**Exhibit 10.1**

 

**MANUFACTURINGAGREEMENT**

 

**THISMANUFACTURING AGREEMENT** (the “Agreement”) is made and enteredinto as of July 24, 2008 (the “Effective Date”), by and between OsirisTherapeutics, 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, datedMay 8, 2008 (the “Asset Purchase Agreement”), pursuant to which Osirissold, and NuVasive purchased, technology related to manufacturing the Osteocelproduct line (as more specifically set forth therein); and

 

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

 

**NOW,THEREFORE**, in consideration of the mutual covenants andagreements contained herein, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Parties heretoagree as follows:

 

**ARTICLE1DEFINED TERMS**

 

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

 

1.1. “AATB” means theAmerican Association of Tissue Banks.

 

1.2. “Action” shall havethe 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 indirectlythrough one or more intermediaries, controls, is controlled by, or is undercommon control with, such party.

 

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

 

1.5. “cGTP” means currentGood Tissue Practice as defined in FDA rules and regulations, includingthe United States regulations set forth at 21 CFR Parts 1270 and 1271, subpartsC and D, as in effect and as may be amended or replaced by the FDA from time totime.

 

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

 

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disclose suchinformation, (c) known by the Receiving Party prior to disclosure of suchinformation, or (d) independently developed by the Receiving Party withoutuse of the Disclosing Party’s information. Notwithstanding the foregoing andfor the avoidance of doubt, the Confidential Information of NuVasive includesall Licensed Technology, whether or not marked, identified or otherwiseacknowledged to be confidential and whether or not known or developed byOsiris, and the use and disclosure of Licensed Technology by Osiris (as theReceiving 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 thethen immediately preceding 12-month period” as published by the US Government.

 

1.8. “Damages” shall havethe 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 ofpossession of Product to a carrier, FCA the Facility (Incoterms 2000).

 

1.10. “Donor” means ahuman 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 thisAgreement.

 

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

 

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

 

1.15. “FDA” means theU.S. Food and Drug Administration, and any successor or replacement agencythereto.

 

1.16. “Inventions” shallhave 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 notreasonably be found by the exercise of ordinary care in an initial physicalinspection by NuVasive, such as, but not limited to, the presence of acontaminant or Osiris’ failure to Process Product in accordance with cGTP.

 

1.18. “Laws” means alllaws, rules, regulations, ordinances, standards and guidelines that apply tothe Processing of Product or the performance of either party’s obligationsunder 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 ofFederal Regulations Parts 1270 and 1271, Human Cells, Tissues, and Cellular andTissue Based Products, other rules, regulations or standards promulgated by theFDA or any other applicable governmental agency, and of the AATB, as each maybe amended from time to time.

 

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1.19. “LicensedTechnology” means the intellectual property (including patents and patentspending of NuVasive), methods, technology, and know-how owned or licensed byNuVasive and used in, held for use in, intended for use in, related to ornecessary for Processing the Product. Licensed Technology shall include allTransferred Technology as defined in and purchased by NuVasive under the AssetPurchase Agreement.

 

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

 

1.21. “Lot Records” meansmanufacturing, packaging and test records, donor suitability determinationdocumentation, cleaning, labeling and “sterilization” processes documentationand documentation relating to Processing and release of each Lot, includingexception documentation, deviations/discrepancies, raw data or data worksheetsand additional documentation generated and/or processed as part of theproduction record of the related Lot.

 

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

 

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

 

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

 

1.25. “Order” shall havethe 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 thisAgreement.

 

1.27. “Osiris ProductWarranty” shall have the meaning as such term is defined in Section 3.7 ofthis Agreement.

 

1.28. “Osiris ResponsibleParty” shall have the meaning as such term is defined in Section 6.1 ofthis Agreement.

 

1.29. “Parties” shallmean 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 procuringmaterials, Donor Tissue and Donors suitability for determination, formanufacturing), handling, storing, analyzing, testing, packaging, labeling andpreparing for shipment Product by Osiris pursuant to this Agreement.

 

1.31. “Product” meansosteobiologic allograft material containing cancellous bone (which containsviable mesenchymal stem cells) Processed by Osiris using the LicensedTechnology and meeting the Specifications attached hereto as Exhibit A,and which has passed all required inspections and testing and has been releasedfor distribution for human implantation.

 

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

 

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

 

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

 

1.35. “Publication” shallhave 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 havethe meaning as such term is defined in Section 7.1 of this Agreement.

 

**ARTICLE2PROCUREMENT AND SUPPLY OF DONORS**

 

Donor ProcurementObligations. Osiris shall use its commercially reasonablebest efforts to procure Donor Tissue as necessary to meet the MinimumPerformance Levels and to Process Product in accordance with the terms of thisAgreement.

 

**ARTICLE3MANUFACTURING OF PRODUCT; TECHNOLOGY LICENSE**

 

3.1. ManufacturingObligations. Osiris shall Process for and supply to NuVasive Product inaccordance with the terms of this Agreement. Osiris shall Process and supplythe Product to NuVasive hereunder in conformity with the Specifications and incompliance with cGTP and all applicable Laws. If either party seeks a change tothe Specifications or there is a change in applicable Laws that wouldnecessitate a change in the Specifications, the parties will meet and confer ingood faith to determine whether and what changes (if any) should be madethereto. Any and all amendments or modifications in the Specifications must beagreed upon in writing by both parties.

 

3.2. Forecasting andOrders. On or before sixty (60) days prior to each calendar quarter,NuVasive shall provide to Osiris a binding order (“Order”) for the quantity andsize of Product to be delivered by Osiris to NuVasive in the following calendarquarter. Each Order shall be in writing, and shall specify the quantity ofunits of Product by size, the brand name of each unit of Product ordered, therequested Delivery date(s), the destination shipping address(es), and theProduct Fees therefor. Osiris shall be required to supply to NuVasive all suchquantities of Product as NuVasive orders pursuant to such Orders in accordancewith the Product unit sizes and brand names specified in such Orders and shalluse its commercially reasonable best efforts to conform to the requestedDelivery date(s) set forth in such Orders, provided in each case suchOrders do not exceed the Minimum Performance Levels during the applicableperiods set forth in Section 3.3 below. Osiris shall deliver the Productto NuVasive pursuant to the Orders, subject to available Product being releasedfor transplantation; provided, that the Parties understand and agree the finalDelivery dates for Orders may vary from the requested dates based upon DonorTissue procurement.

 

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3.3. PerformanceLevels.

 

3.3.1. MinimumPerformance Levels. Osiris shall use its commercially reasonable bestefforts to Deliver Product to NuVasive at least in the quantities set forthbelow during the applicable periods (“Minimum Performance Levels”) and shallDeliver any such Product according to Product unit size and brand namespecifications established by NuVasive and set forth in each Order. NuVasiveshall provide Orders to purchase from Osiris Product in quantities of at leastthe 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. AdditionalProduct. Osiris shall have the right, in its discretion, to Process andDeliver Product hereunder in quantities that exceed NuVasive’s Orders (the “ExcessQuantities”), provided that Osiris gives advance written notice to NuVasive ofits intent to Process and Deliver the Excess Quantities. Following receipt ofsuch written notice, the Parties shall discuss and attempt in good faith toreach agreement on the unit sizes of the Excess Quantities. If the parties areunable to reach agreement on the unit sizes of any Excess Quantities within ten(10) days from the notice, Osiris shall Process and Deliver to NuVasiveunit sizes of such Excess Quantities in the same proportion as the unit sizesof Product set forth in NuVasive’s most recent Order. Subject to the notice andsizing provisions immediately above, in addition to NuVasive’s requirement topurchase from Osiris Product in quantities of at least the Minimum PerformanceLevel (provided that Osiris and/or its subcontractors Processes at least suchquantities) for the applicable period, NuVasive shall purchase from Osiris theExcess Quantities that Osiris Processes in accordance with this Agreementduring the Term; provided, however, that NuVasive shall have no obligationhereunder to purchase Product in quantities greater than  ***  cubic centimeters, and the Delivery andpurchase of such greater quantities of Product, if any, shall be by mutualwritten agreement of both parties. For all Product Processed hereunder, Osirisshall provide NuVasive with a monthly forecast of projected Productmanufacturing quantities for such month.

 

3.4. Shipment andDelivery. All Product shall be shipped to NuVasive or NuVasive’s customersas directed by NuVasive using a shipping company designated by NuVasive. Osirisshall tender Product for Delivery, FCA the Facility, in accordance with theSpecifications and addressed to the shipping address specified by NuVasive inthe Orders or to such other address as NuVasive may provide to Osiris inwriting in advance of any Delivery. NuVasive shall provide Osiris with standardshipping instructions prior to the first requested shipping date hereunder;thereafter, such shipping instructions may be changed upon written notice givento Osiris by NuVasive. Osiris shall not Deliver any Product prior to completionof quality control and release testing by Osiris. NuVasive shall be responsiblefor all shipping and insurance charges and risk of loss associated with theshipment of Product hereunder (from and after Delivery), provided that Osirishas complied with

 

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the shipping instructionsof NuVasive and that the Product is tendered for Delivery in accordance withthe Specifications. Title to Product shall pass to NuVasive upon Delivery ofProduct to the carrier selected by NuVasive.

 

3.5. Quality Control;Release Testing; Documentation. Osiris shall be responsible for qualitycontrol tests to ensure that each Lot conforms to the Specifications and isproduced in accordance with applicable Laws and cGTP, and Osiris shall beresponsible for all release testing. All quality control test results andrelease testing and other documents related to quality control and qualityassurance and copies thereof shall be made available to NuVasive at Osiris’soffices upon written request of NuVasive. Such information is consideredNuVasive’s Confidential Information in accordance with this Agreement and shallbe transferred to NuVasive upon the termination of this Agreement. Any testingperformed by or on behalf of Osiris (including tests to confirm that each Lotmeets the Specifications) shall be performed at Osiris’s sole cost and expenseand may be used by NuVasive for final release of each Lot without additionaltesting by NuVasive; provided, however, that NuVasive may conduct its ownrelease testing of each Lot in its discretion. NuVasive (in its solediscretion) shall determine the form and substance of any release testinginformation that is submitted to any regulatory authority. At the time ofDelivery of each Lot, Osiris shall send to NuVasive a signed Certificate ofAnalysis with respect to such Lot. Within thirty (30) days following theDelivery of each Lot, Osiris shall provide NuVasive with properly completedcopies of Lot Records for such Lot prepared in accordance with theSpecifications and applicable Laws.

 

3.6. Rejection andCure. Upon receipt of each shipment of Product, NuVasive or its customersshall perform an initial physical inspection of such Product and review anyrelated documentation. If any Product (including without limitation anydocumentation related thereto) fails, in whole or in part, to conform to theapplicable Specifications and the terms hereof, or if any Product is notProcessed in accordance with cGTP or applicable Laws, then NuVasive shall havethe right to reject such nonconforming Product. NuVasive shall give writtennotice to Osiris of its rejection hereunder as soon as possible, but no morethan thirty (30) days after NuVasive’s or its customer’s receipt of suchshipment, specifying the grounds for such rejection. If at any time thereafterNuVasive discovers a Latent Defect, NuVasive shall give written notice toOsiris of its rejection hereunder as soon as possible, but no more than ninety(90) days after NuVasive’s receipt of the Product, specifying the groundsfor such rejection. The nonconforming Product shall be held for Osiris’sdisposition, or shall be returned to Osiris, in each case at Osiris’s expense,as directed by Osiris. Osiris shall use commercially reasonable best efforts tocorrect the root cause of the nonconformance in order to comply with therequirements of the applicable Specification. In addition, Osiris shall, at itsexpense, promptly replace each nonconforming Product with conforming Product.

 

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

 

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WARRANTY OFMERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

 

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

 

3.9. RegulatoryApprovals. Product is currently regulated under 21 CFR parts 1270 and 1271as a human cellular and tissue based tissue product. NuVasive shall obtain atits expense all regulatory approval by the FDA or other regulatory authoritynecessary or required for the distribution, sale and marketing of Product undercurrent Laws as of the Effective Date. At NuVasive’s request during the Term,Osiris will assist NuVasive in preparing the portions of NuVasive’s regulatoryfilings that pertain to Processing and will make appropriate Osiris personnelreasonably available for meetings with regulatory authorities relating toProcessing, provided that all such regulatory filings shall be the sole andexclusive property of NuVasive and NuVasive shall have sole authority andresponsibility with respect to contacts and communications with regulatoryauthorities relating to the Product. In the event of changes in applicableLaws, or significant regulatory differences in foreign countries where NuVasivedistributes Product, the Parties shall cooperate to determine what actions, ifany, are required to meet any new or foreign regulations and shall negotiate ingood faith changes to this Agreement including but not limited to, changes toOrders, Product Fees and Minimum Performance Levels to reflect any change inProduct manufacturing costs. No change in Product-specific manufacturingprocesses, test methods, or other procedures or documentation relating toProcessing shall be implemented by Osiris unless and until the parties haveagreed in writing to such change.

 

3.10. TechnologyLicense. NuVasive hereby grants to Osiris during the Term, for the solepurpose of performing its duties and fulfilling its obligations under this Article 3,a non-exclusive and non-transferable license, without a right to sublicense, touse the Licensed Technology solely to the extent necessary to Process theProduct under the terms and conditions of this Agreement. Notwithstanding theforegoing, NuVasive hereby consents to the sublicense by Osiris of the LicensedTechnology to the Persons listed on  Schedule 3.11  solely to the extent necessary for suchsubcontractor to provide processing services to Osiris, provided that the termsof any such sublicense arrangement shall either be pursuant to (i) theterms of those Contracts between Seller and such Persons which are identifiedon  Schedule 3.11  hereto as such Contracts are in effect on thedate hereof or (ii) require the prior written consent of NuVasive, whichconsent 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 Agreementwithout the prior written consent of NuVasive, which consent may be granted orwithheld in NuVasive’s sole discretion. Such subcontractors shall be subject toconfidentiality obligations at least as stringent, when taken as a whole, asprovided in this Agreement. No subcontractor may further subcontract anyresponsibilities under this Agreement without the prior written consent ofNuVasive, which consent may be granted or withheld in NuVasive’s solediscretion. Any approved subcontractor shall be

 

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subject to all of theterms and conditions applicable to Osiris under this Agreement. Osiris shall beresponsible, and shall remain liable, for the performance of all of itsobligations under this Agreement and for any breach by any subcontractorthereof. NuVasive shall have the right to audit and inspect all subcontractorswith whom Osiris may enter into agreements in the performance of itsresponsibilities under this Agreement. Such audit and inspection rights shallbe substantially similar to the rights of NuVasive to audit and inspect Osirisunder this Agreement.

 

**ARTICLE4FEES**

 

4.1. Product Fees.NuVasive shall pay to Osiris $ *** per cubic centimeter of Product (“Product Fees”) Delivered toNuVasive and that is not timely rejected by NuVasive pursuant to Section 3.6above. All payments due hereunder shall be made in U.S. dollars, withoutset-off or counterclaim. For the avoidance of doubt, NuVasive shall beresponsible for paying to Osiris the Product Fee for all conforming Productthat is Delivered to NuVasive as a replacement of Product rejected inaccordance with Section 3.6 to the extent that payment for such Productwas not previously made.

 

4.2. Adjustments toProduct Fees. The Product Fees shall be escalated on January 1, 2009by the then current increase in CPI. Adjustments to Product Fees shall beeffective January 1st  and shall applyto 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 ofDelivery of the conforming Product. In the event NuVasive fails to pay inaccordance with this Section 4.3, Osiris may, in addition to any otherremedies 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. Allpayments required under this Agreement are exclusive of any applicable federal,state and local taxes. Each of the Parties shall be responsible for the paymentof taxes and other assessments for which it is liable under Laws.

 

**ARTICLE5ADDITIONAL OBLIGATIONS**

 

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

 

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Product-Related Inspectionif requested by NuVasive. If NuVasive is not present during a Product-RelatedInspection, Osiris shall promptly provide a summary report of the results ofthe Product-Related inspection to NuVasive. Osiris shall promptly notifyNuVasive of the results of any inspection, comments, responses or noticesreceived from the FDA, AATB, or other applicable regulatory authorities, whichrelate to the Processing of Product hereunder. With respect to the forgoing,each Party shall provide the other Party at such other Party’s request withcopies of any notices or correspondence from or to such regulatory authoritiesthat directly relate to Product. Such notices and correspondence are consideredConfidential Information in accordance with this Agreement. The Parties willcooperate in the development and review of responses that are required to besubmitted to any regulatory authority relating to the Processing of Productprior 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) yearsafter shipment of any such Product, or the period of time required byapplicable Laws, regulations and/or standards, whichever is greater. No recordsrequired by this Agreement shall be discarded by Osiris without specific priorwritten notification of Osiris’ intent to discard to NuVasive. Those records(or copies of those records) that Osiris is unwilling to retain will betransferred to NuVasive for storage. Osiris shall promptly (and, in any event,within twenty four (24) hours) notify NuVasive of any information of whichit becomes aware concerning Product supplied to NuVasive. Any such notificationwill include all related information in reasonable detail. Upon suchnotification, the parties shall consult with each other in an effort to arriveat a mutually acceptable procedure for taking appropriate action; provided,however, that nothing contained herein shall be construed as restricting theright of either party to make a timely report of such matter to any regulatoryauthority or take other action that it deems to be appropriate or required byapplicable Laws.

 

5.3. RegulatoryCompliance. 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. AATBAccreditation. The Parties agree that Osiris is actively pursuing AATBaccreditation, and that NuVasive shall continue to perform its obligationsunder this Agreement despite the pendency of such AATB accreditation for solong as Osiris is using reasonable commercial efforts to obtain suchaccreditation. Once obtained, Osiris agrees to maintain its accreditation withthe 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 andthe actions taken to cure the loss of AATB accreditation. In the event thatOsiris fails to cure such loss within six months, notwithstanding any provisionto the contrary contained in this Agreement, NuVasive shall be immediately andforever relieved of any obligation to order Product or to pay any fees withrespect thereto and shall have the right to cancel or amend, without liability,any Orders then pending; provided, however, NuVasive shall pay the Product Feesfor all Orders shipped as long as such Orders are filled with Product Processedwhile Osiris was accredited.

 

5.5. Complaints.Osiris hereby agrees to advise NuVasive promptly (and, in any event, withinthirty-six (36) hours) of any complaint information (including adverseevent information) Osiris receives relating to Product. Osiris will assistNuVasive in investigating and resolving all complaints and adverse eventsrelated to the Processing of Product. NuVasive will be responsible forevaluating and investigating complaints and the Parties will cooperate inpreparing communications to any regulatory authorities regarding Productcomplaints or adverse events.

 

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

 

5.6. Product Tracking.NuVasive shall be responsible for maintaining trackability for all Productsprovided by Osiris. Tracking records shall be maintained by NuVasive inaccordance with all applicable Laws.

 

5.7. ProductWithdrawal. In the event Osiris or NuVasive believes it may be necessary toconduct a recall, field correction, market withdrawal, stock recovery, or othersimilar action with respect to Product (a “Product Withdrawal”), NuVasive shallmake all decisions as to such Product Withdrawal and Osiris shall cooperate withNuVasive in any Product Withdrawal. NuVasive shall bear all costs in connectionwith any such Product Withdrawal and NuVasive shall reimburse Osiris for allreasonable out-of-pocket expenses incurred by Osiris in connection with anysuch Product Withdrawal; provided, however, that if such Product Withdrawal isattributable to any breach, misrepresentation or non-fulfillment of anycovenant, agreement, representation or warranty made or to be performed byOsiris under the Asset Purchase Agreement or this Agreement (including, withoutlimitation, the failure of any Product supplied hereunder to meet the OsirisProduct Warranty) or to the negligent act or omission or willful misconduct ofOsiris, Osiris shall reimburse NuVasive for all costs reasonably incurred byNuVasive in connection with any such Product Withdrawal.

 

**ARTICLE6INDEMNIFICATION AND INSURANCE**

 

6.1. Osiris’sIndemnity Obligations. Osiris shall defend, indemnify and hold harmlessNuVasive, 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 withoutlimitation reasonable attorneys’ fees and expenses) (herein “Damages”) relatingto or resulting from a claim that arises out of (a) any breach by Osirisor its Affiliates, sublicensees, contractors or subcontractors, or any of theirrespective officers, directors, employees, or agents (the “Osiris ResponsibleParties”) of this Agreement, including without limitation, the failure of anyProduct supplied hereunder to meet or comply with the Specifications or OsirisProduct Warranty, (b) the negligence or willful misconduct of any of theOsiris Responsible Parties, (c) any violation of Law by any of the OsirisResponsible Parties; or (d) the unauthorized use of Licensed Technology byany of the Osiris Responsible Parties; provided, however, this Section 6.1shall not impose any obligation on Osiris to indemnify the NuVasive Indemniteesto the extent of any Damages for which NuVasive is obligated to indemnify theOsiris Indemnitees pursuant to Section 6.2.

 

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

 

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6.3. Notice of Claim. The indemnificationobligations of the parties pursuant to this Agreement shall be proportional tothe relative responsibility or fault of each party for the Damages incurred asa result of the actions or inactions of such party. Promptly after receipt by aNuVasive Indemnitee or Osiris Indemnitee of the commencement of any such claim,demand, action, suit or proceeding (collectively, “Action”) which is thesubject of the other party’s indemnification obligations hereunder, such Indemniteeshall notify the other party of the commencement of the Action. Any failure toprovide such notice shall only relieve the other party of its indemnificationobligations hereunder to the extent the indemnifying party has been materiallyprejudiced by such failure. The indemnifying party shall have sole right toselect and retain attorneys (reasonably acceptable to the Indemnitee) to assertor negotiate, and sole right to control, the defense and any settlement of theAction, to the extent of the indemnifying party’s corresponding indemnificationand defense obligations, except that under no circumstances shall theindemnifying party enter into any settlement that involves an admission ofliability, negligence or other culpability by the Indemnitee, or requires theIndemnitee to contribute to the settlement, without the Indemnitee’s priorwritten consent. Without limiting the indemnifying party’s foregoing right toselect and retain attorneys and to sole control of the defense and settlementof such Action, the Indemnitee may, at its own expense, participate in thedefense of, or otherwise consult with counsel of its own choice in connectionwith, an Action that is the subject of the other party’s indemnificationobligations.

 

6.4. Limitation of Liability. IN NO EVENT SHALLEITHER PARTY BE LIABLE, WHETHER AS A RESULT OF CONTRACTUAL BREACH, TORT OROTHERWISE, TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, SPECIAL, OR INCIDENTALDAMAGES INCURRED BY SUCH OTHER PARTY, INCLUDING BUT NOT LIMITED TO INJURY TOGOODWILL, OR DIRECT, INDIRECT OR SPECULATIVE LOST PROFITS. The foregoingLimitation of Liability shall not apply to a party’s liability for breach ofits confidentiality obligations hereunder or to the extent such damages arepaid to a third party in connection with a third party claim that isindemnified hereunder.

 

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

 

**ARTICLE7TERM AND TERMINATION**

 

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

 

7.2. Termination.

 

7.2.1. This Agreement maybe terminated, prior to the expiration of its Term, by either party immediatelyupon written notice to the other party after the material breach of any

 

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provision of thisAgreement by the other party if the other party has not cured such breachwithin thirty (30) days after receipt of written notice thereof from thenon-breaching party.

 

7.2.2. This Agreement may be terminated, prior to theexpiration of its Term, immediately upon written notice by either party if theother party shall have become insolvent or bankrupt, or shall have made ageneral assignment for the benefit of its creditors, or any case or proceedingshall have been commenced by or against the other party in bankruptcy orseeking reorganization, liquidation, dissolution, or any other relief under anybankruptcy, insolvency, reorganization or other similar act or law, and anysuch event shall have continued for sixty (60) days undismissed orundischarged.

 

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

 

7.3. Effect of Termination or Expiration. Aftereither party provides notice of termination under Section 7.2.1 or 7.2.2and pending termination of this Agreement under such Sections, the Partiesshall continue to perform their respective obligations hereunder. Expiration ortermination of this Agreement shall not relieve the Parties of any obligationaccruing prior to such expiration or termination. The provisions ofSections 3.7, 5.2, 6.1, 6.2, 6.3, 6.4, 6.5, 8.1, 8.2, and 8.3 and theapplicable provisions of Article 9 shall survive any expiration ortermination of this Agreement. Each party agrees to return upon the expirationor termination of this Agreement all Confidential Information acquired from theother party, except as to such information it may be required to retain underapplicable Laws, and except for one copy of such information may be retained bysuch party’s legal department;  provided, that if Osiris elects not to retain a copy of any such ConfidentialInformation provided to NuVasive pursuant to Section 3.5 hereof, thenNuVasive shall, upon reasonable notice to NuVasive and during NuVasive’s normalbusiness hours, provide Osiris with access to such Confidential Information asis reasonably necessary for purposes of Osris’ compliance with applicable Lawsor in connection with Osiris’ defense of any third party claims relatedthereto.

 

**ARTICLE8INTELLECTUAL PROPERTY AND CONFIDENTIALITY**

 

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

 

8.2. Other Inventions. The parties do notcontemplate that any inventions, discoveries, improvements, modifications,derivations, information, know-how and the like that arise out of theperformance of this Agreement (collectively, the “Inventions”), including thoserelated to processes, compositions of matter and methods of use, whetherprotectable by patent or as a trade secret, shall by Osiris. Accordingly, anyand all Inventions made by either party individually or jointly hereunder,including any Inventions hereunder pertaining to Processing of Product, shallbe owned solely by NuVasive, and Osiris hereby assigns to NuVasive all right,title and interest in and to all Inventions. Osiris shall, upon NuVasive’srequest, execute such documents, including any and all applications,assignments or other instruments, give any testimony and take such otheractions as

 

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

 

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NuVasive deems necessaryfor NuVasive to obtain such ownership and to apply for, secure, and maintainpatent or other proprietary protection in the United States or any othercountry with respect to Product or Inventions, provided that NuVasive shallcompensate Osiris for its reasonable out of pocket costs and expensesassociated with such actions. All Inventions and any information with respectthereto shall be the Confidential Information of NuVasive.

 

8.3. Confidentiality. The Receiving Party shallensure the confidentiality of the Disclosing Party’s Confidential Informationit receives by taking substantially the same precautions as the Receiving Partydoes with its own Confidential Information, but not less than a reasonablestandard of care. The Receiving Party shall not use the Disclosing Party’sConfidential Information for any purpose other than to carry out the ReceivingParty’s obligations hereunder. The obligations of confidentiality shall notapply to information that the Receiving Party is required by applicable Laws todisclose; provided, however, that the Receiving Party shall so notify theDisclosing Party of the Receiving Party’s intent to disclose and shallcooperate with the Disclosing Party at the Disclosing Party’s expense onreasonable measures to protect the confidentiality of the Disclosing Party’sConfidential Information. The Receiving Party may not disclose the DisclosingParty’s Confidential Information received pursuant to this Agreement except tothe Receiving Party’s directors, officers, employees, consultants, attorneysand accountants who reasonably require disclosure of such ConfidentialInformation for the Receiving Party to exercise its rights or perform itsobligations under this Agreement, provided that such persons and entities areobligated to hold the Confidential Information in confidence in accordance withrestrictions and procedures no less stringent than provided for herein and suchpersons enter into a written confidentiality agreement whereunder they agreenot to disclose such information. The fact that general information may be inor become part of the public domain, in and of itself, does not exclude anyspecific Confidential Information from the obligations of this Agreement. TheParties hereto understand and agree that this Section 8.3 is reasonableand necessary to protect NuVasive’s and Osiris’ respective business interests.The Parties further agree that the other may suffer irreparable harm from abreach of this Section 8.3. Thus, in addition to any other rights orremedies, all of which shall be deemed cumulative, a party shall be entitled topursue injunctive relief to enforce the terms of this Section 8.3.

 

8.4. Publications. No announcement, newsrelease, public statement, publication, or presentation relating to thisAgreement or either party’s performance hereunder (collectively, a “Publication”)shall be made without the other party’s prior written approval, except asrequired by Law. Each party agrees to submit each Publication it proposes tomake to the other party for purposes of such other party’s review, comment andapproval. Each party further agrees to respond as promptly as reasonablypossible.

 

**ARTICLE9MISCELLANEOUS**

 

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

 

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Agreement without priorwritten consent of Osiris to an Affiliate of NuVasive or in connection with amerger or sale of all or substantially all of the assets of NuVasive.

 

9.2. Notices. Allnotices or other communications given pursuant hereto shall be in writing anddeemed given (a) when delivered by messenger, (b) when sent by facsimile,(with receipt confirmed), (c) when received by the addressee, if sent byFederal 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 andfacsimile numbers set forth below (or to such other addresses and facsimilenumbers 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 eitherparty hereto shall be excused to the extent that performance is renderedimpossible by strike, fire, explosion, flood, acts of God, terrorism, war orcivil commotion, governmental acts or orders or restrictions, failure ofsuppliers, public utilities or common carriers, or any other reason wherefailure to perform is beyond the reasonable control of and is not caused by thenegligence of the non-performing party. Such non-performing party shallexercise best efforts to eliminate the force majeure event and to resumeperformance of its affected obligations as soon as practicable. In the eventthat, as a result of such force majeure event, a party does not perform all ofits obligations hereunder for any period of ninety (90) consecutive days,in addition to any other rights hereunder, the other party may terminate thisAgreement on thirty (30) days’ prior written notice to the non-performingparty.

 

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

 

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

 

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renegotiate in good faithany term held to be invalid, and be bound by the mutually agreed uponsubstitute provision.

 

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

 

9.7. Governing Law; Consent to Jurisdiction.This Agreement shall be governed by the laws of the State of Delaware, withoutregard to conflicts of laws principles.

 

9.8. Dispute Resolution. In the event of adispute arising under this Agreement, each party agrees to notify the otherparty of the specific complaints or points of disagreement, and to use its goodfaith efforts to resolve such dispute, without legal action, by referring suchdispute to Randy Mills, the Chief Executive Officer of Osiris, and the GeneralCounsel of NuVasive (collectively, “Executives”) for resolution. The Executivesshall meet promptly after such referral to attempt to resolve such disputethrough good faith discussions. In the event the Executives cannot resolve suchdispute within fifteen (15) days of such initial meeting, either party mayrequest that such dispute be resolved by binding arbitration before one (1) neutralarbitrator in accordance with the then-current Commercial Arbitration Rules ofthe American Arbitration Association, applying the substantive law specified inSection 9.7. The parties shall jointly select the arbitrator. Within three(3) months of the conclusion of an arbitration proceeding, the arbitrationdecision shall be rendered in writing and shall specify the basis on which thedecision was made. Any award rendered by the arbitrator shall be final andbinding upon the parties, and judgment upon any such award may be entered inany court having jurisdiction thereof. Arbitration shall be conducted inChicago, Illinois. The parties agree that, any provision of applicable lawnotwithstanding, they will not request, and the arbitrator shall have no authorityto award, punitive or exemplary damages against either party. The costs of thearbitration, including administration fees, shall be shared by the parties inproportion to their fault, as determined by the arbitrator. Notwithstanding theforegoing, the parties agree that if any breach or threatened breach of thisAgreement 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 competentjurisdiction. Notwithstanding anything to the contrary in this Agreement, this Section 9.8shall not apply to any disputes arising under Section 8.3(Confidentiality) or to any disputes relating to a party’s intellectualproperty (including, without limitation, disputes relating to ownership orinventorship of inventions, validity or infringement of patents, or scope ofpatent claims).

 

9.9. Independent Contractor. The relationshipbetween NuVasive and Osiris established by this Agreement is that ofindependent contractors. Neither party shall have authority to concludecontracts 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 toexecute, acknowledge and deliver such further instruments, and to do all suchother acts, as may be reasonably necessary or appropriate in order to carry outthe purpose and intent of this Agreement.

 

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9.11. Representationsand Warranties. Each of the Parties represents and warrants that (i) itis fully authorized to enter into this Agreement; (ii) its entering intoand performance under this Agreement does not violate or breach it Certificateof Incorporation or corporate bylaws or any agreement or contract to which itis a party; (iii) there is no claim, demand, action, suit or proceeding orinvestigation pending or currently threatened against it or any of itsAffiliates involving or relating to the subject matter hereof, or which, ifadversely determined, would restrict it from entering into this Agreement andcarrying out its obligations under this Agreement; and (iv) it has nolegal obligations which would prevent this Agreement from being fully implementedin accordance with its terms.

 

**[THEREMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]**

 

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IN WITNESS WHEREOF, the undersigned caused thisAgreement 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 |
|                                |                     |  |  |  |  |  |  |  |

 

**SIGNATUREPAGE TO**

**MANUFACTURINGAGREEMENT**

 

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** **

**Exhibit AProduct Specifications**

 

**OsirisMaterials Specifications numbers 90055, 90067, 90080, 90081, 90103, 90128,90129, 90149, and 90188, as may be amended by mutual written agreement of theparties.**

 

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