Document:

Exhibit
10.5

 

EMPLOYMENT AGREEMENT

 

                This
EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 3rd day of December,
2004, (the “Effective Date”) by and between Osiris Therapeutics, Inc., a
Delaware corporation (the “Company”), and Cary J. Claiborne, (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 December 3, 2004; 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 Chief Financial Officer during the
Employment Period. As such, the Executive shall render executive policy and
other management services to the Company of the

 

1

 

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 Executive’s best 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 180,000 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 may be eligible to earn a bonus in the amount of USD of up to 50,000
for the year 2005, which payments shall be based on mutually agreed performance
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 are prescribed by law or Company policy.

 

2

 

(f)
Equity. Upon the effective date of the Agreement, the Executive shall be
granted 240,000 options to purchase Company common stock at USD .10 per share, as
determined in the sole discretion of the Board. 
The options shall vest ratably, one-fourth on each anniversary of the effective
date for four consecutive years until fully vested.  The Executive may further be granted 60,000
options to purchase Companies common stock at USD .10.  These shares shall be granted upon meeting
certain milestones set in mutual agreement by the Company and the
Executive.  These shares shall vest
ratably, one-fourth on each anniversary of the grant 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.

 

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

 

6.                        Confidentiality: Work Product.

 

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

 

3

 

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).

 

7.                        Termination of Employment.  Either party may terminate employment within
the first 90 days of the effective date for any reason.

 

(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 

 

4

 

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.  The Executive may
be eligible for severance payments after completion of 90 days of employment.  No severance payment will be made if
Executive is terminated within the first 90 days after the effective date.

 

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

 

(b) Disability. If the
Company terminates the Executive’s employment
during the Employment Period because of the Executive’s disability pursuant to Section 7(a)(ii)(A) hereof, the Company shall pay to the
Executive, the Executive’s Base Salary prorated through the Date of Termination
and all other accrued and unpaid amounts, if any, to which the Executive is
entitled as of the Date of Termination, and the Company shall have no further
obligations to the Executive under this
Agreement; provided, that payments so made to the Executive
during any period that the Executive is unable to perform all of the Executive’s
duties hereunder by reason of illness, physical or mental illness or 

 

5

 

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 one half of the Executive’s annual Base Salary,
payable in a lump sum within 30 days from the Date of Termination, plus all
medical and life 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 and life benefits
shall be subject to the mitigation obligations in Section 8(f) below (the “Severance
Payments”), and the Company shall have no further obligations to the Executive
under this Agreement.

 

(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 one full year 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 the twelve-month period 

 

6

 

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(f) 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 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 

 

7

 

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.

 

(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 

 

8

 

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

            ATTENTION: CEO

            Fax:
410.522.5519

 

 

(b)                        If to the Executive:

 

Cary J. Claiborne

3056 Seneca Chief Trail

Ellicott City, Maryland 
21042

 

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 

 

9

 

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.

 

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.

 

10

 

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 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 or public
offering.

 

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

 

11

 

“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
December 3, 2004.

 

“Employment Period” is defined in Section 2 above.

 

“Executive” means Cary
J. Claiborne.

 

“Extended Term” is
defined in Section 2 above.

 

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

 

12

 

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: 

  	
  /s/ C. Randal Mills

  
	
   

  	
   

  
	
   

  	
  Name: C. Randal Mills

  
	
   

  	
   

  
	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
  12/3/04

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The Executive:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Cary J. Claiborne

  
	
   

  	
  Cary J. Claiborne

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
  12/3/04

  

 

 

14Exhibit
10.6

 

EMPLOYMENT AGREEMENT

 

                This EMPLOYMENT AGREEMENT (“Agreement”) is entered
into as of the first day of September, 2004, (the “Effective Date”) by and
between Osiris Therapeutics, Inc., a Delaware corporation (the “Company”), and
Harry Carmitchel, (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 September 1, 2004; 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 Chief Operating Officer during the
Employment Period. As such, the Executive shall render executive policy and
other management services to the Company of the 

 

1

 

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.

 

The Executive is permitted a maximum of 5 days per
month, during which time he may tend to other pre-established business
relationships outside of Osiris.

 

 

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 150,000 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 may be eligible to earn a bonus in the amount of USD of up to 18,000
for the year 2004, which payments shall be based on mutually agreed performance
targets.  The Executive may further be
eligible to a bonus in the amount of USD 40,000 for the year 2005, which
payments shall be based and dependent on mutually agreed performance 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 fifteen 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 

 

2

 

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 are prescribed by law or Company policy.

 

(f)
Equity. Upon the effective date of the Agreement, the Executive shall be
granted 400,000 options to purchase Company common stock at USD .10 per share, as
determined in the sole discretion of the Board. The options shall vest ratably,
one-fourth on each anniversary of the Effective Date for four consecutive years
until fully vested.   The Executive
shall further be granted 100,000 options to purchase Companies common stock at
USD .10, upon meeting certain milestones set in mutual agreement by the Company
and the Executive.  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 Virginia to the Baltimore,
Maryland area to include: incurred closing costs, real estate commissions, and
packaging, moving, and temporary storage services.  Such reimbursements will take into account
the tax consequences of any non-deductible monies, such that all reimbursements
or items of imputed income will also include monies sufficient to cover the
state and federal tax liabilities associated with such payments (i.e., these
payments will be “grossed-up”), and such reimbursements shall be made within
thirty (30) days of the presentment of invoices for same or advanced where
appropriate, not more that USD 75,000.

 

During
the transition period of Executive’s move from Virginia to Maryland, the
Company shall also provide, for a period of up to six (6) months the following temporary
executive housing and travel reimbursements and advances: (i) temporary
executive housing in the Baltimore area; (ii) transportation costs between
Virginia and Baltimore.

 

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 

 

3

 

itemized
account of such expenses, with appropriate documentation, which shall be
reviewed by the audit committee from time to time at its discretion.

 

6.                        Confidentiality: Work Product.

 

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

 

4

 

a “work made for hire,” the Executive hereby assigns and agrees to
assign to the Company all right, title and interest, including without limitation, copyright in and to such
copyrightable work. The Executive shall
promptly disclose such Work Product and copyrightable work to the Board and
perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and
confirm the Company’s ownership (including, without limitation,
assignments, consents, powers of attorney and other
instruments).

 

7.                        Termination of Employment.

 

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

 

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

 

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

 

(A)           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

 

(B) 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 

 

5

 

such estate, the Executive’s Base Salary prorated through the Date of
Termination and all other accrued and unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination, and the Company shall have no further obligations to the
Executive under this Agreement.

 

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

 

(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. (NOTE:Need to talk about the
disability 

 

6

 

payments if you wish to
leave this section....not possible with the current plan structure.)

 

(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.

 

 

7

 

9.    Noncompetition
and Nonsolicitation.

 

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

 

8

 

supplier, licensee or
business relation and the Company or any Subsidiary.

 

(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:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harry
  Carmitchel

  
	
   

  	
   

  	
  2108
  Piper Way

  
	
   

  	
   

  	
  Keswick,
  Virginia 22947

  

 

9

 

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 

 

10

 

any such provisions,
rights or privileges hereunder.

 

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.

 

11

 

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

 

“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 September 1, 2004.

 

“Employment Period” is defined in Section 2 above.

 

“Executive” means Harry Carmitchel

 

“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

 

12

 

continued
failure of the Company to cure such default within 30 days after written demand
for performance has been given to the Company by the Executive, which demand
shall describe specifically the nature of such 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),
(e) above.

 

“Severance Period” is defined in Section 8(d), (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: 

  	
  /s/ C. Randal Mills

  
	
   

  	
   

  
	
   

  	
  Name: C. Randal Mills

  
	
   

  	
   

  
	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
  November 2nd 2004

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The Executive:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Harry Carmitchel

  
	
   

  	
  Harry Carmitchel

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
  11/2/04

  

 

14

 

[OSIRIS THERAPEUTICS, INC.
LETTERHEAD]

 

 

 

April 1, 2005

Amendment to Employment Agreement for Harry Carmitchel

 

Section 4.g allowed for relocation reimbursements totaling not more
than USD 75,000.  The agreement will be
amended to permit the executive to use the relocation assistance toward his
temporary living expenses.  In no event
shall these expenses exceed USD 75,000.

 

The undersigned have duly executed this Amendment, or have caused this
Amendment to be duly executed on their behalf, as of the day and year
hereinabove written.

 

 

Osiris Therapeutics, Inc.

 

	
  By:

  	
  /s/ C. Randal Mills

  
	
   

  	
  C. Randal Mills

  
	
   

  	
  President & CEO

  
	
   

  	
   

  
	
  Date:

  	
  5/2/05

  
	
   

  	
   

  
	
   

  
	
   

  
	
  Executive:

  
	
   

  	
   

  
	
  /s/ Harry Carmitchel

  
	
  Harry Carmitchel

  
	
   

  	
   

  
	
  Date: 

  	
  5/2/05

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]