Document:

Exhibit 10.16

 

INVESTOR
RIGHTS AGREEMENT

Between

OSIRIS
ACQUISITION II, INC.

and

JCR PHARMACEUTICALS CO., LTD

Dated
as of August 26, 2003

 

 

 

 

TABLE
OF CONTENTS

	
   

  	
   

  	
  Page

  
	
  ARTICLE I
  DEFINITIONS

  	
   

  	
  2

  
	
   

  	
  SECTION
  1.01. Certain
  Defined Terms.

  	
  2

  
	
   

  	
  SECTION
  1.02. Interpretation
  and Rules of Construction

  	
  4

  
	
  ARTICLE
  II REGISTRATION RIGHTS

  	
   

  	
  6

  
	
   

  	
  SECTION
  2.01. Piggyback
  Registration

  	
  6

  
	
   

  	
  SECTION
  2.02. Obligations
  of the Company

  	
  7

  
	
   

  	
  SECTION
  2.03. Information
  from Holders

  	
  10

  
	
   

  	
  SECTION
  2.04. Expenses
  of Registration

  	
  10

  
	
   

  	
  SECTION
  2.05. Indemnification

  	
  10

  
	
   

  	
  SECTION
  2.06. Rule 144
  Reporting

  	
  13

  
	
   

  	
  SECTION
  2.07. Assignment
  of Registration Rights

  	
  13

  
	
   

  	
  SECTION
  2.08. “Market
  Stand Off” Agreement

  	
  14

  
	
   

  	
  SECTION
  2.09. Termination
  of Registration Rights

  	
  14

  
	
   

  	
  SECTION
  2.10. No
  Liability for Insider Trading

  	
  14

  
	
  ARTICLE
  III ADDITIONAL AGREEMENTS

  	
   

  	
  15

  
	
   

  	
  SECTION
  3.01. Delivery
  of Information

  	
  15

  
	
   

  	
  SECTION
  3.02. Reservation
  of Common Stock

  	
  15

  
	
   

  	
  SECTION
  3.03. Confidentiality
  of Records

  	
  16

  
	
   

  	
  SECTION
  3.04. Termination
  of Covenants

  	
  16

  
	
  ARTICLE
  IV REDEMPTION

  	
   

  	
  17

  
	
  ARTICLE V
  PRE-EMPTIVE RIGHT

  	
   

  	
  18

  
	
   

  	
  SECTION
  5.01. Pre-emptive
  Right

  	
  18

  
	
  ARTICLE
  VI MISCELLANEOUS

  	
   

  	
  20

  
	
   

  	
  SECTION
  6.01. Further
  Action

  	
  20

  
	
   

  	
  SECTION
  6.02. Expenses

  	
  20

  
	
   

  	
  SECTION
  6.03. Notices

  	
  20

  
	
   

  	
  SECTION
  6.04. Public
  Announcements

  	
  21

  
	
   

  	
  SECTION
  6.05. Severability

  	
  21

  
	
   

  	
  SECTION
  6.06. Entire
  Agreement

  	
  21

  
	
   

  	
  SECTION
  6.07. Assignment

  	
  21

  
	
   

  	
  SECTION
  6.08. Successors
  and Assigns

  	
  21

  
	
   

  	
  SECTION
  6.09. Governing
  Law

  	
  21

  
	
   

  	
  SECTION
  6.10. Counterparts

  	
  21

  
	
   

  	
  SECTION
  6.11. Brokers

  	
  22

  
	
   

  	
  SECTION
  6.12. Termination

  	
  22

  
	
   

  	
  SECTION 6.13. Arbitration

  	
  22

  
				

 

i

 

INVESTOR
RIGHTS AGREEMENT (this “Agreement”), dated as of August 26, 2003,
between OSIRIS ACQUISITION II, INC., a Delaware corporation (the “Company”),
and JCR PHARMACEUTICALS CO., LTD, a corporation organized under the laws of
Japan (the “Investor”).

WITNESSETH:

WHEREAS,
the Parties have entered into a Stock Purchase Agreement, dated as of the date
hereof (the “Stock Purchase Agreement”), pursuant to which the Investor has
agreed, among other things, to subscribe for and purchase the Company’s Series
B Preferred Stock (as defined in the Stock Purchase Agreement), and having the
designations, rights and preferences set forth in the Amendment of the
Certificate of Incorporation dated as of the date hereof.

WHEREAS,
the Parties desire to enter into this Agreement to govern certain of their
rights, duties and obligations in connection with the shares of the capital
stock of the Company to be held by the Investor and any permitted transferees.

NOW,
THEREFORE, the Parties hereby agree as follows:

 

 

ARTICLE I

DEFINITIONS

 

SECTION
1.01.   Certain Defined Terms. 
As used in this Agreement, the following terms shall have the following
meanings:

“Affiliate”
means, with respect to any Person, any other Person that which, directly or
indirectly, controls, or is controlled by, or is under common control with such
Person.  For the purposes of this
definition, the term “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise.

“Board”
means the Board of Directors of the Company.

“Business
Day” means any day that is not a Saturday, a Sunday or any other day on
which banks are authorized to be closed in the State of Maryland.

“Certificate
of Incorporation” means the Certificate of Incorporation of the Company, as
amended from time to time.

“Common
Stock” means the Common Stock of the Company, par value $0.001 per share.

“Converted
Registrable Securities” means shares of Common Stock issued or issuable
upon the conversion of shares of the Series B Preferred Stock of the Company.

“Encumbrance”
means any security interest, pledge, mortgage, lien (including, without limitation,
environmental and tax liens), charge, encumbrance, adverse claim, preferential
arrangement or restriction of any kind, including any restriction on the use,
voting, transfer, receipt of income or other exercise of any attributes of
ownership.

“Exchange
Act” means the Securities Exchange Act of 1934.

“Governmental
Authority” means any United States or non-United States federal, national,
supranational, state, provincial, local, or similar government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body.

“Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.

“Holder”
means any Person, including the Investor, then owning or having the right to
acquire Registrable Securities or any assignee thereof.

“Law”
means any federal, state, local or foreign statute, law, ordinance, regulation,
rule, code, order, other requirement or rule of law.

 

2

 

“License
Agreement” means the license agreement of even date by and between the Parties.

“Other
Shares” means, at any time, such Shares as do not constitute Primary Shares
or Registrable Securities.

“Outstanding”
with respect to the Shares, means, as of any date of determination, Shares that
have been issued on or prior to such date (other than Shares redeemed,
repurchased or otherwise reacquired by the Company on or prior to such date).

“Parties”
means the Company and the Investor.  “Party”
means each of the Company and the Investor individually.

“Person”
means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.

“Preferred
Stock” means the preferred stock of the Corporation now or hereinafter
authorized, including, without limitation, the Series B Preferred Stock.

“Primary
Shares” means, at any time, the authorized but unissued shares of Common Stock
and the shares of Common Stock held by the Company in its treasury.

“Public
Offering” means a public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of Common Stock
for the account of the Company to the public generally (as adjusted for stock
splits, reverse splits, stock dividends, subdivisions, reclassifications and
similar adjustments) and in respect of which the aggregate net proceeds to the
Company are not less than Twenty Million Dollars ($20,000,000), and as a result
of which shares of Common Stock are designated for trading on The New York
Stock Exchange, The American Stock Exchange or the NASDAQ National Market.

“register”,
“registered” and “registration” refer to a registration effected
by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.

“Registrable
Securities” means (a) the Converted Registrable Securities, and (b) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement
of, the Converted Registrable Securities. 
For purposes of this Agreement, any Registrable Securities shall cease
to be Registrable Securities (i) when they have been registered under the
Securities Act (the registration statement in connection therewith having been
declared effective) and disposed of pursuant to such effective registration
statement, (ii) when they are sold by a Person in a transaction in which the
rights and obligations under the provisions of this Agreement are not assigned;
(iii) when they have been sold or distributed pursuant to Rule 144 (including
Rule 144(k)) or (iv) for any Holder, on the last day of any three-month period
within which all such Registrable Securities held by such Holder may be sold or
distributed without registration pursuant to Rule 144.

 

3

 

“Restricted
Shares” means all Shares other than (a) Shares that have been registered
under an effective registration pursuant to the Securities Act, (b) Shares with
respect to which a Sale has been made in reliance on and in accordance with
Rule 144 or (c) Shares with respect to which the holder thereof shall have
delivered to the Company either (i) an opinion, in form and substance
satisfactory to the Company, of counsel, who shall be satisfactory to the
Company, or (ii) a “no-action” letter from the SEC, in each case to the effect
that subsequent transfers of such Shares may be effected without registration
under the Securities Act.

“Rule
144” means Rule 144 promulgated under the Securities Act or any successor
rule thereto or any complementary rule thereto (such as Rule 144A).

“SEC”
means the Securities and Exchange Commission.

“Securities
Act” means the Securities Act of 1933 and the rules and regulations thereunder.

“Shares”
means all shares of Common Stock, together with (a) all equity securities of
the Company (or any successor or assign of the Company) received on account of
ownership of such Common Stock, including any and all securities issued in
connection with any merger, consolidation, reclassification, stock dividend,
stock split, recapitalization or similar transaction in respect thereof, (b)
all warrants and options to purchase any equity securities of the Company and
(c) any securities of the Company convertible into or exchangeable for Common
Stock.

“Stock
Purchase Agreement” has the meaning ascribed thereto in the preambles of
this Agreement.

“Transaction
Documents” shall have the meaning ascribed thereto in the Stock Purchase
Agreement.

“Transfer”
used as a noun means any direct or indirect sale, assignment, transfer, pledge,
hypothecation, exchange or other disposition by any means whatsoever, whether
by operation of Law or otherwise; and, used as a verb, means any action or
actions taken by or on behalf of a Person, which result in a sale, assignment,
transfer, pledge, hypothecation, exchange or other disposition.

SECTION
1.02.   Interpretation and Rules of Construction.  In this Agreement, except to the extent that
the context otherwise requires:

(a)           when a reference is
made in this Agreement to an Article, Section, Exhibit or Schedule, such
reference is to an Article or Section of, or a Schedule to, this Agreement
unless otherwise expressly indicated;

(b)           the table of
contents and headings for this Agreement are for reference purposes only and do
not affect in any way the meaning or interpretation of this Agreement;

(c)           whenever the words “include”,
“includes” or “including” are used in this Agreement, they are deemed to be
followed by the words “without limitation”;

 

4

 

(d)           the words “hereof, “herein”
and “hereunder” and words of similar import, when used in this Agreement, refer
to this Agreement as a whole and not to any particular provision of this
Agreement;

(e)           all terms defined in
this Agreement have such defined meanings when used in any certificate or other
document made or delivered pursuant hereto, unless otherwise defined therein;

(f)            the definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms;

(g)           any Law defined or
referred to herein or in any agreement or instrument that is referred to herein
means such Law or statute as from time to time amended, modified or
supplemented, including by succession of comparable successor Laws;

(h)           references to a
Person are also to its permitted successors and assigns;

(i)            the use of “or” is
not intended to be exclusive unless expressly indicated otherwise; and

(j)            all references to
currency, monetary values and dollars shall mean United States (U.S.) dollars
and all payments hereunder shall be made in United States dollars.

 

5

 

ARTICLE
II

REGISTRATION RIGHTS

SECTION
2.01.   Piggyback Registration. 
(a) The Company shall notify each Holder in writing at least twenty
(20) days prior to the filing of any registration statement under the Securities
Act in connection with a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding any registration
statements relating to any employee benefit plan or a corporate reorganization
or other transaction covered by Rule 145 promulgated under the Securities Act,
or a registration on any registration form which does not permit secondary
sales or does not include substantially the same information as would be
required to be included in a registration statement covering the resale of
Registrable Securities) and will afford each Holder an opportunity to include
in such registration statement all or part of such Registrable Securities held
by such Holder.  In the event any Holder
desires to include in any such registration statement all or any part of the
Registrable Securities held by such Holder, such Holder shall, within ten (10)
days after the above-described notice from the Company, so notify the Company
in writing, including the number of such Registrable Securities such Holder
wishes to include in such registration statement.  Such notice shall state the intended method of
disposition of the Registrable Securities by such Holder.  If such Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by
the Company, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth herein.  The Company shall have no obligation to
include any Registrable Securities of a Holder in a registration statement
under this Section 2.01 if, in the reasonable opinion of counsel to the Company
delivered to such Holder, all such Registrable Securities proposed to be sold
by such Holder may be sold in a three (3) month period without registration under
the Securities Act pursuant to Rule 144 under the Securities Act; provided,
however, that the Company’s obligation to include such Registrable
Securities in such registration statement shall continue if, within five (5)
days of the delivery of the Company counsel’s opinion, counsel to such Holder
provides a reasonable opinion that such Registrable Securities are not eligible
to be sold pursuant to Rule 144 under the Securities Act.

(b)           If the registration
statement under which the Company gives notice under this Section 2.01 is for
an underwritten offering, the Company shall so advise the Holders.  In such event, the right of each Holder to be
included in a registration pursuant to this Section 2.01 shall be conditioned
upon such Holder’s participation in such underwriting.  In the event a Holder wishes to distribute
all or part of the Registrable Securities held by it through such underwriting,
such Holder shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.  Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of securities to be underwritten, then the
securities proposed to be included in such offering shall be included in the
following order:

(i)            first, any
Primary Shares or other securities proposed to be offered by the Company for
its own account and the Registrable Securities requested to

 

6

 

be
included in such registration which are Converted Registrable Securities and
any other shares of capital stock of the Company not held by the Investor which
have been requested to be included in such registration pursuant to
registration rights previously or hereafter granted by the Company to others (“Other
Registrable Securities”); provided that if necessary, the number of such
Registrable Securities, Primary Shares and the Other Registrable Securities
shall be reduced pro rata among the holders thereof based upon the number of
Registrable Securities and Primary Shares and Other Registrable Securities
requested to be registered by each such holder; and

(ii)           second, any
Other Shares which are not Other Registrable Securities.

(c)           The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 2.01 prior to the effectiveness of such registration whether or not
any Holders have elected to include securities in such registration.  The expenses of such withdrawn registration
shall be borne by the Company in accordance with Section 2.05 hereof.

(d)           For purposes of
Section 2.01 (b)(i), for any selling stockholder that is a Holder and that is a
partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall
be deemed to be a single selling Holder, and any pro rata reduction with
respect to such selling Holder shall be based upon the aggregate amount of
Registrable Securities owned by all such related entities and individuals.

SECTION
2.02.   Obligations of the Company.  Whenever required under this Article II to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

(a)           prepare and file
with the SEC a registration statement with respect to such Registrable
Securities and use commercially reasonable efforts to cause such registration statement
to become effective, and keep such registration statement effective for a
period of up to sixty (60) days or, if earlier, until the distribution
contemplated in the Registration Statement has been completed or all of such Registrable
Securities cease to be Registrable Securities;

(b)           prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement for
the period set forth in paragraph (a) above;

(c)           furnish to the
Investor and each other Holder of Registrable Securities covered by such
registration statement such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and

 

7

 

such
other documents as they may reasonably request in writing in order to
facilitate the disposition of Registrable Securities owned by them, provided,
however, that the obligation of the Company to deliver copies of prospectuses
or preliminary prospectuses to the Investor or the Holder shall be subject to
compliance by the Holder with the applicable provisions of the Securities Act
and of such other securities or blue sky laws as may be applicable in
connection with any use of such prospectuses or preliminary prospectuses, and
delivery to the Company (upon its request) of reasonable written evidence of
compliance therewith;

(d)           use commercially
reasonable efforts to register or qualify the Registrable Securities covered by
such registration statement under such other securities or “blue sky” laws of
such states or other jurisdictions as shall be reasonably requested by each
Holder of Registrable Securities covered by such registration statement to
enable such Holder to consummate the disposition of such Registrable Securities
in such jurisdictions, provided that the Company shall not be required
In connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or other
jurisdictions or to subject itself to taxation in any such jurisdiction;

(e)           in the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing underwriter
of such offering;

(f)            promptly notify
each Holder of Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, provided,
that the Holders agree that, upon receipt of any notice from the Company of the
happening of any event of the kind described in this subsection 2.02(f), they
will immediately discontinue disposition of shares pursuant to a Registration
Statement until they receive copies of the supplemented or amended prospectus
contemplated by this subsection 2.02(f), and, if so directed by the Company the
Holders will deliver to the Company all copies, other than permanent file
copies in their possession, of the most recent prospectus (including any
prospectus supplement) covering such shares at the time of receipt of such
notice or destroy all such copies;

(g)           apply for all such
Registrable Securities registered pursuant to this Agreement to be listed on a
securities exchange on which similar securities issued by the Company are then listed;

(h)           provide a transfer
agent and registrar for all Registrable Securities registered pursuant to this
Agreement and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration;

(i)            use its
commercially reasonable efforts to prevent the issuance of any order suspending
the effectiveness of a registration statement and, in the event of the

 

8

 

issuance
of any stop order suspending the effectiveness of a registration statement or
of any order suspending or preventing the use of any related prospectus or
suspending the qualification of any shares of capital stock included in the
registration statement for sale in any jurisdiction, use its commercially
reasonable efforts promptly to obtain the withdrawal of the order;

(j)            if requested by the
managing underwriter or underwriters (if any), a Holder or its counsel, promptly
incorporate in a prospectus supplement such information as such Person requests
to be included therein with respect to the Holder or the securities being sold,
including, without limitation, with respect to the securities being sold by the
Holder to such underwriter or underwriters, the purchase price being paid
therefore by such underwriter or underwriters and with respect to any other
terms of an underwritten offering of the securities to be sold in such
offering, and promptly make all required filings of such prospectus supplement;

(k)           furnish, at the
request of holders of a majority in interest of the Registrable Securities
participating in the registration, on the date that Registrable Securities held
by the Holders are delivered to the underwriters for sale, if such Registrable
Securities are being sold through underwriters, or, if such Registrable
Securities are not being sold through underwriters, on the date that the
registration statement with respect to such Registrable Securities becomes effective,
(i) an opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of Holders of Registrable  Securities participating in the registration,
addressed to the underwriters, if any, and to such Holders and (ii) a “comfort”
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering
and reasonably satisfactory to holders of a majority in interest of Registrable
Securities participating in the registration, addressed to the underwriters, if
any, and, if permitted by applicable accounting standards to the Holders
requesting registration of Registrable Securities;

(l)            enter into
customary agreements and take all other actions as holders of a majority in
interest of Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of any
Registrable Securities held by the Holders and covered by such registration
statement;

(m)          otherwise comply with
all applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement,
which need not be audited, covering the period of at least twelve (12) months
beginning with the first day of the Company’s first fall calendar quarter after
the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder; and

(n)           permit each
participating Holder to require the insertion in any registration statement
covering such Holder’s Registration Securities of material, furnished to the

 

9

 

Company
in writing, that in the reasonable judgment of such Holder and its counsel
should be included therein in order to reduce the risk that such Holder may be
deemed to be an underwriter or a controlling Person of the Company, or to
reduce the risk and potential liability associated therewith in the event that
such Holder is deemed to be an underwriter or controlling Person of the Company
(including, without limitation, that the holding by such Holder of Registrable
Securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company’s securities covered thereby and that the
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company), provided that the material does
not contain a material misstatement or omission, and provided further
that in the reasonable judgment of the Company and its counsel such material
would not have an adverse effect on the Company or on the Company’s stock
price.

SECTION
2.03.   Information from Holders. 
It shall be a condition precedent to the obligation of the Company to take
any action pursuant to this Article II with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish promptly to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as the Company
may from time to time reasonably request and such information as shall be
required to effect the registration of such Holder’s Registrable Securities; provided
that the Company shall furnish to the Holders, prior to the filing of the
registration statement or any prospectus, amendment or supplement thereto,
copies of the portions of the Registration Statement as proposed to be filed
which contain information regarding the distribution of the shares of
Registrable Securities of such Holders or any other information regarding the
Holders, which such portions will be subject to the reasonable review and comments
of the Holders (and their counsel); and provided further that the
Company will not file any such Registration Statement, any prospectus or any
amendment or supplement thereto in the event that the Holders shall reasonably
object in writing, within five (5) days of receipt (in accordance with Section
5.03) of such portions, to any portion of any such document that is subject to
review by the Holders pursuant to this Section 2.03.

SECTION
2.04.   Expenses of Registration. 
All expenses incurred in connection with registrations, filings or
qualifications pursuant to Section 2.01 including all registration, filing and
qualification fees, printers’ and accounting fees, fees and disbursements of
counsel for the Company, shall be borne by the Company.  Notwithstanding the foregoing, the Holders
shall pay all their internal expenses incurred in connection with the
registration (including, without limitation, all salaries and expenses of the
Holders’ officers and employees performing legal or accounting duties and fees
and expenses of in-house and outside legal counsel and other in-house and
outside consultants to the Holders), as well as any underwriting discounts and
commissions with respect to any Registrable Securities sold by the Holder.

SECTION
2.05.   Indemnification.  In
the event any Registrable Securities are included in a registration statement
under this Article II:

(a)           To the extent
permitted by Law, the Company will indemnify and hold harmless each selling
Holder, the partners or officers, directors and stockholders of such Holder,
legal counsel and accountants for such Holder, any underwriter (as defined in
the Securities Act) for such Holder and each Person, if any, who controls such
Holder or

 

10

 

underwriter
within the meaning of the Securities Act or the Exchange Act, and each
Affiliate of any of the foregoing (each, a “Company Indemnified Party”),
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation by the
Company of the Securities Act, the Exchange Act, any state securities laws or
any rule or regulation promulgated under the Securities Act, the Exchange Act
or any state securities laws (collectively (i), (ii) and (iii) a “Violation”);
and the Company will reimburse each such Company Indemnified Party for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subsection
2.05(a) shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case to the extent that any such loss, claim,
damage, liability or action (including any legal or other expenses incurred)
arises out of or is based upon an untrue statement or allegedly untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Securities in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by the Holder or its counsel or underwriter
specifically for use in the preparation thereof.

(b)           To the extent
permitted by Law, the Holders shall, jointly and severally, indemnify and hold
harmless the Company, the partners or officers, directors and stockholders of
the Company, legal counsel and accountants for the Company, any underwriter,
and any controlling person of any such underwriter, and each Affiliate of any
of the foregoing, against any losses, claims, damages or liabilities (joint or
several) or actions in respect thereof to which any of the foregoing Persons
may become subject, under the Securities Act, the Exchange Act or any state
securities laws, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by a Holder
expressly for use in connection with such registration; and the Holders will
reimburse any Person intended to be indemnified pursuant to this subsection
2.05(b), for any legal or other expenses reasonably incurred by such Person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this subsection 2.05(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of holders of a majority in interest
of the

 

11

 

Registrable
Securities participating in the registration (which consent shall not be
unreasonably withheld).

(c)           The total amount of
the Company’s indemnification liability under Section 2.05(a) and the Holders’
indemnification liability under Section 2.05(b), respectively, shall in each
case be limited to an amount equal to the sum of (a) the aggregate purchase price
paid by the Investor for the Shares issued under the Stock Purchase Agreement
plus (b) the reasonable attorneys’ fees and other expenses of the prevailing
party.  The Holders and the Company agree
that the sole recourse and exclusive remedy with respect to any breach of any
of the representations, warranties and covenants contained in this Agreement
shall be the right to indemnification under this Section 2.05.

(d)           Promptly after
receipt by an indemnified party under this Section 2.05 of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.05, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof; provided, however, that the failure to give
prompt notice shall not: (i) limit the indemnification obligations of the indemnifying
party hereunder except to the extent that the delay in giving, or failure to
give, prompt notice prejudices the ability of the indemnifying party to defend
against such action, or (ii) relieve the indemnifying party of any liability
that it may have to any indemnified party otherwise than under this Section
2.05.  The indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding.

(e)           If the indemnification
provided for in this Section 2.05 is held by a court of competent jurisdiction
to be unavailable to an indemnified party with respect to any losses, claims,
damages or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted
by applicable Law contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. 
The relative fault of the indemnifying party and of the indemnified
party shall be determined by a court of competent jurisdiction by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or

 

12

 

prevent
such statement or omission; provided that in no event shall any
contribution by either party hereunder exceed the net proceeds from the
offering received by the Holders.  The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 2.05(d) were determined by pro  rata
allocation or by any other method of allocation which does not take account of
the equitable consideration referred to in this paragraph.

(f)            The obligations of
the Company and the Holders under this Section 2.05 shall survive the
completion of any offering of Registrable Securities in a registration
statement under this Article II, and otherwise.

(g)           Defect Eliminated
in Final Prospectus.  The foregoing
indemnity agreements of the Company and Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at
the time such registration statement becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”),
such indemnity agreement shall not inure to the benefit of any person if a copy
of the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim, or damage at or
prior to the time such action is required by the Securities Act.

SECTION
2.06.   Rule 144 Reporting. 
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
SEC that may at any time permit the Holders to sell securities of the Company
to the public without registration or pursuant to a registration on Form S-3,
the Company agrees, at all times after the consummation of a Public Offering
to:

(a)           make and keep public
information available, as those terms are understood and defined in SEC Rule 144,
or any similar or analogous rule promulgated under the Securities Act;

(b)           file with the SEC in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and

(c)           furnish to the
Holders forthwith upon request (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144, the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements) or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing the Holders of any rule or
regulation of the SEC that permits the selling of any such securities without
registration or pursuant to such form.

SECTION
2.07.   Assignment of Registration Rights.  The rights to register Registrable Securities
pursuant to Section 2.01 may be assigned (but only with all related
obligations) only by the Investor to an Affiliate of the Investor that, after
such assignment or transfer, holds shares

 

13

 

of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations) provided
that (i) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (ii) such transferee or assignee agrees in writing to be bound
by and subject to the terms and conditions of this Agreement, including,
without limitation, Section 2.08 below and (iii) such transferee or assignee
acquires from such party at least two hundred fifty thousand (250,000) shares
of such Registrable Securities (as adjusted for any stock dividends paid in such
Registrable Securities, and combinations, stock splits, recapitalizations and
the like with, respect to such Registrable Securities).

SECTION
2.08.   “Market Stand Off” Agreement.  (a) The Investor and each other Holder
hereby agrees that it will not, during the period commencing on the effective
date of a registration statement of the Company filed under the Securities Act
and ending on the date specified by the Company and the managing underwriter,
but in no event for a date later than that to which the officers of the Company
have agreed to, directly or indirectly (i) lend, offer, pledge, sell, contract
to sell (including, without limitation, any short sale), offer to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any Shares (whether such Shares are then
owned by the Investor or such other Holder or are thereafter acquired), or
(ii) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of the
Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise.

(b)           In order to enforce
the foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registrable Securities held by the Investor or such other Holder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.

SECTION
2.09.   Termination of Registration Rights.  No Holder shall be entitled to exercise any
right provided for in this Article II after four (4) years following the
consummation of the Company’s initial Public Offering or such earlier time at
which all Registrable Securities held by such Holder (and any Affiliate of such
Holder with whom such Holder must aggregate its sales under Rule 144) can be
sold without registration in compliance with Rule 144(k) of the Securities Act.

SECTION
2.10.   No Liability for Insider Trading.  Notwithstanding any other provision of this
Agreement, in no event shall the Company or any of its Affiliates be
responsible for any liability to which any Holder or any of its Affiliates may
be subject by reason of trading in securities of the Company at a time when it
is in possession of material non-public information.

 

14

 

ARTICLE III

ADDITIONAL AGREEMENTS

 

SECTION
3.01.   Delivery of Information. 
(a) So long as the Investor continues to hold a majority of the
issued and outstanding Series B Preferred Stock, the Company shall deliver to
the Investor within one-hundred twenty (120) days after the end of each fiscal
year of the Company after the date this Agreement, a balance sheet of the
Company, as at the end of such fiscal year, and a statement of income and a
statement of cash flows of the Company, for such year, all prepared in
accordance with United States generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail (the “Audited
Financial Statements”).  Such
financial statements shall be accompanied by a report and opinion thereon by a
firm of independent public accountants of national standing selected by the
Company (the “Audit Report”).

(b)           So long as the
Investor continues to hold a majority of the issued and outstanding Series B
Preferred Stock, the Company shall deliver to the Investor within forty-five
(45) days after the end of the first, second and third quarterly accounting
periods after the date of this Agreement in each fiscal year of the Company, a
balance sheet of the Company as of the end of each such quarterly period, and a
statement of income and a statement of cash flows of the Company for such
period and for the current fiscal year to date, prepared in accordance with
United States generally accepted accounting principles, subject to year-end
audit adjustments and the addition of and any changes to any notes thereto.

(c)           So long as the
Investor continues to hold a majority of the issued and outstanding Series B
Preferred Stock, the Company shall deliver to the Investor, within five (5) Business
Days after an executive officer of the Company has actual knowledge of: (i) the
occurrence of a default hereunder, or under any material agreement of the
Company with any third party, including any loan or financing agreement, (ii) the
commencement of any legal proceeding against the Company or the occurrence of
any event which is reasonably likely (with or without the passage of time) to
have a material adverse effect on the Company, or (iii) any effect,
condition, event, or circumstance that has resulted in a material or adverse
effect on the business, properties, assets, condition (financial or otherwise),
results of operations, prospects or liabilities of the Company, a statement
from the chief executive officer of the Company describing such occurrence and
management’s anticipated response.

SECTION
3.02.   Reservation of Common Stock.  The Company shall take any and all action
necessary to reserve for issuance the number of shares of Common Stock into
which all of the shares of Series B Preferred Stock authorized by the
Certificate of Incorporation then outstanding or to be sold to the Investor is
convertible, and shall take such further action from time to time thereafter to
increase the number of shares of Common Stock reserved for issuance as required
by any increase in the number of shares of Common Stock into which such Series
B Preferred Stock may then be converted.

 

15

 

SECTION
3.03.   Confidentiality of Records. 
The Investor and each Holder agrees to use, and to use its best efforts
to insure that its authorized representatives use, the same degree of care as
the Investor and such Holder uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that the Investor and such Holder may
disclose such proprietary or confidential information to any partner, member,
subsidiary, parent or Affiliate of the Investor and such Holder solely for the
purpose of evaluating its investment in the Company as long as such partner,
subsidiary or parent is advised of, and agrees in writing to be bound by, the
confidentiality provisions of this Section 3.03.

SECTION
3.04.   Termination of Covenants. 
Unless no longer applicable in accordance with the terms of such Section
at an earlier date, the covenants set forth in Section 3.01 shall in any event
terminate and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Securities
Act in connection with a Public Offering is consummated.

 

16

 

ARTICLE IV

REDEMPTION

 

At
any time and from time to time after the License Agreement between the Parties
of even date is terminated, the Company shall have the right to redeem all of
the issued and outstanding shares of Series B Preferred Stock at a price per
share equal to the Fair Market Value (as defined in the Certificate of
Incorporation) of each share of Series B Preferred Stock to be redeemed.  With respect to such redemption, the Company
shall give at least ten (10) days’ written notice to each holder of Series B
Preferred Stock to be redeemed, which notice shall state the date of the
redemption (the “Redemption Date”), the number of shares to be redeemed,
the aggregate redemption price and the place where such holder may obtain payment
of such redemption price.  On such
Redemption Date, each holder of Series B Preferred Stock called for redemption
shall surrender to the Company or its transfer agent all certificates for the
shares of Series B Preferred Stock to be redeemed; provided, however,
that on such Redemption Date (whether or not the certificates representing such
shares are so surrendered), all rights of the respective holders of such shares
with respect to the ownership thereof shall automatically cease, except for the
right to receive the redemption price hereunder upon surrender of such
certificates.

 

17

 

ARTICLE V

PRE-EMPTIVE RIGHT

 

SECTION
5.01.   Pre-emptive Right.  (a) Subject
to the terms and conditions of this Section 5.01, the Company hereby grants to
the Investor a right of first offer (the “Right of First Offer”) to purchase
its pro rata share of issues and sales by the Company of its Equity Securities
(as hereinafter defined).  The Investor’s
pro rata share, for purposes of this Right of First Offer, is the ratio of the
number of shares of Common Stock owned by the Investor immediately prior to the
issuance of the Equity Securities, assuming full conversion of the Preferred
Stock and exercise of all outstanding rights, options and warrants to acquire
Common Stock held by said Investor, to the total number of shares of Common
Stock outstanding immediately prior to the issuance of the Equity Securities,
assuming full conversion of all outstanding Preferred Stock, and the exercise
of all outstanding rights, options and warrants to acquire Common Stock.

(b)           Each time the
Company proposes to offer any shares, whether now authorized or not, or any
rights, options or warrants to purchase any such shares of Common Stock or of
its preferred stock or any securities of any type that are or may become
convertible into or exchangeable or exercisable for any shares of, any class of
Common Stock or its preferred stock (“Equity Securities”), the Company shall
first make an offer of such Equity Securities to the Investor in accordance
with the following provisions:

(i)            The Company shall
deliver a notice (an “Issue Notice”) to the Investor stating (A) its bona fide
intention to offer such Equity Securities, (B) a description of such Equity Securities,
(C) the number of such Equity Securities to be offered, and (D) the price and
terms upon which it proposes to offer such Equity Securities.

(ii)           By written notice
to the Company within ten (10) Business Days after receipt by the Investor of an
Issue Notice, the Investor may elect to purchase or obtain, at the price and on
the terms specified in the Issue Notice, its pro rata share of the Equity
Securities at the price and upon the terms specified in the Issue Notice and
stating therein the quantity of Equity Securities to be purchased.

(iii)          if all of the
Equity Securities that the Investor is entitled to obtain pursuant to Section
5.01(b)(ii) are not elected to be obtained as provided in Section 5.01(b)(ii),
the Company may, during the one-hundred and twenty (120) day period following
the expiration of the five (5) Business Day period provided in Section
5.01(b)(ii), offer the remaining unsubscribed portion of such Equity Securities
to any Person or Persons at a price not less than, and upon terms no more
favorable to the offeree than, those specified in the Issue Notice.  If the Company does not enter into an
agreement for the sale of the Equity Securities within such period, or if such
agreement is not consummated within one-hundred and twenty (120) days of the
execution thereof, the right provided hereunder shall be deemed to be revived
and such Equity Securities shall not be offered unless first re-offered to the
Investor in accordance herewith.

 

18

 

(iv)          The Right of First
Offer in this Section 5.01 shall not be applicable to (A) the issuance or
sale of shares of Common Stock (or options therefore) to employees or officers
for the primary purpose of soliciting or retaining their services, including,
without limitation, pursuant to the Company’s incentive stock plan or any other
plan or arrangement approved by the Board; (B) the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable
securities, including, without limitation, upon conversion of the Preferred
Stock; (C) the issuance of securities pursuant to a Public Offering; or
(D) securities of the Company issued, in a single transaction or in a
series of related transactions, in connection with bank financing transactions,
commercial credit transactions, equipment lease financing transactions or
similar transactions approved by the Company’s Board the principal purpose of
which is not to raise equity funding and which do not exceed 5% of the Company’s
Equity Securities on a fully diluted basis; (E) securities issued, in a
single transaction or in a series of related transactions, in connection with
transactions with operating companies approved by the Company’s Board involving
research or development funding, technology licensing or joint marketing or
manufacturing activities and which do not exceed 5% of the Company’s Equity
Securities on a fully-diluted basis; and (F) shares of Common Stock or
preferred stock issued in connection with any stock split, stock dividend, or
recapitalization where the proportionate equity of the Investor remains
unchanged by the Company.

 

19

 

ARTICLE VI

MISCELLANEOUS

 

SECTION
6.01.   Further Action.  Each
of the Parties shall use commercially reasonable efforts to take, or cause to
be taken, all appropriate action, do or cause to be done all things necessary,
proper or advisable under applicable Law, and to execute and deliver such
documents and other papers, as may be required to carry out the provisions of
this Agreement and consummate and make effective the transactions contemplated
by this Agreement.

SECTION
6.02.   Expenses.  Except as
otherwise specified in this Agreement, all costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such costs
and expenses.

SECTION
6.03.   Notices.  All notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given
or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by telecopy or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 6.03):

	
   

  	
  (a)

  	
  if to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Osiris Acquisition II,
  Inc.

  
	
   

  	
   

  	
  2001 Aliceanna Street

  
	
   

  	
   

  	
  Baltimore, Maryland
  21231-3043

  
	
   

  	
   

  	
  Attention: President and
  Chief Executive Officer

  
	
   

  	
   

  	
  Telecopier: (410) 522-6999

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Carella, Byrne, Bain,
  Gilfillan,

  
	
   

  	
   

  	
    Cecchi,
  Stewart & Olstein

  
	
   

  	
   

  	
  6 Becker Farm Road

  
	
   

  	
   

  	
  Roseland, NJ 07068

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Elliot M.
  Olstein, Esq.

  
	
   

  	
   

  	
  Telecopier: (973) 994-1744

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  if to the Investor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JCR Pharmaceuticals Co.,
  Ltd.

  
	
   

  	
   

  	
  3-19 Kasuga-cho, Ashiya,
  659-0021, Japan

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
  Telecopier: +81 797 38
  1752

  

 

20

 

Any
notice, if mailed and properly addresses with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; and notice, if transmitted by facsimile, shall be deemed given when
the confirmation of transmission thereof is received by the transmitter.

SECTION
6.04.   Public Announcements.  No Party shall make, or cause to be made, any
press release or public announcement in respect of this Agreement or the
transactions contemplated by this Agreement or otherwise communicate with any
news media without the prior written consent of the Company and the Investor,
and the Parties shall cooperate as to the timing and contents of any such press
release or public announcement.

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

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

SECTION
6.07.   Assignment.  Other
than as expressly provided herein, this Agreement may not be assigned by
operation of law or otherwise without the express written consent of the
Company and, for as so long as it is a Holder, the Investor.

SECTION
6.08.   Successors and Assigns.  Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities).  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

SECTION
6.09.   Governing Law.  This
Agreement shall be governed by, and construed in accordance wife, the laws of
the State of Delaware without giving effect to any choice or conflict of law
provision or rule that would cause the application of the laws of any other
state.

SECTION
6.10.   Counterparts.  This
Agreement may be executed and delivered (including by facsimile transmission)
in one or more counterparts, and by the different Parties in separate
counterparts, each of which when executed shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement.  Delivery of an executed

 

21

 

counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

SECTION
6.11.   Brokers.  The
transactions contemplated hereby have been and shall be carried on by parties
in such manner as not to give rise to any valid claims against the parties for
a brokerage commission, finder’s fee or other like payment.  Each party agrees to indemnify and hold the
other harmless from and against any claims for brokerage commissions or finder’s
fees insofar as such claims shall be alleged to be based upon arrangements or
agreements made by the indemnifying party or on its behalf.  Such indemnity shall include the cost of
reasonable counsel fees in connection with the defense of any such claims.

SECTION
6.12.   Termination.  This
Agreement shall terminate (a) as of the date on which the Holders cease to
hold any Restricted Shares, or (b) automatically upon the termination of
the License Agreement by and between the Parties, provided, however,
that the Company’s right of Redemption (set forth, in Article IV above) shall
survive any termination of this Agreement pursuant to subsection (b) hereof.  In addition, either party may terminate this
Agreement if the other party materially defaults in the performance of any of
its obligations hereunder, and if such default is not cured within forty-five
(45) days after written notice complaining thereof is received by such party
indicating the (i) nature and basis of such default and (ii) non-defaulting
party’s intention to terminate this Agreement under this Section 6.12.

SECTION
6.13.   Arbitration.  All
disputes, controversies or differences which may arise between the Parties, out
of or in relation to this Agreement, or the breach thereof, which cannot be
promptly resolved on an amicable basis, shall be finally settled by arbitration
pursuant to the Japan-American Trade Arbitration Agreement of September, 1952,
by which each Party hereto is bound.

 

22

 

IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed as
of the date first written above.

	
   

  	
  OSIRIS ACQUISITION II,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wiliam Purlsey

  
	
   

  	
   

  	
  Name: William Pursley

  
	
   

  	
   

  	
  Title: President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JCR PHARMACEUTICALS CO.,
  LTD

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shin Ashida

  
	
   

  	
   

  	
  Name: Shin Ashida

  
	
   

  	
   

  	
  Title: President and Chief
  Executive Officer

  

 

23Exhibit 10.17

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

 

 

LICENSE
AGREEMENT

 

This Agreement, dated August 26, 2003 (the “Effective Date”), is
by and between OSIRIS Acquisition II, Inc. (“OSIRIS”), a company duly
incorporated under the laws of the State of Delaware, having offices at 2001
Aliceanna Street, Baltimore, Maryland 21231 USA, and JCR Pharmaceuticals Co.,
Ltd. (“JCR”), a company duly incorporated under the laws of Japan, with its
corporate domicile at 3-19 Kasuga-cho, Ashiya, 659-0021, Japan.

 

WHEREAS, OSIRIS is the owner of certain technology, including, but not
limited to patents and know-how, relating to mesenchymal stem cells; and

 

WHEREAS, JCR desires to obtain, and OSIRIS desires to grant to JCR, an
exclusive right and license in Japan in and to such technology for use in
conjunction with the treatment of hematological malignancies with hematopoietic
stem cells on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and other good
and valuable consideration, the parties agree as follows:

 

1.             DEFINITIONS

 

The terms used in this Agreement have the following meaning:

 

1.1           “Affiliate”,
with respect to any Party, shall mean any Person whether de jure or de facto,
controlling, controlled by, or under common control with, such Party.  For these purposes, “control” shall refer to
(a) the possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise or (b) the ownership, directly or
indirectly, of more than 50% (or such lesser percentage without breaching the
terms of an Agreement with a Third Party which is the maximum allowed to

 

 

 

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EXCHANGE COMMISSION.

 

 

be
owned by a foreign corporation in a particular jurisdiction of the voting
securities or other ownership interest of a Person).

 

1.2           “Combination
Product” means Product that is sold in combination with another product
(such as in a kit) or that is included as part of a service.

 

1.3           “Confidential
Information” shall have the meaning assigned to such term in
Section 9.1.

 

1.4           “Controlled”
shall mean owned by OSIRIS or JCR, as the case may be with the right to grant a
license thereunder without breaching the terms of an agreement with a Third
Party.

 

1.5           “Development Plan”
means the plan attached as Appendix A for development of Product in the
Field in the Territory.

 

1.6           “Field” shall
mean the use of MSC in or in conjunction with the treatment of hematological
malignancies by the use of hematopoietic stem cells derived from peripheral
blood, cord blood or bone marrow.

 

1.7           “First Commercial
Sale” shall mean, with respect to any Product in the Territory, the first
sale by JCR, its Affiliates or Sublicensees to a Third Party of such Product,
in the Territory after all required marketing and pricing approvals (if
required) have been granted, or otherwise permitted, by the governing health
care authority of the Territory.  “First
Commercial Sale” shall not include the sale of any Product for use in clinical
trials or for compassionate use prior to the grant of regulatory approval.

 

1.8           “IND” shall
mean an application that is filed in the Territory by JCR or its Affiliate or
Sublicensee to initiate a clinical trial of Product in the Field in humans.

 

1.9           “JCR Patents”
shall mean any patent or patent application anywhere in the world, including
but not limited to any division, continuation, or continuation-in-part,
reissue, re-

 

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examination,
patent extension, Controlled by JCR or its Affiliates at any time during the
term of this Agreement insofar as it contains one or more claims to JCR Special
Technology.

 

1.10         “JCR Special
Technology” shall mean information, data and materials, Controlled by JCR
that is useful for the recovery, maintenance, expansion, formulation or use of
MSC and that results from the research and/or development of Product under this
Agreement.

 

1.11         “MSC” shall
mean human cells that are capable of differentiation into more than one
mesenchymal lineage.

 

1.12         “Net Sales”
shall mean, with respect to Product in the Territory, the gross amount invoiced
by JCR, its Affiliates, Sublicensees or co-marketers for such Product less
deductions for:  (i) trade, quantity
and/or cash discounts, allowances and rebates actually allowed or given;
(ii) freight, shipping, insurance and other transportation expenses (if
separately identified in such invoice); (iii) credits or refunds actually
allowed for rejections, or defects of such Product, outdated or returned
Product, or because of rebates or retroactive price reductions;
(iv) sales, value-added, excise taxes, tariffs and duties, and other taxes
directly related to the sale, to the extent that such items are separately
identified in such invoice and are paid by the purchaser of Product.  In the event of Combination Product, Net
Sales shall be calculated on the usual individual amount invoiced for the
Product as if it were a stand-alone product.

 

1.13         “Orphan
Designation” means any treatment of a disease which afflicts less than
50,000 patients per year in the Territory and/or the use in such patients and
that meets the criteria for orphan designation application established by the
governing health care authority in the Territory other than the Field.

 

1.14         “OSIRIS Patents”
shall mean any and all patents and/or patent applications in the Territory, and
any division, continuation, continuation-in-part or reissue, re-examination,
patent

 

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EXCHANGE COMMISSION.

 

 

extension,
thereof in each case that is Controlled by OSIRIS as of the Effective Date or
at any time during the term of this Agreement and only to the extent that it
claims the manufacture, use or sale of a Product.  OSIRIS Patents as of the Effective Date are
listed in Appendix B which shall be updated periodically.  In the event that OSIRIS has a license to any
patent or patent application that is sublicensable to JCR, such patent or
patent application shall be included in OSIRIS Patents if JCR agrees to make
payments due thereunder as a result of JCR obtaining a sublicense and
practicing thereunder.

 

1.15         “OSIRIS Technology”
shall mean information, know-how, data and materials, including technical and
non-technical data and information (i) Controlled by OSIRIS on the Effective
Date and/or at any time during the term of this Agreement and (ii) which
relates to Product, and in each case which is necessary or useful for the
development, manufacture, composition, use or sale of Product in the Field in
the Territory.

 

1.16         “Party” shall
mean OSIRIS or JCR and, when used in the plural, shall mean OSIRIS and JCR.

 

1.17         “Patent” shall
mean individually and collectively JCR Patents and OSIRIS Patents.

 

1.18         “Person” shall
mean any natural person, corporation, firm, business trust, joint venture,
association, organization, company, partnership or other business entity, or
any government or any agency or political subdivision thereof.

 

1.19         “Pivotal Trial”
shall mean a clinical trial to establish that Product is safe and effective for
use in the Field in order to support Product Registration.

 

1.20         “Product”
means any product or composition that contains MSC and/or any process or
service performed with respect to recovery, expansion, maintenance,
purification, storage, production, formulation or use of MSC.

 

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EXCHANGE COMMISSION.

 

 

1.21         “Product Registration(s)”
shall mean the approvals or registrations of Product in the Field for sale in
the Territory that is received by JCR or its
Affiliates, co-marketers or Sublicensees during the term of this Agreement from
the governing health care authority in the Territory.

 

1.22         “Royalty Term”
shall mean, with respect to each Product in the Territory on a
Product-by-Product basis, the period of time commencing on the Effective Date
and ending on the later of:  (i) fifteen
(15) years from the date of the First Commercial Sale of such Product in the
Territory, or (ii) the date on which the last OSIRIS Patent in the Territory
covering such Product expires.

 

1.23         “Sublicensee”
shall mean a Third Party to which JCR has granted sublicense and/or
sub-sublicense rights under the licenses and/or sublicenses granted to JCR
hereunder.

 

1.24         “Territory”
shall mean Japan.

 

1.25         “Third Party”
shall mean any Person who or which is neither a Party nor, with respect to a
Party, an Affiliate of that Party.

 

1.26         “Third Party Agreement(s)”
shall have the meaning of Section 2.3.

 

1.27         “Interpretative
Rules” For the purpose of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires:  (a) defined terms include the plural as
well as the singular and the use of any gender shall be deemed to include the
other gender, (b) references to “Articles”, “Sections” and other
subdivisions and to “Schedules” and “Exhibits” without reference to a document,
are to designated Articles, Sections and other subdivisions of and to Schedules
and Exhibits to this Agreement; (c) the use of the term ‘including’ means ‘including
but not limited to’; and (d) the words ‘herein’, ‘hereof’, ‘hereunder’ and
other words of similar import refer to this Agreement in whole and not to any
particular provision.  All dollars are
United States dollars.

 

 

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EXCHANGE COMMISSION.

 

 

2.             GRANT OF LICENSES

 

2.1           License.

 

(a)           OSIRIS hereby grants
to JCR and its Affiliates an exclusive, royalty-bearing license in the
Territory, with the right to grant sublicenses in accordance with the terms of
this Agreement as provided in Section 2.2, under the OSIRIS Patents and OSIRIS
Technology to develop, register and to obtain Product Registrations, use, make,
have made, import, export, offer to sell, sell and have sold Products for use
in the Field in the Territory.

 

(b)           JCR agrees that it
will use OSIRIS Technology and OSIRIS Patents only as licensed under this
Agreement, only as long as licensed under this Agreement and in each case in
accordance with the terms and conditions of this Agreement.

 

(c)           Unless otherwise
mutually agreed to in writing by both Parties, JCR agrees that it will not
manufacture or sell or assist any other Person to manufacture or sell Product
anywhere in the world except for Product for use in the Field in the Territory.

 

2.2           Sublicensing by JCR.

 

(a)           JCR shall have the
right to grant sublicenses to a Third Party under the license granted pursuant
to Section 2.1 with the prior written consent of OSIRIS which shall not be
withheld unreasonably provided that:  (i)
JCR shall guarantee and be responsible for the making of all payments due, and
the making of reports under this Agreement, by reason of milestones achieved
with respect to any Product and/or sales of any Product by its Sublicensees and
their compliance with all applicable licensing terms of this Agreement to the
extent that they are applicable to a Sublicensee; and (ii) each Sublicensee
agrees in writing to comply with Sections 2.1(b), 2.1(c), 4.4, 6.1, 6.3, 6.4
and articles 8 and 9 of this Agreement, with OSIRIS being made a third party
beneficiary thereof with the right of enforcement.

 

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EXCHANGE COMMISSION.

 

 

(b)           Any sublicense
granted by JCR to a Third Party shall include a provision prohibiting further
sublicenses and a provision terminating the sublicense when the license to JCR
terminates.

 

2.3           Third Party
Agreements.  In the event that OSIRIS
obtains Control of new OSIRIS Technology and/or OSIRIS Patents from a Third
Party, OSIRIS shall offer to add such new OSIRIS Technology and/or OSIRIS
Patents to this Agreement.  If JCR agrees
to add new OSIRIS Technology and/or OSIRIS Patents, then the rights licensed to
JCR by OSIRIS are subject to the terms, limitations, restrictions and
obligations of this Agreement, and no increase in royalty percentages set forth
in Section 4.3 shall result from the addition of such new OSIRIS Technology
and/or OSIRIS Patents to this Agreement.

 

2.4           Orphan
Designation.  OSIRIS grants to JCR,
during the term of this Agreement, a right of first negotiation to obtain from
OSIRIS the exclusive right, in the Territory, to develop, register, use, make,
have made, import, export, offer to sell, sell and have sold Products for a use
that has an Orphan Designation in the Territory.  With respect to any such use, JCR shall notify
OSIRIS in writing thereof.  If OSIRIS has
the right to grant such a license at such time, for a period of ninety (90)
days, the Parties shall enter good faith negotiation as to the terms and
conditions of an agreement provided, however that neither Party shall have an
obligation to enter into such agreement.

 

2.5           No license is
granted to JCR hereunder except as expressly granted under this Agreement.

 

2.6           License to OSIRIS.  JCR grants to OSIRIS a non-exclusive,
worldwide license under JCR Patents and JCR Special Technology to make, have
made, use, sell, offer to sell and import Product for any and all uses, which
license shall exclude Product for use in the Field in the Territory

 

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for
the period that the license granted under Section 2.1 to JCR remains in
effect.  The license shall be royalty
free, provided, however, that if the license to JCR under this Agreement is
terminated, the Parties shall negotiate a reasonable royalty.  The license granted under this Section 2.6
includes the right to sublicense with a reasonable royalty payment.

 

3.             TECHNOLOGY TRANSFER, DEVELOPMENT
AND COMMERCIALIZATION.

 

3.1           Technology Transfer by OSIRIS.  (a) OSIRIS shall provide technology
transfer including technical assistance with regard to the OSIRIS Technology
provided under Section 3.1(b) upon the reasonable request of JCR without charge
to JCR other than travel expenses, including air travel, hotels, meals, etc.  (b) In addition, within seven (7) days
of the Effective Date, OSIRIS shall provide JCR with material OSIRIS Technology
that is currently available in any media containing information in text, data
or graphic form.  An outline of such
technology transfer is provided in Appendix C.  (c) OSIRIS will provide JCR with
periodic updates of OSIRIS Technology.

 

3.2           Development
Efforts by JCR.  JCR shall use
reasonable best efforts (including, but not limited to, the conduct of clinical
trials, filing for Product Registrations and for other regulatory approvals,
diligently pursuing such approvals and, upon the grant of regulatory approval,
marketing the Products) to develop and commercialize Products for use in the
Field in the Territory.  (For avoidance
of doubt, the Parties recognize that the Product is a novel product or service
and there are no definitive regulatory guidelines established or applied by the
governing health care authority in the Territory for registering the Product in
the Territory as at the Effective Date.)

 

3.3           Failure to
Develop and Market.

 

In the event that JCR fails to satisfy its development and/or marketing
obligations under Section 3.2 with respect to Product in the Field in the
Territory or fails to file an IND prior to the end of calendar year 2007 or
fails to file a Product Registration for the Product in the Territory within

 

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two (2) years from the OSIRIS’ U.S. FDA
product approval for the Field, OSIRIS shall have the right and option to
terminate this Agreement in its entirety in accordance with Section
10.2(a).  For avoidance of doubt, a
Product Registration in the Territory for the Product is contingent on OSIRIS’
FDA product approval.  Furthermore, if
JCR’s failure to file an IND or a Product Registration within such timeframe is
due to any circumstance beyond its control, including but not limited to
regulatory issues, it shall not be considered as JCR’s failure.

 

3.4           Reporting.

 

(a)           Within sixty (60)
days after the end of each calendar half year, JCR shall provide to OSIRIS a
project status report (including the status of regulatory approvals) of the
development, and registration of Product in the Field in the Territory.  All such reports by JCR shall be treated as
Confidential Information of JCR and shall be subject to the restrictions
imposed under Section 9.1.  In the event
that JCR is not interested in pursuing development and/or commercialization of
Product in the Field in the Territory, JCR shall promptly notify OSIRIS.

 

(b)           Within sixty (60)
days after the end of each calendar half year, OSIRIS shall provide to JCR a
project status report (including the status of regulatory approvals) of the
development, and registration of Product in the Field in the U.S.A.  All such reports by OSIRIS shall be treated
as Confidential Information of OSIRIS and shall be subject to the restrictions
imposed under Section 9.1.

 

(c)           Notwithstanding the
above, at any time each Party shall immediately report to the other Party any
material event in connection with but not limited to clinical, regulatory and
registration issues related to the Product.

 

 

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EXCHANGE COMMISSION.

 

 

4.             FEE; MILESTONE PAYMENTS AND
ROYALTIES.

 

4.1           Fee by JCR.  JCR shall pay to OSIRIS three million dollars
($3,000,000.00) within fourteen (14) days after receipt of the OSIRIS
Technology as provided in Section 3.1.(b)., which amount is non-creditable and
non-refundable.

 

4.2           Milestone
Payments by JCR.  JCR shall pay
OSIRIS the following milestone payments upon the first occurrence of each event
set forth below with respect to Product in the Field in the Territory, whether
achieved by JCR or its Affiliates or its Sublicensee or distributor, which
milestones are non-refundable and non-creditable and are due and payable within
thirty (30) days after the applicable event:

 

(a)           Five Hundred
Thousand Dollars ($500,000.00) upon OSIRIS’ completing the technology transfer,
including technical assistance, of Section 3.1(a).

 

(b)           Five Hundred
Thousand Dollars ($500,000.00) upon the filing of an IND for Product in the
Territory;

 

(c)           One Million Dollars
($1,000,000.00) upon commencement of a Pivotal Trial for Product in the
Territory.

 

(d)           Two Million Dollars
($2,000,000) upon filing a Product Registration for the Product in the
Territory;

 

(e)           Three Million Five
Hundred Thousand Dollars ($3,500,000.00) upon receipt of a Product
Registration;

 

(f)            Five Hundred
Thousand Dollars ($500,000.00) for each Five Million Dollars ($5,000,000.00) of
cumulative Net Sales up to Thirty Million Dollars ($30,000,000.00) of Net
Sales.

 

4.3           Royalties.  (a)        In partial consideration of the rights
and licenses granted by OSIRIS to JCR under this Agreement, during the Royalty
Term, JCR shall pay to OSIRIS a royalty on Net

 

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Sales of Products in an amount equal to the following percentages of
the specified portions of the cumulative Net Sales of all Products for use in
the Field sold by JCR, its Affiliates, co-marketers and its Sublicensees in the
Territory:

(i)                                     [****************************]

 

(ii)                                  [****************************]

 

(iii)                               [****************************]

 

(iv)                              [****************************]

 

(b)           Notwithstanding the
above, in the event that a Third Party sells Product for use in the Field in
the Territory that does not infringe an OSIRIS Patent in the Territory and such
sales are at least fifteen percent (15%) of the sales of JCR for Product for
use in the Field in the Territory, the Parties shall negotiate to reduce the
percentage amount of royalties payable to OSIRIS.

 

4.4           Obligation to Pay
Royalties.  The obligation to pay
royalties to OSIRIS under this Section 4 is imposed only once with respect to
the same unit of Product regardless of the number of Patents pertaining
thereto.  In the case where the Product
is to be resold, there shall be no obligation to pay royalties to OSIRIS under
this Section 4 on sales of Product between JCR and its Affiliates or between
any of them and its co-marketer or Sublicensee, but in such instances the
obligation to pay royalties shall arise upon resale based on Net Sales of the
reseller.

 

5.             REPRESENTATIONS, WARRANTIES AND
COVENANTS.

 

5.1           Representations
and Warranties of Both Parties.  Each
Party represents and warrants to the other Party that, as of the Effective Date
of this Agreement:

 

(a)           Such Party is duly
organized and validly existing and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof.

 

 

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EXCHANGE COMMISSION.

 

 

(b)           OSIRIS has not
granted a license under OSIRIS Technology and/or OSIRIS Patents with respect to
Products in the Field in the Territory to any Third Party which is in conflict
with the license granted to JCR pursuant to this Agreement.

 

5.2           OSIRIS MAKES NO
OTHER REPRESENTATION OR WARRANTY HEREUNDER AND DISCLAIMS ALL OTHER
REPRESENTATIONS AND WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR USE OR WITH RESPECT TO THE VALIDITY,
ENFORCEABILITY, OR PATENTABILITY OF OSIRIS PATENTS OR WITH RESPECT TO
NON-INFRINGEMENT OF THIRD-PARTY PATENTS.

 

6.             PAYMENTS AND REPORTS.

 

6.1           Royalty Payments.  All royalty payments due hereunder shall be
paid quarterly within sixty (60) days of the end of each calendar quarter.  Each such payment shall be accompanied by a
statement of the amount of gross sales of Product, the calculation of Net Sales
and the units of Product during such quarter, the amount of royalties due on
such Net Sales, the conversion rates used in converting to United States Dollars
and any other information reasonably requested by OSIRIS to enable OSIRIS to
determine amounts it is owed hereunder.

 

6.2           Mode of Payment.  JCR shall make all payments required under
this Agreement as directed by OSIRIS from time to time in United States
Dollars.  Whenever for the purpose of
calculating royalties conversion from any foreign currency shall be required,
such conversion shall be at the rate of exchange for the last business day of
the applicable calendar quarter as published in the Wall Street Journal, New
York edition.

 

6.3           Records Retention.  JCR and its Affiliates and its Sublicensees
and co-marketers shall keep complete and accurate records pertaining to the
sale of Products in the Territory and covering

 

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EXCHANGE COMMISSION.

 

all
transactions from which Net Sales are derived for a period of three calendar
years after the year in which such sales occurred, and in sufficient detail to
permit OSIRIS to confirm the accuracy of royalty payments due hereunder.

 

6.4           Audit Request.  At the request and expense (except as
provided below) of OSIRIS, JCR and its Affiliates and its Sublicensees and
co-marketers shall permit an independent, certified public accountant appointed
by OSIRIS and reasonably acceptable to JCR, at reasonable times and upon reasonable
notice, to examine those records and all other material documents relating to
or relevant to Net Sales in the possession or control of JCR and/or its
Affiliates or its Sublicensees and co-marketers, for a period of three years
after such royalties have accrued.  Said
accountant shall not disclose to OSIRIS any information other than information
relating to said reports, royalties, and payments.  Results of any such examination shall be made
available to both Parties.  If, as a
result of any inspection of the books and records of JCR or its Affiliates or
its Sublicensees and co-marketers it is shown that JCR’s royalty payments under
this Agreement were less than the amount which should have been paid, then JCR
shall make all payments required to be made to eliminate any discrepancy
revealed by said inspection within forty-five (45) days after OSIRIS’ demand
therefore.  Furthermore, if the royalty
payments were less than the amount which should have been paid by an amount in
excess of five percent (5%) of the royalty payments actually made during the
period in question, JCR shall also reimburse OSIRIS for the cost of such
inspection.

 

6.5           Taxes.  In the event that JCR is required to withhold
any tax to the tax or revenue authorities in the Territory regarding any
payment to OSIRIS due to the laws of the Territory, JCR shall withhold such tax
from the payment due to OSIRIS and pay such tax directly to such tax or revenue
authorities in the Territory on OSIRIS’ behalf. 
JCR shall provide OSIRIS with a copy of the official receipt of such tax
payment.

 

 

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EXCHANGE COMMISSION.

 

 

7.             PATENT PROSECUTION; ENFORCEMENT;
INFRINGEMENT.

 

7.1           Patent Filing, Maintenance and Prosecution.

 

(a)           OSIRIS or OSIRIS
licensors, in the case of OSIRIS Patents licensed to OSIRIS, shall have the
right to file, prosecute and maintain OSIRIS Patents in the Territory through
patent counsel selected by OSIRIS or its licensors, and OSIRIS shall consult
with and keep JCR advised with respect thereto. 
OSIRIS shall disclose to JCR the complete texts of all such patents and
patent applications filed by OSIRIS or its licensor, as well as all information
received concerning the institution or possible institution of any opposition,
re-examination, reissue, revocation, nullification or any official proceeding involving
any patent licensed herein in the Territory. 
JCR shall have the right to review such pending applications and other
proceedings and make recommendations to OSIRIS concerning them and their
conduct.

 

(b)           Upon issue of any
OSIRIS Patent in the Territory covering the Product for the Field, JCR may
register and OSIRIS shall assist JCR in such registration with the Japan Patent
Office that names JCR as an exclusive licensee for such OSIRIS Patent under the
rights granted to JCR in this Agreement.

 

(c)           In the event OSIRIS
intends to finally abandon any OSIRIS Patents licensed to JCR under this
Agreement, it shall notify JCR.  JCR
shall have the right and option, but not the obligation, to prosecute and/or
maintain such OSIRIS Patent which OSIRIS had intended to abandon.  In event JCR decides to execute such option,
the application of such OSIRIS Patent shall be assigned to JCR.

 

7.2           Patent Enforcement.

 

(a)           Each Party shall
notify the other promptly after such Party becomes aware of any alleged
infringement of any OSIRIS Patent in the Territory with respect to a Product
for use in

 

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the
Field.  If any of the OSIRIS Patents
under which JCR holds a license hereunder is infringed by a Third Party with
respect to a Product for use in the Field in the Territory, JCR shall have the
right and option, but not the obligation, to bring an action for infringement,
at its sole expense, against such Third Party in the name of OSIRIS and/or in
the name of JCR, and to join OSIRIS as a party plaintiff if required.  JCR shall promptly notify OSIRIS of any such
infringement and shall keep OSIRIS informed as to the prosecution of any action
for such infringement.  JCR shall have
the full control over the conduct of the litigation including settlement
thereof provided, however, that JCR shall make no decision, including, but not
limited to, settlement which adversely affects the validity or enforceability
of the OSIRIS Patents without the written consent of OSIRIS.  It is understood that in the case of OSIRIS
Patents sublicensed to JCR, the rights of this Section 7.2(a) are subject to
the terms and restrictions of the Third Party Agreement(s).

 

(b)           In the event that
JCR does not institute an infringement proceeding against an offending Third
Party within ninety (90) days after becoming aware or receiving notice of any
alleged infringement, then OSIRIS shall have the right and option, but not the
obligation, to institute such an action and to retain any recovered damages.

 

(c)           In any infringement
suit either Party may institute to enforce any OSIRIS Patents pursuant to this
Agreement, the other Party hereto shall, at the request of the Party initiating
such suit, cooperate in all respects and, to the extent possible, have its
employees testify when requested and make available relevant records, papers,
information, samples, specimens, and the like. 
All reasonable out-of-pocket costs incurred in connection with rendering
cooperation requested hereunder shall be paid by the Party requesting
cooperation.

 

(d)           The costs and expenses
of any action instituted pursuant to this Section 7.2 (including reasonable
fees of attorneys and other professionals) shall be borne by the Party

 

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

 

instituting
the action, or, if the Parties elect to cooperate in instituting and maintaining
such action, such costs and expenses shall be borne by the Parties in such
proportions as they may agree in writing. 
Each Party shall execute all necessary and proper documents and take
such actions as shall be appropriate to allow the other Party to institute and
prosecute such infringement actions (if such other Party has the right to
institute and prosecute such infringement actions pursuant to this
Section 7.2).

 

(e)           In the event that
either Party shall undertake the enforcement of any OSIRIS Patent, any award or
compensation (including the fair market value of non-monetary compensation)
paid by Third Parties as a result of such an infringement action (whether by
way of settlement or otherwise) shall be applied as follows:  (i) first, to reimbursement of each
Party for all expenses incurred by each in connection with such action, on a
pro rata basis, and (ii) second, any remaining balance shall be allocated
to the Party undertaking the action, except that any such amount received by
JCR shall be deemed to be Net Sales hereunder, for which OSIRIS shall be
entitled to receive a royalty as provided in this Agreement.

 

7.3           Infringement
Actions by Third Parties.  In the
event of the institution of any suit by a Third Party against JCR, its
Affiliates or its Sublicensees for patent infringement involving the use, sale,
distribution or marketing of any Product in the Territory, JCR shall promptly
notify OSIRIS in writing of such suit. 
In the event of all such actions, JCR shall defend such action at its
own expense, and OSIRIS hereby agrees to assist and cooperate with JCR, to the
extent necessary in the defense of such suit and to reimburse JCR for twenty
nine percent (29%) of the out-of-pocket expenses (including reasonable attorney’s
fees and other professional fees) incurred by JCR in such defense.  JCR shall have the right to settle the suit
or consent to an adverse judgment thereto, in its sole discretion.  During the pendency of such action, all
royalties due hereunder shall continue to be

 

 

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

 

 paid by JCR. 
JCR shall pay seventy one percent (71%) and OSIRIS twenty nine percent
(29%) of any award for damages, or any amount due pursuant to any settlement
entered into by JCR with such Third Party. 
Twenty nine percent (29%) of any and all damages and awards received by
JCR as a result thereof (i.e., as a result of a counterclaim) shall be paid to
OSIRIS.

 

8.             INDEMNIFICATION.

 

8.1           By JCR.  JCR shall indemnify and hold OSIRIS and
licensors of OSIRIS to the extent that JCR is sublicensed hereunder and its
directors, officers, employees, shareholders and agents, harmless from and
against any and all Third Party claims, suits or demands for liabilities,
damages, losses, costs and expenses (including the reasonable fees of attorneys
and other professionals) arising out of or resulting from the development,
manufacture, use, distribution or sale of any MSC or Product by JCR, its
Affiliates, co-marketers or Sublicensees or any person or entity that prepares
or manufactures MSC or Product for or on behalf of any of the foregoing or any
person or entity who receives or obtains (directly or indirectly) MSC or
Product from any of the foregoing, except those losses which arise out of
intentional misconduct or gross negligence of OSIRIS.

 

8.2           Costs of
Enforcement.  As the parties intend
complete indemnification, all costs and expenses of enforcing any provision of
this Section 8 shall also be reimbursed by the indemnifying Party.

 

8.3           Conditions to
Indemnification.  A person or entity
that intends to claim indemnification under this Section (the “Indemnitee”)
shall promptly notify JCR (the “Indemnitor”) of any loss, claim, damage,
liability or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall assume the defense thereof with
counsel mutually satisfactory to the Indemnitee whether or not such claim is
rightfully brought; provided, however, that an Indemnitee shall have the right
to retain its own counsel, with the fees and expenses to be

 

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

 

paid
by the Indemnitor if Indemnitor does not assume the defense, or if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other person represented by such counsel in such
proceedings.  The indemnity agreement in
this Section 8 shall not apply to amounts paid in settlement of any loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld or delayed
unreasonably.  The failure to deliver
notice to the Indemnitor within a reasonable time after the commencement of any
such action, only if prejudicial to its ability to defend such action, shall
relieve such Indemnitor of any liability to the Indemnitee under this Section,
but the omission so to deliver notice to the Indemnitor will not relieve it of
any liability that it may have to any Indemnitee otherwise than under this
Section.  The Indemnitee under this
Section, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigations of any action, claim or
liability covered by this indemnification. 
The Indemnitor shall not settle or compromise any loss, liability, claim,
damage or action without the consent of the Indemnitee which consent will not
be withheld unreasonably.

 

8.4           Any and all
Sublicensees of JCR shall agree to the same indemnity as in Section 8.1 of this
Agreement and OSIRIS shall be made a Third Party beneficiary thereof with the
right of enforcement.

 

9.             CONFIDENTIALITY.

 

9.1           Subject to Section
9.5, during the term of this Agreement, it is contemplated that each Party will
disclose to the other Party confidential information and materials which is
owned or Controlled by the Party providing such information and materials or
which that Party is obligated to maintain in confidence and which is designated
by the Party providing such information and

 

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

 

materials
as confidential (such material and information is individually and collectively
“Confidential Information”).  Each Party
shall have the right to refuse to accept the other Party’s Confidential
Information.  Subject to Section 9.5,
each Party agrees to retain the other Party’s Confidential Information in
confidence, and to limit disclosure of any such Confidential Information to its
officers, directors, employees and permitted assigns on a need to know basis
and only if the recipient of the Confidential Information has agreed in writing
to maintain confidentiality.  Each Party
agrees to use the other Party’s Confidential Information only as permitted by
this Agreement, and subject to Section 9.5, not to disclose or provide any such
Confidential Information to any other person or entity without the prior
written consent of the Party providing such Confidential Information.

 

9.2           The obligations of confidentiality and non-use of Section
9.1 will not apply to:

 

(a)           portions of the
Confidential Information rightfully known to the receiving Party, without
obligation of confidentiality or non-use, prior to disclosure thereof by the
disclosing Party, as demonstrated by written records of the receiving Party;

 

(b)           portions of the
Confidential Information that become generally available to the public, without
restriction and without breach of this Agreement by the receiving Party; or

 

(c)           portions of the
Confidential Information that become rightfully available, without obligation
of confidentiality or non-use, to the receiving Party from others having no obligation
to hold such Confidential Information in confidence; or

 

(d)           disclosures required
by an order of a court of competent jurisdiction provided that the owner of the
Confidential Information is given notice of such order in sufficient time to
oppose and appeal such order.

 

 

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

 

(e)           is preclinical or
clinical data or other information concerning Product that Party is reasonably
required to disclose to consultants (such as advertising agencies,
reimbursement experts and marketing research companies), customers, healthcare
professionals, consumers or regulatory agencies as part of its routine
advertising or promotional activities or medical education, professional
services, adverse event investigation and reporting, or Product quality or
complaint investigation and reporting functions, or which is disclosed by a
Party to Affiliates and Sublicensees in order to allow them to market and sell
PRODUCT in the TERRITORY (provided that such Affiliates agree to be bound by
the confidentiality obligations set forth in this Section).

 

9.3           (a)           Except as provided in Section 9.3(b),
9.3(c), 9.4 or 12.6, neither Party shall disclose any terms or conditions of
this Agreement to any Third Party without the prior consent of the other Party.

 

(b)           A Party may disclose
the terms or conditions of this Agreement, (i) on a need-to-know basis to its
legal and financial advisors to the extent such disclosure is reasonably
necessary in connection with such Party’s activities expressly permitted by
this Agreement and ordinary and customary business operations, and (ii) to a
Third Party in connection with (w) an equity investment in such Party,
(x) a merger, consolidation, change in control or similar transaction by
such Party, (y) the transfer or sale of all or substantially all of the assets
of such Party, or (z) in connection with the granting of a sublicense under
this Agreement.

 

(c)           Prior to execution
of this Agreement the Parties have agreed upon the substance of information
that may be used to describe the terms and conditions of this transaction,
which is attached in Appendix D and each Party may disclose the
information of Appendix D without the consent of the other Party.

 

 

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

 

9.4           The obligations of
this Section 9 shall not apply to the extent that a Party is required to
disclose information and/or the terms or conditions of this Agreement by
applicable law, rule regulation or bona fide legal process,
provided that the Party required to make the disclosure takes reasonable steps
to restrict and maintain confidentiality of such disclosure and provides
reasonable prior notice to the other Party.

 

9.5           A Party may provide
or disclose Confidential Information of the other Party for use in a manner
that is consistent with the license granted to a Party, provided that the Third
Party agrees to confidentiality provisions similar to those of this Agreement.

 

9.6           Injunctive Relief.  The Parties acknowledge that money damages
alone would not adequately compensate the disclosing Party in the event of a
breach by the receiving Party of this Section 9, and that, in addition to all
other remedies available to the disclosing Party at law or in equity, it shall
be entitled to seek injunctive relief for the enforcement of its rights under
this Section 9.

 

9.7           Confidentiality
Term.  The obligations of this
Article 9 shall terminate ten (10) years after disclosure of Confidential
Information or five (5) years after the termination of this Agreement whichever
occurs later.

 

10.          TERM; TERMINATION.

 

10.1         Term.  This Agreement shall commence as of the
Effective Date and, unless sooner terminated as provided hereunder, shall
expire in the Territory upon the expiration of the full Royalty Term with
respect to Product in the Territory.

 

10.2         Breach.

 

(a)           In the event of
breach under this Agreement, either Party shall have the right to terminate
this Agreement only through a written notice of termination of the Agreement to
the

 

 

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

 

breaching
party specifying the breach (“Notice of Termination”).  If the breach has not been cured, within one-hundred
and twenty (120) days of the Notice of Termination (thirty (30) days for a
payment breach), the Party serving the Notice of Termination shall have the
right to terminate this Agreement by written notice.

 

(b)           An election of
remedy by a Party for a material breach of this Agreement under this Section
10.2 on one occasion shall not constitute a waiver as to any other remedy that
may be available to such Party under this Section 10.2 as to any material
breach on another occasion.

 

10.3         Effect of Expiration or Termination.

 

(a)           Following expiration
of the term of this Agreement under Section 10.1 with respect to a Product in
the Field in the Territory JCR shall have the royalty-free, perpetual right to
manufacture, have manufactured, use and sell such Product in the Field in the
Territory.

 

(b)           Upon termination of
this Agreement under Section 10.2, 10.4 or 10.7 (other than as a result of a
breach of this Agreement by OSIRIS), JCR shall promptly:  (i) transfer free of charge, to OSIRIS
or such other Person as OSIRIS shall designate, any and all rights that it may
have under any government registrations or authorizations, including Product
Registrations, with respect to Product in the Field, and shall immediately
cancel any such registrations or authorizations, including Product
Registrations, with respect thereto as may not be transferable;
(ii) provide to OSIRIS all data and other information in JCR’s, or its
Affiliates’ or Sublicensees’ possession or control relating to such Product
Registrations; and (iii) discontinue all distribution of Product and the use of
the OSIRIS Patents and OSIRIS Technology and JCR Special Technology in
connection therewith.  All rights of JCR
under the licenses for such Product granted hereunder shall revert to
OSIRIS.  The rights and licenses granted
to JCR shall terminate with respect to Product; (iv) grant OSIRIS a
non-exclusive, royalty-bearing license at a reasonable royalty under and to JCR
Special

 

 

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

 

Technology
and JCR Patents to make, have made, use, sell, offer to sell and import
Products in the Field for use in the Territory, including a right to sublicense
a Third Party(ies) in conjunction with a license to OSIRIS Technology and
provide to OSIRIS such technology that is licensed to OSIRIS under this Section
10.3(b) to the extent that it has not been previously provided to OSIRIS.

 

10.4         Either Party may
terminate this Agreement, if, at any time, the other Party becomes insolvent or
the other Party shall file in any court or agency pursuant to any statute or regulation
of a country in the Territory a petition of bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver of
trustee of the other Party or of its assets or if the other Party proposes a
written agreement of composition or extension of its debts or if the other
Party shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after filing thereof, or if the other party shall make an assignment
for the benefit of its creditors. 
Notwithstanding the bankruptcy of OSIRIS or the impairment of
performance of OSIRIS of its obligations under this section, JCR shall be
entitled to retain the licenses granted herein, provided it continues to comply
with its obligations to OSIRIS hereunder.

 

10.5         Right to Sell
Stock on Hand.  Upon the termination
of any rights granted hereunder, in whole or in part as to Product for use in
the Field in the Territory, for any reason other than a failure to cure a
material breach of this Agreement by JCR, JCR shall have the right to dispose
of all Product then on hand for use in the Field in the Territory, and the
royalties shall be paid to OSIRIS with respect to such Product as though such rights
had not terminated.

 

10.6         Accrued Rights, Surviving Obligations.

 

(a)           Termination,
relinquishment or expiration of this Agreement for any reason shall be without
prejudice to any rights which shall have accrued to the benefit of either Party
prior

 

 

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

 

to
such termination, relinquishment or expiration. 
Such termination, relinquishment or expiration shall not relieve either
Party from obligations which are expressly indicated to survive termination or
expiration of this Agreement.

 

(b)           Termination,
relinquishment or expiration of this Agreement shall not terminate JCR’s
obligation to pay all royalties and other payments that shall have accrued
prior to such termination.  All of the
Parties’ rights and obligations under Sections 2.l(b), 2.1(c), 6.3, 6.4, 10.5
and 10.6 and Articles 8 and 9 shall survive termination, relinquishment or
expiration hereof.

 

10.7         This Agreement may be
unilaterally terminated by JCR by one-hundred and eighty (180) days’ prior
written notice to OSIRIS or by mutual agreement of the Parties.

 

11.          FORCE MAJEURE.

 

11.1         Events of Force
Majeure.  Except for payments due
under this Agreement, neither Party shall be held liable or responsible to the
other Party nor be deemed to be in default under or in breach of any provision
of this Agreement for failure or delay in fulfilling or performing any
obligation of this Agreement when such failure or delay is due to force
majeure, and without the fault or negligence of the Party so failing or
delaying.  For purposes of this
Agreement, force majeure is defined as causes beyond the control of the Party,
including, without limitation, acts of God; acts, regulations, or laws of any
government; war; civil commotion; destruction of production facilities or
materials by fire, flood, earthquake, explosion or storm; labor disturbances;
epidemic; and failure of pubic utilities or common carriers.  In such event JCR or OSIRIS, as the case may
be, shall immediately notify the other Party of such inability and of the
period for which such inability is expected to continue.  The Party giving such notice shall thereupon
be excused from such of its obligations under this Agreement as it is thereby
disabled from performing for so long as it is so disabled, provided, however,
if the force majeure does not terminate within six (6) months, the other

 

 

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

 

Party
shall have the right to terminate this Agreement by written notice to the Party
providing notice of the force majeure. 
To the extent possible, each Party shall use reasonable efforts to
minimize the duration of any force majeure.

 

12.          MISCELLANEOUS.

 

12.1         Relationship of
Parties.  Nothing in this Agreement
is intended or shall be deemed to constitute a partnership, agency,
employer-employee or joint venture relationship between the Parties.  No Party shall incur any debts or make any
commitments for the other, except to the extent, if at all, specifically
provided herein.

 

12.2         Assignment.  Neither Party shall be entitled to assign its
rights hereunder without the express written consent of the other Party hereto,
except that both JCR and OSIRIS may otherwise assign their respective rights
and transfer their respective duties hereunder to its Affiliate or to any
assignee of all or substantially all of their respective businesses (or that
portion thereof to which this Agreement relates) or in the event of their
respective merger or consolidation or similar transaction.  No assignment shall relieve JCR of its
obligations hereunder.  No assignment and
transfer shall be valid or effective unless and until the assignee/transferee
shall agree in writing to be bound by the provisions of this Agreement in which
case the Agreement will inure to the benefit of such successors and assigns.

 

12.3         Further Actions.  Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

 

12.4         Notice.  Any notice or request required or permitted
to be given under or in connection with this Agreement shall be deemed to have
been sufficiently given if in writing and personally delivered or sent by
certified mail (return receipt requested), facsimile transmission 

 

 

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

 

(receipt
verified), or overnight international express courier service (signature
required), prepaid, to the Party for which such notice is intended, at the
address set forth for such Party below:

 

(a)           In the case of JCR, to:

 

JCR Pharmaceuticals Co., Ltd.

3-19 Kasuga-cho

Ashiya, 659-0021, Japan

Facsimile No. +81-797-38-1752

Attn:  President and Chief Executive
Officer

(b)           In the case of OSIRIS, to:

 

Osiris Acquisition II, Inc.

2001 Aliceanna Street

Baltimore, Maryland  21231

USA

Facsimile No.:  410-563-0794

Attn:  President and Chief Executive
Officer

or to such other address for such Party as it shall have specified by
like notice to the other Party, provided that notices of a change of address
shall be effective only upon receipt thereof. 
If delivered personally or by facsimile transmission, the date of delivery
shall be deemed to be the date on which such notice or request was given.  If sent by overnight express courier service,
the date of delivery shall be deemed to be the next business day after such
notice or request was deposited with such service.  If sent by certified mail, the date of
delivery shall be deemed to be the third business day after such notice or
request was deposited with the U.S. Postal Service.

 

12.5         Use of Name.  Except as otherwise provided herein, neither
Party shall have any right, express or implied, to use in any manner the name
or other designation of the other Party or any other trade name or trademark of
the other Party for any purpose in connection with the performance of this
Agreement.

 

12.6         Public
Announcements.  Except as required by
law, rule or regulation (including, without limitation, disclosure requirements
of the U.S. Securities and Exchange Commission,

 

 

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

 

NASDAQ
or any other stock exchange on which securities issued by OSIRIS are traded),
neither Party shall make any public announcement concerning this Agreement or
the subject matter hereof without the prior written consent of the other, which
shall not be unreasonably withheld.  It
shall not be unreasonable for a Party to withhold consent with respect to any
public announcement containing any of such Party’s Confidential
Information.  In the event of a required
public announcement, to the extent practicable under the circumstances, the
Party making such announcement shall provide the other Party with a copy of the
proposed text prior to such announcement sufficiently in advance of the
scheduled release of such announcement to afford such other Party a reasonable
opportunity to review and comment upon the proposed text.  Once text is approved, the substance of that
which is disclosed in such text may be disclosed to the public by a Party
without the permission of the other Party.

12.7         Waiver.  A waiver by either Party of any of the terms
and conditions of this Agreement in any instance shall not be deemed or construed
to be a waiver of such term or condition for the future, or of any subsequent
breach hereof.  All rights, remedies,
undertakings, obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be in limitation of any other remedy, right,
undertaking, obligation or agreement of either Party.

 

12.8         Compliance with
Law.  JCR agrees to comply with all
applicable laws, rules and regulations with respect to Product for use in the
Field in the Territory.

 

12.9         Severability.  When possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement and the parties shall negotiate, in good faith, a
new provision which will, as closely as possible, carry out 

 

 

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

 

the
intentions of the parties provided for in the invalidated provision.  If such agreement is not reached in sixty
(60) days, the affected Party(ies) may terminate this Agreement.

 

12.10       Amendment.  No amendment, modification or supplement of
any provisions of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each Party.

 

12.11       Governing Law.  This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Maryland,
USA without regard to its choice of law principles.

 

12.12       Arbitration.  All disputes, controversies or differences
which may arise between the Parties, out of or in relation to this Agreement,
or the breach thereof, which cannot be promptly resolved on an amicable basis,
shall be finally settled by arbitration pursuant to the Japan-American Trade
Arbitration Agreement of September, 1952, by which each Party hereto is bound.

 

12.13       Entire Agreement.  This Agreement, together with the Exhibits
hereto, sets forth the entire agreement and understanding between the Parties
as to the subject matter hereof and merges all prior discussions and
negotiations between them, and neither of the Parties shall be bound by any
conditions, definitions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein or as
duly set forth on or subsequent to the date hereof in writing and signed by a
proper and duly authorized officer or representative of the Party to be bound
thereby.

 

12.14       Parties in Interest.  All the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns.

 

 

 

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

 

12.15       Descriptive
Headings.  The descriptive headings
of this Agreement are for convenience only, and shall be of no force or effect
in construing or interpreting any of the provisions of this Agreement.

 

12.16       Counterparts.  This Agreement may be executed simultaneously
in any number of counterparts, any one of which need not contain the signature
of more than one Party but all such counterparts taken together shall
constitute one and the same agreement.

 

 

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

 

 

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.

 

	
   

  	
   

  	
  OSIRIS ACQUISITION II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William Pursley

  
	
   

  	
   

  	
  Name: William Pursley

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JCR PHARMACEUTICALS CO., LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Shin Asada

  
	
   

  	
   

  	
  Name: Shin Ashida

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  

 

 

 

30

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

 

 

APPENDIX
A — Development Plan

CONFIDENTIAL

JCR
Pharmaceuticals Co.

July 25,

 

	
  (Task)
  A

  	
   

  	
  B

  	
   

  	
  C

  	
   

  	
  D

  	
   

  	
  E

  
	
   

  	
   

  	
  *Prerequisites to start
  clinical research

  Completion of Technology Transfer to JCR Osiris’ FDA BLA (or filing for such)

  	
   

  	
  IRB discussion,
  application, approval

  	
   

  	
  

  Step 1

  
	
  Technology Transfer to
  JCR as described in Appendix C, including but Transfer of Osiris Technology
  currently available in any media containing information in Technical
  training: 2JCR members dispatched to Osiris Training period: 6 months

  

  

  Planning of MSC manufacturing facilities.

  	
   

  	
  

  

  03’/09 - 04’/02

  

  

  

  

  

  

  

  

  Remodel JCR Minami Plant to accommodate

  	
   

  	
  

  

  

  

  

  

  

  

  

  Production at JCR

  04’/03 - 04’/08

  	
   

  	
  

  

  If YES, then proceed to Task E.

  	
   

  	
  Physician-sponsored
  clinical research.

  

  *Physicians assume responsibility for the clinical research.

  

  

  

  Participating Institutions:

  1) Kelo University

  2) University of Tokyo

  3) Tokai University

  4) Jichi Medical School

  

  Based on Osiris’ Ph I/II protocol

  

  Number of subjects: 10/Institution

  

  Disease target:

  Hematologic malignancy (leukemia)

  Donor (HSC): related

  HLA Identical (6/6) related

  MSC Donors:

  1) related

  2) non-related

  Research period: 2 years

  Evaluation period: 1 year

  Follow up period: 3 years

  *Is dose escalation study necessary?

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  -04’/10 >

  	
   

  	
  04’/10 - 06’/10(?)

  

 

31

 

	
  F

  	
   

  	
  G

  	
   

  	
  H

  	
   

  	
  I

  	
   

  	
  J

  
	
  Rating

  and

  judgment

  	
   

  	
  

  JMHLW

  Consultation

  	
   

  	
  

  Phase II

  	
   

  	
  JMHLW

  Filing

  	
   

  	
  JMHLW

  Approv

  (Product

  Registration)

  
	
  

  

  If GOOD, then proceed to Task G

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  >

  	
   

  	
  

  

  If JMHLW shows favorable response, then proceed as below.

  

  

  

  

  

  

  Apply for

  Designation of

  “Advanced

  Medical Technology” status.

  v

  Deliberation

  period: 6 months

  v

  If Designation

  approved, proceed

  to Task H

  	
   

  	
  (IND) Notification of
  clinical trial plan

  

  Clinical trial by JCR Multicenter study participated by:

  1) Kelo University

  2) University of Tokyo

  3) Tokai University

  4) Jichi Medical School

  

  

  

  Based on Osiris’ Ph II/III protocol

  

  Number of subjects: 6/Institution

  

  Disease target:

  Hematologic malignancy

  Donor (HSC): related

     HLA Identical (6/6) related MSC Donors:

                1)
  related

                 2)
  non-

     I: (-MSC)

    II: (+MSC)

  Clinical trial period: 2 years

  Evaluation period: 1 year

  Follow-up period: 3 years

  	
   

  	
   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

  *

  	
   

  	
   

  

 

In
the event of Osiris obtains the FDA BLA for the Product or files with the FDA
prior to

‘04, possibility to manufacture MSC at Osiris MSC from the Japanese source and
supply to

the participating institutions of the Clinical Research should be considered
and discussed.

THIS
DEVELOPMENT PLAN IS NOT BINDING AND IS SUBJECT TO CHANGE UPON DISCUSSION
BETWEEN JCR AND OSIRIS.

JAPAN FILING OF THE PRODUCT REGISTRATION IS CONTINGENT UPON OSIRIS’ FDA BLA OF
THE PRODUCT FOR THE FIELD.

 

* Target:
IND filing within 

2007 (Product Registration

filing within 2 years after Osiris’ FDA BLA for the Product.

 

32

 

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

 

 

APPENDIX
B

	
  Japanese Application Number

  	
  Filing Date

  
	
  5501124

  	
  16-Jun-1992

  
	
  Title:  MONOCLONAL ANTIBODIES SPECIFIC FOR
  MARROW-DERIVED MESENCHYMAL CELLS

  
	
  2000535733

  	
  12-Mar-1999

  
	
  Title:  USES FOR NON-AUTOLOGUS MESENCHYMAL STEM
  CELLS

  
	
  10532103

  	
  22-Jan-1998

  
	
  Title:  OSTEOPOROSIS BOND REGENERATION

  
	
  2000536402

  	
  12-Mar-1999

  
	
  Title:  MESENCHYMAL STEM CELLS FOR PREVENTION AND
  TREATMENT OF IMMUNE RESPONSES IN TRANSPLANTATION

  
	
  2001534394

  	
  26-Oct-2000

  
	
  Title:  MESENCHYMAL STEM CELLS FOR PREVENTION AND
  TREATMENT OF IMMUNE RESPONSES IN TRANSPLANTATION

  
	
  2000542045

  	
  12-Mar-1999

  
	
  Title:  MESENCHYMAL STEM CELLS AS
  IMMUNOSUPPRESSANTS

  
	
  2000553555

  	
  08-Jun-1999

  
	
  Title:  REGULATION OF HEMATOPOIETIC STEM CELL
  DIFFERENTIATION BY THE USE OF HUMAN MESENCHYMAL STEM CELLS

  
	
  2000582047

  	
  04-Nov-1999

  
	
  Title:  USES OF FIBROBLASTS OR SUPERNATANTS FROM
  FIBROBLASTS FOR THE SUPPRESSION OF IMMUNE RESPONSES IN TRANSPLANTATION

  

 

 

33

 

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

 

 

APPENDIX
C

 

The clinical documents that will be provided
are:

•                                          Investigator’s
Brochure:  This provides a summary of all
preclinical investigations and the Phase 1 studies in humans that support the
Phase 2 development program.

•                                          Protocol No.
240:  This provides complete detail for
the Phase 2 study of the universal hMSCs in patients with hematologic
malignancies undergoing HLA-identical sibling PBSC transplants.  The primary efficacy outcome is the incidence
of acute GVHD at Day 84.  Two doses of
hMSCs will be examined (5 and 10 X 10e6/kg) versus placebo.

•                                          Protocol No.
290:  This provides complete detail for
the 5-year follow up of patients who complete Protocol No. 240.  The primary goal in this study is to provide
long-term safety data and to look at overall survival and the incidence of
chronic GVHD.

The manufacturing and development documents
that will be provided are:

Type
5 Biological Drug Master File.

Document
Transfer Implementation Plan.

Master
Production Records for Donor Cell Bank and Product Dose Manufacturing.

Pertinent
Standard Operating Procedures supportive of Manufacturing, Quality Control and
Facility Maintenance.

 

 

34

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

 

 

APPENDIX
D

 

Osiris Therapeutics, Inc. (Osiris) and JCR
Pharmaceuticals Co, Ltd. (JCR) entered into a License Agreement (Agreement)
whereby Osiris has granted to JCR an exclusive right in Japan to its universal,
adult mesenchymal stem cell (MSC) technology for use in conjunction with the
treatment of hematological malignancies with hematopoietic stem cells.  Although financial terms of the Agreement
have not been disclosed, Osiris received an upfront license fee and will
receive additional fees as specific milestones are met.  In addition, Osiris will receive royalties
upon the successful launch of the proposed product.  Pursuant to a related Stock Purchase
Agreement, JCR will also purchase preferred shares of Osiris.

 

 

35

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