Document:

Exhibit
10.14

EXECUTION
COPY

 

 

 

 

INVESTOR RIGHTS AGREEMENT

Between

OSIRIS ACQUISITION II, INC.

and

BOSTON SCIENTIFIC CORPORATION

 

 

 

Dated as of March 5, 2003

 

 

TABLE OF CONTENTS

	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
  SECTION 1.01. Certain Defined
  Terms

  	
  1

  
	
  SECTION 1.02. Other Defined Terms

  	
  4

  
	
  SECTION 1.03. Interpretation and
  Rules of Construction

  	
  5

  
	
   

  	
   

  
	
  ARTICLE II RESTRICTIONS ON TRANSFER

  	
  5

  
	
  SECTION 2.01. Restrictions on
  Transfer

  	
  5

  
	
  SECTION 2.02. Permitted Transfers
  and Right of First Refusal

  	
  6

  
	
  SECTION 2.03. Legend

  	
  6

  
	
  SECTION 2.04. Voting Rights

  	
  7

  
	
   

  	
   

  
	
  ARTICLE III PRE-EMPTIVE RIGHT

  	
  7

  
	
  SECTION 3.01. Pre-emptive Right

  	
  7

  
	
   

  	
   

  
	
  ARTICLE IV REGISTRATION RIGHTS

  	
  9

  
	
  SECTION 4.01. Piggyback
  Registration

  	
  9

  
	
  SECTION 4.02. Form S-3
  Registration

  	
  10

  
	
  SECTION 4.03. Obligations of the
  Company

  	
  11

  
	
  SECTION 4.04. Information from
  Holders

  	
  14

  
	
  SECTION 4.05. Expenses of
  Registration

  	
  14

  
	
  SECTION 4.06. Indemnification

  	
  15

  
	
  SECTION 4.07. Rule 144 Reporting

  	
  17

  
	
  SECTION 4.08. Assignment of
  Registration Rights

  	
  18

  
	
  SECTION 4.09. “Market Stand-Off”
  Agreement

  	
  18

  
	
  SECTION 4.11. No Liability for
  Insider Trading

  	
  18

  
	
   

  	
   

  
	
  ARTICLE V ADDITIONAL AGREEMENTS

  	
  19

  
	
  SECTION 5.01. Delivery of
  Information

  	
  19

  
	
  SECTION 5.02. Audit

  	
  19

  
	
  SECTION 5.03. Inspection

  	
  20

  
	
  SECTION 5.04. Reservation of
  Common Stock

  	
  20

  
	
  SECTION 5.05. Confidentiality of
  Records

  	
  20

  
	
  SECTION 5.06. Restrictive
  Agreements

  	
  20

  
	
  SECTION 5.07. Termination of
  Covenants

  	
  21

  
	
   

  	
   

  
	
  ARTICLE VI REDEMPTION

  	
  21

  
	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  21

  
	
  SECTION 7.01. Further Action

  	
  21

  
	
  SECTION 7.02. Expenses

  	
  21

  
	
  SECTION 7.03. Notices

  	
  21

  
	
  SECTION 7.04. Public
  Announcements

  	
  22

  
	
  SECTION 7.05. Severability

  	
  22

  
	
  SECTION 7.06. Entire Agreement

  	
  23

  

 

i

 

	
  SECTION 7.07. Assignment

  	
  23

  
	
  SECTION 7.08. Successors and
  Assigns

  	
  23

  
	
  SECTION 7.09. Governing Law

  	
  23

  
	
  SECTION 7.10. Counterparts

  	
  23

  
	
  SECTION 7.11. Brokers

  	
  23

  
	
  SECTION 7.12. Termination

  	
  24

  

 

ii

 

INVESTOR RIGHTS AGREEMENT
(this “Agreement”), dated as of March 5, 2003, between OSIRIS
ACQUISITION II, INC., a Delaware corporation (the “Company”), and BOSTON
SCIENTIFIC CORPORATION, a Delaware corporation (the “Investor”).

W
I T N E S S E T H:

WHEREAS, the Parties have
entered into an Investment Agreement, dated as of the date hereof (the “Investment
Agreement”), pursuant to which the Investor has agreed, among other things,
to subscribe for and purchase shares (the “Preferred Shares”) of the
Company’s Series 2003 Preferred Stock, par value $0.001 per share (the “Preferred
Stock”), and having the designations, rights and preferences set forth in
the Certificate of Amendment (as defined in the Investment Agreement).

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 Person that, directly or indirectly, controls,
is controlled by, or is under common control with, the specified Person.  For purposes of this definition, the term “control”
as applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management of that Person,
whether through ownership of voting securities 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
required or authorized by Law to be closed in The City of New York.

“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 Preferred Stock.

 

 

“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.

“Form S-3” means such
form under the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by the SEC that
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.

“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, owning or having the right to acquire
Registrable Securities or any assignee thereof.

“Investment Agreements”
has the meaning ascribed thereto in the Investment Agreement.

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

“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, 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.

“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

 

2

 

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.

“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).

“Sale” means any
sale, assignment, transfer, distribution or other disposition of Shares or of a
participation therein, whether voluntary or by operation of Law, and “Sell”,
“Selling” and “Sold” shall be construed accordingly.

“SEC” means the
Securities and Exchange Commission.

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

 

3

 

“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.

“Transaction Documents”
shall have the meaning ascribed thereto in the Investment 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.  Other Defined Terms.  The following terms shall have the meanings
defined for such terms in the Sections set forth below:

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Approved
  Third Party Purchaser

  	
   

  	
  2.02(c)

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company
  Indemnified Party

  	
   

  	
  4.06(a)

  
	
  Equity
  Securities

  	
   

  	
  3.01(b)

  
	
  Follow-On
  Registrations

  	
   

  	
  4.02

  
	
  Final
  Prospectus

  	
   

  	
  4.06(g)

  
	
  Issue
  Notice

  	
   

  	
  3.01(b)(i)

  
	
  Investment
  Agreement

  	
   

  	
  Recitals

  
	
  Investor

  	
   

  	
  Preamble

  
	
  Offered
  Shares

  	
   

  	
  2.02(a)

  
	
  Potential
  Seller

  	
   

  	
  2.02(a)

  
	
  Potential
  Seller Offer

  	
   

  	
  2.02(a)

  
	
  Preferred
  Shares

  	
   

  	
  Recitals

  
	
  Preferred
  Stock

  	
   

  	
  Recitals

  
	
  Redemption
  Date

  	
   

  	
  Article
  VI

  
	
  Right
  of First Offer

  	
   

  	
  3.01(a)

  
	
  Shares
  Offer

  	
   

  	
  2.02(a)

  
	
  Third
  Party Purchaser

  	
   

  	
  2.02(a)

  
	
  Violation

  	
   

  	
  4.06(a)

  

 

4

 

SECTION
1.03.  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”;

(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.

ARTICLE II

RESTRICTIONS ON TRANSFER

 

SECTION 2.01.  Restrictions on Transfer.  Until such time as the Shares are freely
tradable without registration or other restriction under federal and state
securities laws, neither the Investor nor any Holder of Shares may Transfer all
or any portion of the Shares except as expressly provided in this Agreement or
the Investment Agreement.  A Transfer of
the whole or any portion of the Shares in violation of the provisions of this
Agreement and the Investment Agreement shall be null and void ab initio and shall be of no effect.

 

5

 

SECTION 2.02.  Permitted Transfers and Right of First
Refusal.  (a)  In the event that the Investor or any Holder
(the “Potential Seller”) receives a bona fide offer (the “Shares
Offer”) from an independent third party (the “Third Party Purchaser”)
to purchase all or any of the Shares held by the Investor or such Holder, such
Potential Seller shall first offer in writing (the “Potential Seller Offer”)
such Shares to the Company at the same price and upon the same terms provided
in the Shares Offer.  The Potential
Seller Offer shall set forth (i) the number of Shares proposed to be
purchased in the Shares Offer (the “Offered Shares”), (ii) the name
and address of the proposed Third Party Purchaser, (iii) the amount of
consideration to be received by the Potential Seller in the Shares Offer, and
(iv) the proposed method of payment. 
The Company shall have the right, upon written notice to the Potential
Seller within ten (10) Business Days following receipt of the Potential Seller
Offer, to purchase from the Potential Seller all of the Offered Shares within
thirty (30) days following receipt of the Potential Seller Offer.

(b)           If the Company gives notice in accordance with Section
2.02(a) above of its election to purchase all of the Offered Shares, the
Company shall, within thirty (30) days following receipt of the Potential
Seller Offer, purchase such Offered Shares at the price and upon the terms
contained in the Potential Seller Offer. 
The Potential Seller shall continue to be subject to the terms and
conditions of this Agreement until the conditions set forth in Section 4.04(c)
below have been satisfied.

(c)           In the event that (i) the Potential Seller complies with
the provisions of Section 2.02(a) and (ii) the Company fails to elect to
purchase all of the Offered Shares in accordance with Section 4.04(a), then the
Offered Shares that the Company has not so elected to purchase may be
transferred to the Third Party Purchaser named in the Potential Seller Offer
(the “Approved Third Party Purchaser”); provided, however,
that (w) such Offered Shares are sold at the price and upon the same terms set
forth in the Potential Seller Offer, (x) such sale is made within ninety (90) days
after the expiration of the option period provided in Section 2.02(a),
(y) the sale of such Offered Shares is not made in such a manner that
would result in the Company being obligated to register its securities under
the Securities Act, and (z) the Approved Third Party Purchaser unconditionally
assumes all of the Potential Seller’s rights, duties and obligations with
respect to the Shares under this Agreement (including, without limitation, as
specifically provided under Section 2.04), the Investment Agreement and
applicable Law.  Any of the Offered
Shares not transferred to the Approved Third Party Purchaser by the Potential
Seller within the ninety (90) days provided in the foregoing sentence shall
remain subject to all of the provisions of this Agreement (including, without
limitation, Section 2.01 and this Section 2.02).

SECTION
2.03.  Legend.  (a)            The
Investor understands that, until such time as the Shares may be sold by
non-affiliates of the Company pursuant to Rule 144 under the Securities Act without
any restriction as to the number of securities as of a particular date that can
then be immediately sold or otherwise cease to be Restricted Shares, each
certificate representing the Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Shares):

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY OTHER
JURISDICTION.  THE

 

6

 

SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT.

(b)           The certificates held by the Holders that are subject to
the Right of First Refusal set forth in this Article II shall have
endorsed thereon, in addition to such other legends as required to be imprinted
thereon pursuant to this Agreement or to applicable law, a legend in
substantially the following form:

THE SECURITIES REPRESENTED
BY THE CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL, A RIGHT OF
REDEMPTION AND CERTAIN OTHER RESTRICTIONS ON TRANSFER AS SET FORTH IN EITHER AN
INVESTOR RIGHTS AGREEMENT OR AN INVESTMENT AGREEMENT, ENTERED INTO AMONG THE
COMPANY AND THE REGISTERED HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON REQUEST TO THE HOLDER OF
RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.

SECTION 2.04.  Voting Rights.  For so long as (i) the Investor holds at
least ten percent (10%) of Preferred Shares outstanding at any time; and
(ii) the Investor retains the right to the license granted pursuant to
that certain License Agreement, dated of even date herewith, by and between the
Company and the Investor (the “License Agreement”) (including to the
extent the Investor retains such right following termination of the License
Agreement), then any transfer of the Preferred Shares to any third party
(including affiliates and subsidiaries of the Investor or any third party) is
subject to the requirement that the transferee agree in writing with the
Company and the Investor to take all actions in order to cause the election to
the Company’s Board of Directors of one (1) representative designated by the
Investor pursuant to the Certificate of Incorporation for so long as the
Investor continues to meet the requirements of subsections (i) and (ii) hereof.

ARTICLE III

PRE-EMPTIVE RIGHT

 

SECTION 3.01.  Pre-emptive Right.  (a) 
Subject to the terms and conditions of this Section 3.01, 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

 

7

 

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 five (5) 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 3.01(b)(ii) are not
elected to be obtained as provided in Section 3.01(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 3.01(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.

(iv)          The Right of First Offer in this
Section 3.01 shall not be applicable to (A) the issuance or sale of shares
of Common Stock (or options therefor) 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

 

8

 

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; (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.

ARTICLE IV

REGISTRATION RIGHTS

 

SECTION 4.01.  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 4.01 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 4.01 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 4.01 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

 

9

 

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 be included in such registration which
are Converted Registrable Securities; provided that if necessary, the
number of such Registrable Securities and Primary Shares shall be reduced pro rata
among the holders thereof based upon the number of Registrable Securities and
Primary Shares requested to be registered by each such holder; and

(ii)           second, any Other Shares.

(c)           The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 4.01 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 4.05 hereof.

(d)           For purposes of Section 4.01(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 4.02.  Form S-3 Registration.  In addition to the rights set forth in
Section 4.01, if, after the occurrence of a Public Offering, the holders of a
majority in interest of the Registrable Securities shall request in writing
that the Company file a registration statement on Form S-3 (or any successor to
Form S-3) or any similar short-form registration statement for a public
offering of shares of Registrable Securities (“Follow-On Registrations”)
the reasonably anticipated aggregate price to the public of which would exceed
$15,000,000, and the Company is entitled to use Form S-3 to register securities
for such an offering, the Company will promptly give written notice of the
request for the proposed registration to all Holders and include all
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within ten (10) days
after receipt of such written notice from the Company.  If the Follow-On Registration is for an underwritten
offering, the provisions of Section 4.01(b) shall apply to such
registration.  In connection with the
Follow-On Registration, the Company shall:

(a)           as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of the Holder’s Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written
request given within ten (10) days after receipt of such written notice from
the Company; provided,

 

10

 

however, that the
Company shall not be obligated to effect any such registration, qualification
or compliance pursuant to this Section 4.02 if:

(i)            the Form S-3 (or any successor or
similar form) is not available for such offering under applicable Law;

(ii)           the selling Holder, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and other securities (if
any) at an aggregate price to the public of less than fifteen million dollars
($15,000,000);

(iii)          it provides written notice to Holders
within thirty (30) days of any registration request under this Section 4.02
stating the Company’s intention to file a registration statement in connection
with a Public Offering within ninety (90) days of such written notice; provided
that such filing is, or is likely to be made within such ninety (90) day
period;

(iv)          the Company shall furnish to the
Holders a certificate signed by the Chairman of the Board stating that in the
Board’s good faith judgment, it would be seriously detrimental to the Company
and the stockholders for such Form S-3 registration to be effected at such
time, in which event the Company shall have the right to defer the filing of
the Form S-3 registration statement for a period of not more than one hundred
and eighty (180) days after receipt of the request under this Section 4.02; or

(v)           in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, unless the Company is already subject
to service in such jurisdiction and except as may be required under the
Securities Act; and

(b)           subject to the foregoing, the Company
shall file a Form S-3 registration statement covering the Registrable
Securities and other securities so requested to be registered as soon as
practicable after receipt of the request of the requesting Holders.

SECTION 4.03.  Obligations of the Company.  Whenever required under this Article IV 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

 

11

 

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 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 the 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 the 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 4.04(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 4.04(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;

 

12

 

(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 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 therefor
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

 

13

 

beginning with the first day
of the Company’s first full 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 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 4.04.  Information from Holders.  It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Article IV 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 6.03) of such portions, to any portion of any such
document that is subject to review by the Holders pursuant to this Section
4.04.

SECTION 4.05.  Expenses of Registration.  All expenses incurred in connection with
registrations, filings or qualifications pursuant to Sections 4.01 and 4.02,
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.  In
addition, the Company shall not be required to pay for any expenses of any
registration 

 

14

 

proceeding
begun pursuant to Section 4.02 if the registration request is subsequently
withdrawn at the request of any Holder (in which case such Holder shall bear
such expenses).

SECTION 4.06.  Indemnification.  In the event any Registrable Securities are
included in a registration statement under this Article IV:

(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
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 (collectively a “Violation”):  (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; 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 4.06(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

 

15

 

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 4.06(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 4.06(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 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 4.06(a) and the Holders’
indemnification liability under Section 4.06(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 Investment
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 4.06.

(d)           Promptly after receipt by an
indemnified party under this Section 4.06 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 4.06, 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 4.06.  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 4.06 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

 

16

 

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 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
4.06(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 4.06 shall survive the completion of any
offering of Registrable Securities in a registration statement under this
Article IV, 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 4.07.  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

 

17

 

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 4.08.  Assignment of Registration Rights.  The rights to cause the Company to register
Registrable Securities pursuant to this Article IV 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 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 4.09 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 4.09.  “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, 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 4.10.  Termination of Registration Rights.  No Holder shall be entitled to exercise any
right provided for in this Article IV 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 4.11.  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

 

18

 

of
trading in securities of the Company at a time when it is in possession of
material non-public information.

ARTICLE V

ADDITIONAL AGREEMENTS

 

SECTION 5.01.  Delivery of Information.  (a)  So
long as the Investor continues to hold a majority of the issued and outstanding
Series 2003 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 2003 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 2003 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 5.02.  Audit. 
In the event the Company fails to provide the Investor with the reports
specified under Section 5.01 within the applicable time periods specified in
Section 5.01, the Investor may, if within thirty (30) days after providing
written notice to the Company of such failure to provide such reports the
Company does not correct such failure, request that the accounting firm of its
choice audit the Company, at the Investor’s expense, in order to produce such
reports in a manner satisfactory to the Investor, in its reasonable discretion,
and the Company shall reasonably cooperate with any such audit; provided
that such

 

19

 

audit
is performed in a manner that does not interfere unreasonably with the business
or operations of the Company and that such accounting firm enters into a
confidentiality agreement with Company, in form and substance reasonably
satisfactory to the Company.  This
Section 5.02 shall constitute the Investor’s sole and exclusive remedy for the
Company’s breach of Section 5.01.

SECTION 5.03.  Inspection.  So long as the Investor continues to hold a
majority of the issued and outstanding Series 2003 Preferred Stock, upon at
least ten (10) Business Days’ prior written notice to the Company, the Company
shall permit the Investor, during normal business hours, to visit and inspect
the Company’s properties, to examine its books of account and financial records
and to discuss the Company’s affairs, finances and accounts with its officers,
provided that no such visit or inspection unreasonably interferes with the
business or operations of the Company.

SECTION 5.04.  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 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 Preferred
Stock may then be converted.

SECTION 5.05.  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 5.05.

SECTION 5.06.  Restrictive Agreements.  The Company will not enter into or become
obligated under any agreement or contract, including, without limitation, any
loan agreement, promissory note (or other evidence of indebtedness), mortgage,
security agreement or lease, which by its terms prevents or materially
restricts the Company from performing its obligations under this Agreement; provided,
however, that the Investor agrees that neither the authorization,
creation or issuance of any new class or series of stock or any other
securities convertible into equity securities of the Corporation with
preferences, rights or powers senior to, or an a parity with, those of the
Series 2003 Preferred Stock, nor the Company’s entering into any loan
agreement, promissory note (or other evidence of indebtedness), mortgage,
security interest or lien giving the other party thereto rights senior to the
Investor shall in either case in and of itself be deemed to prevent or
materially restrict the Company from performing its obligations under this
Agreement.

 

20

 

SECTION 5.07.  Termination of Covenants.  Unless no longer applicable in accordance
with the terms of such Section at an earlier date, the covenants set forth in
Sections 5.01, 5.02 and 5.03 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.

ARTICLE VI

REDEMPTION

 

At any time and from time to
time after (a) the Investor gives notice of its intent to terminate the
Transaction Documents pursuant to Section 7.03 (Termination of Agreement Prior
to FDA Approval) of the Development Agreement, or (b) the termination of
any of the Transaction Documents by the Company for the Investor’s breach, the
Company shall have the right to redeem all of the issued and outstanding shares
of Preferred Stock at a price per share equal to the Fair Market Value (as
defined in the Certificate of Incorporation) of each share of 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 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 Preferred Stock called for
redemption shall surrender to the Company or its transfer agent all
certificates for the shares of 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.

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.01.  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 7.02.  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 7.03.  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,

 

21

 

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 7.03):

	
   

  	
  (a)

  	
  if to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Osiris Acquisition II,
  Inc.

  
	
   

  	
   

  	
  2001 Aliceanna Street

  
	
   

  	
   

  	
  Baltimore, Maryland
  21231-3043

  
	
   

  	
   

  	
  Attention: Chief Executive
  Officer

  
	
   

  	
   

  	
  Facsimile No: (410)
  522-6999

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wilmer, Cutler &
  Pickering

  
	
   

  	
   

  	
  2445 M Street, NW

  
	
   

  	
   

  	
  Washington, D.C. 20037

  
	
   

  	
   

  	
  Attention: Michael R.
  Klein, Esq.

  
	
   

  	
   

  	
  Facsimile No: (202)
  663-6000

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  if to the Investor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Boston Scientific
  Corporation

  
	
   

  	
   

  	
  One Boston Scientific
  Place

  
	
   

  	
   

  	
  Natick, MA 01760-1537

  
	
   

  	
   

  	
  Telecopy: (508) 650-8956

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shearman & Sterling

  
	
   

  	
   

  	
  599 Lexington Ave.

  
	
   

  	
   

  	
  New York, New York
  10022-6069

  
	
   

  	
   

  	
  Telecopy: (212) 848-7179

  
	
   

  	
   

  	
  Attention: Clare O’Brien,
  Esq.

  

 

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 7.04.  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 7.05.  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

 

22

 

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 7.06.  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 7.07.  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 7.08.  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 7.09.  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.  The Parties unconditionally and irrevocably
agree and consent to the exclusive jurisdiction of the courts located in the
State of Delaware and waive any objection with respect thereto, for the purpose
of any action, suit or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby, and further agree not to commence any
such action, suit or proceeding except in any such court.

SECTION 7.10.  Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different Parties in separate counterparts, each of which when executed shall
be deemed to be an original, but all of which taken together shall constitute
one and the same agreement.  Delivery of
an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 7.11.  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.

 

23

 

SECTION 7.12.  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 Transaction Documents by the Investor
pursuant to Section 7.03 (Termination of Agreement Prior to FDA Approval) of
the Development Agreement, provided, however, that the Company’s
right of Redemption (set forth in Article V 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 7.12.

 

24

 

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/
  William H. Pursley

  
	
   

  	
   

  	
  Name:

  	
  William
  H. Pursley

  
	
   

  	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BOSTON
  SCIENTIFIC CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Larry Best

  
	
   

  	
   

  	
  Name:

  	
  Larry
  Best

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial Officer

  
					

 

 

25Exhibit 10.15

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

WITNESSETH:

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

WHEREAS, Osiris is active in
a number of fields covered by the Transaction Documents but lacks the resources
that are necessary to conduct clinical trials and bring certain products into
the market, while at the same time BSC has such means but lacks the necessary
technology and intellectual property rights to enter into the fields covered by
the Transaction Documents;

WHEREAS, the essential aim
of Osiris and BSC in entering into the Transaction Documents is therefore to
transfer certain of Osiris’ intellectual property rights as set forth in this
Agreement to ensure adequate access of certain products covered by the
Transaction Documents to the markets; and

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

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

ARTICLE I

DEFINITIONS

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

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

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

 

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.

 

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

“Average Selling Price”
or “ASP” has the meaning set forth in Exhibit C.

“Bankruptcy Code” has
the meaning set forth in Section 8.13.

“BSC Election Period”
has the meaning set forth in Section 2.04.

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

“Burns Lawsuit” means
any claims that are asserted now or in the future against Osiris, any
predecessor thereof, or BSC in Burns v. Friedli, et al. Case No.
24-C-02-00903, currently pending in the Circuit Court for Baltimore City,
Maryland, and all subsequent proceedings, including without limitation,
appellate proceedings, related thereto.

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

“Change of Control”
means, with respect to a Person, an event where another Person (alone or
together with such Person’s Affiliates) (i) consummates a merger,
consolidation, reorganization or similar transaction or series of related
transactions, whether direct or indirect, with such first Person, (ii) acquires
beneficial ownership of greater than thirty-five percent (35%) of the capital
stock of such first Person, (iii) acquires by sale, transfer or other
disposition substantially all of the assets of such first Person, whether in
one transaction or in a series of related transactions, or (iv) otherwise
acquires Control of such first Person.

“Commercialize” has
the meaning set forth in Section 2.06.

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

“Control” means, with
respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee or executor, by contract
or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.

“EEA” shall mean the
European Economic Area.

 

2

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.

 

“Encumbrance” means
any security interest, pledge, hypothecation, mortgage, lien (including,
without limitation, environmental and tax liens) or other encumbrance.

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

“Field” means any and
all applications in the treatment of disease, dysfunction, injury or other
abnormalities of (i) the heart or (ii) the circulatory system.

“Force Majeure” has
the meaning set forth in Section 8.15.

“Intellectual Property”
means all intellectual property rights, including without limitation (i) United
States and foreign patents and patent applications, divisions, continuations,
continuations-in-part, reissues, renewals, reexaminations, requests for
continued examination, supplemental registrations or extensions thereof, (ii)
trademarks, whether registered or unregistered and applications for
registration thereof, (iii) copyrights, whether registered or unregistered and
applications for registration thereof, and (iv) Know-How.

“Inventions” has the
meaning set forth in the Development Agreement.

“Joint Invention” has
the meaning set forth in the Development Agreement.

“Know-How” means all
formulae, procedures, trade secrets, know-how, technology, plans, methods,
processes, specifications, models, protocols, techniques, technical or
proprietary information and data (including, without limitation, formulae,
experimentation, design, testing, manufacturing and regulatory data, and
products, compositions and procedures), and patentable and unpatentable Inventions
that are not disclosed in a published patent application or patent or otherwise
publicly available.

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

“License Fees” has
the meaning set forth in Section 4.01.

“Licensed Technology”
has the meaning set forth in Section 2.01.

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

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

“MSC Products” means
applications of MSC Technology in the Field.

“MSC Technology”
means all proprietary information relating to MSC that is owned by or licensed
to Osiris, as of the Effective Date and/or any time during the Term of this
Agreement, including without limitation, formulae, procedures, trade secrets,
know-how,

 

3

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.

 

technology, plans, methods,
processes, specifications, models, protocols, techniques and experimentation,
and design, testing and manufacturing data, whether or not protected by patent,
copyright or other statutory means, and including all methods, processes,
products, compositions and procedures used in the manufacture, production,
testing, evaluation and packaging of any MSC Products.

“MSC Technology
Improvements” means all MSC Technology (i) created, obtained or otherwise
acquired by Osiris after the Effective Date or (ii) in-licensed to Osiris from
a Third Party after the Effective Date.

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

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

“Osiris Improvements”
means any and all (i) Osiris Patent Improvements, including all Intellectual
Property therein and (ii) MSC Technology Improvements, including all
Intellectual Property therein.

“Osiris Improvement
Notice” has the meaning set forth in Section 2.04.

“Owned Licensed
Technology” means Licensed Technology owned by Osiris.

“Osiris Patent
Improvements” means all Patents (i) granted, obtained, or otherwise
acquired by Osiris after the Effective Date or (ii) in-licensed to Osiris from
a Third Party after the Effective Date.

“Patents” means all
United States and foreign patents and patent applications, provisionals,
divisions, continuations, continuations-in-part, reissues, reexaminations or
extensions thereof owned by or licensed to Osiris, as of the Effective Date
and/or any time during the Term of this Agreement, including but not limited to
those patents and applications set forth in Exhibit A.

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

“Proceeding” has the
meaning set forth in Section 3.03.

“Products” means
applications of MSC Technology to treat (i) acute myocardial infarction and
(ii) chronic ischemia.

“Royalties” has the
meaning set forth in Section 4.02.

 

4

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.

 

“Sublicensed Technology”
means all Licensed Technology that is not Owned Technology but instead licensed
to Osiris from another Person, as scheduled in Exhibit D.

“Subsequent Products”
means applications of MSC Technology in the Field, other than Products.

‘Term” has the
meaning set forth in Section 7.01.

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

“Transfer Price” has
the meaning set forth in the Contract Manufacturing Agreement.

“Trademark” has the
meaning set forth in Section 2.03.

“TTBE” shall have the
meaning set forth in Section 7.01.

ARTICLE II

GRANT OF RIGHTS

SECTION 2.01 License.  Subject to the terms and conditions of this
Agreement, Osiris hereby grants BSC a worldwide, exclusive license under the
Patents and MSC Technology, including all Intellectual Property therein, in
existence as of the Effective Date (subject to Section 2.04) (collectively the “Licensed
Technology”) for the sole purpose of developing, making, having made,
marketing, distributing, having distributed, using, exporting, selling and
offering to sell MSC Products.  The
foregoing license grant is nonsublicensable by BSC except to (i) BSC’s
Affiliates and Third Party contract manufacturers (where such sublicenses shall
be subject to the terms and conditions of the Contract Manufacturing Agreement
and the Development Agreement) and (ii) Osiris for the purpose of performing in
accordance with the Development Agreement and Contract Manufacturing Agreement
(where Osiris may further sublicense only to Osiris’ Affiliates and Third Party
contract manufacturers for purposes of performance under the Contract
Manufacturing Agreement and Development Agreement).  For the avoidance of doubt, (i) no license is
granted by Osiris to BSC to use any of the Licensed Technology outside the
Field, (ii) except as expressly authorized pursuant to the Development
Agreement and Contract Manufacturing Agreement, Osiris may not commercialize
any of the Licensed Technology in the Field, (iii) Osiris may not license any
of the Licensed Technology for use in the Field to any Person, except BSC, (iv)
nothing in this Agreement shall affect any of Osiris’ rights to the Licensed
Technology outside the Field, and (v) nothing in this Agreement shall prevent
Osiris from licensing (including, without limitation, exclusively) the Licensed
Technology for use solely outside of the Field. 
In the event an agreement governing Osiris’ use or sublicensing of
Sublicensed Technology is terminated by Osiris or the owner or licensor of such
Sublicensed Technology, then, at BSC’s option, the sublicenses under such
Sublicensed Technology granted to BSC shall survive such termination to the
extent allowed by and in accordance with the terms and conditions of the
agreement between the owner or licensor of the Sublicensed Technology and
Osiris and pursuant to the terms and conditions of this Article II.

 

5

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.

 

SECTION 2.02 License to
Sublicensed Technology.  Osiris shall
obtain, at its expense, all necessary consents and approvals to effectuate the
licenses granted pursuant to Section 2.01 with respect to Licensed Technology
that is in the form of Sublicensed Technology.

SECTION 2.03 Trademark
License.

(a)           Osiris and BSC shall work together to select a trademark
to be used for the Product (“Trademark”), such Trademark must be agreed
to by both Parties prior to use by either Party.  Osiris shall own and maintain all right,
title and interest in and to Trademark, subject to the license granted under
this Section 2.03.

(b)           Osiris hereby grants BSC a fully paid up, royalty-free,
worldwide, non-assignable license to use Trademark in connection with the
promotion, marketing, sale, distribution and delivery of the MSC Products
during the term of this Agreement.  This
license shall be non-sublicensable except with the prior written consent of
Osiris, which consent shall not be unreasonably withheld.  BSC shall be obligated to use Trademark in
connection with the promotion, marketing, sale, distribution or delivery of any
MSC Product and in accordance with Osiris’s guidelines governing the use of
Trademark.  Osiris shall take such
actions as are reasonably required to maintain Trademark in effect, and shall
inform BSC of any changes in or additions to Trademark.

SECTION 2.04 Notice of
and Election as to Osiris Improvements. 
Upon the discovery, invention or acquisition (including in-licensing)
from a Third Party of an Osiris Improvement, in each case by Osiris, the
definition of “Licensed Technology” shall automatically be deemed to include
such Osiris Improvement and the license granted to BSC to Licensed Technology
under Section 2.01 shall include such Osiris Improvement.  The effect of the foregoing shall be that, as
set forth in Section 2.01, Osiris shall have granted BSC a worldwide, exclusive
license under such Osiris Improvement, including all Intellectual Property
therein, effective as of such discovery, invention or acquisition, for the sole
purpose of developing, making, having made, marketing, distributing, having
distributed, using, exporting, selling and offering to sell MSC Products, the
foregoing license grant nonsublicensable by BSC except to (i) BSC’s Affiliates
and Third Party contract manufacturers (where such sublicenses shall be subject
to the terms and conditions of the Contract Manufacturing Agreement and the
Development Agreement) and (ii) Osiris for the purpose of performing in
accordance with the Development Agreement and Contract Manufacturing Agreement
(where Osiris may further sublicense only to Osiris’ Affiliates and Third Party
contract manufacturers for purposes of performance under the Contract
Manufacturing Agreement and Development Agreement).  With respect to each such Osiris Improvement,
Osiris shall notify BSC of such discovery, invention or acquisition (an “Osiris
Improvement Notice”).  Each Osiris
Improvement Notice shall be deemed an offer by Osiris to BSC to remove such
Osiris Improvement from the definition of “Patents” (if an Osiris Patent
Improvement) and “Licensed Technology” and to remove such Osiris Improvement
from the license granted to BSC under Section 2.01.  BSC shall have thirty (30) days (the “BSC
Election Period”) from the date of each Osiris Improvement Notice to reject
the Osiris Improvement.  If BSC notifies
Osiris during the BSC Election Period that BSC rejects the Osiris Improvement,
the definitions of “Patents” (if an Osiris Patent Improvement) and “Licensed
Technology” shall thenceforth be deemed not to include such Osiris Improvement
and such

 

 

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COMMISSION.

 

Osiris
Improvement shall be removed from the license to Licensed Technology granted to
BSC under Section 2.01.  If, however, BSC
fails to respond to Osiris during the BSC Election Period with respect to the
Osiris Improvement Notice, the definitions of “Patents” (if an Osiris Patent
Improvement) and “Licensed Technology” shall continue to be deemed to include
such Osiris Improvement and the license granted to BSC to Licensed Technology
under Section 2.01 shall continue to include such Osiris Improvement.

SECTION 2.05 Exclusivity.

(a)           Notwithstanding anything in this Agreement to the
contrary, during the term of this Agreement, (i) Osiris may not enter into any
license (except as expressly provided in Section 2.01 with respect to
Affiliates and Third Party contract manufacturers), commercialization,
collaboration, distribution or similar agreement with respect to the
application of MSCs in the Field or MSC Technology in the Field with Persons
other than BSC without the prior written consent of BSC and (ii) any and all
MSCs sold by Osiris to Persons other than BSC must be sold with a limited label
license or other restriction that states such MSCs may only be used in a
specified field or application, where such specified field or application does
not fall within the Field, e.g., “For use only in __________ applications.”

(b)           Notwithstanding anything in this Agreement to the
contrary, during the term of this Agreement, BSC may not enter into any
in-license or similar agreement with respect to MSC Products with Persons other
than Osiris without the prior written consent of Osiris, which consent shall
not be unreasonably withheld or delayed, provided, however that
the Parties agree that it shall be reasonable for Osiris to withhold consent
with respect to any MSC Product for which BSC’s license under Section 2.01 of
this Agreement has converted to a non-exclusive license pursuant to the terms
of this Agreement or the Development Agreement.

SECTION 2.06 Commercialization;
Sales Updates.

(a)           BSC shall use commercially reasonable efforts to promote
(including without limitation pre-marketing, advertising, education and
detailing), market, distribute, sell and provide product support for
(collectively, “Commercialize”) the Products in each country where the
Parties obtain Approval for the Products (or, if an Approval covers a group of
countries; in such group as a whole), and in any event, shall exert efforts and
take an approach to Commercializing the Products that is consistent with those
BSC exerts and takes in Commercializing other products developed by BSC of
similar marketability and profitability.

(b)           Semi-annually, BSC shall notify Osiris in writing of
monthly gross sales, net sales and unit volume by country or other geographical
grouping, as is consistent with BSC practices (in local currency).

SECTION 2.07 Non-Solicitation.  During the Term, each Party agrees that it
shall not solicit any employee of the other Party or any of its Affiliates,
with whom it has come in contact or interacted for the purposes of the
performance of any of the Transaction Documents, to leave the employment of the
other Party or its Affiliate and accept employment or work as a consultant with
the first Party.  Notwithstanding the
foregoing, nothing herein shall restrict or preclude

 

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either
Party’s right to make generalized searches for employees by the issue of
advertisement in the media (including trade media) or by engaging search firms
to engage in searches that are not targeted or focused on an employee or
employees of the other Party.

ARTICLE III

INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION

SECTION 3.01 Pre-Existing
Rights.  Each Party acknowledges that
any and all Intellectual Property of the other Party is and shall continue to
be owned by such other Party, subject only to the licenses granted under this
Agreement, the Development Agreement, and the Contract Manufacturing Agreement.

SECTION 3.02 Maintenance
of Intellectual Property.  Osiris
shall perform all filings, recordings and other acts, and pay all required fees
and taxes, to maintain and protect its interest in each item of Licensed Technology.  Osiris shall not permit any item of Owned
Licensed Technology in the Field, and shall use its reasonable best efforts to
not permit any item of Sublicensed Technology in the Field, to become
abandoned, dedicated to the public, disclaimed or to lapse without the prior
written consent of BSC.  Except in the
event of (i) a Change of Control or (ii) a sale of the Owned Licensed
Technology in the Field in conjunction with a sale of all or substantially all
of the business of Osiris, and provided, in either case (i) or (ii), the
recipient or purchaser of the Owned Licensed Technology in the Field agrees to
assume and is capable of assuming all obligations and liabilities under this
Agreement, Osiris shall not sell or assign any item of Owned Licensed Technology
in the Field without the prior written consent of BSC, such consent not to be
unreasonably withheld or delayed.  In the
event Osiris grants a security interest in or to any of the Owned Licensed
Technology in the Field, Osiris shall provide BSC written notification of such
grant, such notification to be provided no later than thirty (30) business days
after the date of such grant.

SECTION 3.03 Infringement
of Owned Licensed Technology.

(a)           In the event that any Party obtains knowledge of any
actual or threatened infringement or misappropriation by another Person of any
of the Owned Licensed Technology in the Field, such Party shall notify the
other Party in writing promptly of such actual or threatened infringement or
misappropriation and provide the other Party with any available evidence of
such actual or threatened infringement or misappropriation.

(b)           Osiris, at its expense, shall have the first right to
commence, prosecute and settle or otherwise compromise any dispute, action,
suit or proceeding involving or against any other Person believed to have
infringed or misappropriated any Owned Licensed Technology in the Field (“Proceeding”).  In the event that Osiris institutes a
Proceeding, BSC shall have the right to join or intervene in such Proceeding.  No settlement, consent judgment or other
voluntary final disposition of any Proceeding brought pursuant to this
Paragraph 3.03(b) may be entered into by either Party without the consent of
the other Party, which consent shall not be unreasonably withheld or delayed.

 

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BRACKETS AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

(c)           In the event Osiris does not institute a Proceeding to
obtain a discontinuance of or remedy for any actual or threatened infringement
or misappropriation of the Owned Licensed Technology in the Field within sixty
(60) days of the date of receipt by Osiris of a written demand from BSC, then
BSC, at its cost, may institute a Proceeding with respect to the actual or
threatened infringement or misappropriation at its own expense.  If required by Law, Osiris shall permit any
action under this Paragraph 3.03(c) to be brought in its name, including being
joined as party-plaintiffs.

(d)           In the event a Party initiates a Proceeding pursuant to
this Section 3.03, the other Party shall cooperate fully, including, if
required to bring such action, the furnishing of a power of attorney.

(e)           Any recovery with respect to infringement or
misappropriation in the Field shall first be applied in satisfaction of
out-of-pocket expenses and fees, including attorneys’ fees and expenses,
incurred by the Parties and the remainder shall belong to Osiris.  Any recovery with respect to infringement or
misappropriation outside the Field shall first be applied in satisfaction of
out-of-pocket expenses and fees, including attorneys’ fees and expenses,
incurred by the Parties and the remainder shall be divided equally between the
Parties.

SECTION 3.04 Infringement
of Sublicenscd Technology.  In the
event that any Party obtains knowledge of any actual or threatened infringement
or misappropriation by another Person of any of the Sublicensed Technology in
the Field, such Party shall notify the other Party in writing promptly of such
actual or threatened infringement or misappropriation and provide the other
Party with any available evidence of such actual or threatened infringement or
misappropriation.  Osiris shall use
commercially reasonable efforts to obtain a discontinuance of or remedy for any
actual or threatened infringement or misappropriation, including promptly
informing the owner of the relevant Sublicensed Technology and working with
such owner to obtain a discontinuance of or remedy for any actual or threatened
infringement or misappropriation.

ARTICLE IV

PAYMENTS

License Fees.  BSC shall pay to Osiris the license fees in
the amount and in accordance with the schedule set forth below (“License
Fees”):

(i)                                     within ten (10)
Business Days of the Effective Date: 
$5 million;

(ii)                                  within ten (10)
Business Days of the enrollment of the first patient in the first
Phase III clinical trials for an MSC Product developed pursuant to the
Development Agreement:  $10 million;

(iii)                               within ten (10)
Business Days of the first filing of a Biologics License Application with
respect to an MSC Product developed pursuant to the Development Agreement:  $5 million; and

 

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COMMISSION.

 

(iv)                              within ten (10)
Business Days of the first approval by the FDA of an MSC Product developed
pursuant to the Development Agreement: 
$10 million.

SECTION 4.02 Royalties.  In addition to License Fees, BSC shall pay
Osiris royalties for MSC Products acquired or manufactured by BSC or its
Affiliates outside of the terms of the Contract Manufacturing Agreement, if
any, in the amount and in accordance with the provisions set forth in
Exhibit C (“Royalties”).  For
the avoidance of doubt, if BSC pays Transfer Prices for MSC Products purchased
pursuant to the Contract Manufacturing Agreement then no Royalties shall be due
in respect of MSC Products so purchased. 
Royalties shall be paid by BSC to Osiris on a quarterly basis, no later
than thirty (30) Business Days after the end of each calendar quarter.

SECTION 4.03 Osiris Audit
Rights.  BSC shall maintain accurate
records and books of account sufficient to substantiate the Royalties paid to
Osiris, including records of the quantities of MSC Products sold.  Upon reasonable notice to BSC, Osiris shall
have the right to conduct an audit, not more than once per calendar year,
through an independent accounting firm reasonably acceptable to BSC, of the
calculation of the ASP for MSC Products and to examine the records and books of
accounts of BSC in connection therewith. 
If such audit determines that payments are due to Osiris, BSC shall pay
to Osiris any such additional amounts within thirty (30) days of the date on
which such auditor’s written report is delivered to BSC and Osiris.  Osiris shall bear the full cost and expense
of such audit, unless a discrepancy in excess of five percent (5%) in favour of
Osiris is discovered, in which event BSC shall bear the full cost and expense
of such audit.

SECTION 4.04 Deductions.  Any income or other taxes which BSC is
required by Law to pay or withhold on behalf of Osiris with respect to monies
payable to Osiris under this Agreement shall be deducted from the amount of
such payments and paid to the relevant competent taxing authority.  BSC shall promptly provide Osiris with a
certificate or other documentary evidence to enable Osiris to support a claim
for a refund or a foreign tax credit with respect to any such tax so withheld
or deducted by BSC.  BSC and Osiris will
reasonably cooperate in completing and filing documents required under the
provisions of any applicable tax treaty or under any other applicable law, in
order to enable BSC to make such payments to Osiris without any deduction or
withholding, if possible.

SECTION 4.05 Interest on
Late Payments.  Interest shall accrue
on late payments by BSC at a rate of eight percent (8%) per annum or the
maximum amount permitted by Law, whichever is less.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

SECTION 5.01 Mutual
Representations.  Each Party hereby
represents and warrants to the other Party as follows:

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

 

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COMMISSION.

 

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

(c)           Such Party’s execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) violate, conflict with or result in the breach of any
provision of the certificate of incorporation or by-laws (or similar
organizational documents) of such Party, (ii) conflict with or violate any Law
or governmental order applicable to such Party or its assets, properties or
businesses, or (iii) conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any encumbrance on any of its
outstanding shares of common stock or preferred stock or any of the assets or
properties of such Party pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which it is a party or by which any of such Party’s
shares of common stock or preferred stock or any of the Party’s assets or
properties is bound or affected.

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

SECTION 5.02 Osiris
Warranties.  Osiris hereby represents
and warrants to BSC as follows:

(a)           Osiris is the sole and exclusive owner of the entire
right, title and interest in and to, or holds an exclusive license under, the
Licensed Technology, free and clear of all Encumbrances, and, to the actual
knowledge of Osiris, is entitled to use and license the Licensed Technology in
the Field, subject only to the terms of license agreements with respect to the
Sublicensed Technology and copies of all such agreements have been provided to
BSC.  To the actual knowledge of Osiris,
no other Person (including any government) has any license, claim or other right
or interest in or to the Licensed Technology in the Field.  To the actual knowledge of Osiris, the
Licensed Technology may be exclusively licensed in the Field as provided in
this Agreement, without incurring any obligation to any other Person (except with
respect to any statutory march-in rights and the payment of royalties).

(b)           To the actual knowledge of Osiris, the Licensed Technology
is valid and enforceable and not subject to any outstanding consent,
settlement, decree, order, injunction, judgment or ruling that would impair the
validity or enforceability of any such Licensed Technology.

 

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(c)           To the actual knowledge of Osiris, the Licensed Technology
includes all of the Intellectual Property necessary to develop, manufacture,
distribute, sell, use and export the Products.

(d)           To the actual knowledge of Osiris, the use of the Licensed
Technology in the Field does not infringe or misappropriate any Intellectual
Property or other rights of any Third Party.

(e)           To the actual knowledge of Osiris, the making, using,
selling, offering for sale, exporting or importing of the Products will not
infringe or misappropriate any Intellectual Property or other rights of any
Third Party.

(f)            Osiris has made all reasonable inquiries and has
diligently conducted a reasonably complete and thorough due diligence review
and investigation of Intellectual Property rights of Third Parties in the Field
and prior art in the Field as part of Osiris’s preparation and prosecution of
its patent rights and its general due diligence undertakings in connection with
entering into this Agreement, and has reviewed all relevant information and
prior art obtained or derived from such due diligence review and
investigation.  Osiris has disclosed all
material prior art of which it has knowledge and other material information obtained
or derived from such due diligence review and investigation to BSC as of the
date hereof.

(g)           Osiris has not granted any Person, other than BSC, a
license to or under any of the Licensed Technology in the Field.

SECTION 5.03 DISCLAIMER.  EXCEPT AS EXPLICITLY PROVIDED IN THIS
ARTICLE, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND,
EXPRESS, IMPLIED, OR STATUTORY, AND THE PARTIES EXPRESSLY DISCLAIM ALL OTHER
WARRANTIES.

SECTION 5.04 Osiris
Indemnity.  Osiris hereby agrees to
indemnify and hold harmless each BSC Indemnitee from and against any and all
Losses incurred by it, her or him arising from any Action made, brought or
threatened against any of the BSC Indemnitees by a Third Party as a result of
(a) any negligent or willful act or omission of Osiris in relation to its, her
or his obligations under this Agreement, (b) the breach of any representation
or warranty, covenant or agreement by Osiris contained in this Agreement, (c)
any allegation that the use of the Licensed Technology infringes or
misappropriates any Third Party’s Intellectual Property, (d) any allegation
that the manufacture, use, sale, offer to sell, export or import of any Product
infringes or misappropriates any Third Party’s Intellectual Property or (e) the
Burns Litigation; for the avoidance of doubt, the Losses in respect of which
each BSC Indemnitee shall be entitled to indemnification under this Section
5.04(e) shall include, without limitation, any adverse effect upon, or
modification of, the license or any other rights granted to BSC under this Agreement
and any reduction in the amount of capital stock of Osiris held by BSC.

SECTION 5.05 BSC
Indemnity.  BSC agrees to indemnify,
defend and hold harmless each Osiris Indemnitee from and against any and all
Losses incurred by it, her or him arising from any Action made, brought or
threatened against any of the Osiris Indemnitees by a Third 

 

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COMMISSION.

 

Party
as a result of (a) any negligent or willful act or omission of BSC in relation
to its, her or his obligations under this Agreement or (b) the breach of any
representation or warranty, covenant or agreement by BSC contained in this
Agreement.

SECTION 5.06 Special
Damages.  IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR RELATED TO THIS AGREEMENT.

SECTION 5.08  Insurance.  Each Party shall maintain comprehensive
general liability insurance, including products liability, with a minimum
liability coverage limit of two million dollars ($2,000,000) per occurrence.

ARTICLE VI

CONFIDENTIALITY

SECTION 6.01 Confidentiality.  During the Term of this Agreement and for the
period of three (3) years thereafter, the Receiving Party shall maintain
Confidential Information in confidence, and shall not disclose, divulge or
otherwise communicate such Confidential Information to others, or use it for
any purpose, except pursuant to, and in order to carry out, the terms and
objectives of this Agreement.  The
Receiving Party hereby shall exercise every reasonable precaution to prevent
and restrain the unauthorized disclosure of such Confidential Information by
any of its directors, officers, employees, consultants, subcontractors, or
agents.  Upon termination of this
Agreement, each Party hereby shall return to the other Party, upon demand, all
Confidential Information in its possession or, upon demand, to destroy such
Confidential Information and provide a certificate to the other Party of such
destruction signed by an officer of the destroying Party.

SECTION 6.02 Release from
Restrictions.  The provisions of
Section 6.01 shall not apply to any Confidential Information disclosed
hereunder that:

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

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

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

(d)           is legally required to be disclosed
to the FDA; provided, however, the Receiving Party shall continue
to treat such Confidential Information as confidential pursuant to Section 6.01
unless and until such Confidential Information becomes published or generally
known to the public through no fault or omission on the part of the Receiving
Party; or

 

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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)           a Party is legally compelled to
disclose; provided, however, that the Receiving Party shall
provide prompt written notice of such requirement to the Disclosing Party so
that the Disclosing Party may seek a protective order or other remedy or waive
compliance with Section 6.01; and provided  further that in the
event that such protective order or other remedy is not obtained or the
Disclosing Party waives compliance with Section 6.01, the Receiving Party shall
be permitted to furnish only that portion of such Confidential Information that
is legally required to be provided and the Receiving Party shall exercise its
reasonable best efforts to obtain assurances that confidential treatment shall
be accorded such information.

SECTION 6.03 Public
Announcements and Publications. 
Except as required by Law or by the requirements of any securities
exchange on which the securities of a Party hereto are listed, no Party to this
Agreement shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without the prior written
consent of the other Party, and the Parties shall cooperate as to the timing
and contents of any such press release or public announcement.

ARTICLE VII

TERM AND TERMINATION

SECTION 7.01 Expiration.

(a)           Unless earlier terminated in accordance with this Article
VII and subject to subsection (b) below, this Agreement shall expire on a
country by country basis upon the expiration of the last to expire Patent in
such country (“Term”); provided, however, with respect to
any country in which Osiris does not own or have exclusive rights to any
Patent, this Agreement shall expire on the expiration of the last to expire
Patent in the United States.

(b)           With regard to the member states of the EEA, the following
determines the duration of this Agreement: 
This Agreement shall expire in each member state of the EEA on a country
by country basis on the later to occur of

(i)                                     the tenth
anniversary of the commercial launch of the Products by BSC anywhere in the
EEA, or

(ii)                                  the expiration,
in such member state, of the last to expire of the Patents, provided these
rights derive from necessary patents within the meaning of the block exemption
on technology transfer under Article 81 of the EC Treaty (the “TTBE”);

provided, however,
that if in such member state the expiration of the last to expire of the
Patents occurs prior to the tenth anniversary of the commercial launch of the
Products by BSC anywhere in the EEA, and the Know-How has become generally
known or insubstantial, through no fault of BSC, then this Agreement shall
terminate with respect to such member state.

 

14

 

SECTION 7.02 Mutual
Agreement.  This Agreement may be
terminated at any time upon mutual written agreement of the Parties.

SECTION 7.03 Termination
for Cause.  This Agreement may be
terminated by either Party, if the other Party shall be in material breach of
any provision contained in this Agreement and any such breach shall not have
been remedied within ninety (90) Business Days after receipt of written notice
from any other Party specifying (i) such breach and (ii) intention to terminate
if such breach is not cured within ninety (90) Business Days.

SECTION 7.04 Insolvency
of Other Party.  This Agreement may
be terminated by a Party if the other Party should commence any case,
proceeding or action (i) under any existing or future Law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it as a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding up, liquidation, dissolution,
composition or other relief with respect to it or its debts or (ii) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets; or, there shall be commenced
against the other Party any such case, proceeding or other action which results
in the entry of an order for relief or any such adjudication or appointment
remains undismissed, undischarged or unbonded for a period of thirty (30) days.

SECTION 7.05 Automatic
Termination.  This Agreement shall
automatically terminate upon the termination of the Development Agreement by
BSC pursuant to Section 7.03 thereof (Termination of Agreement Prior to FDA
Approval); provided, however, notwithstanding anything in this
agreement to the contrary, effective immediately upon Osiris’ receipt of notice
to terminate, as provided pursuant to Section 7.03 of the Development
Agreement, no further License Fees shall become due or payable to Osiris and
Osiris shall have no right to any further License Fees.

SECTION 7.06 Termination
of the Development Agreement.  This
Agreement may be terminated by Osiris in the event of a termination of the
Development Agreement, in accordance with the terms of the Development Agreement,
because of material breach by BSC of the Development Agreement prior to the
first Approval by the FDA of a Product.

SECTION 7.07 Effect of
Termination.

(a)           In the event of termination of this Agreement pursuant to
Section 7.02, the effect of such termination will be as agreed to in writing by
the Parties.

(b)           In the event of termination of this Agreement by BSC
pursuant to Sections 7.03 or by BSC pursuant to Section 7.04, the licenses
granted pursuant to Article II of this Agreement shall survive but only so
long as (i) BSC pays any remaining License Fees owed to Osiris and
(ii) BSC continues to (a) pay Royalties per Section 4.02 with respect to
MSC Products not acquired pursuant to the terms of the Contract Manufacturing
Agreement or (b) pay Transfer Prices with respect to MSC Products purchased
from Osiris in accordance with the Contract Manufacturing Agreement.  Notwithstanding this subsection (b), at the
time that this Agreement

 

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would have expired on a country by country basis
pursuant to the terms of Section 7.01, the foregoing licenses shall be deemed
to have expired in such country pursuant to such Section 7.01 with the
termination effect that would occur solely upon an expiration under Section
7.01.

(c)           In the event of termination of this Agreement by Osiris
pursuant to Section 7.03, the licenses granted by Osiris to BSC pursuant to
Article II of this Agreement shall survive as a non-exclusive license
(except that such licenses shall remain exclusive with respect to any MSC
Product that has FDA Approval as of the date of termination of this Agreement),
but only so long as (x) BSC pays any remaining License Fees owed to Osiris and
(y) BSC continues to (A) pay Royalties per Section 4.02 with respect to MSC
Products not acquired pursuant to the terms of the Contract Manufacturing Agreement
or (B) pay Transfer Prices with respect to MSC Products purchased from Osiris
in accordance with the Contract Manufacturing Agreement.  Notwithstanding this subsection (c), at the
time that this Agreement would have expired on a country by country basis
pursuant to the terms of Section 7.01, the foregoing licenses shall be deemed
to have expired in such country pursuant to such Section 7.01 with the
termination effect that would occur solely upon an expiration under Section
7.01.

(d)           In the event of termination of this Agreement by Osiris
pursuant to (i) Section 7.04 and BSC is subject to a voluntary or involuntary
petition under Chapter 7 of the Bankruptcy Code as of such termination or (ii)
Section 7.06, all rights, title and interest to the Products shall be owned
exclusively by Osiris, BSC shall have no right in or to the Products and the
licenses granted pursuant to Article II shall not survive termination.

(e)           Survival.  In
addition to any clause which by its express terms survives termination, the
respective rights and obligations of the parties under the provisions of
Articles VI (Confidentiality), VII (Term and Termination), and Sections 3.01,
5.04, 5.05, 5.06, 8.01 and 8.09, and the rights to any amounts owed by one
Party to the other prior to termination or expiration, shall also survive any
termination of this Agreement.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01 Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by an internationally recognized overnight courier service, by
telecopy or registered or certified mail (postage prepaid, return receipt
requested) to the respective Parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.01):

(a)           if to Osiris:

Osiris Acquisition II, Inc.

2001 Aliceanna Street

Baltimore, Maryland  21231-3043

Attention:  Chief Executive Officer

Facsimile No.:  (410) 522-6999

 

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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.

 

with a copy to:

Wilmer, Cutler & Pickering

2445 M Street, NW

Washington, D.C.  20037

Attention:  Michael R. Klein, Esq.

Facsimile No.:  (202) 663-6000

(b)           if to BSC:

Boston Scientific Corporation

One Boston Scientific Place

Natick, MA  01760-1537

Telecopy:  (508) 650-8956

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

with a copy to:

Boston Scientific Corporation

One Boston Scientific Place

Natick, MA  01760-1537

Telecopy:  (508) 650-8956

Attention:  General Counsel

SECTION 8.02 Headings.  The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of the Agreement.

SECTION 8.03 Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner
in order that the transactions contemplated by this Agreement are consummated
as originally contemplated to the greatest extent possible.

SECTION 8.04 Entire
Agreement.  The Transaction Documents
constitute the entire agreement of the Parties with respect to the subject
matter thereof and supersede all prior agreements and undertakings, both
written and oral, among the Parties with respect to the subject matter thereof.

SECTION 8.05 Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.  Neither Party may
assign this Agreement without the prior written consent of the other Party; provided,

 

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AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH A “*” AND
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however that a Party
may assign to an Affiliate its rights and obligations under this Agreement
without the approval of the other Party. 
No assignment by either Party permitted hereunder shall relieve the
applicable Party of its then-existing obligations under this Agreement.

SECTION 8.06 No Third
Party Beneficiaries.  This Agreement
shall be binding upon and inure solely to the benefit of the Parties and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever.

SECTION 8.07 Change of
Control.  In the event of a Change of
Control of Osiris or BSC, this Agreement and all rights and obligations of each
Party shall survive such Change of Control unaffected.

SECTION 8.08 Amendment.  This Agreement may not be amended or modified
except by an instrument in writing signed by authorized representatives of
Osiris and BSC.

SECTION 8.09 Governing
Law and Venue.  This Agreement shall
be governed by, and construed in accordance with, the Laws of the State of
Delaware.  The Parties unconditionally
and irrevocably agree and consent to the exclusive jurisdiction of the courts
located in the state of Delaware and waive any objection with respect thereto,
for the purpose of any action, suit or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby, and further agree not
to commence any such action, suit or proceeding except in any such court.

SECTION 8.10 Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different Parties in separate counterparts, each of which when executed shall
be deemed to be an original, but all of which taken together shall constitute
one and the same agreement.  Delivery of
an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 8.11 No Waiver.  The failure of either Party to enforce at any
time for any period the provisions of or any rights deriving from this
Agreement shall not be construed to be a waiver of such provisions or rights or
the right of such Party thereafter to enforce such provisions.

SECTION 8.12 Independent
Contractor.  In performing under this
Agreement, each Party shall be acting as an independent contractor and shall
not be considered or deemed to be an agent, employee, joint venturer, or
partner of the other Party.  Each Party
shall at all times maintain complete control over its personnel and
operations.  Neither Party shall have, or
shall represent that it has any power, right or authority to bind the other
Party to any obligation or liability, or to assume or create any obligation or
liability on behalf of the other Party.

SECTION 8.13 Statement of
Intent With Respect to Bankruptcy. 
The Parties intend that all rights and licenses granted under this
Agreement with respect to Licensed Technology are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, 111 U.S.C. § 101, et seq. (“Bankruptcy
Code”), licenses of rights to

 

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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.

 

“intellectual
property” as defined in the Bankruptcy Code. 
The Parties agree that BSC, as a licensee of intellectual property,
shall retain and may fully exercise all of its rights and elections under the
Bankruptcy Code.

SECTION 8.14 Registration
and Filing of this Agreement.  To the
extent, if any, that a Party concludes in good faith that it is required to
file or register this Agreement or a notification thereof with any governmental
authority, including, without limitation, the U.S. Securities and Exchange
Commission, the Competition Directorate of the Commission of the European
Communities, the U.S. Department of Justice or the U.S. Federal Trade
Commission, in accordance with Law, such Party shall inform the other Party
thereof and both Parties shall cooperate each at its own expense in such filing
or notification and shall execute all documents reasonably required in connection
therewith.  In such filing or
registration, the Parties shall request confidential treatment of sensitive
provisions of the Agreement, to the extent permitted by Law.  The Parties shall promptly inform each other
as to the activities or inquiries of any such governmental authority relating
to this Agreement, and shall cooperate to respond to any request for further
information therefrom on a timely basis.

SECTION 8.15 Force
Majeure.  If any of the Parties is
delayed or prevented in fulfilling its undertakings in accordance with this
Agreement by unforeseeable circumstances beyond its control, and without the
fault or negligence of such Party such as, but not limited to, acts of God,
fire, flood, embargo or war, (a “Force Majeure”), the Party shall be exempted
from liability for delays due to such reasons; provided, however,
that it promptly notifies the other Party thereof after such a circumstance has
occurred.  Upon such notification, the
Parties shall agree upon a reasonable extension of the time for performance,
not to exceed an extension equal to the period the Force Majeure condition
continues to exist; provided, however the Party so affected shall
take whatever reasonable steps are necessary to relieve the effect of such
circumstance as rapidly as possible.  For
purposes of this Agreement, the Parties agree that general shortages of
transport, goods or energy and faults or delays in deliveries from
subcontractors or suppliers shall not constitute a Force Majeure.

 

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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.

 

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

 

	
  BOSTON SCIENTIFIC CORPORATION

  	
   

  	
  OSIRIS ACQUISITION II, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Larry Best

  	
   

  	
  By:

  	
  /s/ William H. Pursley

  
	
   

  	
  Name:

  	
  Larry Best

  	
   

  	
   

  	
  Name:

  	
  William H. Pursley

  
	
   

  	
   

  	
  Senior Vice President and

  	
   

  	
   

  	
  Title:

  	
  President and Chief

  
	
   

  	
   

  	
    Chief
  Financial Officer

  	
   

  	
   

  	
   

  	
  Executive Officer

  
									

 

 

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

 

Exhibit
B: MSCs

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

 

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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.

 

Exhibit
C: Royalties

For each MSC Product (i)
sold by BSC in a country where Osiris owns an issued, enforceable Patent and
where the MSC for such MSC Product was not acquired pursuant to the terms of
the Contract Manufacturing Agreement and the use or sale of the MSC Product is
covered by one or more claims of the issued Patent or (ii) sold by BSC and
manufactured by BSC in a country where Osiris owns an issued, enforceable
Patent and where the MSC for such MSC Product was not acquired pursuant to the
terms of the Contract Manufacturing Agreement and the manufacture of the MSC
Product is covered by one or more claims of the issued Patent, BSC shall pay
Osiris the following royalty payments based on percentages of the Average
Selling Price (“ASP,” as further defined below) of such MSC Product less
the cost and expenses incurred by BSC in the manufacturing of such MSC Product
(“MC”):

For MSC Products developed
entirely under the Development Agreement:

(i)            For the sale of MSC Products in the intravenous infusion
market ([*]% of ASP)-MC

(ii)           For the sale of MSC Products in the direct injection
market, the amounts due to Osiris for purchase of MSC Products shall be based
on the cumulative net revenue from sales of the specific MSC Product during the
term of this Agreement:

[**************************************]

[**************************************]

[**************************************]

[**************************************]

[**************************************]

For
MSC Products developed entirely outside the Development Agreement:

The Parties shall work
together in good faith to determine the appropriate royalty payments due to
Osiris for MSC Products developed by BSC outside the Development Agreement; provided,
however, (i) the Parties agree to take into account the research and
development costs incurred by BSC in developing such MSC Products and (ii) in
any event, the royalty payments due to Osiris for such MSC Products shall be no
less than ([*]% of ASP)-MC and no greater than ([*]% of ASP)-MC.

For
MSC Products developed partially under the Development Agreement:

The Parties shall work
together in good faith to determine the appropriate royalty payments due to
Osiris for MSC Products where development of such MSC Products began under the
Development Agreement but BSC completed development of such MSC Products
outside the Development Agreement; provided, however, (i) the
Parties agree to take into account the phase at which BSC took over development
of the MSC Product and the research and development costs incurred by BSC in
developing such MSC Products and (ii) in any event,

 

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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 royalty payments due to Osiris for such
MSC Products shall be within the ranges set forth below:

(a)           ([*******]% of ASP)-MC for MSC Products sold in the
intravenous infusion market where BSC took over development of such MSC Product
during Phase III long-term research and testing of the MSC Product;

(b)           ([*******]% of ASP)-MC for MSC Products sold in the
intravenous infusion market where BSC took over development of such MSC Product
during Phase II efficacy research and testing of the MSC Product;

(c)           ([*******]% of ASP)-MC for MSC Products sold in the direct
injection market where BSC took over development of such MSC Product during
Phase III long-term research and testing of the MSC Product; and

(d)           ([*******]% of ASP)-MC for MSC Products sold in the direct
injection market where BSC took over development of such MSC Product during
Phase II efficacy research and testing of the MSC Product.

Calculation of ASP

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

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

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

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

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

 

23

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