Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is
entered into as of the 23rd of July 2008 based on acceptance of
the offer, (the “Effective Date”) by and between Osiris Therapeutics, Inc.,
a Delaware corporation (the “Company”), and Richard W. Hunt, (the “Executive”).

 

WHEREAS, the Company desires to employ the
Executive, and the Executive desires to be employed by the Company, on the
terms and conditions set forth herein from and after July 23, 2008; and

 

WHEREAS, the board of directors of the Company (the “Board”)
has authorized the entry into this Agreement with the Executive.

 

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

 

1.         Employment Agreement. On the terms and conditions
set forth in this Agreement, the Company agrees to employ the Executive and the
Executive agrees to be employed by the Company for the Employment Period set
forth in Section 2 hereof and in the position and with the duties set
forth in Section 3 hereof.

 

2.         Term. The initial term of
employment under this Agreement shall be for a three-year period commencing on
the date hereof (the “Initial Term”). The term of employment shall be
automatically renewed for an additional consecutive 12-month period (the “Extended
Term”) as of the third and every subsequent anniversary of the date hereof,
unless and until either party provides written notice to the other party in
accordance with Section 11 hereof not less than 90 days before such
anniversary date that such party is terminating the term of employment under
this Agreement, which termination shall be effective as of the end of such Initial
Term or Extended Term, as the case may be, or until such term of employment is
otherwise terminated as hereinafter set forth. Such Initial Term and all such
Extended Terms are collectively referred to herein as the “Employment Period.”
The parties’ obligations under Sections 6, 8, 9, and 10 hereof shall survive
the expiration or termination of the Employment Period.

 

3.         Position and Duties. The Executive shall
initially serve as Chief Financial Officer during the Employment Period. As
such, the Executive shall render executive policy and other management services
to the Company of the 

 

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type customarily performed by persons serving in a similar, officer
capacity, and shall perform the other duties and objectives as the CEO may
determine from time to time. The Executive shall report to the CEO.  Objectives of the Executive may be amended by
the CEO from time to time.  The Executive
shall devote the sufficient efforts and working time to the performance of the
Executive’s duties and the advancement of the business and affairs of the
Company.

 

4.         Compensation.

 

(a) Base Salary.
During the Employment Period, the Company shall pay to the Executive an annual
base salary (the “Base Salary”), which initially shall be at the rate of USD
270,000 per year. The Base Salary shall be reviewed no less frequently than
annually and may be increased at the discretion of the Board. When the
Executive’s Base Salary is increased, the increased amount shall be the Base
Salary for the next 12-month period. Except as otherwise agreed in writing by
the Executive, the Base Salary shall not be reduced from the amount previously
in effect during the Employment Period. The Base Salary shall be payable
semimonthly or in such other installments as shall be consistent with the
Company’s payroll procedures.

 

(b) Bonus. At the
discretion of the Board, the Executive will be eligible to earn a bonus for
2008 in the amount up to USD 40,000. The bonus amount will depend upon
performance against mutually agreed targets.  
At the discretion of the Board, the Executive will be eligible to earn a
bonus for 2009 in the amount up to USD 80,000. The bonus amount will depend
upon performance against mutually agreed targets.

 

(c) Benefits. During
the Employment Period, the Executive will be entitled to such other benefits
approved by the Board and made available to employees generally. Nothing
contained in this Agreement shall prevent the Company from changing insurance
carriers or from effecting modifications in insurance coverage or other
employee benefits that impact Executive.

 

(d) Vacation:
Holidays. The Executive shall be entitled to all public holidays observed by
the Company and per Company policy as determined by the Board and twenty
vacation days in accordance with the applicable vacation policies for senior
executives of the Company, which shall be taken at a reasonable time or times
so as not to negatively impact the operations of the Company. A maximum of 20
unused vacation days may be carried over for twelve months after the year in
which they accrue.

 

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(e) Withholding Taxes
and Other Deductions. To the extent required by law, the Company shall
withhold from any payments due Executive under this Agreement any applicable
federal, state or local taxes and such other deductions as are prescribed by
law or Company policy.

 

(f) Equity. Upon the effective date of
the Agreement, the Executive shall be granted 120,000 options to purchase
Company common stock at the current fair market value based on the close of
business market price of July 22, 2008. The options shall vest ratably,
one-fourth on each anniversary of the Effective Date for four consecutive years
until fully vested.  Upon mutual agreement
of the Board and the Executive, stock grants or similar instruments may be
substituted in place of stock options.

 

5.                           Expenses.  The Executive’s expenses incurred in the
performance of his duties hereunder, including the costs of travel, and similar
business expenses incurred shall be reimbursed by the Company promptly in
accordance with Company expense policies upon periodic presentation by the
Executive of an itemized account of such expenses, with appropriate
documentation, which shall be reviewed by the audit committee from time to time
at its discretion.

 

6.                           Confidentiality:
Work Product.

 

(a) Information. The Executive
acknowledges that the information, observations and data obtained by the
Executive concerning the business and affairs of the Company and its
Subsidiaries during the course of the Executive’s performance of services for,
or employment with, any of the foregoing Persons (whether or not compensated
for such services) are the property of the Company and its Subsidiaries,
including information concerning acquisition opportunities in or reasonably
related to the business or industry of the Company or its Subsidiaries of which
the Executive becomes aware during such period. Therefore, the Executive agrees
that he will not at any time (whether during or after the Employment Period)
disclose to any unauthorized person or, directly or indirectly, use for the
Executive’s own account or the account of any other Person, any of such
information, observations or data without the Board’s consent, unless and to
the extent that the aforementioned matters become generally known to and
available for use by the public other than as a direct or indirect result of
the Executive’s acts or omissions to act or the acts or omissions to act of
other senior or junior management employees of the Company and its
Subsidiaries. The Executive agrees to deliver to the Company at the termination
of the Executive’s employment, or at any other time the Company may request in
writing (whether during or after the Employment Period), all memoranda, notes,
plans, records, reports and other documents, regardless of the format or media 

 

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(and
copies thereof), relating to the business of the Company and its Subsidiaries
and their predecessors (including, without limitation, all acquisition
prospects, lists, customer and contact information) which the Executive may
then possess or have under the Executive’s control.

 

(b) Inventions and Patents. The
Executive acknowledges that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports and all similar or
related information (whether or not patentable) that relate to the actual or
anticipated business, research and development or existing or future products
or services of the Company or its Subsidiaries that are conceived, developed,
made or reduced to practice by the Executive while employed by the Company or
any of its predecessors (“Work Product”) belong to the Company and the
Executive hereby assigns, and agrees to assign, all of the above to the
Company. Any copyrightable work prepared in whole or in part by the Executive
in the course of the Executive’s work for any of the foregoing entities shall
be deemed a “work made for hire” under the copyright laws, and the Company
shall own all rights therein. To the extent that any such copyrightable work is
not a “work made for hire,” the Executive hereby assigns and agrees to assign
to the Company all right, title and interest, including without limitation,
copyright in and to such copyrightable work. The Executive shall promptly
disclose such Work Product and copyrightable work to the Board and perform all
actions reasonably requested by the Board (whether during or after the
Employment Period) to establish and confirm the Company’s ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).

 

7.       Termination of Employment.

 

(a) Permitted Terminations. The
Executive’s employment hereunder may be terminated during the Employment Period
without any breach of this Agreement only under the following circumstances:

 

(i)       Death. The Executive’s
employment hereunder shall terminate upon the executive’s death;

 

(ii)      By the Company.   The Company may terminate the Executive’s
employment:

 

(A)         If the Executive shall have been unable to perform all of
the Executive’s duties hereunder by reason of illness, physical or mental
disability or other similar incapacity, which inability shall continue for
three or more consecutive months or four or more non-consecutive months; or

 

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(B)         for the failure of Executive
to satisfactorily perform the duties and the tasks of the office held by the
Executive as reasonably determined by the Board, and such failure is not cured
within 30 days after the Executive receives specific written notice thereof
from the Board; or

 

(C)         for Cause; or

 

(iii)    By the Executive.   The Executive may terminate employment for
Good Reason.

 

(b) Termination.  Any
termination of the Executive’s employment by the Company or the Executive
(other than because of the Executive’s death) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 11
hereof. Termination of the Executive’s employment shall take effect on the Date
of Termination.

 

8.      Compensation Upon
Termination.

 

(a)  Death. If the Executive’s
employment is terminated during the Employment Period as a result of the
Executive’s death, the Company shall pay to the Executive’s estate, or as may
be directed by the legal representatives of such estate, the Executive’s Base
Salary prorated through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination, and the Company shall have no further obligations to the Executive
under this Agreement.

 

(b) Disability. If the Company terminates the Executive’s
employment during the Employment Period because of the Executive’s disability
pursuant to Section 7(a)(ii)(A) hereof, the Company shall pay to the
Executive, the Executive’s Base Salary prorated through the Date of Termination
and all other accrued and unpaid amounts, if any, to which the Executive is
entitled as of the Date of Termination, and the Company shall have no further
obligations to the Executive under this Agreement; provided, that
payments so made to the Executive during any period that the Executive is
unable to perform all of the Executive’s duties hereunder by reason of illness,
physical or mental illness or other similar incapacity shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the time of
any such payment under disability benefit plans of the Company and which
amounts were not previously applied to reduce any such payment.

 

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(c) By the Company with Cause or by the
Executive without Good Reason. If the Company terminates the Executive’s
employment during the Employment Period for Cause pursuant to Section 7(a)(ii)(C) hereof
or if the Executive voluntarily terminates the Executive’s employment during
the Employment Period other than for Good Reason, the Company shall pay the
Executive the Executive’s Base Salary prorated through the Date of Termination
and all other accrued and unpaid amounts, if any, to which Executive is
entitled as of the Date of Termination, and the Company shall have no further
obligations to the Executive under this Agreement.

 

(d) By the Company due to Lack of
Performance. If the Company terminates the Executive’s employment during
the Employment Period due to Lack of Performance pursuant to Section 7(a)(ii)(B) hereof,
the Company shall pay the Executive in a lump sum (A) the Executive’s Base
Salary prorated through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination, and (B) an aggregate amount equal to three months of the
Executive’s annual Base Salary, payable in a lump sum within 30 days from the
Date of Termination, plus all medical, life, and disability benefits, if any,
Executive had been receiving immediately preceding the termination for the
six-month period following the Date of Termination (the “Severance Period”), provided
such medical, life, and disability benefits shall be subject to the mitigation
obligations in Section 8(e) below (the “Severance Payments”), and the
Company shall have no further obligations to the Executive under this
Agreement.

 

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(e) By the Company without Cause or by the
Executive for Good Reason. If the Company terminates the Executive’s
employment during the Employment Period other than for Cause, Lack of
Performance, disability or death pursuant to Section 7(a)(i) or (ii) hereof,
or the Executive terminates his employment during the Employment Period for
Good Reason pursuant to Section 7(a)(iii) hereof, the Company shall
pay the Executive in a lump sum (A) the Executive’s Base Salary prorated
through the Date of Termination and all other accrued and unpaid amounts, if
any, to which the Executive is entitled as of the Date of Termination, and (B) an
aggregate amount equal to six months of the Executive’s Base Salary, payable in
a lump sum within 30 days from the Date of Termination, plus all medical, life,
and disability benefits, if any, Executive had been receiving immediately
preceding the termination for six months period following the Date of
Termination (the “Severance Period”), provided such medical, life, and
disability benefits shall be subject to the mitigation obligations in Section 8(e) below
(the “Severance Payments”), and the Company shall have no further obligations
to the Executive under this Agreement.

 

(f) Mitigation. The Company’s obligation
to continue to provide the Executive with medical, life, and disability
benefits pursuant to Section 8(d) and (f) above shall cease if
the Executive becomes eligible to participate in benefits similar to those
provided under this Agreement as a result of the Executive’s subsequent
employment, whether as part of an organization or as an independent consultant,
during the period that the Executive is entitled to receive such benefits.

 

(g) Release. The Executive agrees that,
except for such other payments and benefits to which the Executive may be
entitled as expressly provided by the terms of this Agreement or any applicable
employee benefit plan, the Severance Payments set forth above shall be in lieu
of all other claims that the Executive may make by reason of termination of his
employment or any such breach of this Agreement and that, as a condition to
receiving the Severance Payments, the Executive will execute a release of
claims in a form reasonably satisfactory to the Company.

 

(h) Effect on other Benefits. Except as
specifically provided in this Agreement, no compensation or other benefits are
guaranteed beyond the Date of Termination or termination of this Agreement.

 

9.        Noncompetition
and Nonsolicitation.

 

(a) Noncompetition. The Executive
acknowledges that in the course 

 

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of his employment with the Company and its Subsidiaries, he has and
will continue to become familiar with the trade secrets of, and other
confidential information concerning, the Company and its Subsidiaries, that the
Executive’s services will be of special, unique and extraordinary value to the
Company and its Subsidiaries and that the Company’s ability to accomplish its
purposes and to successfully pursue its business plan and compete in the
marketplace depend substantially on the skills and expertise of the Executive.
Therefore, and in further consideration of the compensation being paid to the
Executive hereunder, the Executive agrees that, during the Employment Period
and any Severance Period, although in no event less than two (2) years
from the Date of Termination, so long as Severance Payments are made or have
been made in accordance with this Agreement (the “Noncompete Period”), he shall
not directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in, any business competing with
the Business of the Company or its Subsidiaries in any country where the
Company or its Subsidiaries conducts business, or plans to conduct business,
provided such plans have been communicated to Executive. For purposes of this Section 11,
the “Business” shall mean all commercial or therapeutic use that involves
mesenchymal stem cells (MSCs) or cells substantially similar to mesenchymal
stem cells, that is, a homogeneous population of cells that can differentiate
along more than one connective tissue lineage as long, regardless of the
source; all commercial efforts to deliver or improve the delivery of MSCs for
therapeutic purposes; all commercial efforts that would seek to enhance the
endogenous in vivo population of MSCs in the body by pharmaceutical or chemical
means; any other effort to commercially compete with Osiris to which the
Executive has confidential knowledge. 
(to cover hiring, business partnerships, vendor relationships,
etc.).  Executive acknowledges that this
covenant has a unique, very substantial and immeasurable value to Company, that
Executive has sufficient assets and skills to provide a livelihood for himself
while such covenant remains in force.

 

(b) Nonsolicitation. During the
Employment Period and for two (2) years following the Date of Termination,
the Executive shall not directly or indirectly through another entity (i) induce
or attempt to induce any employee of the Company or any Subsidiary to leave the
employ of the Company or such Subsidiary, or in any way willfully interfere
with the relationship between the Company or any Subsidiary and any employee
thereof or (ii) induce or attempt to induce any customer, supplier,
licensee or other business relation of the Company or any Subsidiary to cease
doing business with the Company or such Subsidiary, or in any way interfere
with the relationship between any such customer, supplier, licensee or business
relation and the Company or any Subsidiary.

 

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(c) Revision of
Restrictions. If, at the time of enforcement of this Section 9,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum
duration, scope or geographical area reasonable under such circumstances shall
be substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law.

 

10.         Enforcement.
The Executive acknowledges that the restrictions imposed on him by Section 6(a),
6(b) and 9 are reasonable and necessary, in view of the nature of the
Company’s business, the nature of the services to be provided by the Executive
and the Executive’s access to confidential information of the Company, to
protect the legitimate interests of the Company and that any breach or
threatened breach of any provision thereof will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy therefore.
Therefore, in the event a breach or threatened breach by the Executive of any
provision of Section 6(a), 6(b) or 9, the Company shall be entitled
to obtain from any court of competent jurisdiction, in addition to any and all
other rights and remedies existing in its favor, an order of specific
performance and/or preliminary or permanent injunctive relief in order to
enforce, or prevent any violations of, such provision (without posting a bond
or other security).

 

11.         Notices. All notices, demands, requests or other
communications required or permitted to be given or made hereunder shall be in
writing and shall be delivered, telecopied or mailed by first class registered
or certified mail, postage prepaid, addressed as follows:

 

(a)                      If to the
Company;

 

Osiris Therapeutics, Inc.

7015 Albert Einstein Drive

Columbia, MD 21046

ATTN: CEO

Fax: 443.545. 1702

 

(b)                     If to the Executive:

Richard W. Hunt

7530 Damascus Road

Laytonsville, Maryland 20882

 

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or
to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or
made for all purposes three days after it is deposited in the U.S. mail,
postage prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.

 

12.         Severability.
The invalidity or unenforceability of any one or more provisions of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.

 

13.         Survival. It is
the express intention and agreement of the parties hereto that the provisions
of Sections 6, 8, 9, and 10 hereof shall survive the termination of employment
of the Executive. In addition, all obligations of the Company to make payments
hereunder shall survive any termination of this Agreement on the terms and
conditions set forth herein.

 

14.         Assignment. The
rights and obligations of the parties to this Agreement shall not be assignable
or delegable, except that (i) in the event of the Executive’s death, the
personal representative or legatees or distributes of the Executive’s estate,
as the case may be, shall have the right to receive any amount owing and unpaid
to the Executive hereunder and (ii) the rights and obligations of the
Company hereunder shall be assignable and delegable in connection with any
subsequent merger, consolidation, sale or other transfer of all or
substantially all of the assets of the Company or similar reorganization of a
successor corporation.

 

15.         Binding Effect.  Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.

 

16.         Amendment: Waiver.
This Agreement shall not be amended, altered or modified except by an
instrument in writing duly executed by the parties hereto. Neither the waiver
by either of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure of either of the parties, on one
or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall thereafter be construed as a
waiver of any subsequent breach- or default of a similar nature, or as a waiver of any such provisions,
rights or privileges hereunder.

 

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17.         Headings.
Section and subsection headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a pan of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof

 

18.         Governing
Law. This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware (but not including the choice
of law rules thereof), and the parties irrevocably consent to the personal
jurisdiction of the state and federal courts in Delaware.

 

19.         Entire
Agreement: Agreement Replaced. This Agreement constitutes the entire
agreement between the parties respecting the employment of Executive, there
being no representations, warranties or commitments except as set forth herein.

 

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

 

21.         Attorney’s
Fees. In the case of a formal dispute hereunder brought in any forum of
competent jurisdiction, the prevailing party shall be entitled to recover from
the non-prevailing party, all reasonable legal fees, and expense and costs
incurred in connection with such dispute, including any appeal therefrom.

 

22.         Furtherance
of Agreement. Executive agrees to execute any documents or take any other
actions reasonably necessary or otherwise requested by Company to effectuate
the intent of all provisions under this Agreement.

 

23.                            Definitions.

 

“Agreement” means this Employment Agreement.

 

“Base Salary” is defined in Section 4(a) above.

 

“Beneficial Owner” means a beneficial owner within
the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended.

 

“Board” means the board of directors of the
Company.

 

“Business” is defined in Section 9 above.

 

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“Cause” means (i) the
commission of a felony or a crime involving moral turpitude or the commission
of any other act or omission involving dishonesty or fraud with respect to the
Company or any of its Subsidiaries or any of their customers or suppliers, (ii) conduct
tending to bring the Company or any of its Subsidiaries into substantial public
disgrace or disrepute, (iii) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (iv) any breach of a
material Section of this Agreement.

 

“Code” means the
Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“Company” means Osiris
Therapeutics, Inc., its subsidiaries, affiliates, and its successors and
assigns.

 

“Date of Termination” means (i) if
the Executive’s employment is terminated by the Executive’s death, the date of
the Executive’s death; (ii) if the Executive’s employment is terminated
because of the Executive’s disability pursuant to Section 7(a)(ii)(A) hereof,
the effective date of Notice of Termination; (iii) if the Executive’s
employment is terminated by the Company for Lack of Performance pursuant to
section 7(a)(ii)(B), or for Cause pursuant with section 7(a)(ii)(C) hereof
or by the Executive for Good Reason pursuant to section 7(a)(iii) hereof,
the date specified in the Notice of Termination; or (iv) if the executive’s
employment is terminated during the Employment Period other than pursuant to
section 7(a), the date on which the notice of Termination is given.

 

“Effective Date” means July 23,
2008.

 

“Employment Period” is defined in Section 2
above.

 

“Executive” means Richard
Hunt.

 

“Extended Term” is defined in Section 2
above.

 

“Good Reason” means (i) the
Company’s failure to perform or observe any of the material terms or provisions
of this Agreement, and the continued failure of the Company to cure such
default within 30 days after written demand for performance has been given to
the Company by the Executive, which demand shall describe specifically the
nature of such 

 

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alleged failure to perform or observe such material terms or
provisions; (ii) a material reduction in the scope of the Executive’s
responsibilities and duties; or (iii) in the absence of a written
agreement between Company and Executive, a material reduction in Executive’s
base pay or incentive compensation.

 

“Initial Acquirer” means any
individual, or entity organized under the laws of any jurisdiction for the
purpose of investing in securities of entities engaged in the Business.

 

“Initial Term” is defined in Section 2
above.

 

“Lack of Performance” means the
failure of Executive to satisfactorily perform the duties and the tasks of the
office held by the Executive as reasonably determined by the Board, and such
failure is not cured within 30 days after the executive receives specific
written notice thereof from the Board.

 

“Noncompete Period” is defined in Section 9(a) above.

 

“Notice of Termination” is defined in Section 7(b) above.

 

“Person” means an
individual, a partnership, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.

 

“Severance Payments” is defined in Section 8(d) and
(e) above.

 

“Severance Period” is defined in Section 8(d) and
(e) above.

 

“Subsidiary” means any
corporation of which the Company owns securities having a majority of the
ordinary voting power in electing the board of directors directly or through
one or more subsidiaries.

 

“Work Product” is defined in Section 6(b) above.

 

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IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have
caused this Agreement to be duly executed on their behalf, as of the day and
year first hereinabove written.

 

	
   

  	
  Osiris
  Therapeutics, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  C. Randal Mills

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:
  C. Randal Mills

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
  

  	
  July 23,
  2008

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The
  Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
      /s/
  Richard W. Hunt

  
	
   

  	
  Richard
  W. Hunt

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
  

  	
  July 23,
  2008

  
				

 

14Exhibit 10.1

 

July 28, 2008

 

Thomas E. Richards

1801 California Street

Denver, CO  80202

 

Dear Tom:

 

Giving people the
opportunity to develop professionally through new challenges is an investment
in our greatest resource – employees. 
Fostering and developing the talent of employees is critical to the
success of the business and to our future. 
With that, I am pleased to offer you a promotion to the position of
Executive Vice President and Chief Operating Officer, continuing to report
directly to me, effective July 28, 2008. I am confident of the value you
will continue to bring to the business.

 

1.               Base Salary: 
Your base salary increases to $700,000 per annum.

 

2.               Annual Bonus Plan: 
You will be eligible to participate in the annual bonus plan for
2008.  Your target bonus will increase to
150% of your annual base pay (based upon your performance rating, if any,
prorated to reflect your promotion date and other changes in accordance with
the terms of the plan and adjusted for Company, business unit and individual
performance).

 

3.               Equity Incentive Plan: You are entitled to participate in
Qwest’s Equity Incentive Plan.  You will
receive an equity award with an approximate value of $2,800,000.  Fifty percent of the equity value will be
awarded in stock options, twenty five percent in restricted stock and twenty
five percent in performance shares. The actual number of stock options will be
determined using a Black Scholes value of $1.25. The actual number of
restricted and performance shares will be determined by the market close price
of Qwest stock on July 28, 2008. 
All will be rounded to the nearest 1000.

 

4.               Executive Perquisite: For 2008, you will receive an additional
executive perquisite benefit of $15,000 (prorated and grossed up for income
tax). Your perquisite check will be paid to you on or before August 8,
2008. Beginning in 2009, you will receive an executive perquisite benefit of
$50,000 (grossed up for income tax).

 

5.               Background Check: 
As a condition of this promotion, you must undergo and pass a background
check at this time. Please complete and return the enclosed Request for
Information and Consent and Disclosure forms within 5 business days of your
receipt of this letter to Jana Venus at 1801 California Street, 23rd Floor, Denver,
CO  80202. You will not be contacted as
to the results of the background check unless there is a problem.

 

Congratulations
on this wonderful opportunity, Tom.  Your
hard work and commitment to delivering the Spirit of Service is genuinely
appreciated.

 

Sincerely,

 

 

Edward A. Mueller

Chairman and Chief
Executive Officer

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