**EXHIBIT10.1**

 

**OSIRISTHERAPEUTICS, INC.AMENDED AND RESTATED 2006 OMNIBUS PLAN(as amended and restated effective June 4, 2008)**

 

**ARTICLEIPURPOSE; EFFECTIVE DATE; DEFINITIONS**

 

        1.1 **    Purpose.**    This Osiris Therapeutics, Inc. 2006 Omnibus Plan (the*“Plan”* ) is intended to securefor Osiris Therapeutics,  Inc. (the *“Company”*) and its stockholders the benefits of the incentive inherent in common stockownership by the employees of the Company and its subsidiaries and directors ofthe Company who are largely responsible for the Company’s future growth andcontinued financial success and to afford such persons the opportunity toobtain or increase their proprietary interest in the Company on a favorablebasis and thereby have an opportunity to share in its success.

 

        1.2 **    Effective Date.**    This Plan (as initially adopted by the Board andratified by the stockholders) initially became effective on April 17,2006. This Plan has been amended and restated in its entirety, effective June 4,2008, to, among other things, be exempt from (or, where applicable, to complywith) the requirements of Section 409A of the Code and to incorporatecertain other amendments and clarifications.

 

        1.3 **    Definitions.**    Throughout this Plan, the following terms shall havethe meanings indicated:

 

        (a)   **“Agreement”** shall mean an OptionAgreement, Restricted Stock Agreement, Performance Share Agreement, PerformanceUnit Agreement or SAR Agreement.

 

        (b)   **“Benefits”** shall mean any one or moreof the following awards that may be granted under this Plan:

 

          (i)  Options(including ISOs and NQSOs);

 

         (ii)  StockAppreciation Rights;

 

        (iii)  PerformanceShares;

 

        (iv)  PerformanceUnits; or

 

         (v)  RestrictedStock.

 

        (c)   **“Board”** shall mean the Board ofDirectors of the Company.

 

        (d)   **“Change of Control”** shall mean (a) thereorganization, consolidation or merger of the Company or any of itssubsidiaries holding or controlling a majority of the assets relating to thebusiness of the Company, with or into any third party (other than asubsidiary); (b) the assignment, sale, transfer, lease or otherdisposition of all or substantially all of the assets of the Company and itssubsidiaries taken as a whole; or (c) the acquisition by any third partyor group of third parties acting in concert, of beneficial ownership (withinthe meaning of Rule 13d-3 of the Securities and Exchange Commission (“SEC”)under the Securities Exchange Act of 1934, as amended) of shares of votingstock of the Company, the result of which in the case of any transactiondescribed in clauses (a), (b) and (c) above is that immediatelyafter the transaction the stockholders of the Company immediately before thetransaction, other than the acquiror, own less than fifty percent (50%) of thecombined voting power of the outstanding voting securities entitled to votegenerally in the election of directors of the surviving or resultingcorporation in a transaction specified in clause (a) above, theacquiror in a transaction specified in clause (b) above, or theCompany or the acquiror in a transaction specified in clause (c) above.  Notwithstanding the foregoing, the sale ofCompany securities beneficially owned by Peter Friedli (“Friedli Shares”) shallnot, by itself or when combined with any other transactions, constitute aChange in Control, unless such other transactions would constitute a Change inControl without regard to the sale of Friedli Shares.

 

        (e)   **“Code”** shall mean the InternalRevenue Code of 1986, as amended, any successor revenue laws of the UnitedStates, and the rules and regulations promulgated thereunder.

 

        (f)    **“Committee”** shall mean anycommittee of the Board designated by the Board to administer this Plan.

 

        (g)   **“Common Stock”** shall mean thecommon stock, par value $.001 per share, of the Company.

 

        (h)   **“Company”** shall mean OsirisTherapeutics, Inc., a Delaware corporation.

 

 

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        (i)    **“Eligible Person”** shall mean anEmployee or a Non-Employee Director who has been designated by the Committee aseligible to receive a Benefit under this Plan in accordance with Section 3.1.

 

        (j)    **“Employee”** shall mean any personengaged or proposed to be engaged as an officer or employee of the Company orone of its subsidiaries.

 

        (k)   **“Exchange Act”** shall mean theSecurities Exchange Act of 1934, as amended.

 

        (l)    **“Fair Market Value”** shall meanwith respect to the Common Stock on any day, (i) the closing sales priceon the immediately preceding business day of a share of Common Stock asreported on the principal securities exchange on which shares of Common Stockare then listed or admitted to trading, or (ii) if not so reported, theaverage of the closing bid and asked prices on the immediately precedingbusiness day as reported by NASDAQ, or (iii) if not so reported, asfurnished by any member of the National Association of Securities Dealers, Inc.selected by the Committee. In the event that the price of a share of CommonStock shall not be so reported or furnished, the Fair Market Value of a shareof Common Stock shall be determined by the Committee in good faith. Forpurposes hereof, the fair market value on any day of an Option granted underthe Plan shall be the value of the underlying Stock, determined as aforesaid,less the exercise price of the Option. A “business day” is any day, other thanSaturday or Sunday, on which the relevant market is open for trading.

 

        (m)  **“ISO”** shall mean an Option thatqualifies as an incentive stock option under Code Section 422. No Optionthat is intended to be an ISO shall be invalid under this Plan for failure toqualify as an ISO.

 

        (n)   **“NQSO”** shall mean a nonqualifiedstock option which is an Option that does not qualify as an incentive stockoption under Code Section 422.

 

        (o)   **“Non-Employee Director”** shall meana member of the Board who is not an Employee.

 

        (p)   **“Option”** shall mean an option topurchase shares of Common Stock granted by the Committee. An Option may beeither an ISO or a NQSO, but only an Employee may be granted an ISO.

 

        (q)   **“Option Agreement”** shall mean thecertificate evidencing an Option grant.

 

        (r)   **“Option Shares”** shall mean the sharesof Common Stock purchased upon exercise of an Option.

 

        (s)   **“Performance Cycle”** shall have themeaning set forth in Section 7.1.

 

        (t)    **“Performance Period”** shall havethe meaning set forth in Section 6.1.

 

        (u)   **“Performance Share”** shall mean anaward made pursuant to Article VI of this Plan of the right to receiveCommon Stock at the end of a specified Performance Period if specifiedperformance goals are met.

 

        (v)   **“Performance Unit”** shall mean anaward made pursuant to Article VII of this Plan of the right to receive afixed dollar amount, payable in cash or Common Stock or a combination of both,at the end of a specified Performance Cycle if specified performance goals aremet.

 

        (w)  **“Plan”** shall mean this OsirisTherapeutics, Inc. 2006 Omnibus Plan, as the same may be amended from timeto time.

 

        (x)   **“Restricted Stock”** shall meanCommon Stock granted under Article VIII of this Plan, subject to suchrestrictions, if any, as the Committee may determine, as evidenced in aRestricted Stock Agreement. Shares of Common Stock shall cease to be RestrictedStock when, in accordance with the terms of the Restricted Stock Agreement,they become transferable and free of substantial risk of forfeiture.

 

        (y)   **“Restricted Stock Agreement”** shallmean any agreement evidencing the grant of Restricted Stock to an EligiblePerson pursuant to this Plan.

 

        (z)   **“Restriction Period”** shall meanthe time period, if any, during which Restricted Stock is subject to therestrictions set forth in a Restricted Stock Agreement.

 

        (aa) **“SAR Agreement”** shall mean thecertificate evidencing the grant of a Stock Appreciation Right to an EligiblePerson pursuant to this Plan.

 

        (bb) **“Stock Appreciation Right” or “SAR”**shall mean the right to receive cash or Common Stock, granted pursuant to Article Vof this Plan and a SAR Agreement.

 

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        (cc) **“10% Stockholder”** shall mean anindividual owning (directly or by attribution as provided in Code Section 424(d))stock possessing more than 10% of the total combined voting power of allclasses of stock of the Company.

 

**ARTICLEIIADMINISTRATION**

 

        2.1 **    Committee Administration.**    This Plan and the Benefits awarded hereunder shall beinterpreted, construed and administered by the Committee in its solediscretion. An Eligible Person (or other person, such as a beneficiary)eligible for Benefits under the Plan may appeal to the Committee in writing anydecision or action of the Committee with respect to the Plan that adverselyaffects the Eligible Person (or other person). Upon review of such appeal andin any other case where the Committee has acted with respect to the Plan, theinterpretation and construction by the Committee of any provisions of this Planor of any Benefit shall be conclusive and binding on all parties.

 

        2.2 **    Committee Composition.**    The Committee shall consist of not less than twopersons who shall be members of the Board and shall be subject to such termsand conditions as the Board may prescribe. Each Committee member shall be a “nonemployee director” within the meaning of Rule 16b-3 promulgated under theExchange Act and shall qualify to make determinations as to executivecompensation under the listing requirements of the NASDAQ Global Market (orwhatever other exchange the Common Stock may be listed for trading from time totime). Once designated, the Committee shall continue to serve until otherwisedirected by the Board. From time to time, the Board may increase the size ofthe Committee and appoint additional members thereof, remove members (with orwithout cause) and appoint new members in substitution therefor, fill vacancieshowever caused and remove all members of the Committee.

 

        Amajority of the entire Committee shall constitute a quorum, and the action of amajority of the members present at any meeting at which a quorum is presentshall be deemed the action of the Committee. In addition, any decision ordetermination reduced to writing and signed by all of the members of theCommittee shall be fully as effective as if it had been made by a majority voteat a meeting duly called and held. Subject to the provisions of this Plan andthe Company’s bylaws, and to any terms and conditions prescribed by the Board,the Committee may make such additional rules and regulations for theconduct of its business as it shall deem advisable. The Committee shall holdmeetings at such times and places as it may determine.

 

        2.3 **    Committee Powers.**    The Committee shall have authority to award RestrictedStock and to grant Options, SARs, Performance Shares and Performance Unitspursuant to or as evidenced by an Agreement providing for such terms (not inconsistentwith the provisions of this Plan) as the Committee may consider appropriate.Such terms shall include, without limitation, as applicable, the number ofshares, the exercise price, the medium and time of payment, the term of eachaward and any vesting requirements, if any, and may include conditions (inaddition to those contained in this Plan) on the exercisability of all or anypart of an Option or SAR, the terms and conditions applicable to PerformanceShares and Performance Units or on the transferability or forfeitability ofRestricted Stock. Notwithstanding any such conditions, the Committee may, inits discretion, accelerate the time at which any Option or SAR may be exercisedor the time at which Restricted Stock may become transferable ornonforfeitable. In addition, the Committee shall have complete discretionaryauthority to prescribe the form of Agreements; to adopt, amend and rescind rules andregulations pertaining to the administration of the Plan; and to make all otherdeterminations necessary or advisable for the administration of this Plan. Theexpress grant in the Plan of any specific power to the Committee shall not beconstrued as limiting any power or authority of the Committee. All expenses ofadministering this Plan shall be borne by the Company. The Committee shall havethe authority to delegate from time to time its powers hereunder, in whole orin part, in accordance with and subject to compliance with all applicable laws,rules and regulations.

 

        2.4 **    Receipt of Benefits byCommittee Members.**     Members of the Committeeshall be eligible to receive Benefits under this Plan; provided, however, thatthe Committee may, but shall not be required to, seek ratification of the Boardor members thereof, on such terms as the Committee shall determine, in respectof any such Benefits so awarded.

 

        2.5 **    Good Faith Determinations.**    No member of the Committee or other member of the Boardshall be liable for any action or determination made in good faith with respectto this Plan or any Benefit granted hereunder.

 

**ARTICLEIIIELIGIBILITY; TYPES OF BENEFITS; SHARES SUBJECT TO PLAN**

 

        3.1 **    Eligibility.**    The Committee shall from time to time determine anddesignate Employees and Non-Employee Directors as Eligible Persons who shallreceive Benefits under this Plan and the number of Options, Stock AppreciationRights, Performance Shares, Performance Units and shares of Restricted Stock tobe awarded to each such Eligible Person or the formula or other basis on whichsuch Benefits shall be awarded to Eligible Persons. In making any such award,the Committee may take into account the nature of services rendered by anEligible Person, commissions, fees or other compensation earned by the EligiblePerson, the capacity of the Eligible Person to contribute to the success of theCompany and other factors that the Committee may consider relevant.

 

        3.2 **    Types of Benefits.**    Benefits under this Plan may be granted in any one orany combination of (a) Options, (b) Stock Appreciation Rights, (c) PerformanceShares, (d) Performance Units, and (e) Restricted Stock, as describedin this Plan. The Committee may (x) award 

 

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Benefits in tandem so that acceptance of or exerciseof one Benefit cancels the right of an Eligible Person to another and (y) awardBenefits in any combination or combinations and subject to any condition orconditions consistent with the terms of this Plan that the Committee in itssole discretion may consider appropriate.

 

        3.3 **    Shares Subject to this Plan.**    Subject to the provisions of Section 4.1(e) (relatingto adjustment for changes in Common Stock), the maximum number of shares thatmay be issued under this Plan shall not exceed in the aggregate 1,450,000shares of Common Stock. The maximum number of shares authorized under this Planshall only be increased with approval of the stockholders of the Company(except as provided in Section 4.1(e)). Such shares may be authorized and unissuedshares or authorized and issued shares that have been reacquired by theCompany. If any Benefits awarded under this Plan shall for any reason terminateor expire, or be surrendered or forfeited, without having been exercised infull, or without shares otherwise issuable thereunder having been issued forany reason, then the shares not purchased or issued under such Benefits shallbe available again for grant hereunder, provided, however, that insofar as anSAR is exercised and settled for cash, the number of shares in respect of whichthe SAR is so exercised and settled shall not again be available for granthereunder. Anything in this Plan to the contrary notwithstanding, in no eventshall any Eligible Person receive in any calendar year Benefits under this Planinvolving more than 125,000 shares of Common Stock (subject to adjustment asprovided in Section 4.1(e)).

 

        3.4 **    $100,000 Limitation.**    Except as provided elsewhere in this Section, theCommittee shall not grant an ISO to, or modify the exercise provisions of anoutstanding ISO for, any person who, at the time of grant or modification, asapplicable, would thereby hold ISOs issued by the Company if the aggregate FairMarket Value (determined as of the respective dates of grant and modificationof each Option) of the Option Shares underlying such ISOs as are exercisablefor the first time during any calendar year would exceed $100,000 (or suchother limitation as may be prescribed by the Code from time to time). Theforegoing restriction on modification of outstanding ISOs shall not precludethe Committee from modifying an outstanding ISO if, as a result of suchmodification and with the consent of the holder, such Option no longerconstitutes an ISO. Furthermore, if the $100,000 limitation (or such otherlimitation prescribed by the Code) described in this Section is exceeded,then the ISO, the granting or modification of which resulted in exceeding suchlimitation, shall be treated as an ISO up to the limitation, and the excessshall be treated as a NQSO.

 

**ARTICLEIVSTOCK OPTIONS**

 

        4.1 **    Grant; Terms and Conditions.**    The Committee, in its discretion, may from time to timegrant ISOs or NQSOs, or both, to any Eligible Person; provided that ISOs shallonly be granted to Employees. Each Eligible Person who is granted an Optionshall receive an Option Agreement from the Company in a form specified by theCommittee and containing such provisions, consistent with this Plan, as theCommittee, in its sole discretion, shall determine at the time the Option isgranted.

 

        (a)   **Number of Shares.**    Each Option Agreement shall state the number of sharesof Common Stock to which it pertains.

 

        (b)   **Option Price.**    Each Option Agreement shall state the Option exerciseprice, which shall not be less than 100% of the Fair Market Value per share ofCommon Stock on the date of grant of the Option. In the case of an ISO grantedto a 10% Stockholder, the Option exercise price shall not be less than 110% ofthe Fair Market Value per share of Common Stock on the date of grant of theOption. The date of the grant of an Option shall be the date specified by theCommittee in its grant of the Option. Subject to the foregoing, the price atwhich each share of Common Stock covered by an NQSO granted under the Plan maybe purchased shall be the price determined by the Committee, in its absolutediscretion, to be suitable to attain the purposes of this Plan.

 

        (c)   **Medium and Time of Payment.**    Upon the exercise of an Option, the Option exerciseprice shall be payable in United States dollars, in cash (including by check)or (unless the Committee otherwise prescribes) in shares of Common Stock ownedby the optionee (but not with Restricted Stock prior to the expiration of theRestriction Period), in NQSOs granted to the optionee under the Plan which arethen exercisable (provided that the purchase price of Common Stock under an ISOmay not be paid in NQSOs), or in a combination of cash, Common Stock and NQSOs.If all or any portion of the Option exercise price is paid in Common Stockowned by the optionee, then that stock shall be valued at its Fair Market Valueas of the date the Option is exercised. If all or any portion of the Optionexercise price is paid in NQSOs granted to the optionee under the Plan, thensuch NQSOs shall be valued at their Fair Market Value as of the date the Optionis exercised.

 

        (d)   **Term and Exercise of Options.**    The term of each Option shall be determined by theCommittee at the time the Option is granted; provided that the term of anOption shall in no event be more than ten years from the date of grant or, inthe case of an ISO granted to a 10% Stockholder, more than five years from thedate of grant. During the lifetime of an optionee, the Option shall beexercisable only by him or her and shall not be assignable or transferable byhim or her and no person shall acquire any rights therein. Following anoptionee’s death, the Option may be exercised (to the extent permitted underthe Plan) by the person designated by the optionee as a beneficiary in awritten notification delivered to the Committee prior to the optionee’s death,or if there is no such written designation, by the executor or administrator ofthe optionee’s estate or by the person or persons to whom such rights pass bywill or by the laws of descent and distribution.

 

        (e)   **Recapitalization; Reorganization.**    Subject to any otherwise required action by thestockholders of the Company, the Change of Control provisions set forth in Article IXof this Plan and any provision expressly to the contrary and contained in anAgreement, each 

 

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of (i) the maximum number of shares of CommonStock that may be issued under this Plan pursuant to Section 3.3 above, (ii) themaximum number of shares of Common Stock that may be granted or be the subjectof grants made to any Participant in any calendar year, (iii) the numberof shares of Common Stock covered by each outstanding Option, (iv) thenumber of shares of Common Stock to which each Stock Appreciation Right orPerformance Share relates, (v) the kind of shares subject to outstandingBenefits and (vi) the per share exercise price under each outstandingOption or SAR, shall be proportionately and equitably adjusted to account forany increase or decrease in the number of issued shares of Common Stockresulting from a reorganization, recapitalization, stock split, combination ofshares, merger, consolidation, rights offering, subdivision or consolidation ofshares or the payment of a stock dividend (but only on the Common Stock) or anyother change in the capital structure or state of incorporation of the Company,in each case, in the manner the Committee deems appropriate. Such othersubstitutions or adjustments shall be made as may be determined by theCommittee, in its sole discretion, to be necessary or appropriate under thecircumstances. In connection with any event described in this paragraph, theCommittee may provide, in its sole discretion, for the cancellation of anyoutstanding awards and payment in cash or other property therefor.

 

        Subjectto any action that may otherwise be required on the part of the stockholders ofthe Company, if the Company is the surviving corporation in any merger,consolidation, sale, transfer, acquisition, tender offer or exchange offerwhich does not result in a Change of Control, then each outstanding Option,Stock Appreciation Right, Restricted Stock and Performance Share award shall pertainto and apply to the securities or other consideration that a holder of thenumber of shares of Common Stock subject to the Option or to which the StockAppreciation Right or Restricted Stock or Performance Share relates would havebeen entitled to receive in such transaction.

 

        Notwithstandingthe foregoing, in no event shall any Option or be exercisable after the date oftermination of the exercise period of such Option.

 

        In theevent of a change in the Common Stock as presently constituted, which change islimited to a change of all of the authorized shares with par value into thesame number of shares with a different par value or without par value, theshares resulting from any such change shall be deemed to be the Common Stockwithin the meaning of this Plan.

 

        Thegrant of an Option, Stock Appreciation Right or other Benefit pursuant to thisPlan shall not affect in any way the right or power of the Company to makeadjustments, reclassifications, reorganizations or changes of its capital orbusiness structure or to merge or to consolidate or to dissolve, liquidate,sell or otherwise transfer all or any part of its business or assets.

 

        Theprovisions of this Section 4.1(e) shall be limited in respect of ISOsto the extent necessary to comply with the applicable provisions of Code Section 424(a).

 

        (f)    **Rights as a Stockholder.**    Subject to Section 10.10 of this Plan regardinguncertificated shares, an optionee or a transferee of an Option shall have norights as a stockholder with respect to any shares covered by his or her Optionuntil the date of the issuance of a stock certificate to him or her for thoseshares upon payment of the exercise price. No adjustments shall be made fordividends (ordinary or extraordinary, whether in cash, securities or otherproperty) or distributions or other rights for which the record date is priorto the date such stock certificate is issued, except as provided in Section 4.1(e).

 

        (g)   **Modification, Extension and Renewal ofOptions.**     Subject to the terms and conditionsand within the limitations of this Plan, the Committee may modify, extend orrenew outstanding Options granted under this Plan or accept the surrender ofoutstanding Options (to the extent not theretofore exercised) and authorize thegranting of new Options in substitution therefor (to the extent not theretoforeexercised). No modification of an Option shall, without the consent of theoptionee, alter or impair any rights or obligations under any Optiontheretofore granted under this Plan. Notwithstanding the foregoing,

 

          (i)  noOption exercise period may be extended beyond the latest date at which theOption otherwise would have expired; and

 

         (ii)  theCommittee shall not have authority to reprice to reduce the exercise priceOptions without first obtaining shareholder approval for such repricing.

 

        (h)   **Exercisability and Term of Options.**    Unless earlier terminated, Options granted pursuant tothis Plan shall be exercisable at any time on or after the dates ofexercisability and before the expiration date. Notwithstanding the foregoing,an Option shall terminate and may not be exercised if the Eligible Person towhom it is granted ceases to be employed by, or provide services as aNon-Employee Director to, the Company, except that: (1) unless theCommittee shall at any time determine that the Eligible Person’s employment orservice was terminated for conduct that in the judgment of the Committeeinvolves dishonesty or action by the Eligible Person that is detrimental to thebest interest of the Company, the Eligible Person may at any time within ninety(90) days after termination of his or her employment or service exercisehis or her Option but only to the extent the Option was exercisable by him orher on the date of termination of employment or service; (2) if suchEligible Person’s employment or service terminates on account of total andpermanent disability, then the Eligible Person may at any time within one yearafter termination of his or her employment or service exercise his or herOption but only to the extent that the Option was exercisable on the date oftermination of employment or service; and (3) if such Eligible Person dieswhile in the employ of the Company or while serving as a Non-Employee Director,or within the ninety (90) day or twelve month period following terminationof his or her employment or service as described in clause (1) or (2) above,then his or her 

 

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Option may be exercised at any  time within twelve months following his orher death by the person specified in Section 4.1(d), but only to theextent that such Option was exercisable by him or her on the date oftermination of employment or service. The last sentence shall apply to anyoutstanding Options which are ISOs to the extent permitted by Code Section 422,and such outstanding ISOs in excess thereof shall, immediately upon theoccurrence of the event described in such sentence, be treated for all purposesof the Plan as NQSOs and shall be immediately exercisable as such as providedin such sentence. The Committee may, in its discretion, provide in any OptionAgreement or determine at any time after the date of grant that theexercisability of an Option will be accelerated, in whole or in part, in theevent of an Eligible Person’s retirement, death, disability or termination ofservice on the Board. Any cessation of employment, for purposes of ISOs only,shall include any leave of absence in excess of ninety (90) days unlessthe Employee’s reemployment rights are guaranteed by law or by contract.Notwithstanding anything to the contrary in this subsection, an Option may notbe exercised by anyone after the expiration of its term. Notwithstandinganything to the contrary in this subsection, an Option shall not terminate ifthe Employee to whom it is granted ceases to be employed by the Company butcontinues to serve as a Non-Employee Director of the Company or its successor,in which event the Option shall terminate if the Eligible Person ceases to be aNon-Employee Director of the Company or its successor and the Eligible Personmay at any time within ninety (90) days (or other applicable perioddescribed above) after ceasing to be a Non-Employee Director exercise his orher Option, but only to the extent that the Option was exercisable by him orher on the date on which he or she ceased to be a Non-Employee Director.

 

        4.2 **    Other Terms and Conditions.**    Through the Option Agreements authorized under thisPlan, the Committee may impose such other terms and conditions, notinconsistent with the terms hereof, on the grant or exercise of Options, as itdeems advisable.

 

**ARTICLEVSTOCK APPRECIATION RIGHTS**

 

        5.1 **    Grant of Stock AppreciationRights.**     The Committee, in its discretion,may from time to time grant Stock Appreciation Rights to Eligible Persons underthis Plan. Such Stock Appreciation Rights may, but need not, be granted inconjunction with an Option grant.

 

        5.2 **    Exercise.**    Stock Appreciation Rights shall entitle the holder,upon exercise thereof in whole or in part, to receive payment in the amount andform determined pursuant to Section 5.3(b). The exercise of StockAppreciation Rights shall result in a termination of the Stock AppreciationRights with respect to the number of shares covered by the exercise and, ifgranted in conjunction with an Option, shall also result in a termination ofthe related Option with respect to the number of shares covered by theexercise. The exercise period of a Stock Appreciation Right may be extended inaccordance with Section 4.1(g) (as applied to Stock AppreciationRights instead of Options as otherwise therein provided), provided that suchextension is not beyond the latest date at which the Stock Appreciation Rightwould have otherwise expired.

 

        5.3 **    Terms and Conditions.**    Stock Appreciation Rights granted under this Plan toEligible Persons shall be evidenced by SAR Agreements, which shall be in such formand contain such provisions, consistent with this Plan, as the Committee, inits sole discretion, shall determine at the time the Stock Appreciation Rightis granted.

 

        (a)   StockAppreciation Rights shall not be exercisable during the first six months aftertheir date of grant. Such rights shall be exercisable during the holder’slifetime only by the holder. Following the death of the Participant, the SARmay be exercised (to the extent permitted under the Plan) by the persondesignated as a beneficiary in a written notification delivered to theCommittee prior to the death, or if there is no such written designation, bythe executor or administrator of the Participant’s estate or by the person orpersons to whom such rights pass by will or by the laws of descent anddistribution.

 

        (b)   Uponexercise of Stock Appreciation Rights, the holder shall be entitled to receivetherefor payment, in the sole discretion of the Committee, in the form ofshares of Common Stock (rounded down to the next whole number so that nofractional shares are issued), cash or any combination thereof. The amount ofsuch payment shall be equal in value to the difference between the StockAppreciation Right exercise price per share (which shall be at least equal to theFair Market per share of the Common Stock as of the date of grant of the SAR)and the Fair Market Value per share of the Common Stock on the date the StockAppreciation Right is exercised, multiplied by the number of shares withrespect to which the Stock Appreciation Right shall have been exercised.

 

        (c)   StockAppreciation Rights shall terminate in accordance with the provisions of Section 4.1(h) (asapplied to Stock Appreciation Rights instead of Options as otherwise thereinprovided) if the holder’s employment or service with the Company (or itssuccessor, if applicable) terminates.

 

        5.4 **    Effect on Related StockOption.**     The number of shares of Common Stockwith respect to which Stock Appreciation Rights are exercised (rather than thenumber of shares issued by the Company upon such exercise) shall be deemed forthe purpose of Section 3.3 to have been issued under an Option grantedpursuant to this Plan and shall not thereafter be available for the granting offurther Benefits under this Plan.

 

        5.5 **    No Rights as a Stockholder.**    Holders of Stock Appreciation Rights hereunder shallhave no rights as stockholders in respect thereof. No adjustments shall be madefor dividends (ordinary or extraordinary, whether in cash, securities or otherproperty) or distributions or other rights for which the record date is priorto the date such stock certificate is issued, except as provided in Section 4.1(e),as applied to Stock Appreciation Rights.

 

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**ARTICLEVIPERFORMANCE SHARES**

 

        6.1 **    Award of Performance Shares.**    The Committee shall have the authority to grantPerformance Shares to any Eligible Person, subject to the maximum number ofshares of Common Stock that may be issued under this Plan pursuant to Section 3.3,above. The Committee shall determine the Eligible Persons to whom, and the timeor times at which, Performance Shares shall be awarded, the number ofPerformance Shares to be included in each award, the duration of the period(the “Performance Period”) during which, and the conditions under which,receipt of the shares of Common Stock will be deferred, and the other terms andconditions of the award in addition to those set forth in Section 6.2. Theprovisions of Performance Share awards need not be the same with respect toeach grantee, and such awards to individual grantees need not be the same insubsequent years.

 

        6.2 **    Terms and Conditions.**    Performance Shares awarded pursuant to this Article VIshall be subject to the following terms and conditions and such other terms andconditions, not inconsistent with the terms of this Plan, as the Committeeshall deem desirable:

 

        (a)   **Conditions.**    The Committee, in its sole discretion, shall specifythe Performance Period during which, and the conditions under which, thereceipt of shares of Common Stock covered by the Performance Share award willbe deferred. The receipt of shares of Common Stock pursuant to a PerformanceShare award may be conditioned upon the attainment of one or morepre-established performance goals, which if applicable, may be established inaccordance with the requirements of Section 162(m) of the Code andthe regulations promulgated thereunder. To meet such requirements, objectiveperformance goals must be established by the Committee in writing not laterthan 90 days after the commencement of the Performance Period, providedthat the outcome is substantially uncertain at the time the goal isestablished. The performance goals may be based on the Company’s stock price,return on assets, return on capital employed, return on shareholders’ equity,earnings, earnings per share, total shareholder return, sales, costs, successin meeting specified product development or other milestones, or otherwise,whether related to the performance of Osiris, a particular business unit,individual performance, or otherwise, as may be established by the Committeefrom time to time. Except as provided in any applicable Agreement, when circumstancesoccur that cause predetermined performance objectives to be an inappropriatemeasure of performance, the Compensation Committee, in its discretion, mayadjust the performance goals.

 

        (b)   **Award Certificate.**    Each Performance Share award shall be evidenced by, andsubject to the terms of, a Performance Share certificate executed by theCompany. The Performance Share certificate shall specify the number of sharesof Common Stock subject to the award, the applicable Performance Period, theapplicable performance goals, and the other terms and conditions applicable tosuch award.

 

        (c)   **Stock Certificates.**    If the Committee determines, after the expiration ofthe Performance Period, that the performance goals specified in the PerformanceShare certificate and all other material terms of the Performance Share awardhave been satisfied, stock certificates representing the number of shares ofCommon Stock covered by the Performance Share award shall be issued andregistered in the name of, and delivered to, the grantee.

 

        (d)   **Termination of Employment or Service.**    Unless otherwise determined by the Committee at thetime of grant, the Performance Shares will be forfeited upon a grantee’stermination of employment or service during the Performance Period for anyreason (including death, disability or retirement).

 

        (e)   **Payouts.**    At the end of a Performance Period, the Committee shalldetermine the extent to which the applicable performance goals have been satisfied.In the event of a payout with respect to a Performance Share award, such payoutshall be made no later than two and one-half (2 (1) / 2 ) months following the end of thePerformance Period.

 

        (f)    **Effect of Recapitalization; Reorganization.**    In the event of a transaction described in Section 4.1(e),each outstanding Performance Share award shall be adjusted as provided in Section 4.1(e).

 

        6.3 **    Individual Limit.**    The maximum number of shares of Common Stock that maybe subject to Performance Share awards granted to any individual EligiblePerson during any calendar year shall be 50,000 shares (subject to any increaseor decrease pursuant to the adjustment provisions of this Plan).

 

        6.4 **    Deferrals.**    The Committee, in its discretion, may provide anopportunity for Eligible Persons to defer Performance Share awards beyond thescheduled payment date described in Section 6.2(e). In such event, thedeferral election and deferred payout shall comply with the requirements of Section 409Aof the Code. Accordingly, (i) the deferral election shall be made no laterthan twelve (12) months prior to the end of the Performance Period (or sixmonths prior to the end of the Performance Period if the Performance Sharesqualify as “performance-based compensation” within the meaning of Section 409A),(ii) the deferred payout date shall be a specified date or otherpermissible payment event under Section 409A that is at least five (5) yearsafter the date described in Section 6.2(e), and (iii) in the case ofan Eligible Person who is a “specified employee” within the meaning of Section 409Aof the Code and such deferred payment is made on account of his or herseparation from service with the Company, the payment is made at least six (6) monthsfollowing such separation from service.

 

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**ARTICLEVIIPERFORMANCE UNITS**

 

        7.1 **    Award of Performance Units.**    The Committee shall have the authority to grantPerformance Units to any Eligible Person, subject to Section 3.3. TheCommittee shall determine the Eligible Person to whom, and the time or times atwhich, Performance Units shall be awarded, the number of Performance Units tobe included in each award, the duration of the period (the “Performance Cycle”)during which, and the conditions under which, a grantee’s right to PerformanceUnits will be vested, and the other terms and conditions of the award inaddition to those set forth in Section 7.2. A Performance Unit shall havea fixed dollar value. The provisions of Performance Unit awards need not be thesame with respect to each grantee, and such awards to individual grantees neednot be the same in subsequent years.

 

        7.2 **    Terms and Conditions.**    The Performance Units awarded pursuant to this Article VIIshall be subject to the following terms and conditions and such other terms andconditions, not inconsistent with the terms of this Plan, as the Committeeshall deem desirable:

 

        (a)   **Conditions.**    The Committee, in its sole discretion, shall specifythe Performance Cycle during which, and the conditions under which, the grantee’sright to Performance Units will be vested. The vesting of Performance Unitsshall be conditioned upon the attainment of one or more pre-establishedperformance goals, which if applicable may be objective and established inaccordance with the requirements of Section 162(m) of the Code andthe regulations promulgated thereunder. To meet such requirements, objectiveperformance goals must be established by the Committee in writing not laterthan 90 days after the commencement of the Performance Cycle, providedthat the outcome is substantially uncertain at the time the goal isestablished. The performance goals may be based on the Company’s stock price,return on assets, return on capital employed, return on shareholders’ equity,earnings, earnings per share, total shareholder return, sales, costs, successin meeting specified product development or other milestones, or otherwise,whether related to the performance of Osiris, a particular business unit,individual performance, or otherwise, as may be established by the Committeefrom time to time. Except as provided in any applicable Agreement, whencircumstances occur that cause predetermined performance objectives to be aninappropriate measure of performance, the Committee, in its discretion, mayadjust the performance goals.

 

        (b)   **Award Certificate.**    Each Performance Unit Award shall be evidenced by, andsubject to the terms of, a Performance Unit certificate executed by theCompany. The Performance Unit certificate shall specify the dollar value of theaward, the applicable Performance Cycle, the applicable performance goals, andthe other terms and conditions applicable to such award.

 

        (c)   **Termination of Employment.**    Unless otherwise determined by the Committee at thetime of grant, the Performance Units will be forfeited upon an Eligible Person’stermination of employment or service during the Performance Cycle for anyreason (including death, disability or retirement).

 

        (d)   **Payouts.**    At the end of a Performance Period, the Committee shalldetermine the extent to which the applicable performance goals have beensatisfied. In the event of a payout with respect to a Performance Unit award,such payout shall be made no later than two and one-half (2 (1) / 2 ) months following the end of thePerformance Period. Payment may be made in cash, shares of Common Stock or acombination of both, as determined by the Committee in its sole discretion.

 

        (e)   **Effect of Recapitalization; Reorganization.**    In the event of a transaction described in Section 4.1(e),each outstanding Performance Unit award shall be adjusted as provided in Section 4.1(e).

 

        7.3 **    Individual Limit.**    The maximum dollar amount of Performance Unit awardsthat may be granted to any individual during any calendar year shall be$4,000,000.

 

        7.4 **    Deferrals.**    The Committee, in its discretion, may provide an opportunityfor Eligible Persons to defer Performance Unit awards beyond the scheduledpayment date described in Section 7.2(d). In such event, the deferralelection and deferred payout shall comply with the requirements of Section 409Aof the Code. Accordingly, (i) the deferral election shall be made no laterthan twelve (12) months prior to the end of the Performance Period (or sixmonths prior to the end of the Performance Period if the Performance Unitsqualify as “performance-based compensation” within the meaning of Section 409A),(ii) the deferred payout date shall be a specified date or otherpermissible payment event under Section 409A that is at least five (5) yearsafter the date described in Section 7.2(d), and (iii) in the case ofan Eligible Person who is a “specified employee” within the meaning of Section 409Aof the Code and such deferred payment is made on account of his or herseparation from service with the Company, the payment is made at least six (6) monthsfollowing such separation from service.

 

**ARTICLEVIIIRESTRICTED STOCK**

 

        8.1 **    Restricted Stock.**    The Committee, in its discretion, may from time to timeaward and direct the Company to issue and transfer Restricted Stock to anyEligible Person eligible to receive Benefits under this Plan. Each EligiblePerson who is awarded Restricted Stock subject to continuing restrictions shallreceive a Restricted Stock Agreement from the Company in a form specified bythe Committee and containing the terms and conditions, consistent with thisPlan, as the Committee, in its sole discretion, shall determine at the time theaward is made.

 

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        RestrictedStock awarded to Eligible Persons may not be sold, transferred, pledged orotherwise encumbered during the Restriction Period. The Eligible Person shallotherwise have the entire beneficial ownership of the Restricted Stock awardedto him or her, including the right to receive dividends and the right to votesuch Restricted Stock.

 

        If anEligible Person ceases to be employed by, or serve as a Non-Employee Directorof, the Company prior to the expiration of the Restriction Period, or if thespecified conditions are not met, then he or she shall forfeit all of his orher Restricted Stock with respect to which the Restriction Period has not yetexpired and those shares of Common Stock must be immediately returned to theCompany; provided, however, that the Restricted Stock Agreements, in thediscretion of the Committee and pursuant to such terms and conditions as it mayimpose, may provide: (1) that, if such Eligible Person’s employment orservice terminates for any reason other than conduct that in the judgment ofthe Committee involves dishonesty or action by the Eligible Person that isdetrimental to the best interests of the Company, then the Restricted Stock orany related compensation deferral or a portion thereof shall not be forfeited; (2) that,if such Eligible Person’s employment or service terminates on account of totaland permanent disability, then the Eligible Person shall not forfeit his or herRestricted Stock or any related compensation deferral or a portion thereof; and(3) that, if such Eligible Person dies while employed by, or serving as aNon-Employee Director of, the Company, then his or her Restricted Stock or anyrelated compensation deferral or a portion thereof is not forfeited. Inaddition, the Committee shall, in accordance with its authority under Section 2.3hereof, have the power to make any determinations as to the lapse ofrestrictions in respect of any Restricted Stock upon the occurrence of anyevent described above.

 

        Subjectto Section 10.10, each Eligible Person who is awarded Restricted Stockmay, but need not, be issued a stock certificate in respect of such shares ofRestricted Stock. Each certificate registered in the name of an EligiblePerson, if any, shall bear an appropriate legend referring to the terms,conditions and restrictions applicable to such award as specifically set forthin the Restricted Stock Agreement.

 

        TheCommittee shall require that any stock certificate issued in the name of anEligible Person representing shares of Restricted Stock be held in the custodyof the Company until the expiration of the Restriction Period applicable tosuch Restricted Stock and that, as a condition of such issuance of acertificate for Restricted Stock, the Eligible Person shall have delivered astock power, endorsed in blank, relating to the shares covered by suchcertificate. In no event shall the Restriction Period end prior to the payment,or the making by the Eligible Person to the Company of adequate provision forthe payment, of the amount of any federal, state or local income or employmenttax withholding that may be required with respect to the Restricted Stock.

 

        Duringthe Restriction Period, the individual who owns Restricted Stock shall have theright to vote shares of Restricted Stock and to receive any dividends or otherdistributions paid on such shares, subject to any restrictions deemedappropriate by the Committee.

 

        If anychange is made in the Common Stock by reason of any merger, consolidation,reorganization, recapitalization, stock dividend, split up, combination ofshares, exchange of shares, change in corporate structure, or otherwise, thenany shares received by an Eligible Person with respect to Restricted Stockshall be subject to the same restrictions applicable to such Restricted Stockand the certificates representing such shares shall be deposited with theCompany.

 

**ARTICLEIXCHANGE OF CONTROL**

 

        9.1   Upona Change of Control where the Company is not the surviving corporation (orsurvives only as a subsidiary of another corporation), unless the Committeedetermines otherwise, all outstanding Benefits shall be assumed by, or replacedwith comparable rights granted by, the surviving corporation.

 

        9.2   Notwithstandingthe foregoing, subject to Section 9.3, in the event of a Change ofControl, the Committee may take any of the following actions: (a) requirethat holders surrender their outstanding Options and Stock Appreciation Rightsin exchange for a payment by the Company, in cash or Common Stock as determinedby the Committee, in an amount equal to the amount by which the then FairMarket Value of the shares subject to the holder’s unexercised Options andStock Appreciation Rights exceeds the exercise price of the Options and StockAppreciation Rights; (b) after giving holders an opportunity to exercisetheir outstanding Options and Stock Appreciation Rights, terminate any or allunexercised Options and Stock Appreciation Rights, at such time as theCommittee deems appropriate; or (c) declare all (or a portion of all)outstanding Options and Stock Appreciation Rights to be fully exercisable anddeclare that all (or certain) restrictions and conditions on outstandingPerformance Shares, Performance Unit, and Restricted Stock shall immediatelylapse. Any surrender or termination of rights under this Section 9.2 shalltake place as of the date of the Change of Control or such other date as theCommittee may specify.

 

        9.3   Notwithstandinganything in the Plan to the contrary, in the event of a Change of Control, theCommittee shall not have the right to take any actions described in the Plan(including without limitation actions described in Section 9.2) that wouldmake the Change of Control ineligible for favorable accounting treatment orthat would make the Change of Control ineligible for desired tax treatment if,in the absence of such right, the Change of Control would qualify for suchtreatment and the Company intends to use such treatment with respect to theChange of Control.

 

**ARTICLEXMISCELLANEOUS**

 

 

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        10.1 **    Withholding Taxes.**    An Eligible Person granted Options, Restricted Stock,Stock Appreciation Rights, Performance Shares or Performance Units under thisPlan shall be conclusively deemed to have authorized the Company to withholdfrom the salary, commissions, fees or other compensation of such EligiblePerson funds in amounts or property (including Common Stock) in value equal toany federal, state and local income, employment or other withholding taxesapplicable to the income recognized by such Eligible Person and attributable tothe Options, Option Shares, Restricted Stock, Stock Appreciation Rights,Performance Shares or Performance Units as, when and to the extent, if any,required by law; provided, however, that, in lieu of the withholding of federal,state and local taxes as herein provided, the Company may require that theEligible Person (or other person exercising such Option, Stock AppreciationRights, Performance Shares or Performance Units or holding such RestrictedStock) pay the Company an amount equal to the federal, state and localwithholding taxes on such income at the time such withholding is required orsuch other time as shall be satisfactory to the Company.

 

        10.2 **    Amendment, Suspension,Discontinuance or Termination of Plan.**     TheCommittee may from time to time amend, suspend or discontinue this Plan orrevise it in any respect whatsoever for the purpose of maintaining or improvingthe effectiveness of this Plan as an incentive device, for the purpose of conformingthis Plan to applicable governmental regulations or to any change in applicablelaw or regulations or for any other purpose permitted by law; provided,however, that no such action by the Committee shall adversely affect anyBenefit theretofore granted under this Plan without the consent of the holderso affected; and provided further that the Committee may not materiallyincrease the number of shares of Common Stock authorized under Section 3.3of this Plan or materially modify this Plan’s requirements as to eligibilityfor participation or materially increase the benefits accruing to participantsunder this Plan, in any such case without the approval of the stockholders ofthe Company. Unless sooner terminated by the Committee, this Plan willterminate on April 16, 2016.

 

        10.3 **    Governing Law.**    This Plan shall be governed by, and construed inaccordance with, the laws of the State of Delaware (without giving effect toprinciples of conflict of laws).

 

        10.4 **    Designation.**    This Plan may be referred to in other documents andinstruments as the “Osiris Therapeutics, Inc. Amended and Restated 2006Omnibus Plan.”

 

        10.5 **    Indemnification of Committee.**    In addition to such other rights of indemnification asthey may have as directors or as members of the Committee, the members of theCommittee shall be indemnified by the Company against the reasonable expenses,including attorneys’ fees, actually and necessarily incurred in connection withthe defense of any investigation, action, suit or proceeding, or in connectionwith any appeal therefrom, to which they or any of them may be a party byreason of any action taken or failure to act under or in connection with thisPlan or any Benefit, and against all amounts paid by them in settlement thereof(provided such settlement is approved by independent legal counsel selected bythe Company) or paid by them in satisfaction of a judgment in or dismissal orother discontinuance of any such investigation, action, suit or proceeding,except in relation to matters as to which it shall be adjudged in suchinvestigation, action, suit or proceeding that such Committee member is liablefor negligence or misconduct in the performance of his or her duties; providedthat, within 60 days after institution of any such investigation, action,suit or proceeding, a Committee member shall in writing offer the Company theopportunity, at its own expense, to handle and defend the same.

 

        10.6 **    Reservation of Shares.**    The Company shall at all times during the term of thisPlan, and so long as any Benefit shall be outstanding, reserve and keepavailable (and will seek or obtain from any regulatory body having jurisdictionany requisite authority in order to issue) such number of shares of its CommonStock as shall be sufficient to satisfy the requirements of this Plan.Inability of the Company to obtain from any regulatory body of appropriatejurisdiction authority considered by the Company to be necessary or desirableto the lawful issuance of any shares of its Common Stock hereunder shallrelieve the Company of any liability in respect of the nonissuance or sale ofsuch Common Stock as to which such requisite authority shall not have beenobtained.

 

        10.7 **    Application of Funds.**    The proceeds received by the Company from the sale ofCommon Stock pursuant to the exercise of Options will be used for generalcorporate purposes.

 

        10.8 **    No Obligation to Exercise.**    The granting of a Benefit shall impose no obligationupon the holder to exercise or otherwise realize the value of that Benefit.

 

        10.9 **    Approval of Stockholders.**    No Benefit granted under this Plan shall be enforceableagainst the Company unless and until this Plan, insofar as it relates to suchBenefit, has been approved or ratified by the stockholders of the Company inthe manner and to the extent required by the Exchange Act and the GeneralCorporation Law of the State of Delaware.

 

        10.10 **    Uncertificated Shares.**    Each Eligible Person who exercises an Option to acquireCommon Stock or is awarded Restricted Stock may, but need not, be issued astock certificate in respect of the Common Stock so acquired. A “book entry” ( *i.e.* , a computerized or manual entry)shall be made in the records of the Company to evidence the issuance of sharesof Common Stock to an Eligible Person where no certificate is issued in thename of the Eligible Person. Such Company records, absent manifest error, shallbe binding on Eligible Persons. In all instances where the date of issuance ofshares may be deemed significant but no certificate is issued in accordancewith this Section 10.10, the date of the book entry shall be the relevantdate for such purposes.

 

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        10.11 **    Forfeiture for Competition.**    If a participant in this Plan provides services to acompetitor of the Company or any of its subsidiaries, whether as an employee,officer, director, independent contractor, consultant, agent or otherwise, suchservices being of a nature that can reasonably be expected to involve theskills and experience used or developed by the participant while an EligiblePerson, then that participant’s rights to any Benefits hereunder shallautomatically be forfeited, subject to a determination to the contrary by theCommittee.

 

        10.12 **    Successors.**    This Plan shall be binding upon any and all successorsof the Company.

 

        10.13 **    Employment/Service Rights.**    Nothing in this Plan or in any Agreement shall confer onany Employee any right to continue in the employ of the Company or any of itssubsidiaries or shall interfere in any way with the right of the Company or anyof its subsidiaries to terminate such person’s employment at any time. Nothingin this Plan or in any Agreement shall confer on any Non-Employee Director anyright to continue to serve as a member of the Board, nor is there any impliedagreement or understanding that such Non-Employee Director will be nominatedfor reelection to the Board.

 

        10.14 **    Other Actions.**    Nothing contained in the Plan shall be construed tolimit the authority of the Company to exercise its corporate rights and powers,including, but not by way of limitation, the right of the Company to grantoptions for proper corporate purposes other than under the Plan with respect toany employee or other person, firm, corporation or association.

 

        10.15 **    Tax Treatment andCharacterization.**     Neither the Company norany other person represents or warrants to any Plan participant (i) thatany Option granted hereunder shall be considered an ISO for applicable taxpurposes or (ii) that favorable or desirable tax treatment orcharacterization will be applicable in respect of any Benefit.

 

        10.16 **    Legend.**    The Committee may require each person exercising anOption to represent to and agree with the Company in writing that he or she isacquiring the Option Shares without a view to distribution thereof. In additionto any legend required by this Plan, the stock certificates representing suchOption Shares may include any legend which the Committee deems appropriate toreflect any restrictions on transfer.

 

        Allcertificates for Option Shares shall be subject to such stock transfer ordersand other restrictions as the Committee may deem advisable under the rules,regulations and other requirements of the Securities and Exchange Commission,any stock exchange upon which the Common Stock is then listed, any applicablefederal or state securities law, and any applicable corporate law, and theCommittee may cause a legend or legends to be put on any such certificates tomake appropriate reference to such restrictions.

 

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