Document:

Exhibit 10.1

 

 

 

OSIRIS THERAPEUTICS, INC.

AMENDED AND RESTATED 1994 STOCK
INCENTIVE PLAN

 

 

 

OSIRIS THERAPEUTICS, INC.

AMENDED AND RESTATED 1994 STOCK
INCENTIVE PLAN

 

Table of Contents

 

	
  1.

  	
  Purpose

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Shares Available Under the Plan

  	
  2

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Option Rights

  	
  3

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Restricted Stock

  	
  4

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Transferability

  	
  6

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Adjustments

  	
  6

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Fractional Shares

  	
  7

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Withholding Taxes

  	
  7

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Participation by Employees of or Consultants to
  Less-Than-80-Percent Subsidiary

  	
  7

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Certain Terminations of Employment or Consulting
  Services, Hardship and Approved Leaves of Absence

  	
  8

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Foreign Participants

  	
  8

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Administration of the Plan

  	
  8

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Amendments and Other Matters

  	
  9

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Termination of the Plan

  	
  10

  

 

i

 

OSIRIS THERAPEUTICS, ETC.

AMENDED AND RESTATED 1994 STOCK
INCENTIVE PLAN

 

                1. Purpose.  The purpose
of this Plan is to attract, compensate and retain directors and officers and
other key employees of and consultants to Osiris Therapeutics, Inc., a Delaware
corporation (the “Corporation”), and its Subsidiaries and to provide such
persons with incentives and rewards for superior performance.

 

                2. Definitions.  As used
in this Plan,

 

                “Board” means the Board Directors of the Corporation.

 

                “Code” means the Internal Revenue Code of 1986, as amended
from time to time.

 

                “Committee” means the committee described in Section 13(a)
of this Plan.

 

                “Common Stock” mean (i) shares of the common stock, par
value $.001 per share, of the Corporation and (ii) any security into which
shares of Common Stock may be converted by reason of any transaction or event
of the type referred to in Section 7 of this Plan.

 

                “Date of Grant” means the date specified by the Committee on
which a grant of Options Rights shall become effective, which shall not be
earlier than the date on which the Committee takes action with respect thereto.

 

                “Incentive Stock Option” means an Option Right that is
intended to qualify as an “incentive stock option” under Section 422 of the
Code or any successor provision.

 

                “IPO” means the initial public offering of Common Stock
pursuant to a registration statement that shall have become effective under the
Securities Act of 1933.

 

                “Less-Than-80-Percent Subsidiary” means a Subsidiary with
respect to which the Corporation directly or indirectly owns or controls less
than 80 percent of the total combined voting or other decision-making power.

 

                “Management Objectives” means the achievement or performance
objectives that may be established by the Board pursuant to this Plan for
Participants who have received grants of Restricted Stock.

 

 

 

                “Market Value per Share” means the fair market value of a
share of Common Stock as determined by the Board from time to time.

 

                “Nonqualified Option” means an Option Right that is not
intended to qualify as a Tax-Qualified Option.

 

                “Optionee” means the person so designated in an agreement
evidencing an outstanding Option Right.

 

                “Option Price” means the purchase price payable upon the
exercise of an Option Right.

 

                “Option Right” means the right to purchase shares of Common
Stock from the Corporation upon the exercise of a Nonqualified Option or a
Tax-Qualified Option granted pursuant to Section 4 of this Plan.

 

                “Participant” means a person who is selected by the Board to
receive benefits under this Plan and (i) is at that time an officer, including
without limitation an officer who may also be a member of the Board, or other
key employee of or a consultant to the Corporation or any Subsidiary or (ii)
has agreed to commence serving in any such capacity.

 

                “Restricted Stock” means Common Stock granted or sold
pursuant to Section 5 of this Plan as to which neither the substantial risk of
forfeiture nor the restrictions on transfer referred to in Section 5 hereof
have expired.

 

                “Rule 16b-3” means Rule 16b-3 under the Securities Exchange
Act of 1934 or any successor rule to the same effect.

 

                “Subsidiary” means a corporation, partnership, joint
venture, unincorporated association or other entity in which the Corporation
has a direct or indirect ownership or other equity interest; provided, however,
for purposes of determining whether any person may be a Participant for
purposes of any grant of Incentive Stock Options, “Subsidiary” means any
corporation in which the Corporation owns or controls directly or indirectly
more than 50 percent of the total combined voting power represented by all
classes of stock issued by such corporation at the time of the grant.

 

                “Tax-Qualified Option” means an Option Right that is
intended to qualify under particular provisions of the Code, including without
limitation an Incentive Stock Option.

 

                3. Shares Available under the Plan.  Subject to adjustment as provided in Section
7 of this Plan, the number of shares of Common Stock issued or transferred and
covered by outstanding awards under this Plan shall not in the aggregate exceed
2,100,000 shares, which may be shares of original issuance or shares held in
treasury or a combination thereof.  For
the purposes of this Section 3:

 

 

2

 

                (a) Shares of
Common Stock covered by an Option Right granted under this Plan shall be deemed
to have been issued or transferred, and shall cease to be available for issuance
or transfer in respect of any other award granted hereunder, at the earlier of
the time when they are actually issued or transferred or the time when dividend
equivalents are paid thereon.

 

                (b) Shares of
Common Stock covered by a Restricted Stock award granted under this Plan shall
be deemed to have been issued or transferred, and shall cease to be available
for issuance or transfer in respect of any other award granted hereunder, at
the earlier of the time when they cease to be subject to a substantial risk of
forfeiture or the time when dividends are paid thereon.

 

                4. Option Rights.  The
Board may from time to time authorize grants to Participants of options to
purchase shares of Common Stock upon such terms and conditions as the Board may
determine in accordance with the following provisions:

 

                (a) Each grant
shall specify the number of shares of Common Stock to which it pertains.

 

                (b) Each grant
shall specify an Option Price per share of Common Stock, which may be less
than, equal to or greater than the Market Value per Share on the Date of Grant,
except that the Option Price per Common Share of an Incentive Stock Option
shall be equal to or greater than the Market Value per Share on the Date of
Grant.

 

                (c) Each grant
shall specify the form of consideration to be paid in satisfaction of the
Option Price and the manner of payment of such consideration, which may include
(i) cash in the form of currency or check or other cash equivalent acceptable
to the Corporation, (ii) nonforfeitable, nonrestricted shares of Common Stock,
which are already owned by the Optionee and have a value at the time of
exercise that is equal to the Option Price, (iii) any other legal consideration
that the Board may deem appropriate, including without limitation any form of
consideration authorized under Section 4(d) below, on such basis as the Board
may determine in accordance with this Plan and (iv) any combination of the
forgoing.

 

                (d) On or after
the Date of Grant of any Nonqualified Option, the Board may determine that
payment of the Option Price may also be made in whole or in part in the form of
shares of Restricted Stock or other shares of Common Stock that are subject to
risk of forfeiture or restrictions on transfer. 
Unless otherwise determined by the Board on or after the Date of Grant,
whenever any Option Price is paid in whole or in part by means of any of the
forms of consideration specified in this Section 4(d), the shares of Common
Stock received by the Optionee upon the exercise of

 

 

3

 

the Nonqualified Option shall be subject to the same risks of
forfeiture or restrictions on transfer as those that applied to the
consideration surrendered by the Optionee; provided, however,
that such risks of forfeiture and restrictions on transfer shall apply only to
the same number of shares of Common Stock received by the Optionee as applied
to the forfeitable shares of Common Stock or Restricted Stock surrendered by
the Optionee.

 

                (e) Any grant may
provide for deferred payment of the Option Price from the proceeds of the sale
through a broker of some or all of the shares of Common Stock to which the
exercise relates.

 

                (f) Successive
grants mat be made to the same Participant regardless of whether any Option
Rights previously granted to the Participant remain unexercised.

 

                (g) Each grant
shall specify the period or periods of continuous employment, or continuous
engagement of the consulting services, of the Optionee by the Corporation or
any Subsidiary that are necessary before the Option Rights or installments
thereof shall become exercisable, and any grant may provide for the earlier
exercise of the Option Rights in the event of a change in control of the
Corporation or other similar transaction or event.

 

               (h) Option Rights
granted pursuant to this Section 4 may be Nonqualified Options or Tax-Qualified
Options or combinations thereof.

 

                (i) On or after
the Date of Grant of any Nonqualified Option, the Board may provide for the
payment to the Optionee of dividend equivalents thereon in cash or shares of
Common Stock on a current, deferred or contingent basis, or the Board may
provide that any dividend equivalents shall be credited against the Option
Price.

 

                (j) No Option
Right granted pursuant to this Section 4 may be exercised more than 10 years
from the Date of Grant.

 

                (k) Each grant
shall be evidenced by an agreement, which shall be executed on behalf of the
Corporation by any officer thereof and delivered to and accepted by the
Optionee and shall contain such terms and provisions as the Board may determine
consistent with this Plan.

 

                5. Restricted Stock.  The
Board may also authorize grants or sales to Participants of shares of
Restricted Stock upon such terms and conditions as the Board may determine in
accordance with the following provisions:

 

                (a) Each grant or
sale shall constitute an immediate transfer of the ownership of shares of
Common Stock to the Participant in consideration of the performance of
services,

 

 

4

 

entitling such Participant to dividend, voting and other ownership
rights, subject to the substantial risk of forfeiture and restrictions on
transfer hereinafter referred to.

 

                (b) Each grant or
sale may be made without additional consideration from the Participant or in
consideration of a payment by the Participant that is less than the Market
Value per Share on the Date of Grant.

 

                (c) Each grant or
sale shall provide that the shares of Restricted Stock covered thereby shall be
subject to a “substantial risk of forfeiture” within the meaning of Section 83
of the Code for a period to be determined by the Committee on the Date of
Grant, and any grant or sale may provide for the earlier termination of such
period in the event of a change in control of the Corporation or other similar
transaction or event.

 

                (d) Each grant or
sale shall provide that, during the period for which such substantial risk of
forfeiture is to continue, the transferability of the shares of Restricted
Stock shall be prohibited or restricted in the manner and to the extent
prescribed by the Board on the Date of Grant. 
Such restrictions may include without limitation rights of repurchase or
first refusal in the Corporation or provisions subjecting the shares of
Restricted Stock to a continuing substantial risk of forfeiture in the hands of
any transferee.

 

                (e) Any grant or
sale may require that any or all dividends or other distributions paid on the
shares of Restricted Stock during the period of such restrictions be
automatically sequestered and reinvested on an immediate or deferred basis in
additional shares of Common Stock, which may be subject to the same
restrictions as the underlying award or such other restriction as the Committee
may determine.

 

                (f) Each grant may
specify one or more Management Objectives that are to be achieved by the
Participant, which may be described in terms of Corporation-wide objectives or
objectives that are related to the performance of the individual Participant or
the Subsidiary, division, department or function within the Corporation or
Subsidiary in which the Participant is employed or with respect to which the
Participant provides consulting services, and to the extent that any grant so
specifies one or more Management Objectives:

 

                (i)
it shall also specify a minimum level of acceptable achievement, below which
all of the shares of Restricted Stock covered by the award shall be forfeited,
and shall set forth a formula for determining the number of shares of
Restricted Stock to

 

 

5

 

be retained by the Participant if performance is at or
above the minimum level of acceptable achievement but falls short of full
achievement of the specified Management Objectives; and

 

                (ii)
the Board may adjust the specified Management Objectives and the related
minimum level of acceptable achievement if, in the sole judgment of the
Committee, events or transactions have occurred after the Date of Grant that
are unrelated to the performance of the Participant and result in distortion of
the specified Management Objectives or the related minimum level of acceptable
achievement.

 

                (g) Each grant or
sale shall be evidenced by an agreement, which shall be executed on behalf of
the Corporation by any officer thereof and delivered to and accepted by the
Participant and shall contain such terms and provisions as the Board may
determine consistent with this Plan. 
Unless otherwise directed by the Board, all certificates representing
shares of Restricted Stock, together with a stock power that shall be endorsed
in blank by the Participant with respect to the shares of Restricted Stock,
shall be held in custody by the Corporation until all restrictions thereon
lapse.

 

                6. Transferability.  (a)
No Option Right or other “derivative security” (as that term is used in Rule
16b-3) granted under this Plan may be transferred by a Participant except by
will or the laws of descent and distribution. 
Option Rights may not be exercised during a Participant’s lifetime
except by the Participant or, in the event of the Participant’s legal
incapacity, by his guardian or legal representative acting in a fiduciary
capacity on behalf of the Participant under state law and court supervision.

 

                (b) Any grant of
Option Rights made under this Plan may provide that all or any part of the
shares of Common Stock that are to be issued or transferred by the Corporation
upon the exercise thereof shall be subject to further restrictions upon
transfer.

 

                7. Adjustments.  The
Board may make or provide for such adjustments in the number of shares of
Common Stock covered by outstanding Option Rights, the Option Prices per share
of Common Stock applicable to any such Option Rights, and the kind of shares
(including shares of another issuer) covered thereby, as the Board may in good
faith determine to be equitably required in order to prevent dilution or
expansion of the rights of Participants that otherwise would results from (i)
any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Corporation or (ii) any merger,
consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of warrants
or other

 

6

 

rights to purchase securities or (iii) any
other corporate transaction or event having an effect similar to any of the
foregoing. In the event of any such transaction or event, the Board may provide
in substitution for any or all outstanding awards under this Plan such
alternative consideration as it may in good faith determine to be equitable
under the circumstances and may require in connection therewith the surrender
of all awards so replaced. Moreover, the Board may on or after the Date of
Grant provide in the agreement evidencing any award under this Plan that the
holder of the award may elect to receive an equivalent award in respect of
securities of the surviving entity of any merger, consolidation or other
transaction or event having a similar effect, or the Board may provide that the
holder will automatically be entitled to receive such an equivalent award. The
Board may also make or provide for such adjustments in the maximum number of
shares of Common Stock specified in Section 3 of this Plan, the maximum number
of shares of Common Stock specified in Section 4(a) of this Plan, as the Board
may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 7.

 

                8.
Fractional Shares. The Corporation
shall not be required to issue any fractional shares of Common Stock pursuant
to this Plan. The Board may provide for the elimination of fractions or for the
settlement thereof in cash.

 

                9.
Withholding Taxes. To the extent that
the Corporation is required to withhold federal, state, local or foreign taxes
in connection with any payment made or benefit realized by a Participant or
other person under this Plan, and the amounts available to the Corporation for
the withholding are insufficient, it shall be a condition to the receipt of any
such payment or the realization of any such benefit that the Participant or
such other person make arrangements satisfactory to the Corporation for payment
of the balance of any taxes required to be withheld. At the discretion of the
Board, any such arrangements may include relinquishment of a portion of any
such payment or benefit. The Corporation and any Participant or such other
person may also make similar arrangements with respect to the payment of any taxes
with respect to which withholding is not required.

 

                10.
Participation by Employees of or Consultants to a
Less-Than-80-Percent Subsidiary. As a condition to the effectiveness
of any grant or award to be made hereunder to a Participant who is an employee
of or a consultant to a Less-Than-80-Percent Subsidiary, regardless of whether
the Participant is also employed by or engaged as a consultant to the
Corporation or another Subsidiary, the Board may require the
Less-Than-80-Percent Subsidiary to agree to transfer to the Participant (as, if
and when provided for under this Plan and any applicable agreement entered into
between the Participant and the Less-Than-80-Percent Subsidiary pursuant to
this Plan) the shares of Common Stock that would otherwise be delivered by the Corporation
upon receipt by the Less-Than-80-Percent Subsidiary

 

7

 

of any consideration then otherwise payable
by the Participant to the Corporation. Any such grant or award may be evidenced
by an agreement between the Participant and the Less-Than-80-Percent
Subsidiary, in lieu of the Corporation, on terms consistent with this Plan and
approved by the Board and the Less-Than-80-Percent Subsidiary. All shares of
Common Stock so delivered by or to a Less-Than-80-Percent Subsidiary will be
treated as if they had been delivered by or to the Corporation for purposes of
Section 3 of this Plan, and all references to the Corporation in this Plan
shall be deemed to refer to the Less-Than-80-Percent Subsidiary except with
respect to the definitions of the Board and the Committee and in other cases
where the context otherwise requires.

 

                11.
Certain Terminations of Employment or Consulting
Services, Hardship and Approved Leaves of Absence. Notwithstanding
any other provision of this Plan to the contrary, in the event of termination
of employment or consulting services by reason of death, disability, normal
retirement, early retirement with the consent of the Corporation, termination
of employment or consulting services to enter public service with the consent
of the Corporation or leave of absence approved by the Corporation, or in the
event of hardship or other special circumstances, of a Participant who holds an
Option Right that is not immediately and fully exercisable, any shares of
Restricted Stock as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or any shares of Common
Stock that are subject to any transfer restriction pursuant to Section 6(b) of
this Plan, the Board may take any action that it deems to be equitable under
the circumstances or in the best interests of the Corporation, including
without limitation waiving or modifying any limitation or requirement with
respect to any award under this Plan.

 

                12.
Foreign Participants. In order to
facilitate the making of any award or combination of awards under this Plan,
the Board may provide for such special terms for awards to Participants who are
foreign nationals, or who are employed by or engaged as consultants to the
Corporation or any Subsidiary outside of the United States of America, as the
Board may consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. The Board may also approve such supplements to, or
amendments, restatements or alternative versions of, this Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of this Plan as in effect for any other purpose; provided, however,
that no such supplements, amendments, restatements or alternative versions
shall include any provisions that are inconsistent with the terms of this Plan,
as then in effect, unless this Plan could have been amended to eliminate the
inconsistency without further approval by the stockholders of the Corporation.

 

                13.
Administration of the Plan. (a) This
Plan shall be administered by the Board until consummation of an IPO. Upon

 

8

 

the consummation of an IPO, the authority of
the Board shall be delegated to a committee composed of not less than three
members of the Board, each of whom shall be a “disinterested person” within the
meaning of Rule 16b-3, and the Plan shall thereafter be administered by the
Committee. A majority of the members of the Board or the committee, as the case
may be, shall constitute a quorum, and the acts of the members of the Board or
the Committee who are present at any meeting thereof at which a quorum is
present, or acts unanimously approved in writing by the members of the Board or
the Committee, shall be the acts of the Board or the Committee.

 

                (b)
The interpretation and construction by the Board or the Committee of any
provision of this Plan or any agreement, notification or document evidencing a
grant of Option Rights or shares of Restricted Stock, and any determination by
the Board or the Committee pursuant to any provision of this Plan or any such
agreement, notification or document, shall be final and conclusive. No member
of the Board or the Committee shall be liable for any such action taken or
determination made in good faith.

 

                14.
Amendments and Other Matters. (a) This Plan
may be amended from time to time by the Board; provided, however,
except as expressly authorized by this Plan, no such amendment shall increase
the number of shares of Common Stock specified in Section 3 of this Plan, or otherwise
cause this Plan to cease to satisfy any applicable condition of Rule 16b-3
following the consummation of an IPO, without the further approval of the
stockholders of the Corporation. The Board may grant under this Plan any award
or combination of awards authorized under this Plan in exchange for the
cancellation of an award that was not granted under this Plan.

 

                (b)
With the concurrence of the affected Optionee, the Board may cancel any
agreement evidencing Option Rights granted under this Plan. In the event of any
such cancellation, the Board may authorize the granting of new Option Rights
hereunder, which may or may not cover the same number shares of Common Stock as
had been covered by the cancelled Option Rights, at such Option Price, in such
manner and subject to such other terms, conditions and discretion as would have
been permitted under this Plan had the cancelled Option Rights not been
granted.

 

                (c)
This Plan shall not confer upon any Participant any right with respect to
continuance of employment or other service with the Corporation or any
Subsidiary and shall not interfere in any way with any right that the
Corporation or any Subsidiary would otherwise have to terminate any Participant’s
employment or other service at any time.

 

                (d) (i) To the extent that any provision of this Plan
would prevent any Option Right that was intended to qualify as a Tax-Qualified Option
from so qualifying, any such provision shall be null and void with respect to
any such

 

9

 

Option Right; provided,
however, that any such provision shall remain in effect with respect to
other Option Rights, and there shall be no further effect on any provision of
this Plan.

 

                (ii) Any award that may be made pursuant to an
amendment to this Plan that shall have been adopted without the approval of the
stockholders of the Corporation shall be null and void if it is subsequently
determined that such approval was required in order for this Plan to continue
to satisfy the applicable conditions or Rule 16b-3 following the consummation
of an IPO.

 

                15.
Termination of the Plan. No further
awards shall be granted under this Plan after the passage of 10 years from the
date on which this Plan is first approved by the stockholders of the
Corporation.

 

10

 

AMENDMENT
NO. 1 

TO THE

OSIRIS
THERAPEUTICS, INC.

AMENDED
AND RESTATED 1994 STOCK INCENTIVE PLAN

 

                WHEREAS,
Osiris Therapeutics, Inc. (the “Company”) maintains the Osiris Therapeutics,
Inc. Amended and Restated 1994 Stock Incentive Plan (the “Plan”) to attract,
compensate and retain directors, officers and other key employees and
consultants of the Company; and

 

                WHEREAS,
on December 12, 1994, the Board of Directors of the Company (the “Board”)
adopted the Plan at a Board meeting and the shareholders of the Company
approved the Plan; and

 

                WHEREAS,
Section 15 of the Plan provides that no further awards may be granted under the
Plan after the passage of 10 years from the date of shareholder approval (i.e.,
December 12, 2004); and

 

                WHEREAS,
at a meeting on October 10, 2005, the Board and the shareholders approved a
resolution to extend the term of the Plan for an additional ten year period;
and

 

                WHEREAS,
pursuant to Section 14 of the Plan, the Board of Directors (the “Board”) of the
Company has reserved the right to amend the Plan; and

 

                WHEREAS,
this Amendment No. 1 is intended to give effect to the Board’s resolution on
October 10, 2005; 

 

                NOW,
THEREFORE, the Plan is hereby amended in the following respects, effective as
of December 12, 2004:

 

I.      Section 15 of the Plan is amended in its entirety to read as
follows:

 

“15.         Termination of the Plan.  No further awards shall be granted under this
Plan after December 12, 2014.”

 

II.    In all respects not amended the Plan is hereby ratified and
confirmed.

 

                Executed
the 16th day of June, 2006.

 

	
   

  	
  OSIRIS THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cary ClaiborneExhibit 10.2

OSIRIS
THERAPEUTICS, INC.

2006
OMNIBUS PLAN

ARTICLE I

PURPOSE; EFFECTIVE DATE; DEFINITIONS

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

1.2           Effective Date.  Subject to ratification by the Company’s
stockholders as provided in Section 10.9, this Plan (as adopted by the Board)
shall be effective on and after April 17, 2006.

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

(a)           “Agreement”
shall mean an Option Agreement, Restricted Stock Agreement, Performance Share
Agreement, Performance Unit Agreement or SAR Agreement.

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

(i)            Options (including ISOs and NQSOs);

(ii)           Stock Appreciation Rights

(iii)          Performance Shares

(iv)          Performance Units; or

(v)           Restricted Stock.

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

(d)           “Change of Control”
shall mean (a) the reorganization, consolidation or merger of the Company or
any of its subsidiaries holding or controlling a majority of the assets
relating to the business of the Company, with or into any third party (other
than a subsidiary); (b) the assignment, sale, transfer, lease or other
disposition of all or substantially all of the assets of the Company and its
subsidiaries taken as a whole; or (c) the acquisition by any third party or
group of third parties acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission (“SEC”) under
the Securities Exchange Act of 1934, as amended) of shares of voting stock of
the Company, the result of which in the case of 

any transaction described in clauses (a), (b) and
(c) above is that immediately after the transaction the stockholders of the
Company immediately before the transaction, other than the acquiror, own less
than fifty percent (50%) of the combined voting power of the outstanding voting
securities entitled to vote generally in the election of directors of the surviving
or resulting corporation in a transaction specified in clause (a) above, the
acquiror in a transaction specified in clause (b) above, or the Company or the
acquiror in a transaction specified in clause (c) above.  Notwithstanding the foregoing, the sale of
Company securities beneficially owned by Peter Friedli (“Friedli Shares”) shall
not, by itself or when combined with any other transactions, constitute a
Change in Control, unless such other transactions would constitute a Change in
Control without regard to the sale of Friedli Shares.

(e)           “Code”
shall mean the Internal Revenue Code of 1986, as amended, any successor revenue
laws of the United States, and the rules and regulations promulgated
thereunder.

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

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

(h)           “Company”
shall mean Osiris Therapeutics, Inc., a Delaware corporation.

(i)            “Employee”
shall mean any person engaged or proposed to be engaged as an officer or
employee of the Company or one of its subsidiaries.

(j)            “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.

(k)           “Fair Market Value”
shall mean with respect to the Common Stock on any day, (i) the closing sales
price on the immediately preceding business day of a share of Common Stock as
reported on the principal securities exchange on which shares of Common Stock
are then listed or admitted to trading, or (ii) if not so reported, the closing
sales price on the immediately preceding business day of a share of Common
Stock as published in the NASDAQ National Market Issues report in the Eastern
Edition of The Wall Street Journal, or (iii) if not so reported, the average of
the closing bid and asked prices on the immediately preceding business day as
reported on the NASDAQ National Market System, or (iv) if not so reported, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Committee.  In the event
that the price of a share of Common Stock shall not be so reported or
furnished, the Fair Market Value of a share of Common Stock shall be determined
by the Committee in good faith.  The
market value of an Option granted under the Plan on any day shall be the market
value of the underlying Stock, determined as aforesaid, less the exercise price
of the Option.  A “business day” is any
day, other than Saturday or Sunday, on which the relevant market is open for trading.

(l)            “ISO” shall
mean an Option that qualifies as an incentive stock option under Code Section
422.  No Option that is intended to be an
ISO shall be invalid under this Plan for failure to qualify as an ISO.

 

 

2

 

 

(m)          “NQSO”
shall mean a nonqualified stock option which is an Option that does not qualify
as an incentive stock option under Code Section 422.

(n)           “Non-Employee Director”
shall mean a member of the Board who is not an Employee.

(o)           “Option”
shall mean an option to purchase shares of Common Stock granted by the
Committee.  An Option may be either an
ISO or a NQSO, but only an Employee who is actually employed by the Company may
be granted an ISO.

(p)           “Option Agreement”
shall mean the certificate evidencing an Option grant.

(q)           “Option Shares”
shall mean the shares of Common Stock purchased upon exercise of an Option.

(r)            “Performance Cycle”
shall have the meaning set forth in Section 7.1.

(s)           “Performance Period”
shall have the meaning set forth in Section 6.1.

(t)            “Performance Share”
shall mean an award made pursuant to Article VI of this Plan of the right to
receive Common Stock at the end of a specified Performance Period if specified
performance goals are met.

(u)           “Performance Unit”
shall mean an award made pursuant to Article VII of this Plan of the right to
receive a fixed dollar amount, payable in cash or Common Stock or a combination
of both, at the end of a specified Performance Cycle if specified performance
goals are met.

(v)           “Plan”
shall mean this Osiris Therapeutics, Inc. 2006 Omnibus Plan, as the same may be
amended from time to time.

(w)          “Restricted Stock”
shall mean Common Stock granted under Article VIII of this Plan, subject to
such restrictions as the Committee may determine, as evidenced in a Restricted
Stock Agreement.  Shares of Common Stock
shall cease to be Restricted Stock when, in accordance with the terms of the
Restricted Stock Agreement, they become transferable and free of substantial
risk of forfeiture.

(x)            “Restricted Stock
Agreement” shall mean the certificate evidencing the grant of
Restricted Stock to an Employee pursuant to this Plan.

(y)           “Restriction Period”
shall mean the time period during which Restricted Stock is subject to the
restrictions set forth in a Restricted Stock Agreement.

(z)            “SAR Agreement”
shall mean the certificate evidencing the grant of a Stock Appreciation Right
to an Employee pursuant to this Plan.

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

 

 

3

 

(bb)         “10% Stockholder”
shall mean an individual owning (directly or by attribution as provided in Code
Section 424(d)) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company.

ARTICLE II

ADMINISTRATION

2.1           Committee Administration.  This Plan and the Benefits awarded hereunder
shall be interpreted, construed and administered by the Committee in its sole
discretion.  An Employee or Non-Employee
Director eligible for Benefits under the Plan may appeal to the Committee in
writing any decision or action of the Committee with respect to the Plan that
adversely affects the Employee or Non-Employee Director.  Upon review of such appeal and in any other
case where the Committee has acted with respect to the Plan, the interpretation
and construction by the Committee of any provisions of this Plan or of any
Benefit shall be conclusive and binding on all parties.

2.2           Committee Composition.  The Committee shall consist of not less than
two persons who shall be members of the Board and shall be subject to such
terms and conditions as the Board may prescribe.  Each Committee member shall be a
“disinterested person” within the meaning of Rule 16b-3 promulgated under the
Exchange Act.  Once designated, the
Committee shall continue to serve until otherwise directed by the Board.  From time to time, the Board may increase the
size of the Committee and appoint additional members thereof, remove members (with
or without cause) and appoint new members in substitution therefor, fill
vacancies however caused and remove all members of the Committee.

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

2.3           Committee Powers.  The Committee shall have authority to award
Restricted Stock and to grant Options, SARs, Performance Shares and Performance
Units pursuant to an Agreement providing for such terms (not inconsistent with
the provisions of this Plan) as the Committee may consider appropriate.  Such terms shall include, without limitation,
as applicable, the number of shares, the Option price, the medium and time of
payment, the term of each award and any vesting requirements and may include
conditions (in addition to those contained in this Plan) on the exercisability
of all or any part of an Option or SAR, the terms and conditions applicable to
Performance Shares and Performance Units or on the transferability or
forfeitability of Restricted Stock. 
Notwithstanding any such conditions, the Committee may, in its
discretion, accelerate the time at which any Option or SAR may be exercised or
the time at which Restricted Stock may become transferable or
nonforfeitable.  In addition, the
Committee shall have complete discretionary authority to prescribe the form of
Agreements; to adopt, amend 

 

4

 

and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of this Plan. 
The express grant in the Plan of any specific power to the Committee shall
not be construed as limiting any power or authority of the Committee.  All expenses of administering this Plan shall
be borne by the Company.

2.4           Limitation on Receipt of
Benefits by Committee Members. 
No person while a member of the Committee shall be eligible to receive
any Benefits under this Plan, but a member of the Committee may exercise
Options (but not Stock Appreciation Rights) granted prior to his or her
becoming a member of the Committee.

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

ARTICLE III

ELIGIBILITY; TYPES OF BENEFITS; SHARES SUBJECT TO PLAN

3.1           Eligibility.  The Committee shall from time to time
determine and designate the Employees of the Company to receive Benefits under
this Plan and the number of Options, Stock Appreciation Rights, Performance
Shares, Performance Units and shares of Restricted Stock to be awarded to each
such Employee or the formula or other basis on which such Benefits shall be
awarded to Employees.  In making any such
award, the Committee may take into account the nature of services rendered by
an Employee, commissions or other compensation earned by the Employee, the
capacity of the Employee to contribute to the success of the Company and other
factors that the Committee may consider relevant.

3.2           Types of Benefits.  Benefits under this Plan may be granted in
any one or any combination of (a) Options, (b) Stock Appreciation Rights, (c)
Performance Shares, (d) Performance Units, and (e) Restricted Stock, as
described in this Plan.  The Committee
may (x) give Employees a choice between two or more Benefits or combinations of
Benefits, (y) award Benefits in tandem so that acceptance of or exercise of one
Benefit cancels the right of an Employee to another and (z) award Benefits in
any combination or combinations and subject to any condition or conditions
consistent with the terms of this Plan that the Committee in its sole
discretion may consider appropriate.

3.3           Shares Subject to this
Plan.  Subject to the
provisions of Section 4.1(e) (relating to adjustment for changes in Common
Stock), the maximum number of shares that may be issued under this Plan shall
not exceed in the aggregate 3,400,000 shares of Common Stock.  The maximum number of shares authorized under
this Plan shall only be increased with approval of the stockholders of the
Company (except as provided in Section 4.1(e)). 
Such shares may be authorized and unissued shares or authorized and
issued shares that have been reacquired by the Company.  If any Options granted under this Plan shall
for any reason terminate or expire or be surrendered without having been
exercised in full, then the shares not purchased under such Options shall be
available again for grant hereunder. 
Anything in this Plan to the contrary notwithstanding, in no event shall
any Employee receive in any calendar year Benefits under this 

 

5

 

Plan involving more than 500,000 shares of Common
Stock (subject to adjustment as provided in Section 4.1(e)).

3.4           $100,000 Limitation.  Except as provided elsewhere in this Section,
the Committee shall not grant an ISO to, or modify the exercise provisions of
an outstanding ISO for, any person who, at the time of grant or modification,
as applicable, would thereby hold ISOs issued by the Company if the aggregate
Fair Market Value (determined as of the respective dates of grant and modification
of each Option) of the Option Shares underlying such ISOs as are exercisable
for the first time during any calendar year would exceed $100,000 (or such
other limitation as may be prescribed by the Code from time to time).  The foregoing restriction on modification of
outstanding ISOs shall not preclude the Committee from modifying an outstanding
ISO if, as a result of such modification and with the consent of the holder,
such Option no longer constitutes an ISO. 
Furthermore, if the $100,000 limitation (or such other limitation
prescribed by the Code) described in this Section is exceeded, then the ISO,
the granting or modification of which resulted in exceeding such limitation,
shall be treated as an ISO up to the limitation, and the excess shall be treated
as a NQSO.

ARTICLE IV

STOCK OPTIONS

4.1           Grant; Terms and
Conditions.  The
Committee, in its discretion, may from time to time grant ISOs or NQSOs, or
both, to any Employee eligible to receive Benefits under this Plan.  Each Employee who is granted an Option shall
receive an Option Agreement from the Company in a form specified by the
Committee and containing such provisions, consistent with this Plan, as the
Committee, in its sole discretion, shall determine at the time the Option is
granted.

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

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

(c)           Medium and Time of Payment.  Upon the exercise of an Option, the Option
exercise price shall be payable in United States dollars, in cash (including by
check) or (unless the Committee otherwise prescribes) in shares of Common Stock
owned by the optionee (but not with Restricted Stock prior to the expiration of
the Restriction Period), in NQSOs granted to the optionee under the Plan which
are then exercisable (provided that the purchase price of Common Stock under an
ISO may not be paid in NQSOs), or in a combination of cash, Common Stock and
NQSOs.  If all or any portion of the
Option exercise price is paid in 

 

 

6

 

Common Stock owned by the optionee, then that stock
shall be valued at its Fair Market Value as of the date the Option is
exercised.  If all or any portion of the
Option exercise price is paid in NQSOs granted to the optionee under the Plan,
then such NQSOs shall be valued at their Fair Market Value as of the date the
Option is exercised.

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

(e)           Recapitalization;
Reorganization.  Subject
to any required action by the stockholders of the Company and the Change of
Control provisions set forth in Article IX of this Plan, the maximum number of
shares of Common Stock that may be issued under this Plan pursuant to Section
3.3 above, the number of shares of Common Stock with respect to which Options
will be granted to Non-Employee Directors pursuant to Section 4.2, the number
of shares of Common Stock covered by each outstanding Option, the number of
shares of Common Stock to which each Stock Appreciation Right relates, the kind
of shares subject to outstanding Options and the per share exercise price under
each outstanding Option shall be adjusted, in each case, to the extent and in
the manner the Committee deems appropriate for any increase or decrease in the
number of issued shares of Common Stock resulting from a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Common Stock) or any other change
in the corporate structure or state of the Company.

Subject to any action that
may be required on the part of the stockholders of the Company, if the Company
is the surviving corporation in any merger, consolidation, sale, transfer,
acquisition, tender offer or exchange offer which does not result in a Change
of Control, then each outstanding Option and Stock Appreciation Right shall
pertain to and apply to the securities or other consideration that a holder of
the number of shares of Common Stock subject to the Option or to which the
Stock Appreciation Right relates would have been entitled to receive in such
transaction.

Notwithstanding the
foregoing, in no event shall any Option be exercisable after the date of
termination of the exercise period of such Option.

In the event of a change in
the Common Stock as presently constituted, which change is limited to a change
of all of the authorized shares with par value into the same number of shares
with a different par value or without par value, the shares resulting from any
such change shall be deemed to be the Common Stock within the meaning of this Plan.

 

 

7

 

The foregoing adjustments
shall be made by the Committee, whose determination shall be final, binding and
conclusive.

The grant of an Option or
Stock Appreciation Right pursuant to this Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate, sell or otherwise transfer all or any
part of its business or assets.

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

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

(g)           Modification, Extension
and Renewal of Options. 
Subject to the terms and conditions and within the limitations of this
Plan, the Committee may modify, extend or renew outstanding Options granted under
this Plan or accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options in
substitution therefor (to the extent not theretofore exercised).  No modification of an Option shall, without
the consent of the optionee, alter or impair any rights or obligations under
any Option theretofore granted under this Plan. 
Notwithstanding the foregoing, pursuant to the provisions of the
proposed regulations under Section 409A of the Code, no Option exercise period
may be extended beyond the later of (1) the end of the calendar year in which
the Option would have otherwise expired, or (2) the date that is two and
one-half (2-1/2) months after the Option would have otherwise expired; provided
that this sentence shall not apply if, at the time the exercise period is
extended, the Option exercise price exceeds the Fair Market Value of the Common
Stock subject to the Option (i.e., the
Option is “underwater”) (to the extent permitted under Section 409A of the
Code).

(h)           Exercisability and Term of
Options.  Unless earlier
terminated, Options granted pursuant to this Plan shall be exercisable at any
time on or after the dates of exercisability and before the expiration
date.  Notwithstanding the foregoing, an Option
shall terminate and may not be exercised if the Employee to whom it is granted
ceases to be employed by the Company, except that: (1) unless the Committee
shall determine that the Employee’s employment was terminated for conduct that
in the judgment of the Committee involves dishonesty or action by the Employee
that is detrimental to the best interest of the Company, the Employee may at
any time within ninety (90) days after termination of his or her employment
exercise his or her Option but only to the extent the Option was exercisable by
him or her on the date of termination of employment; (2) if such Employee’s
employment terminates on account of total and permanent disability, then the
Employee may at any time within one year after termination of his or her
employment exercise his or her Option but only to the extent that the Option
was exercisable on the date of termination of employment; and (3) if such
Employee dies while in the employ of the Company, or within the ninety (90) day
or twelve month period 

 

8

 

following termination of his or her employment as
described in clause (1) or (2) above, then his or her Option may be exercised
at any time within twelve months following his or her death by the person
specified in Section 4.1(d), but only to the extent that such Option was
exercisable by him or her on the date of termination of employment.  The last sentence shall apply to any
outstanding Options which are ISOs to the extent permitted by Code Section 422,
and such outstanding ISOs in excess thereof shall, immediately upon the
occurrence of the event described in such sentence, be treated for all purposes
of the Plan as NQSOs and shall be immediately exercisable as such as provided
in such sentence.  The Committee may, in
its discretion, provide in any Option Agreement or determine at any time after
the date of grant that the exercisability of an Option will be accelerated, in
whole or in part, in the event of an Employee’s retirement, death or disability.  Any cessation of employment, for purposes of
ISOs only, shall include any leave of absence in excess of ninety (90) days
unless the optionee’s reemployment rights are guaranteed by law or by contract.  Subject to Section 4.1(g), above, the Committee
may, in its discretion, extend the post-termination exercise periods set forth
in this subsection, but not beyond the expiration date of the Option.  Notwithstanding anything to the contrary in
this subsection, an Option may not be exercised by anyone after the expiration
of its term.  Notwithstanding anything to
the contrary in this subsection, an Option shall not terminate if the Employee
to whom it is granted ceases to be employed by the Company but continues to
serve as a Director of the Company or its successor, in which event the Option
shall terminate if the Employee ceases to be a Director of the Company or its
successor and the Employee may at any time within three months after ceasing to
be a Director exercise his or her Option, but only to the extent that the
Option was exercisable by him or her on the date on which he or she ceased to
be a Director.

4.2           Other Terms and Conditions.  Through the Option Agreements authorized
under this Plan, the Committee may impose such other terms and conditions, not
inconsistent with the terms hereof, on the grant or exercise of Options, as it
deems advisable.

ARTICLE V

STOCK APPRECIATION RIGHTS

5.1           Grant of Stock
Appreciation Rights.  The
Committee, in its discretion, may from time to time grant Stock Appreciation
Rights to Employees under this Plan. 
Such Stock Appreciation Rights may, but need not, be granted in
conjunction with an Option grant.

5.2           Exercise.  Stock Appreciation Rights shall entitle the
holder, upon exercise thereof in whole or in part, to receive payment in the
amount and form determined pursuant to Section 5.3(b).  The exercise of Stock Appreciation Rights
shall result in a termination of the Stock Appreciation Rights with respect to
the number of shares covered by the exercise and, if granted in conjunction
with an Option, shall also result in a termination of the related Option with
respect to the number of shares covered by the exercise.

5.3           Terms and Conditions.  Stock Appreciation Rights granted under this
Plan to Employees shall be evidenced by SAR Agreements, which shall be in such
form and contain such provisions, consistent with this Plan, as the Committee,
in its sole discretion, shall determine at the time the Stock Appreciation
Right is granted.

 

 

9

 

(a)           Stock Appreciation Rights shall not be exercisable during
the first six months after their date of grant. 
Such rights shall not be transferable other than by will or by the laws
of descent and distribution and shall be exercisable during the holder’s
lifetime only by the holder.

(b)           Upon exercise of Stock Appreciation Rights the holder
shall be entitled to receive therefor payment, in the sole discretion of the
Committee, in the form of shares of Common Stock (rounded down to the next whole
number so that no fractional shares are issued), cash or any combination
thereof.  The amount of such payment
shall be equal in value to the difference between the Stock Appreciation Right
exercise price per share (which shall be at least equal to the Fair Market per
share of the Common Stock as of the date of grant of the SAR) and the Fair
Market Value per share of the Common Stock on the date the Stock Appreciation
Right is exercised, multiplied by the number of shares with respect to which
the Stock Appreciation Right shall have been exercised.

(c)           Stock Appreciation Rights shall terminate in accordance
with the provisions of Section 4.1(h) if the holder’s employment with the
Company terminates.

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

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

ARTICLE VI

PERFORMANCE SHARES

6.1           Award of Performance
Shares.  The Committee
shall have the authority to grant Performance Shares to any Employee or
Non-Employee Director, subject to the maximum number of shares of Common Stock
that may be issued under this Plan pursuant to Section 3.3, above.  The Committee shall determine the persons to
whom, and the time or times at which, Performance Shares shall be awarded, the
number of Performance Shares to be included in each award, the duration of the
period (the “Performance Period”) during which, and the conditions under which,
receipt of the shares of Common Stock will be deferred, and the other terms and
conditions of the award in addition to those set forth in Section 6.2.  Any deferral of a Performance Share award
shall be made in accordance with the requirements of Section 409A of the
Code.  The provisions of Performance
Share awards need not be the same with respect to each grantee, and such awards
to individual grantees need not be the same in subsequent years.

 

 

10

 

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

(a)           Conditions.  The Committee, in its sole discretion, shall
specify the Performance Period during which, and the conditions under which,
the receipt of shares of Common Stock covered by the Performance Share award
will be deferred.  The receipt of shares
of Common Stock pursuant to a Performance Share award shall be conditioned upon
the attainment of one or more pre-established objective performance
goals, which if applicable shall be established in accordance with the
requirements of Section 162(m) of the Code and the regulations promulgated
thereunder.  Such goals must be
established by the Committee in writing not later than 90 days after the
commencement of the Performance Period, provided that the outcome is
substantially uncertain at the time the goal is established.  The performance goals may be based on the
Company’s stock price, return on assets, return on capital employed, return on
shareholders’ equity, earnings, earnings per share, total shareholder return,
sales, costs, or such other performance goals as may be established by the
Committee from time to time.

(b)           Award Certificate.  Each Performance Share award shall be
evidenced by, and subject to the terms of, a Performance Share certificate
executed by the Company.  The Performance
Share certificate shall specify the number of shares of Common Stock subject to
the award, the applicable Performance Period, the applicable performance goals,
and the other terms and conditions applicable to such award.

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

(d)           Termination of Employment.  Unless otherwise determined by the Committee
at the time of grant, the Performance Shares will be forfeited upon a grantee’s
termination of employment during the Performance Period for any reason
(including death, disability or retirement).

(e)           Payouts.  At the end of a Performance Period, the
Committee shall determine the extent to which the applicable performance goals
have been satisfied.  In the event of a
payout with respect to a Performance Share award, such payout shall be made no
later than two and one-half (2-1/2) months following the end of the Performance
Period (subject to any deferrals permitted by the Committee in accordance with
Section 409A of the Code).

6.3           Individual Limit.  The maximum number of shares of Common Stock
that may be subject to Performance Share awards granted to any individual
during any calendar year shall be 100,000 shares (subject to any increase or
decrease pursuant to the adjustment provisions of this Plan).

 

 

11

 

ARTICLE VII

PERFORMANCE UNITS

7.1           Award of Performance Units.  The Committee shall have the authority to
grant Performance Units to any Employee or Non-Employee Director, subject to
Section 3.3.  The Committee shall
determine the persons to whom, and the time or times at which, Performance
Units shall be awarded, the number of Performance Units to be included in each
award, the duration of the period (the “Performance Cycle”) during which, and
the conditions under which, a grantee’s right to Performance Units will be
vested, the ability of grantees to defer the receipt of payment of such
Performance Units, and the other terms and conditions of the award in addition
to those set forth in Section 7.2.  A
Performance Unit shall have a fixed dollar value.  The provisions of Performance Unit awards
need not be the same with respect to each grantee, and such awards to
individual grantees need not be the same in subsequent years.

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

(a)           Conditions.  The Committee, in its sole discretion, shall
specify the Performance Cycle during which, and the conditions under which, the
grantee’s right to Performance Units will be vested.  The vesting of Performance Units shall be
conditioned upon the attainment of one or more pre-established objective
performance goals, which if applicable shall be established in accordance with
the requirements of Section 162(m) of the Code and the regulations promulgated
thereunder.  Such goals must be
established by the Committee in writing not later than 90 days after the
commencement of the Performance Cycle, provided that the outcome is
substantially uncertain at the time the goal is established.  The performance goals may be based on the
Company’s stock price, return on assets, return on capital employed, return on
shareholders’ equity, earnings, earnings per share, total shareholder return,
sales, costs, or such other objective performance goals as may be established
by the Committee from time to time.

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

(c)           Vesting; Payment.  If the Committee determines, after the
expiration of the Performance Cycle, that the performance goals specified in
the Performance Unit certificate and all other material terms of the award have
been satisfied, the Performance Units will be vested and the grantee will
receive payment of the amount specified in the Performance Unit Certificate as
soon as practicable thereafter.  Payment
may be made in cash, shares of Common Stock or a combination of both, as
determined by the Committee, in its sole discretion.

(d)           Termination of Employment.  Unless otherwise determined by the Committee
at the time of grant, the Performance Units will be forfeited upon a
Participant’s 

 

12

 

termination of employment during the Performance
Cycle for any reason (including death, disability or retirement).

(e)           Payouts.  At the end of a Performance Period, the
Committee shall determine the extent to which the applicable performance goals
have been satisfied.  In the event of a
payout with respect to a Performance Unit award, such payout shall be made no
later than two and one-half (2-1/2) months following the end of the Performance
Period (subject to any deferrals permitted by the Committee in accordance with
Section 409A of the Code).

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

ARTICLE VIII

RESTRICTED STOCK

8.1           Restricted Stock.  The Committee, in its discretion, may from
time to time award and direct the Company to issue and transfer Restricted
Stock to any Employee eligible to receive Benefits under this Plan.  Each Employee who is awarded Restricted Stock
shall receive a Restricted Stock Agreement from the Company in a form specified
by the Committee and containing the terms and conditions, consistent with this
Plan, as the Committee, in its sole discretion, shall determine at the time the
award is made.

Restricted Stock awarded to
Employees may not be sold, transferred, pledged or otherwise encumbered during
a Restriction Period commencing on the date of the award and ending at such
later date or dates as the Committee may designate at the time of the
award.  The Employee shall have the
entire beneficial ownership of the Restricted Stock awarded to him or her,
including the right to receive dividends and the right to vote such Restricted
Stock.

If an Employee ceases to be
employed by the Company prior to the expiration of the Restriction Period, or
if the specified conditions are not met, then he or she shall forfeit all of
his or her Restricted Stock with respect to which the Restriction Period has
not yet expired and those shares of Common Stock must be immediately returned
to the Company; provided, however, that the Restricted Stock Agreements, in the
discretion of the Committee and pursuant to such terms and conditions as it may
impose, may provide:  (1) that, if such
Employee’s employment terminates for any reason other than conduct that in the
judgment of the Committee involves dishonesty or action by the Employee that is
detrimental to the best interests of the Company, then the Restricted Stock or
any related compensation deferral or a portion thereof shall not be forfeited;
(2) that, if such Employee’s employment terminates on account of total and
permanent disability, then the Employee shall not forfeit his or her Restricted
Stock or any related compensation deferral or a portion thereof; and (3) that,
if such Employee dies while employed by the Company, then his or her Restricted
Stock or any related compensation deferral or a portion thereof is not
forfeited.

Subject to Section 10.10,
each Employee who is awarded Restricted Stock may, but need not, be issued a
stock certificate in respect of such shares of Restricted Stock.  Each certificate registered in the name of an
Employee, if any, shall bear an appropriate legend 

 

13

 

referring to the terms,
conditions and restrictions applicable to such award as specifically set forth
in the Restricted Stock Agreement.

The Committee shall require
that any stock certificate issued in the name of an Employee representing
shares of Restricted Stock be held in the custody of the Company until the
expiration of the Restriction Period applicable to such Restricted Stock and
that, as a condition of such issuance of a certificate for Restricted Stock,
the Employee shall have delivered a stock power, endorsed in blank, relating to
the shares covered by such certificate. 
In no event shall the Restriction Period end prior to the payment by the
Employee to the Company of the amount of any federal, state or local income or
employment tax withholding that may be required with respect to the Restricted
Stock.

During the Restriction
Period, the individual who owns Restricted Stock shall have the right to vote
shares of Restricted Stock and to receive any dividends or other distributions
paid on such shares, subject to any restrictions deemed appropriate by the
Committee.

If any change is made in the
Common Stock by reason of any merger, consolidation, reorganization,
recapitalization, stock dividend, split up, combination of shares, exchange of
shares, change in corporate structure, or otherwise, then any shares received
by an Employee with respect to Restricted Stock shall be subject to the same
restrictions applicable to such Restricted Stock and the certificates
representing such shares shall be deposited with the Company.

ARTICLE IX

CHANGE OF CONTROL

9.1           Upon a Change of Control where the Company is not the
surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding
Options and Stock Appreciation Rights that are not exercised shall be assumed by,
or replaced with comparable rights granted by, the surviving corporation.

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

 

 

14

 

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

ARTICLE X

MISCELLANEOUS

10.1         Withholding Taxes.  An Employee granted Options, Restricted
Stock, Stock Appreciation Rights, Performance Shares or Performance Units under
this Plan shall be conclusively deemed to have authorized the Company to
withhold from the salary, commissions or other compensation of such Employee
funds in amounts or property (including Common Stock) in value equal to any
federal, state and local income, employment or other withholding taxes
applicable to the income recognized by such Employee and attributable to the
Options, Option Shares, Restricted Stock, Stock Appreciation Rights, Performance
Shares or Performance Units as, when and to the extent, if any, required by
law; provided, however, that, in lieu of the withholding of federal, state and
local taxes as herein provided, the Company may require that the Employee (or
other person exercising such Option, Stock Appreciation Rights, Performance
Shares or Performance Units or holding such Restricted Stock) pay the Company
an amount equal to the federal, state and local withholding taxes on such
income at the time such withholding is required or such other time as shall be
satisfactory to the Company.

10.2         Amendment, Suspension,
Discontinuance or Termination of Plan.  The Committee may from time to time amend,
suspend or discontinue this Plan or revise it in any respect whatsoever for the
purpose of maintaining or improving the effectiveness of this Plan as an
incentive device, for the purpose of conforming this Plan to applicable
governmental regulations or to any change in applicable law or regulations or
for any other purpose permitted by law; provided, however, that no such action
by the Committee shall adversely affect any Benefit theretofore granted under
this Plan without the consent of the holder so affected; and provided further
that the Committee may not materially increase the number of shares of Common
Stock authorized under Section 3.3 of this Plan or materially modify this
Plan’s requirements as to eligibility for participation or materially increase
the benefits accruing to participants under this Plan, in any such case without
the approval of the stockholders of the Company.  Unless sooner terminated by the Committee,
this Plan will terminate on April 16, 2016.

10.3         Governing Law.  This Plan shall be governed by, and construed
in accordance with, the laws of the State of Delaware (without giving effect to
principles of conflict of laws).

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

10.5         Indemnification of
Committee.  In addition to
such other rights of indemnification as they may have as directors or as
members of 

 

15

 

the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including
attorneys’ fees, actually and necessarily incurred in connection with the
defense of any investigation, action, suit or proceeding, or in connection with
any appeal therefrom, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with this Plan or any
Benefit, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in or dismissal or other
discontinuance of any such investigation, action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such investigation,
action, suit or proceeding that such Committee member is liable for negligence
or misconduct in the performance of his or her duties; provided that, within 60
days after institution of any such investigation, action, suit or proceeding, a
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.

10.6         Reservation of Shares.  The Company shall at all times during the
term of this Plan, and so long as any Benefit shall be outstanding, reserve and
keep available (and will seek or obtain from any regulatory body having
jurisdiction any requisite authority in order to issue) such number of shares
of its Common Stock as shall be sufficient to satisfy the requirements of this
Plan.  Inability of the Company to obtain
from any regulatory body of appropriate jurisdiction authority considered by
the Company to be necessary or desirable to the lawful issuance of any shares
of its Common Stock hereunder shall relieve the Company of any liability in
respect of the nonissuance or sale of such Common Stock as to which such requisite
authority shall not have been obtained.

10.7         Application of Funds.  The proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of Options will be used for
general corporate purposes.

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

10.9         Approval of Stockholders.  No Benefit granted under this Plan shall be
enforceable against the Company unless and until this Plan has been approved or
ratified by the stockholders of the Company in the manner and to the extent
required by the Exchange Act and the General Corporation Law of the State of
Delaware.

10.10       Uncertificated Shares.  Each Employee who exercises an Option to
acquire Common Stock or is awarded Restricted Stock may, but need not, be
issued a stock certificate in respect of the Common Stock so acquired.  A “book entry” (i.e., a computerized
or manual entry) shall be made in the records of the Company to evidence the
issuance of shares of Common Stock to an Employee where no certificate is
issued in the name of the Employee.  Such
Company records, absent manifest error, shall be binding on Employees.  In all instances where the date of issuance
of shares may be deemed significant but no certificate is issued in accordance
with this Section 10.10, the date of the book entry shall be the relevant date
for such purposes.

10.11       Forfeiture for Competition.  If a participant in this Plan provides
services to a competitor of the Company or any of its subsidiaries, whether as
an employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can

 

16

 

reasonably be expected to involve the skills and
experience used or developed by the participant while an Employee, then that
participant’s rights to any Benefits hereunder shall automatically be
forfeited, subject to a determination to the contrary by the Committee.

10.12       Successors.  This Plan shall be binding upon any and all
successors of the Company.

10.13       Employment Rights.  Nothing in this Plan or in any Agreement
shall confer on any Employee any right to continue in the employ of the Company
or any of its subsidiaries or shall interfere in any way with the right of the
Company or any of its subsidiaries to terminate such person’s employment at any
time.  Nothing in this Plan or in any
Agreement shall confer on any Non-Employee Director any right to continue to
serve as a member of the Board, nor is there any implied agreement or
understanding that such Non-Employee Director will be nominated for reelection
to the Board.

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

10.15       Tax Treatment and
Characterization.  Neither
the Company nor any other person represents or warrants to any Plan participant
(i) that any Option granted hereunder shall be considered an ISO for applicable
tax purposes or (ii) that favorable or desirable tax treatment or
characterization will be applicable in respect of any Benefit.

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

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

 

 

17

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