Document:

Exhibit
10.7

 

EMPLOYMENT AGREEMENT

 

                This
EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the first day of June
12, 2006, (the “Effective Date”) by and between Osiris Therapeutics, Inc., a
Delaware corporation (the “Company”), and Earl Fender, (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 June 12, 2006; and

 

WHEREAS, the board of directors of the Company (the
“Board”) has approved and 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 Vice President and General Manager for
Orthopedics during the Employment Period. As such, the Executive shall render
executive policy and other management

 

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services
to the Company of the 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 225,000 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 2006 in the amount of 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 10 unused vacation
days may be carried over for twelve months after the year in which they accrue.

 

(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

 

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are prescribed by law or Company
policy.

 

(f)
Equity. Upon the effective date of the Agreement, the Executive shall be
granted 300,000 options to purchase Company common stock at the current fair value of USD 1.71 per share. 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. 
In any event, all unvested shares will vest immediately upon a “Change
of Control”, of the Company as defined below.

 

(g)
Relocation.  The Company will
reimburse or advance all reasonable and necessary costs and expenses associated
with the relocation of Executive and his family from Massachusetts to the
Baltimore, Maryland area to include: incurred closing costs, real estate
commissions, and packaging, moving, and temporary storage services up to a
total of USD 105,000.  The Company will
take into account the tax consequences of any non-deductible monies, such that
all reimbursements or items of imputed income will be “grossed up” to cover the
state and federal tax liabilities associated with such payments. All
reimbursements for actual expenses shall be made within thirty (30) days of the
presentment of invoices for same or advanced where appropriate.

 

During
the transition period of Executive’s move to Maryland, the Company shall also
provide, for a period of up to twelve (12) months the following temporary
executive housing and travel reimbursements and advances: (i) temporary
executive housing in the Baltimore area; (ii) transportation costs to and from
Baltimore.  Total reimbursement
for this transition period shall not exceed USD 45,000.

 

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

 

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(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 (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).

 

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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

 

(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

 

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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.

 

(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.

  
	
   

  	
   

  	
  2001 Aliceanna St.

  
	
   

  	
   

  	
  Baltimore, MD 21231

  
	
   

  	
   

  	
  ATTN: CEO

  
	
   

  	
   

  	
  Fax:
  410-563-0794

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If
  to the Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Earl
  Fender

  
	
   

  	
   

  	
  121
  Bates Way

  
	
   

  	
   

  	
  Hanover,
  MA 02339

  

 

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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.

 

“Cause” means (i) the commission of a felony or a crime
involving

 

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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.

 

“Change of Control” means if Friedli Corporate
Finance and its affiliates control less than 33% of the Company.

 

“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
June 12, 2006.

 

“Employment Period” is defined in Section 2 above.

 

“Executive” means
Earl Fender

 

“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

 

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Executive,
which demand shall describe specifically the nature of such 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.

 

13

 

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:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  C. Randal Mills

  
	
   

  	
   

  
	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The Executive:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Earl Fender

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
				

 

 

14Exhibit 10.11

 

THIS EXHIBIT HAS BEEN REDACTED
AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH A “*” AND
BRACKETS AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

CONTRACT
MANUFACTURING AGREEMENT

This CONTRACT MANUFACTURING
AGREEMENT (this “Agreement”) is made and entered into this 5th day of
March, 2003 (the “Effective Date”), by and between BOSTON SCIENTIFIC
CORPORATION (“BSC”) a Delaware corporation, and OSIRIS ACQUISITION II,
INC. (“Osiris”), a Delaware corporation (each a “Party,” and
collectively, the “Parties”).

W I T N E S S E T H:

WHEREAS, the Parties are
parties to that certain Investment Agreement of even date herewith (the “Investment
Agreement”), that certain Development Agreement of even date herewith (the “Development
Agreement”), that certain License Agreement of even date herewith (the “License
Agreement”), that certain Loan Agreement of even date herewith and that
certain Investor Rights Agreement of even date herewith (collectively, the “Transaction
Documents”); and

WHEREAS, pursuant to the
transactions contemplated by the Transaction Documents, the Parties agreed to
enter into this Agreement.

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

ARTICLE I

DEFINITIONS

SECTION 1.01               General.  As used herein, the following terms shall
have the following meanings:

“AE” shall mean, with
respect to use of any Product, any adverse event (within the meaning of
applicable FDA regulations, and including, without limitation, any unfavorable
and unintended sign (including, without limitation, an abnormal laboratory
finding), exacerbation of a pre-existing condition, intercurrent illness, drug
interaction, significant worsening of a disease under investigation or
treatment, significant failure of expected pharmacological or biological
action, or symptom or disease temporally associated with the use of such
Product, whether or not considered to be related to such Product), which event
is associated with the use of such Product (i) in clinical investigation; or
(ii) by a patient once such Product has been approved, whether or not such
event is considered to be drug-related.  AE(s)
shall include such events (i) occurring in the course of the use of such
Product in professional practice; (ii) occurring from drug overdose whether
accidental or intentional; (iii) occurring from drug abuse; (iv) occurring from
drag withdrawal; and (v) any significant and consistent failure of expected
pharmacological action.  Notwithstanding
the foregoing, AEs shall include any 

 

 

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experience required to be
reported to a relevant authority in any such country.  For purposes of clarity, the term AE(s) as
used in this Agreement includes SAE(s).

“ASP” shall have the
meaning set forth in Exhibit A.

“Act” means the
United States Food, Drug and Cosmetic Act and similar Laws in foreign
jurisdictions, all as may be amended from time to time.

“Action” means any
claim, lawsuit or other action.

“Affiliate” means any
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with another Person.

“Approvals” means
authorizations granted to a sponsor firm from a Regulatory Authority, including
BLA approvals, to distribute, for either investigational or commercial purposes,
a medical product.

“Back-Up Facility”
shall have the meaning set forth in Section 4.04.

“Bankruptcy Code” has
the meaning set forth in Section 9.13.

“BLA” means a
Biologies License Application filed with the FDA in respect of a Product in
order to manufacture, market, sell or use the Product in the United States.

“BSC Indemnitee”
means BSC, its Affiliates, and each of their respective directors, officers,
employees and agents.

“Business Day” means
any day that is not a Saturday, a Sunday or any other day on which banks are
required or authorized by Law to be closed in The City of New York.

“Change of Control”
shall have the meaning set forth in the License Agreement.

“Commercialize” shall
have the meaning set forth in the License Agreement.

“Confidential Information”
means all nonpublic proprietary information and materials (whether or not
patentable), disclosed by one Party (the “Disclosing Party”) to the
other Party (the “Receiving Party”), irrespective of the manner in which
the Disclosing Party disclosed such information, in furtherance of this
Agreement, including, but not limited to, substances, formulations, techniques,
methodology, equipment, data, reports, correspondence, know-how, manufacturing
documentation and sources of supply, as well as the existence of this
Agreement.

“FDA” means the
United States Food and Drug Administration.

“Final Product”
means, with respect to any Product and country, the version of the relevant
Product that is approved for marketing, distribution or sale in the relevant
country.

 

 

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“Force Majeure” shall
have the meaning set forth in Section 9.15.

“Intellectual Property”
shall have the meaning set forth in the License Agreement.

“JSC” shall have the
meaning set forth in the Development Agreement.

“Law” means any
United States or non-United States federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule, code,
order, requirement or rule of law.

“Licensed Technology”
shall have the meaning set forth in the License Agreement.

“Losses” means any
losses, liabilities, awards, interest, judgments, penalties, expenses
(including, without limitation, reasonable attorneys’ fees and expenses), costs
or damages.

“MSC” means
mesenchymal stem cells as described in Exhibit B.

“MSC Products” shall
have the meaning set forth in the License Agreement.

“Net Sales” shall
mean gross revenues from the sale by BSC or its Affiliates of Final Products to
Third Parties, less (i) trade and/or quantity discounts actually allowed, (ii)
sales, value added or other excise taxes and import duties of a similar nature
paid and invoiced to customers, and (iii) amounts repaid or credited by reason
of purchase chargebacks or rebates.

“Osiris Indemnitee”
means Osiris, its Affiliates, and each of their respective directors, officers,
employees and agents.

“Person” means an individual,
partnership, joint venture, corporation, limited liability company, trust,
unincorporated organization or other entity (including, without limitation, any
“group” within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934).

“Product Forecast”
shall have the meaning set forth in Section 4.01.

“Products” shall have
the meaning set forth in the License Agreement.

“Product Specifications”
shall have the meaning set forth in the Development Agreement.

“Purchase Order” shall
have the meaning set forth in Section 4.02.

“PSURs” means
periodic safety update reports.

“Regulatory Authority”
means any national, supra-national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity.  

 

 

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For purposes of clarity, the
term “Regulatory Authority” as used in this Agreement includes the FDA.

“Regulatory Filings”
means, for any country, the regulatory documents filed with a Regulatory
Authority necessary or helpful for obtaining all Approvals required for the
importation, exportation, promotion, pricing, marketing or sale of the Products
in such country.

“SAE(s)” (Serious
Adverse Event(s)) shall mean (with respect to any Product) reference to any
adverse experience (within the meaning of the then current versions of ICH E6;
Good Clinical Practice: Consolidated guideline, CPMP/ICH/135/95 and ICH E2A:
Clinical Safety Data Management: Definitions and Standards for Expedited
Reporting CPMP/ICH/377/95), occurring during clinical trials of the drug or
thereafter, in connection with the administration of such Product to a patient
at any dose that results in any of the following outcomes: death, a
life-threatening adverse drug experience, inpatient hospitalization or
prolongation of existing hospitalization, a persistent or significant
disability/incapacity, or a congenital anomaly/birth defect.  Important medical events that may not result
in death, be life-threatening or require hospitalization may be considered an
adverse experience for purposes of the foregoing sentence when, based upon
appropriate medical judgment, they may jeopardize the’ patient or subject and
may require medical or surgical intervention to prevent one of the outcomes
listed in this definition.

“Shared Damages”
shall have the meaning set forth in Section 6.06.

“Subsequent Products”
shall have the meaning set forth in the License Agreement.

“Term” shall have the
meaning set forth in Section 8.01.

“Third Party” means a
Person who is not a Party or an Affiliate of a Party.

“Third Party Manufacturer”
shall have the meaning set forth in Section 4.04.

“TPM” shall have the
meaning set forth in Section 4.04.

“Transfer Price”
means the price BSC pays Osiris for the Final Products as set forth in Exhibit
A.

ARTICLE II

GRANT OF RIGHTS

SECTION 2.01               License.  Subject to the terms and conditions of this
Agreement, BSC hereby grants Osiris, for the sole purpose of performing its
duties and fulfilling its obligations under this Agreement, a worldwide,
exclusive (subject to BSC retained rights described below) license under the
Licensed Technology to (i) make, have made and use MSC Products and (ii) sell
MSC Products to BSC.  The foregoing
license grant is nonsublicensable; provided, however, Osiris may
sublicense to Osiris’ Affiliates and Third Party contract manufacturers solely
for the 

 

 

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purpose of fulfilling its obligations under this
Agreement.  The exclusivity of the
foregoing license is subject in all respects to BSC’s retained right to (a)
make, have made, use and sell MSC Products subject to the terms and conditions
of this Agreement and (b) grant sublicenses to BSC’s Affiliates and Third Party
contract manufacturers to make, have made, use and sell MSC Products subject to
the terms and conditions of this Agreement. 
For the avoidance of doubt, Osiris may not manufacture or sell MSC
Products except as expressly set forth in this Agreement.

SECTION 2.02               Payment Currency.  Unless otherwise specified in this Agreement,
all references to money payments, currency, monetary values and dollars or U.S.
dollars mean United States dollars, and all payments hereunder shall be made in
United States dollars.

ARTICLE III

REGULATORY

SECTION 3.01               Product Incidents.  Each Party shall promptly inform the other of
any material safety or health incidents related to any Product, Final Product,
or MSC, including the use, manufacture, labeling or packaging of any of the
foregoing.  During the Term, each Party
shall promptly inform the other upon becoming aware of any unusual or unexpected
reactions or events, malfunctions, safety or efficacy of or attributable to any
Product, Final Product or MSC and/or any Regulatory Authority action related
thereto.

SECTION 3.02               Reporting Obligations.

(a)           Exchange of Drug Safety Information.  Each Party shall promptly inform the other
Party of any AEs of which such first Party, or any of its Affiliates becomes
aware.  BSC shall record, investigate,
summarize and review any AEs.  Each Party
shall, and shall require that its Affiliates, (i) adhere to all requirements of
applicable Laws which relate to the reporting and investigation of AEs, and
(ii) keep the other Party informed of such experiences.

(b)           Reporting of Adverse Events and Serious Adverse Events.  In order that each Party may be fully
informed, BSC shall notify Osiris in accordance with this section of all AEs anywhere
in the world in accordance with the timelines established by BSC from time to
time (and reasonably acceptable to Osiris) and, together with such
notification, shall provide a summary of each such AE.  Notwithstanding the foregoing, BSC shall
report all SAEs to Osiris within such shorter time frame as may be necessary as
to allow Osiris sufficient time to evaluate, process and comply with worldwide
regulatory reporting relating to each Product as required by Law.

(c)           PSURs and Safety Requests from Health Authorities.  Each Party shall use the ICH-E2C format as
standard for the compilation of PSURs for which it is responsible under Law, or
as determined by the JSC in accordance with Law.  A Party preparing a PSUR for which it is
responsible pursuant to the foregoing sentence shall provide the other Party
with copies of any such PSUR at the time of its submission or such earlier time
as the JSC may agree.  During the
preparation of the PSUR, if significant safety issues arise, the JSC shall
discuss and address such issues.  The
agreed reporting intervals for PSURs shall be every six (6) months for the
first 

 

 

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two (2) years following the
first BLA approval, and thereafter at least annually, unless applicable Laws
governing PSURs require more frequent or different reporting and unless
otherwise agreed by the JSC.

(d)           Exchange of Drug Safety Requests.  The Parties shall immediately provide each other
with copies of all drug safety requests from all governmental and other
Regulatory Authorities.  Proposed answers
affecting a Product will be exchanged between the Parties before submission and
the Parties shall cooperate with respect to such answers; provided, however,
that Osiris shall have ultimate decision-making authority with respect to
answers relating to a Product, unless Law require otherwise.  The Parties shall exchange decisions received
from applicable Regulatory Authorities reasonably promptly after a Party
receives notice of such decision.

(e)           Regulatory Actions. 
Each Party shall advise the other Party of any regulatory action of
which it is aware, which would affect any Product in any country.

(f)            Safety Data Base; Medical Inquiries.  BSC shall be responsible for:

(i)                                     the creation of
a master safety database which shall include any AE relating to any Product
occurring anywhere; and

(ii)                                  responding to
all medical inquiries.

BSC shall carry out the responsibility
referred to it by the JSC in connection with such safety data-base or medical
inquiries.  BSC shall give Osiris access
to such safety database and shall keep Osiris informed of such medical
inquiries.  Osiris shall deliver copies
of any and all reports and responses submitted by or on behalf of Osiris to any
Regulatory Authority in respect of any Product, to BSC.

(g)           Events Affecting Integrity or Reputation.  The Parties shall notify each other immediately
of any circumstances of which they are aware which arise whereby the integrity
and reputation of any Product or of the Parties are threatened by the unlawful
activity of any Third Party in relation to any Product, which circumstances
shall include, by way of illustration, deliberate tampering with or
contamination of any Product by any Third Party as a means of extorting payment
from the Parties or another Third Party. 
In any such circumstances, the Parties shall, to a reasonable extent,
cooperate fully to limit any damage to the Parties and/or to any Product.

(h)           Governmental Inspection.  Each Party shall advise the other of any
governmental communication, inspection or report of which it is aware and which
affects the Product or Law relating to the Product.  Any response to a regulatory notice relating
to the Product or such Law shall be prepared jointly by the Parties, with the
lead role taken by the Party to whom such notice is addressed (or, if addressed
to both Parties, with the lead role taken by Osiris); provided, however, that
each Party shall be entitled to take all such actions with respect to such
notice as are required of it by Law.  Both
Parties shall have the right to be present during any such inspection.

 

 

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(i)            Summary of Safety Information.  The JSC shall coordinate the preparation of
the investigators brochure and summary of safety information.  During the preparation of the documents, if
significant safety issues arise, the JSC shall discuss the safety issues
reasonably promptly.

SECTION 3.03               Technical Support Regarding
Adverse Events and Product Complaints.

(a)           Product Complaints.  Each Party shall notify the other Party of any
complaint  received or which such Party
becomes aware of regarding the Product if such complaint is reasonably likely
to have any regulatory or legal impact.

(b)           Retention of Product Samples.  Osiris shall retain samples of each
production lot of Product in accordance with applicable Law.

(c)           Quality Assurance Investigations.  Each Party shall take the actions in relation
to AEs that the JSC determines shall be undertaken by such Party.

ARTICLE IV

MANUFACTURE AND SUPPLY

SECTION 4.01               Supply Forecasts.  Six months prior to the initial launch of a
Product, BSC shall submit to Osiris a non-binding, 12-month rolling forecast
representing the total quantity of Product BSC expects to order on a monthly
basis beginning on the initial launch of the Product (“Product Forecast”).  Starting three months prior to planned
launch, this Product Forecast will be updated monthly.  For example, if launch is expected on January
1, 2008, BSC, on July 1, 2007, will submit a Product Forecast covering the
period January 1, 2008 through December 31,2008.  On October 1, 2007, BSC will submit the
revised Product Forecast for the period January 1, 2008 through December 31,
2008.  On November 1, 2007, BSC will
submit the 12-month forecast for the period February 1, 2008 through January
31, 2009 and so on.  Three months prior
to a Purchase Order for any given month, BSC shall provide a final forecast for
that month.  The Purchase Order for that
month may be no more than one hundred twenty percent (120%) and no less than
fifty percent (50%) of the final forecast for that month.  For example, using the dates above, on
October 1, 2007, BSC would submit a final forecast for January of 2008.  If that final forecast is ten units, the
December 1,2007 Purchase Order would be for, between five and twelve units as
BSC would be obligated to purchase at least five units and Osiris would be
obligated to deliver no more than twelve units. 
On November 1, 2007, the final forecast for February 2008 would be
submitted and so on.

SECTION 4.02               Orders.  Together with each monthly Product Forecast,
beginning with the Product Forecast submitted the month prior to the planned
Product launch date, BSC shall deliver to Osiris, in writing, a binding
purchase order (“Purchase Order”) for Products.  This Purchase Order shall be for an amount of
Product in accordance with the terms set forth in Section 4.01.  Each Purchase Order shall specify the Product
ordered, the quantities of Product ordered, the applicable legal label text and
packaging, and the requested time of delivery, manner of shipment, and any
other necessary shipping details.

 

 

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SECTION 4.03               Final Product Specifications:
Packaging and Labeling.  All Final
Products delivered by Osiris hereunder shall be in full compliance with Product
Specifications and shall be ready for end-user sale, including all packaging,
labeling, and instructions-for-use as approved by BSC.  All Final Products shall be labeled
(including bar coding/UPN numbers) in accordance with the procedures specified
from time to time by BSC and BSC shall have final approval over all packaging
and labeling for Final Products.

SECTION 4.04               Obligation to Supply.

(a)           Osiris shall make, have made, manufacture, sell and
deliver Final Products to BSC in accordance with this Agreement and the related
Purchase Orders on the date specified for delivery in the Purchase Order (which
date shall not be earlier than 30 days after the date of the Purchase Order)
or, if no such date is specified, within 30 days of receipt by Osiris of BSC’s Purchase
Order.

(b)           If Osiris fails to supply at least 80% of BSC’s monthly
Purchase Orders with respect to any Final Products for four (4) consecutive
months, then Osiris shall, at no additional cost to BSC, transfer manufacturing
to another Person with the capacity to meet BSC’s needs (“Third Party
Manufacturer”), such Third Party Manufacturer to be selected by Osiris and approved
by BSC, where approval by BSC may not be unreasonably delayed or withheld; provided,
however, Osiris remains obligated under and liable to BSC under all
provisions of this Agreement.  BSC shall
continue to pay Transfer Prices to Osiris for Final Products manufactured by
Third Party Manufacturer and delivered to BSC, regardless of whether such Third
Party Manufacturer charges Osiris more or less than Transfer Prices for the
Final Products.  Any agreement with such
Third Party Manufacturer shall be between Osiris and such Third Party Manufacturer
and BSC shall not be a party to any such agreement nor shall BSC be liable for
any disputes between Osiris and the Third Party Manufacturer.  Osiris further agrees to indemnify, defend
and hold BSC harmless from any and all suits, claims, actions, demands,
liabilities, interest, awards, judgments, penalties, expenses, costs, damages
or losses (including, without limitation, reasonable attorneys’ fees) actually
suffered or incurred by BSC with respect to any dispute with Third Party
Manufacturer.  The provisions of Section
4.10 shall apply to any Third Party Manufacturer selected pursuant to this
paragraph and in accordance therewith, BSC shall have the right, upon
reasonable request, to conduct an inspection of such Third Party Manufacturer’s
manufacturing site to ensure compliance with the provisions of Section 4.10.

(c)           In the event Osiris fails to supply at least 90% of BSC’s
Purchase Orders for two (2) consecutive months, the prices paid by BSC for
Final Products delivered hereunder determined in accordance with Section 4.05
hereof shall be reduced by 10% of such prices until such failure has been cured
for at least two (2) consecutive months. 
The amount of the price reduction provided under this paragraph shall be
in the form of Product credit as opposed to an actual reduction of the Transfer
Price to be paid to Osiris, whereby BSC may apply the credit to purchases of
Final Products.

(d)           Upon BSC’s request, such request to occur no earlier than
the filing of the first BLA, Osiris agrees to work with BSC to establish a
facility for purposes of manufacturing 

 

 

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Products (“Back-Up
Facility”).  Such Back-Up Facility
may be operated by BSC or another Person designated by BSC (“TPM”), Upon
BSC’s request and at BSC’s expense, (i) Osiris shall provide copies of all
Licensed Technology necessary to manufacture the Products to BSC (to the extent
copies were not already provided to BSC pursuant to the License Agreement) or
TPM, and (ii) Osiris shall provide reasonable assistance and training to assist
BSC or TPM in coming online to manufacture the Products.  Any Products manufactured pursuant to this
paragraph (d) may only be used for purposes of fulfilling Purchase Orders and
Commercializing Products.  BSC may
acquire Products for the purpose of fulfilling Purchase Orders and
Commercializing Products under this paragraph (d) only if and when Osiris is
unable to fulfill a Purchase Order.  In
the event Osiris is unable to fulfill a Purchase Order, BSC may acquire Product
for the purpose of fulfilling such Purchase Order and Commercialize such
Product pursuant to this paragraph (d); provided, however, BSC
shall pay Osiris Transfer Prices for each Product acquired and/or
Commercialized by BSC under this paragraph (d) where such Product is in excess
of the amount specified in such Purchase Order.

SECTION 4.05               Product Pricing and Purchases.  Osiris shall invoice BSC for Final Products
delivered in accordance with this Agreement and the Purchase Orders therefor at
the Transfer Prices set forth in Exhibit A attached hereto.  BSC shall pay the amount due and owing under
the invoices within thirty (30) days after the date of Osiris’ invoice,
provided that the invoice date is no earlier than the date shipment is received.  In the event of a dispute between the invoice
amount and the amount paid by BSC, the Parties shall work together in good
faith to resolve the dispute as soon as practicable.  BSC may, at its discretion, set off and
deduct any post-commercialization amounts, including Transfer Prices, due to
Osiris under any invoice hereunder against and from any amounts payable by Osiris
to BSC under Section 2.3 of the Loan Agreement.

SECTION 4.06               Osiris Audit Rights.  BSC shall maintain accurate records and books
of account sufficient to substantiate the calculation of the ASP for Final
Products, including records of the quantities of Final Products sold.  Upon reasonable notice to BSC, Osiris shall
have the right to conduct an audit, not more than once per calendar year,
through an independent accounting firm reasonably acceptable to BSC, of the
calculation of the ASP for Final Products, and to examine the records and books
of account of BSC in connection therewith. 
If such audit determines that payments are due to Osiris, BSC shall pay
to Osiris any such additional amounts within thirty (30) days of the date on
which such auditor’s written report is delivered to BSC and Osiris.  Osiris shall bear the full cost and expense of
such audit, unless a discrepancy in excess of five percent (5%) in favor of
Osiris is discovered, in which event BSC shall bear the full cost and expense/
of such audit.

SECTION 4.07               Shipping and Inventory.  Osiris shall ship Final Products ordered by
BSC hereunder in accordance with the Purchase Orders therefor.  Osiris and BSC shall work together to develop
(i) a shipping plan regarding the shipping of Products and (ii) an inventory
plan regarding the level of Product inventory that BSC and Osiris should
maintain, such plans to be developed prior to the filing of the first BLA.  With respect to shipping costs, the Parties
agree that the shipping plan shall address the allocation of cost of shipping
the Products; provided, however, the Parties agree that (i) in
the event the customer is billed for shipping costs, BSC 

 

 

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shall be responsible for such shipping costs and
such shipping costs shall be excluded from the calculation of Transfer Price;
and (ii) in the event that the customer is not billed for shipping costs, then
BSC and Osiris shall both bear such shipping costs and the allocation of such
costs between the Parties shall be the same as the ASP percentage allocations
set forth in Exhibit A with respect to the calculation of Transfer Prices.  Risk of loss or damage shall pass to BSC only
upon the arrival of the Final Products at BSC’s designated destination point.

SECTION 4.08               Acceptance.

(a)           Each shipment of Final Products from Osiris to BSC shall
contain such quality control certificates reasonably requested by BSC
certifying that the Final Products are in conformity with the Product
Specifications.  Notwithstanding any
prior inspection or payments, all Final Products will be subject to final
inspection and acceptance at BSC’s designated destination point within thirty
(30) days after delivery.  BSC shall
notify Osiris within thirty (30) days after delivery of any apparent defective
material or workmanship or non-conformity of any Final Product to the Product
Specifications or Purchase Order.  If BSC
fails to so notify Osiris within the period, BSC will be deemed to have
accepted the Final Product; provided, however, the warranties set
forth in Article VI shall survive such acceptance.

(b)           Without prejudice to any other right or remedy of BSC, in
case any item is defective in material or workmanship, or otherwise not in
conformity with the Product Specifications or Purchase Order at the time of
delivery by or on behalf of Osiris to BSC’s designated destination point, BSC
will have the right to reject it.  Any
item that has been rejected must be replaced by and at the expense of Osiris
promptly after notice.  BSC will not be
required to pay for any rejected item, or its shipping costs or any other costs
related thereto.  BSC will return all
rejected Final Products to Osiris at Osiris’ expense.

SECTION 4.09               Compliance with Laws.  Osiris shall comply with all applicable Laws
pertaining to the testing, manufacture, labeling or packaging of the Final
Products, and in any other manner pertaining to performance by Osiris of its
obligations under this Agreement, including the maintenance of ongoing quality
assurance and testing procedures to comply with applicable, regulatory
requirements.  BSC shall comply with all
applicable Laws pertaining to the import, export, distribution, sales and
marketing of the Final Products and Osiris shall cooperate with and provide BSC
reasonable assistance with such compliance.

SECTION 4.10               Manufacturing Requirements.  All Final Products shall be manufactured at a
facility reasonably acceptable to BSC in accordance with (i) relevant Laws,
(ii) the Product Specifications, (iii) applicable regulations relating to Good
Manufacturing Practices (“GMP”) and similar requirements required by the
Act, (iv) batch records and (v) other pertinent rules and regulations of the
FDA and any Regulatory Authorities in other applicable jurisdictions.  Upon the reasonable request of BSC, Osiris
shall provide BSC with written evidence of compliance with the criteria set
forth in the preceding sentence.  BSC
shall, upon reasonable request, be entitled to conduct an Inspection of any
such manufacture site.

SECTION 4.11               Regulatory Audit.  Osiris shall permit authorized
representatives of any Regulatory Authority to inspect Osiris’ plant and
production facilities related to or used in 

 

 

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connection with the manufacture of the Final
Products sold to BSC under this Agreement and will promptly notify BSC when
Osiris receives notice of any such inspection. 
Osiris shall advise BSC of the findings of any regulatory inspection and
will take the necessary steps to promptly correct any compliance deficiencies
found by the Regulatory Authority relating to the manufacture of Final Products
sold to BSC pursuant to this Agreement.  Osiris
further agrees to use best efforts to provide BSC such document or conduct such
analyses as BSC may reasonably request in connection with any regulatory
submission or audit concerning such products.

SECTION 4.12               Back-Up Facility.  In the event Final Products are manufactured
at a Back-Up Facility pursuant to the terms of Section 4.04(d).

(a)           Upon the reasonable request of Osiris, BSC shall provide
Osiris with written evidence of compliance with the criteria set forth in
Section 4.10.  Osiris shall, upon
reasonable request, be entitled to conduct an inspection of any such
manufacture site.

(b)           BSC shall permit authorized representatives of any
Regulatory Authority to inspect the Back-Up Facility and will promptly notify
Osiris when BSC receives notice of any such inspection.  BSC shall advise Osiris of the findings of
any regulatory inspection and will take the necessary steps to promptly correct
any compliance deficiencies found by the Regulatory Authority relating to the
manufacture of Final Products.  BSC
further agrees to use best efforts to provide Osiris such document or conduct
such analyses as Osiris may reasonably request in connection with any
regulatory submission or audit concerning such products.

SECTION 4.13               Recalls.

(a)           If, in the judgment of Osiris or BSC, any product defect
or any government action requires a recall of, or the issuance of an advisory
letter regarding any Final Product, either Party may undertake such recall or
issue such advisory letter after consultation with the other Party.  Each Party shall notify the other Party in a
timely manner prior to making any recall or issuing any advisory letter.  The Parties shall endeavor to reach an
agreement prior to making any recall or issuing any advisory letter regarding
the manner, text and timing of any publicity to be given such matters in time
to comply with any applicable legal or regulatory requirements, but such agreement
will not be a precondition to any action that either Party deems necessary to
protect users of the Final Products or to comply with any applicable
governmental orders or mandates.  The
Parties agree to provide reasonable assistance to one another in the event of
any recall or issuance of any advisory letter. 
Notwithstanding anything in this Agreement to the contrary, BSC shall
have the right to manage any recall of Final Products.

(b)           In the event of the issuance of an advisory letter, the
costs of issuing such advisory letter shall be borne by the Party responsible
for the defect causing the need to issue the advisory letter.

(c)           In the event of a recall of any Final Product, Osiris
shall correct any deficiency relating to its manufacturing, packaging, testing,
storing, handling or labeling of such Final Product.  If the reason for the recall is due to a
defect that is the fault of Osiris, (i) Osiris shall, at BSC’s option, either,
at its cost replace each unit of the product recalled (including units held in 

 

 

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inventory by BSC or its
customers) with a corrected product within a reasonable period of time, or
refund the purchase price therefor; and (ii) Osiris shall reimburse BSC for all
reasonable costs and expenses (including shipping, quality control testing,
notification and restocking costs) incurred by BSC as a result of such recall.  If the reason for the recall is due to a
defect that is the fault of BSC or TPM, BSC shall reimburse Osiris for all
reasonable costs and expenses (including shipping, quality control testing, notification
and restocking costs) incurred by Osiris as a result of such recall.  Notwithstanding the foregoing, if the reason
for the recall is due to a design defect, then the Parties will share equally
the costs and expenses (including shipping, quality control testing,
notification and restocking costs) incurred by both Parties as a result of such
recall

SECTION 4.14               Exclusivity.  BSC shall not manufacture MSCs or purchase or
otherwise acquire MSCs from any Person other than Osiris, except as expressly provided
in this Agreement or Section 2.08(b) of the Development Agreement, without the
prior written consent of Osiris.

ARTICLE V

INTELLECTUAL PROPERTY OWNERSHIP

SECTION 5.01               Pre-Existing Rights.  Each Party acknowledges that any and all
Intellectual Property of the other Party is and shall continue to be owned by
such other Party, subject only to the licenses granted under this Agreement,
the License Agreement and the Development Agreement.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

SECTION 6.01               Mutual Representations.  Each Party hereby represents and warrants to the
other Party as follows:

(a)           The execution, delivery and performance of this Agreement
by such Party have been duly authorized by all necessary action on the part of
such Party.

(b)           This Agreement has been duly executed and delivered by
such Party and, assuming due authorization, execution and delivery by the other
Party, constitutes a legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, subject to (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights and remedies
generally, and (ii) the effect of general equitable principles, regardless of
whether asserted in a proceeding in equity or at law.

(c)           Such Party’s execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) violate, conflict with or result in the breach of any
provision of the certificate of incorporation or by-laws (or similar
organizational documents) of such Party, (ii) conflict with or violate any Law
or governmental order applicable to such Party or its assets, properties or
businesses, or (iii) conflict 

 

 

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with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any encumbrance on
any of its outstanding shares of common stock or preferred stock or any of the
assets or properties of such Party pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which it is a party or by which any of such Party’s
shares of common stock or preferred stock or any of the Party’s assets or
properties is bound or affected.

(d)           It is not a party to any litigation relating to, or that
could reasonably be expected to affect, its ability to perform its obligations
under this Agreement.

SECTION 6.02               Osiris Warranty.  Osiris hereby represents and warrants to BSC that
at the time of delivery of Products by Osiris to BSC’s designated destination
point, all Products supplied by Osiris hereunder shall (i) conform to the
appropriate Product Specifications, (ii) comply with any terms and conditions
set forth in the applicable Purchase Order, provided  that such
terms and conditions are not inconsistent with the terms and conditions of this
Agreement and (iii) be free and clear of all liens and encumbrances.

SECTION 6.03               DISCLAIMER.  EXCEPT AS EXPLICITLY PROVIDED IN THIS ARTICLE,
NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS,
IMPLIED, OR STATUTORY, AND THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES.

SECTION 6.04               Osiris Indemnity.  Osiris hereby agrees to indemnify and hold
harmless each BSC Indemnitee from and against any and all Losses incurred by
it, her or him arising from any Action made, brought or threatened against any
of the BSC Indemnitees by a Third Party as a result of (a) any negligent or
willful act or omission of Osiris in relation to its, her or his obligations
under this Agreement or (b) the breach of any representation or warranty,
covenant or agreement by Osiris contained in this Agreement.

SECTION 6.05               BSC Indemnity.  BSC agrees to indemnify, defend and hold
harmless each Osiris Indemnitee from and against any and all Losses incurred by
it, her or him arising from any Action made, brought or threatened against any
of the Osiris Indemnitees by a Third Party as a result of (a) any negligent or
willful act or omission of BSC in relation to its, her or his obligations under
this Agreement, (b) the breach of any representation or warranty, covenant or
agreement by BSC contained in this Agreement, or (c) a Product’s nonconformance
to Product Specifications with respect to Products manufactured by BSC or TPM
pursuant to Section 4.04(d).

SECTION 6.06               Shared Damages.  The Parties agree that Osiris shall bear
fifty percent (50%) and BSC shall bear fifty percent (50%) of all Losses
incurred by or arising from an Action made brought or threatened against any of
the Osiris Indemnitees or any of the BSC Indemnitees by a Third Party as a
result of any product liability claim related to a Product not otherwise
covered by Section 6.04 or Section 6.05 (collectively “Shared Damages”).  Osiris agrees to indemnify and hold harmless
each BSC Indemnitee from and against fifty percent (50%) of all 

 

 

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Shared Damages. 
BSC agrees to indemnify and hold harmless each Osiris Indemnitee from
and against fifty percent (50%) of all Shared Damages.

SECTION 6.07               Special Damages.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR
RELATED TO THIS AGREEMENT.

SECTION 6.08               Insurance.  Each Party shall maintain comprehensive
general liability insurance, including products liability, with a minimum
liability coverage limit of two million dollars ($2,000,000) per occurrence.

ARTICLE VII

CONFIDENTIALITY

SECTION 7.01               Confidentiality.  During the Term of this Agreement and for the
period of three (3) years thereafter, the Receiving Party shall maintain
Confidential Information in confidence, and shall not disclose, divulge or
otherwise communicate such Confidential Information to others, or use it for
any purpose, except pursuant to, and in order to carry out, the terms and
objectives of this Agreement.  The
Receiving Party hereby shall exercise every reasonable precaution to prevent
and restrain the unauthorized disclosure of such Confidential Information by
any of its directors, officers, employees, consultants, subcontractors, or
agents.  Upon termination of this
Agreement, each Party hereby shall return to the other Party, upon demand, all
Confidential Information in its possession or, upon demand, to destroy such
Confidential Information and provide a certificate to the other Party of such
destruction signed by an officer of the destroying Party.

SECTION 7.02               Release from Restrictions.  The provisions of Section 7.01 shall not
apply to any Confidential Information disclosed hereunder that:

(a)           is lawfully disclosed to the Receiving Party by an
independent, unaffiliated third Party rightfully in possession of the
Confidential Information and under no confidentiality or fiduciary obligation
not to make disclosure;

(b)           becomes published or generally known to the public through
no fault or omission on the part of the Receiving Party;

(c)           is developed independently by the Receiving Party without
access to the Confidential Information of the Disclosing Party;

(d)           is legally required to be disclosed to the FDA; provided,
however, the Receiving Party shall continue to treat such Confidential
Information as confidential pursuant to Section 7.01 unless and until such
Confidential Information becomes published or generally known to the public
through no fault or omission on the part of the Receiving Party; or

(e)           a Party is legally compelled to disclose; provided,
however, that the Receiving Party shall provide prompt written notice of
such requirement to the 

 

 

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Disclosing Party so that the
Disclosing Party may seek a protective order or other remedy or waive
compliance with Section 7.01; and provided  further that in the
event that such protective order or other remedy is not obtained or the
Disclosing Party waives compliance with Section 7.01, the Receiving Party shall
be permitted to furnish only that portion of such Confidential Information that
is legally required to be provided and the Receiving Party shall exercise its
reasonable best efforts to obtain assurances that confidential treatment shall
be accorded such information.

SECTION 7.03               Public Announcements and
Publications.  Except as required by
Law or by the requirements of any securities exchange on which the securities
of a Party hereto are listed, no Party to this Agreement shall make, or cause
to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without the prior written consent of the other Party, and the
Parties shall cooperate as to the timing and contents of any such press release
or public announcement.

ARTICLE VIII

TERM AND TERMINATION

SECTION 8.01               Expiration.  The rights and obligation of the Parties
under this Agreement for each Final Product shall remain in full force and
effect until the expiration or termination (with no survival) of all licenses
(whether exclusive or non-exclusive) granted to BSC under Article II of the
License Agreement (the “Term”), unless terminated earlier in accordance
with this Article VIII.

SECTION 8.02               Mutual Agreement.  This Agreement may be terminated at any time upon
mutual written agreement of the Parties.

SECTION 8.03               Termination for Cause.  This Agreement may be terminated by either
Party, if the other Party shall be in material breach of any provision
contained in this Agreement and any such breach shall not have been remedied
within forty-five (45) Business Days after receipt of written notice from any
other Party specifying (i) such breach and (ii) intention to terminate if such
breach is not cured within forty-five (45) Business Days.

SECTION 8.04               Insolvency of Other Party.  This Agreement may be terminated by a Party
if the other Party should commence any case, proceeding or action (i) under any
existing or future Law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it as a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding up, liquidation, dissolution, composition or other relief with respect
to it or its debts or (ii) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part
of its assets; or, there shall be commenced against the other Party any such
case, proceeding or other action which results in the entry of an order for
relief or any such adjudication or appointment remains undismissed,
undischarged or unbonded for a period of thirty (30) days.

 

 

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SECTION 8.05               Termination of Development
Agreement.  This Agreement may be
terminated by Osiris in the event of a termination of the Development
Agreement, in accordance with the terms of the Development Agreement, because
of a material breach by BSC of the Development Agreement prior to the first
Approval by the FDA of a Product.

SECTION 8.06               Automatic Termination.  This Agreement shall automatically terminate
upon the termination of the Development Agreement by BSC pursuant to Section
7.03 thereof (Termination of Agreement Prior to FDA Approval).

SECTION 8.07               Effect of Termination.

(a)           In the event of termination of this Agreement pursuant to
Section 8.02, the effect of such termination will be as agreed to in writing by
the Parties.

(b)           In the event of termination of this Agreement by Osiris
pursuant to Section 8.04, Section 8.05 or Section 8.06, Article II shall
survive termination.

(c)           In the event of termination of this Agreement by BSC
pursuant to (a) Section 8.03 where (i) the applicable breach of this Agreement
by Osiris was a breach of an obligation of Osiris other than an obligation set
forth in Article IV, (ii) such applicable breach was not a breach of any
representation or warranty of Osiris as set forth in Article VI and (iii)
Osiris is able to manufacture and supply Products in accordance with the terms
set forth in Articles IV and VI or (b) Section 8.04 and Osiris is able to
manufacture and supply Products in accordance with the terms set forth in
Articles IV and VI, then notwithstanding anything in this Agreement to the contrary,
Article I, Article II, Article III, Article IV, Article VI and Article IX shall
survive termination of this Agreement; provided, however, in the
event Osiris is unable to manufacture and supply Products in accordance with
the terms set forth in Articles IV and VI, BSC may terminate the entire
Agreement pursuant to Section 8.03.

(d)           In the event of termination of this Agreement by Osiris
pursuant to Section 8.03, Article I, Article II, Article III, Article IV,
Article VI and Article IX shall survive termination of this Agreement; provided,
further, in the event Osiris is unable to manufacture and supply Products
in accordance with the terms set forth in Articles IV and VI, BSC may terminate
the entire Agreement pursuant to Section 8.03.

(e)           Notwithstanding subsections (c) and (d) above, at the time
that the License Agreement would have expired on a country by country basis
pursuant to the terms of Section 7.01 therein (Expiration), those Sections and
Articles referenced in subsection (c) or (d) above, as the case may be, which
survived termination and which are not referenced in subsection (f) below
shall be deemed to have expired in such country pursuant to Section 8.01 as of
such time.

(f)            Survival.  In
addition to any clause which by its express terms survives termination, the
respective rights and obligations of the parties under the provisions of
Articles V (Intellectual Property Ownership), VII (Confidentiality), VIII (Term
and Termination), and Sections 6.04, 6.05, 6.06, 6.07, 9.01 and 9.09, and the
rights to any amounts owed by one Party 

 

 

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COMMISSION.

 

 

to the other prior to
termination or expiration, shall also survive any termination of this
Agreement.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01               Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by an internationally recognized overnight courier service, by
telecopy or registered or certified mail (postage prepaid, return receipt
requested) to the respective Parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.01):

(a)           if to Osiris:

Osiris Acquisition II, Inc.

2001 Aliceanna Street

Baltimore, Maryland  21231-3043

Attention: Chief Executive Officer

Facsimile No: (410) 522-6999

 

 

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with
a copy to:

Wilmer,
Cutler & Pickering

2445 M Street, NW

Washington, D.C.  20037

Attention: Michael R. Klein, Esq.

Facsimile No: (202) 663-6000

(b)           if to BSC:

Boston Scientific Corporation

One Boston Scientific Place

Natick, MA  01760-1537

Telecopy: (508) 650 8956

Attention: Lawrence C. Best, Senior Vice President and CFO

with a copy to:

Boston Scientific Corporation

One Boston Scientific Place

Natick, MA  01760-1537

Telecopy:  (508) 650 8956

Attention: General Counsel

SECTION 9.02               Headings.  The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of the Agreement.

SECTION 9.03               Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner
in order that the transactions contemplated by this Agreement are consummated
as originally contemplated to the greatest extent possible.

SECTION 9.04               Entire Agreement.  The Transaction Documents constitute the
entire agreement of the Parties with respect to the subject matter thereof and
supersede all prior agreements and undertakings, both written and oral, among
the Parties with respect to the subject matter thereof.

SECTION 9.05               Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.  Neither Party may
assign this Agreement without the prior written consent of the other Party; provided,

 

 

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however that a Party may assign to
an Affiliate its rights and obligations under this Agreement without the
approval of the other Party.  No
assignment by either Party permitted hereunder shall relieve the applicable
Party of its then-existing obligations under this Agreement.

SECTION 9.06               No Third Party Beneficiaries.  This Agreement shall be binding upon and
inure solely to the benefit of the Parties and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever.

SECTION 9.07               Change of Control.  In the event of a Change of Control of Osiris
or BSC, this Agreement and all rights and obligations of each Party shall
survive such Change of Control unaffected.

SECTION 9.08               Amendment.  This Agreement may not be amended or modified
except by an instrument in writing signed by authorized representatives of
Osiris and BSC.

SECTION 9.09               Governing Law and Venue.  This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware.  The Parties unconditionally and irrevocably
agree and consent to the exclusive jurisdiction of the courts located in the
state of Delaware and waive any objection with respect thereto, for the purpose
of any action, suit or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby, and further agree not to commence any
such action, suit or proceeding except in any such court.

SECTION 9.10               Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different Parties in separate counterparts, each of which when executed shall
be deemed to be an original, but all of which taken together shall constitute
one and the same agreement.  Delivery of
an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 9.11               No Waiver.  The failure of either Party to enforce at any
time for any period the provisions of or any rights deriving from this
Agreement shall not be construed to be a waiver of such provisions or rights or
the right of such Party thereafter to enforce such provisions.

SECTION 9.12               Independent Contractor.  In performing under this Agreement, each
Party shall be acting as an independent contractor and shall not be considered
or deemed to be an agent, employee, joint venturer, or partner of the other
Party.  Each Party shall at all times
maintain complete control over its personnel and operations.  Neither Party shall have, or shall represent
that it has any power, right or authority to bind the other Party to any
obligation or liability, or to assume or create any obligation or liability on
behalf of the other Party.

SECTION 9.13               Statement of Intent With
Respect to Bankruptcy.  The Parties
intend that all rights and licenses granted under this Agreement with respect
to Licensed Technology are, and shall otherwise be deemed to be, for purposes
of Section 365(n) of the United States 

 

 

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COMMISSION.

 

 

Bankruptcy Code, 111 U.S.C. §
101, et seq. (“Bankruptcy
Code”), licenses of rights to “intellectual property” as defined in the
Bankruptcy Code.  The Parties agree that
Osiris, as a licensee of intellectual property, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code.

SECTION 9.14               Registration and Filing of
this Agreement.  To the extent, if
any, that a Party concludes in good faith that it is required to file or
register this Agreement or a notification thereof with any governmental
authority, including, without limitation, the U.S. Securities and Exchange
Commission, the Competition Directorate of the Commission of the European
Communities, the U.S. Department of Justice or the U.S. Federal Trade
Commission, in accordance with Law, such Party shall inform the other Party
thereof and both Parties shall cooperate each at its own expense in such filing
or notification and shall execute all documents reasonably required in
connection therewith.  In such filing or
registration, the Parties shall request confidential treatment of sensitive
provisions of the Agreement, to the extent permitted by Law.  The Parties shall promptly inform each other
as to the activities or inquiries of any such governmental authority relating
to this Agreement, and shall cooperate to respond to any request for further
information therefrom on a timely basis.

SECTION 9.15               Force Majeure.  If any of the Parties is delayed or prevented
in fulfilling its undertakings in accordance with this Agreement by
unforeseeable circumstances beyond its control, and without the fault or
negligence of such Party such as, but not limited to, acts of God, fire, flood,
embargo or war, (a “Force Majeure”), the Party shall be exempted from
liability for delays due to such reasons; provided, however, that
it promptly notifies the other Party thereof after such a circumstance has
occurred.  Upon such notification, the
Parties shall agree upon a reasonable extension of the time for performance,
not to exceed an extension equal to the period the Force Majeure condition
continues to exist; provided, however the Party so affected shall
take whatever reasonable steps are necessary to relieve the effect of such
circumstance as rapidly as possible.  For
purposes of this Agreement, the Parties agree that general shortages of
transport, goods or energy and faults or delays in deliveries from
subcontractors or suppliers shall not constitute a Force Majeure.

IN WITNESS WHEREOF, BSC and
Osiris have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.

	
  BOSTON SCIENTIFIC CORPORATION

  	
   

  	
  OSIRIS ACQUISITION II, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Larry Best

  	
   

  	
  By:

  	
  /s/ William H. Pursley

  
	
   

  	
  Name:

  	
  Larry Best

  	
   

  	
   

  	
  Name:

  	
  William H. Pursley

  
	
   

  	
  Title:

  	
  Senior Vice President and
  Chief

  Financial Officer

  	
   

  	
   

  	
  Title:

  	
  President and Chief
  Executive

  Officer

  

 

 

 

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Exhibit
A: Transfer Prices

Final Products.

With respect to the purchase of Final Products,
BSC shall pay Osiris the following Transfer Prices based on percentages of the
Average Selling Price (“ASP,” as further defined below) of the Final
Product:

For the sale of Final
Products in the intravenous infusion market: [*]% of ASP

For the sale of Final
Products in the direct injection market, the amounts due to Osiris for purchase
of Final Products shall be based on the [***********************] during the
term of this Agreement:

[***************]: [****]%
of ASP

[***************]: [****]% of ASP

[***************]: [****]% of ASP

[***************]: [****]% of ASP

[***************]: [****]% of ASP

Subsequent Products

With respect to the purchase of Subsequent
Products, BSC and Osiris shall negotiate in good faith to determine the
appropriate Transfer Price for Subsequent Products.  The Parties shall agree on Transfer Prices
for each Subsequent Product prior to initiation of development of the
Subsequent Product and the Parties shall take into account the following
factors when negotiating the Transfer Price: (i) each Party’s contribution to
the research and development of the Subsequent Product; (ii) the research and
development costs to be incurred with respect to the Subsequent Product; and
(iii) the royalties set forth in the License Agreement as a guideline for
calculating Transfer Prices.

Calculation of ASP

The ASP for each Final
Product shall be set initially by BSC and be reset each January 1st and July
1st to be equal to the Average Selling Price of such Final Product during the
preceding six (6) months, where “Average Selling Price” shall mean the Net
Sales, booked by BSC or its Affiliates, in accordance with generally accepted
accounting principles as utilized by BSC in preparing its publicly reported
financial statements, during the preceding six (6) months, divided by the
number of units of the Final Product shipped during the preceding six (6)
months.

Sales and expense data not
in US Dollars shall be converted into US Dollars using the applicable exchange
rate for converting such local currency rate to the US Dollar as follows:

(i)            When reporting on or invoicing monthly sales data, the
monthly average exchange rate is used to convert local currencies into U.S.
currency.  The monthly average exchange
rates are calculated based on the daily rates, as published by Bloomberg.

 

 

21

THIS EXHIBIT HAS BEEN REDACTED
AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH A “*” AND
BRACKETS AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

(ii)           When reporting on or invoicing quarterly sales data, the
quarterly average exchange rate is used to convert local currencies into U.S.
currency.  This quarterly average
exchange rate is calculated based on the monthly average exchange rates.

(iii)          When reporting on or invoicing semi-annual sales data, the
average of the quarterly average exchange rates is used to convert local
currencies into U.S. currency.

 

 

22

THIS EXHIBIT HAS BEEN REDACTED
AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH A “*” AND
BRACKETS AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

Exhibit
B

MSCs are non-embryonic stem
cells that are a predominantly homogeneous cell population, from any source, that
can differentiate to more than one mesenchymal lineage and potentially to
ectodermal, neural, or endothelial lineages.

 

 

23

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