Exhibit
10.3


Freidli Corporate
Finance Inc.

Freigutstrasse 5

8002 Zürich

Switzerland


October 30, 2006


Osiris
Therapeutics, Inc.


2001
Aliceanna Street


Baltimore, Maryland 
21231-3043


Re:          $20,000,000 Convertible Note
Offering


This letter is written in
connection with the proposal of Friedli Corporate Finance, Inc., a Belize
corporation (“FCF”), to undertake on behalf of Osiris Therapeutics, Inc., a
Delaware corporation (“Osiris”), an offering of up to $20,000,000 in
convertible promissory notes (the “Notes”) of Osiris (the “Offering”).  The Notes are, subject to certain conditions,
convertible into shares of the Common Stock, par value $0.001 per share (the “Common
Stock”), of Osiris.  The purpose of this
letter is to set forth certain of the understandings between FCF and Osiris in
connection with the Offering.  Additional
understandings with regard to the arrangement between Osiris and FCF in respect
of the Offering may be the subject of other and additional letters and
agreements by and between the parties.


Osiris and FCF each
understand that the Offering is to be undertaken in compliance with Regulation
S (“Regulation S”) under the United States Securities Act of 1933, as amended
(the “Act”), and also in compliance with the requirements of Regulation D under
the Act.  To that end, FCF does hereby
represent, warrant, covenant and agree, in connection with the Offering, as
follows:


1.             Neither FCF nor any of its affiliates, nor any person
acting on its behalf, have engaged or will engage in any “directed selling
efforts” (as such term is defined in Regulation S) in the United States with
respect to the offering of the Notes, and they have complied and will comply
with the offering restriction requirements of Regulation S in connection with
the Offering.


2.             FCF acknowledges that neither the Notes nor the shares
of Common Stock issuable upon conversion thereof have been, and the Notes will
not be, and the shares of Common Stock issuable upon conversion thereof may not
be, registered under the Act, and that, prior to the expiration of one year
after the closing of the Offering (the “Distribution Compliance Period”),
neither the Notes nor the shares of Common Stock issued upon conversion thereof
may 









 



be offered or sold within the United States, or for
the account or benefit of, any U.S. Person (as defined in Regulation S), except
in accordance with the provisions of Rule 903 or 904 of Regulation S under the
Act, or pursuant to an exemption from the registration requirements of the Act,
or, in the case of any shares of Common Stock issued upon conversion of the
Notes, unless registered pursuant to the Act.


3.             At or prior to the confirmation of sale of any of the
Notes, FCF will have sent to each distributor, dealer or other person receiving
any sort of selling concession, fee or other remuneration in connection with
the purchase or placement of any of the Notes, and to each purchaser of the
Notes in the Offering, a confirmation or notice to substantially the effect as
that which is set forth as the legend on the cover page of the form of Note.


4.             FCF will not engage in hedging transactions with respect
to offers and sales of the Notes or with respect to any shares of Common Stock
of Osiris, during the Distribution Compliance Period, and any and all offering
materials and documents used by FCF in connection with the Offering shall
disclose, in a legend or legends prominently placed, that neither the Notes nor
the shares of Common Stock issued or issuable upon conversion thereof are
registered under the Act, and that neither the Notes nor such shares of Common
Stock can be sold in the United States or to any U.S. Person other than a
distributor during the Distribution Compliance Period, unless they are
registered or unless an exemption from registration is available in respect of
such sale.


5.             To the best of the knowledge of FCF, any and all Notes
placed by or on behalf of FCF in connection with or in furtherance of the
Offering, will be placed to individuals or entities resident of, and if an
entity, organized under the laws of, a jurisdiction other than the United
States, and which or whom are in each case “accredited investors” as defined in
Rule 501(a) of the Act, or “qualified institutional buyers” within the meaning
of Rule 144A of the Act.


6.             FCF will undertake and consummate the Offering of the
Notes, including the issuance of any shares of Common Stock upon the conversion
thereof, in compliance with the applicable securities and other laws, rules and
regulations of the jurisdiction in which such offers and sales occur, including
without limitation, those of the country of Switzerland.


And Osiris does hereby
represent, warrant, covenant and agree, in connection with the Offering, as
follows:


7.             Assuming the accuracy of FCF’s statement as included in
paragraph 1 above, neither Osiris nor any of its affiliates, nor any person
acting on its behalf, has engaged or will engage in any “directed selling
efforts” (as such term is defined in Regulation S) with respect to the Offering
of the Notes, and Osiris has complied and will comply with the offering
restrictions requirements of Regulation S in connection with the Offering.


8.             Osiris will not consent to or otherwise permit or allow,
and will refuse, any transfer of any of the Notes, or of any shares of Common
Stock as may be issued from time to time upon conversion thereof, in either
case, not made in compliance with Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from such registration.



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Each of the parties to
this letter acknowledges that the other will be relying upon the truth and
accuracy of the other’s representations, warranties, agreements and
acknowledgements as set forth herein, in order to determine the applicability
of exemptions from the registration provisions of the Act with respect to the
issuance and sale of the Notes in the Offering, and in connection with the
issuance of the shares of Common Stock of Osiris issued upon the conversion of
the Notes, and each does hereby agree to indemnify and to hold the other
harmless from and against any and all claims, demands or liabilities as may
result or arise from any breach therof.


Please acknowledge your
agreement with the foregoing by executing a copy of this letter in the space
provided below, whereupon this letter agreement will become a binding agreement
between FCF and Osiris.


	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FRIEDLI CORPORATE FINANCE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Peter Friedli

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Peter Friedli

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED THIS 30th DAY OF OCTOBER, 2006.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OSIRIS THERAPEUTICS, INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Cary J. Claiborne

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Cary J. Claiborne

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Chief Financial Officer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 



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