including without
limitation reasonable attorneys’ fees and expenses) (herein “Damages”) relating
to or resulting from a claim that arises out of (a) any breach by Osiris
or its Affiliates, sublicensees, contractors or subcontractors, or any of their
respective officers, directors, employees, or agents (the “Osiris Responsible
Parties”) of this Agreement, including without limitation, the failure of any
Product supplied hereunder to meet or comply with the Specifications or Osiris
Product Warranty, (b) the negligence or willful misconduct of any of the
Osiris Responsible Parties, (c) any violation of Law by any of the Osiris
Responsible Parties; or (d) the unauthorized use of Licensed Technology by
any of the Osiris Responsible Parties; provided, however, this Section 6.1
shall not impose any obligation on Osiris to indemnify the NuVasive Indemnitees
to the extent of any Damages for which NuVasive is obligated to indemnify the
Osiris Indemnitees pursuant to Section 6.2.


 


6.2. NuVasive’
Indemnity Obligations. NuVasive shall defend, indemnify and hold harmless
Osiris and its Affiliates, and their respective successors and permitted
assigns (the “Osiris Indemnitees”) from and against any and all Damages
relating to or resulting from a claim that arises out of (a) any breach by
NuVasive or its Affiliates, sublicensees, contractors or subcontractors, or any
of their respective officers, directors, employees, or agents (the “NuVasive
Responsible Parties”) of this Agreement, (b) the negligence or willful
misconduct of any of the NuVasive Responsible Parties, (c) any changes to
the Specifications requested by NuVasive in writing, or (d) any violation
of Law by any of the NuVasive Responsible Parties; provided, however, this Section 6.2
shall not impose any obligation on NuVasive to indemnify the Osiris Indemnitees
to the extent of any Damages for which Osiris is obligated to indemnify the
NuVasive Indemnitees pursuant to Section 6.1.


 


10
















 


6.3. Notice of Claim. The indemnification
obligations of the parties pursuant to this Agreement shall be proportional to
the relative responsibility or fault of each party for the Damages incurred as
a result of the actions or inactions of such party. Promptly after receipt by a
NuVasive Indemnitee or Osiris Indemnitee of the commencement of any such claim,
demand, action, suit or proceeding (collectively, “Action”) which is the
subject of the other party’s indemnification obligations hereunder, such Indemnitee
shall notify the other party of the commencement of the Action. Any failure to
provide such notice shall only relieve the other party of its indemnification
obligations hereunder to the extent the indemnifying party has been materially
prejudiced by such failure. The indemnifying party shall have sole right to
select and retain attorneys (reasonably acceptable to the Indemnitee) to assert
or negotiate, and sole right to control, the defense and any settlement of the
Action, to the extent of the indemnifying party’s corresponding indemnification
and defense obligations, except that under no circumstances shall the
indemnifying party enter into any settlement that involves an admission of
liability, negligence or other culpability by the Indemnitee, or requires the
Indemnitee to contribute to the settlement, without the Indemnitee’s prior
written consent. Without limiting the indemnifying party’s foregoing right to
select and retain attorneys and to sole control of the defense and settlement
of such Action, the Indemnitee may, at its own expense, participate in the
defense of, or otherwise consult with counsel of its own choice in connection
with, an Action that is the subject of the other party’s indemnification
obligations.


 


6.4. Limitation of Liability. IN NO EVENT SHALL
EITHER PARTY BE LIABLE, WHETHER AS A RESULT OF CONTRACTUAL BREACH, TORT OR
OTHERWISE, TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, SPECIAL, OR INCIDENTAL
DAMAGES INCURRED BY SUCH OTHER PARTY, INCLUDING BUT NOT LIMITED TO INJURY TO
GOODWILL, OR DIRECT, INDIRECT OR SPECULATIVE LOST PROFITS. The foregoing
Limitation of Liability shall not apply to a party’s liability for breach of
its confidentiality obligations hereunder or to the extent such damages are
paid to a third party in connection with a third party claim that is
indemnified hereunder.


 


6.5. Insurance. Each party agrees to procure
and maintain in full force and effect during the term of this Agreement, at its
sole cost and expense, general liability and product liability insurance in amounts
of not less than $2,000,000 per incident and $7,000,000 annual aggregate, which
insurance shall be written on an “occurrence” basis policy form, or, in the
alternative, shall continue for a period of ten (10) years following the
termination or expiration of this Agreement, with a reputable insurance carrier
and name the other party as an additional insured. Each party shall, on
request, provide to the other party a copy of a certificate of coverage or
other written evidence reasonably satisfactory to such requesting party of such
insurance coverage.


 


ARTICLE
7

TERM AND TERMINATION


 


7.1. Term. Unless terminated earlier pursuant
to the terms of this Agreement, this Agreement shall commence on the Effective
Date and remain in effect for eighteen (18) months therefrom (the “Term”).


 


7.2. Termination.


 


7.2.1. This Agreement may
be terminated, prior to the expiration of its Term, by either party immediately
upon written notice to the other party after the material breach of any


 


11

















 


provision of this
Agreement by the other party if the other party has not cured such breach
within thirty (30) days after receipt of written notice thereof from the
non-breaching party.


 


7.2.2. This Agreement may be terminated, prior to the
expiration of its Term, immediately upon written notice by either party if the
other party shall have become insolvent or bankrupt, or shall have made a
general assignment for the benefit of its creditors, or any case or proceeding
shall have been commenced by or against the other party in bankruptcy or
seeking reorganization, liquidation, dissolution, or any other relief under any
bankruptcy, insolvency, reorganization or other similar act or law, and any
such event shall have continued for sixty (60) days undismissed or
undischarged.


 


7.2.3. This Agreement may be terminated, prior to the
expiration of its Term, by NuVasive at any time and for any reason, immediately
upon written notice to Osiris, after Osiris has Delivered to NuVasive an aggregate
of  *** 
cubic centimeters of Product hereunder.


 


7.3. Effect of Termination or Expiration. After
either party provides notice of termination under Section 7.2.1 or 7.2.2
and pending termination of this Agreement under such Sections, the Parties
shall continue to perform their respective obligations hereunder. Expiration or
termination of this Agreement shall not relieve the Parties of any obligation
accruing prior to such expiration or termination. The provisions of
Sections 3.7, 5.2, 6.1, 6.2, 6.3, 6.4, 6.5, 8.1, 8.2, and 8.3 and the
applicable provisions of Article 9 shall survive any expiration or
termination of this Agreement. Each party agrees to return upon the expiration
or termination of this Agreement all Confidential Information acquired from the
other party, except as to such information it may be required to retain under
applicable Laws, and except for one copy of such information may be retained by
such party’s legal department;  provided
, that if Osiris elects not to retain a copy of any such Confidential
Information provided to NuVasive pursuant to Section 3.5 hereof, then
NuVasive shall, upon reasonable notice to NuVasive and during NuVasive’s normal
business hours, provide Osiris with access to such Confidential Information as
is reasonably necessary for purposes of Osris’ compliance with applicable Laws
or in connection with Osiris’ defense of any third party claims related
thereto.


 


ARTICLE
8

INTELLECTUAL PROPERTY AND CONFIDENTIALITY


 


8.1. Intellectual Property. Subject to the
license expressly granted by this Agreement, NuVasive is the sole and exclusive
owner of all right, title and interest in and to the methods of Processing
Product and all of NuVasive’s patents, trademarks, inventions, copyrights,
know-how, and trade secrets.


 


8.2. Other Inventions. The parties do not
contemplate that any inventions, discoveries, improvements, modifications,
derivations, information, know-how and the like that arise out of the
performance of this Agreement (collectively, the “Inventions”), including those
related to processes, compositions of matter and methods of use, whether
protectable by patent or as a trade secret, shall by Osiris. Accordingly, any
and all Inventions made by either party individually or jointly hereunder,
including any Inventions hereunder pertaining to Processing of Product, shall
be owned solely by NuVasive, and Osiris hereby assigns to NuVasive all right,
title and interest in and to all Inventions. Osiris shall, upon NuVasive’s
request, execute such documents, including any and all applications,
assignments or other instruments, give any testimony and take such other
actions as


 






	
  ***

  	
   

  	
  Portions of this
  page have been omitted pursuant to a request for Confidential Treatment
  filed separately with the Commission.

  



 


12

















 


NuVasive deems necessary
for NuVasive to obtain such ownership and to apply for, secure, and maintain
patent or other proprietary protection in the United States or any other
country with respect to Product or Inventions, provided that NuVasive shall
compensate Osiris for its reasonable out of pocket costs and expenses
associated with such actions. All Inventions and any information with respect
thereto shall be the Confidential Information of NuVasive.


 


8.3. Confidentiality. The Receiving Party shall
ensure the confidentiality of the Disclosing Party’s Confidential Information
it receives by taking substantially the same precautions as the Receiving Party
does with its own Confidential Information, but not less than a reasonable
standard of care. The Receiving Party shall not use the Disclosing Party’s
Confidential Information for any purpose other than to carry out the Receiving
Party’s obligations hereunder. The obligations of confidentiality shall not
apply to information that the Receiving Party is required by applicable Laws to
disclose; provided, however, that the Receiving Party shall so notify the
Disclosing Party of the Receiving Party’s intent to disclose and shall
cooperate with the Disclosing Party at the Disclosing Party’s expense on
reasonable measures to protect the confidentiality of the Disclosing Party’s
Confidential Information. The Receiving Party may not disclose the Disclosing
Party’s Confidential Information received pursuant to this Agreement except to
the Receiving Party’s directors, officers, employees, consultants, attorneys
and accountants who reasonably require disclosure of such Confidential
Information for the Receiving Party to exercise its rights or perform its
obligations under this Agreement, provided that such persons and entities are
obligated to hold the Confidential Information in confidence in accordance with
restrictions and procedures no less stringent than provided for herein and such
persons enter into a written confidentiality agreement whereunder they agree
not to disclose such information. The fact that general information may be in
or become part of the public domain, in and of itself, does not exclude any
specific Confidential Information from the obligations of this Agreement. The
Parties hereto understand and agree that this Section 8.3 is reasonable
and necessary to protect NuVasive’s and Osiris’ respective business interests.
The Parties further agree that the other may suffer irreparable harm from a
breach of this Section 8.3. Thus, in addition to any other rights or
remedies, all of which shall be deemed cumulative, a party shall be entitled to
pursue injunctive relief to enforce the terms of this Section 8.3.


 


8.4. Publications. No announcement, news
release, public statement, publication, or presentation relating to this
Agreement or either party’s performance hereunder (collectively, a “Publication”)
shall be made without the other party’s prior written approval, except as
required by Law. Each party agrees to submit each Publication it proposes to
make to the other party for purposes of such other party’s review, comment and
approval. Each party further agrees to respond as promptly as reasonably
possible.


 


ARTICLE
9

MISCELLANEOUS


 


9.1. No Assignment. Except as otherwise set
forth herein, neither Party shall transfer, assign or cede any rights or
delegate any obligations hereunder, in whole or in part, whether voluntarily or
by operation of law, without the prior written consent of the other Party,
which consent may be withheld at the other Party’s reasonable business
discretion, provided, that (a) Osiris may transfer this Agreement without
prior written consent of NuVasive to an Affiliate or in connection with a
merger or sale of all or substantially all of the stock or assets of Osiris to
any party that NuVasive does not reasonably deem to be a competitor, and (b) NuVasive
may transfer this


 


13

















 


Agreement without prior
written consent of Osiris to an Affiliate of NuVasive or in connection with a
merger or sale of all or substantially all of the assets of NuVasive.


 


9.2. Notices. All
notices or other communications given pursuant hereto shall be in writing and
deemed given (a) when delivered by messenger, (b) when sent by facsimile,
(with receipt confirmed), (c) when received by the addressee, if sent by
Federal Express or other express delivery service (receipt requested), or
(d) five days after being mailed in the U.S., first-class postage prepaid,
registered or certified, in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate as to itself by notice to the other party):


 


	
  If to
  Osiris:

  	
   

  	
  If to
  NuVasive

  
	
   

  	
   

  	
   

  
	
  Osiris
  Therapeutics, Inc.

  	
   

  	
  NuVasive, Inc.

  
	
  7015
  Albert Einstein Drive

  	
   

  	
  7473 Lusk Boulevard

  
	
  Columbia,
  MD 21046

  	
   

  	
  San Diego, CA 92121

  
	
  Attention:
  Chief Executive Officer

  	
   

  	
  Attention: General
  Counsel

  
	
  Fax
  No.: 443-545-1701

  	
   

  	
  Fax No.: 858-909-2000

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
  With a copy (which
  shall not constitute notice) to:

  
	
   

  	
   

  	
   

  
	
  McKenna
  Long & Aldridge LLP

  	
   

  	
  DLA Piper US LLP

  
	
  303
  Peachtree St., NE, Suite 5300

  	
   

  	
  4365 Executive Drive

  
	
  Atlanta,
  GA 30308

  	
   

  	
  Suite 1100

  
	
  Attention:
  Michael Cochran, Esq.

  	
   

  	
  San Diego, CA 92122

  
	
  Fax
  No.: 404-527-4198

  	
   

  	
  Attention: Michael
  Kagnoff

  
	
   

  	
   

  	
  Fax No.: 858-638-5022

  



 


9.3. Force Majeure. Nonperformance by either
party hereto shall be excused to the extent that performance is rendered
impossible by strike, fire, explosion, flood, acts of God, terrorism, war or
civil commotion, governmental acts or orders or restrictions, failure of
suppliers, public utilities or common carriers, or any other reason where
failure to perform is beyond the reasonable control of and is not caused by the
negligence of the non-performing party. Such non-performing party shall
exercise best efforts to eliminate the force majeure event and to resume
performance of its affected obligations as soon as practicable. In the event
that, as a result of such force majeure event, a party does not perform all of
its obligations hereunder for any period of ninety (90) consecutive days,
in addition to any other rights hereunder, the other party may terminate this
Agreement on thirty (30) days’ prior written notice to the non-performing
party.


 


9.4. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same instrument.


 


9.5. Partial Invalidity. If any provision of
this Agreement is held to be invalid, the remaining provisions shall
nevertheless remain in full force and effect. In addition, the Parties shall


 


14

















 


renegotiate in good faith
any term held to be invalid, and be bound by the mutually agreed upon
substitute provision.


 


9.6. Entire Agreement; Inconsistent Terms; Waiver.
This Agreement constitutes the entire agreement between the Parties hereto with
respect to the subject matter hereof and may not be amended, modified, waived
or cancelled except by a writing signed by each of the Parties or, in case of a
waiver, by the party effecting such waiver. If any terms or conditions of any
standard form (e.g., purchase order, order acknowledgment, etc.) of Osiris or
NuVasive conflict or are inconsistent with any terms or conditions of this
Agreement, the terms and conditions of this Agreement shall govern. Failure to
require performance of any provision hereof shall in no manner affect the right
of such party at a later time to enforce the same, and no waiver in any one
instance shall be deemed to be a further or continuing waiver of the same or
any other provision.


 


9.7. Governing Law; Consent to Jurisdiction.
This Agreement shall be governed by the laws of the State of Delaware, without
regard to conflicts of laws principles.


 


9.8. Dispute Resolution. In the event of a
dispute arising under this Agreement, each party agrees to notify the other
party of the specific complaints or points of disagreement, and to use its good
faith efforts to resolve such dispute, without legal action, by referring such
dispute to Randy Mills, the Chief Executive Officer of Osiris, and the General
Counsel of NuVasive (collectively, “Executives”) for resolution. The Executives
shall meet promptly after such referral to attempt to resolve such dispute
through good faith discussions. In the event the Executives cannot resolve such
dispute within fifteen (15) days of such initial meeting, either party may
request that such dispute be resolved by binding arbitration before one (1) neutral
arbitrator in accordance with the then-current Commercial Arbitration Rules of
the American Arbitration Association, applying the substantive law specified in
Section 9.7. The parties shall jointly select the arbitrator. Within three
(3) months of the conclusion of an arbitration proceeding, the arbitration
decision shall be rendered in writing and shall specify the basis on which the
decision was made. Any award rendered by the arbitrator shall be final and
binding upon the parties, and judgment upon any such award may be entered in
any court having jurisdiction thereof. Arbitration shall be conducted in
Chicago, Illinois. The parties agree that, any provision of applicable law
notwithstanding, they will not request, and the arbitrator shall have no authority
to award, punitive or exemplary damages against either party. The costs of the
arbitration, including administration fees, shall be shared by the parties in
proportion to their fault, as determined by the arbitrator. Notwithstanding the
foregoing, the parties agree that if any breach or threatened breach of this
Agreement would necessarily result in immediate, irreparable injury to a party,
that party, in addition to any other remedies available under this Agreement,
shall have the right to seek injunctive relief in any court of competent
jurisdiction. Notwithstanding anything to the contrary in this Agreement, this Section 9.8
shall not apply to any disputes arising under Section 8.3
(Confidentiality) or to any disputes relating to a party’s intellectual
property (including, without limitation, disputes relating to ownership or
inventorship of inventions, validity or infringement of patents, or scope of
patent claims).


 


9.9. Independent Contractor. The relationship
between NuVasive and Osiris established by this Agreement is that of
independent contractors. Neither party shall have authority to conclude
contracts or otherwise to act for or bind the other party in any manner,
whatsoever, as agent or otherwise.


 


9.10. Further Actions. Each party agrees to
execute, acknowledge and deliver such further instruments, and to do all such
other acts, as may be reasonably necessary or appropriate in order to carry out
the purpose and intent of this Agreement.


 


15

















 


9.11. Representations
and Warranties. Each of the Parties represents and warrants that (i) it
is fully authorized to enter into this Agreement; (ii) its entering into
and performance under this Agreement does not violate or breach it Certificate
of Incorporation or corporate bylaws or any agreement or contract to which it
is a party; (iii) there is no claim, demand, action, suit or proceeding or
investigation pending or currently threatened against it or any of its
Affiliates involving or relating to the subject matter hereof, or which, if
adversely determined, would restrict it from entering into this Agreement and
carrying out its obligations under this Agreement; and (iv) it has no
legal obligations which would prevent this Agreement from being fully implemented
in accordance with its terms.


 


[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]


 


16

















 


IN WITNESS WHEREOF, the undersigned caused this
Agreement to be executed as of the Effective Date.


 


	
  OSIRIS
  THERAPEUTICS, INC.

  	
  NUVASIVE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ C. Randal Mills

  	
   

  	
  By:

  	
  /s/ Alexis Lukianov

  
	
   

  	
  Name:

  	
  C. Randal Mills

  	
  Name:

  	
  Alexis Lukianov

  
	
   

  	
  Its:

  	
  President &
  CEO

  	
  Its:

  	
  Chief Executive Officer

  
									



 


SIGNATURE
PAGE TO


MANUFACTURING
AGREEMENT


 


17

















 


Exhibit A
Product Specifications


 


Osiris
Materials Specifications numbers 90055, 90067, 90080, 90081, 90103, 90128,
90129, 90149, and 90188, as may be amended by mutual written agreement of the
parties.


 


18