Document:

Exhibit 10.18

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.

DISTRIBUTION AND SUPPLY AGREEMENT

This Distribution and Supply
Agreement by and between Osiris Therapeutics, Inc., a Delaware corporation
having a principal place of business at 2001 Aliceanna Street, Baltimore, MD
21231 (“Osiris”), and Blackstone Medical, Inc., a Massachusetts corporation
having a principal place of business at 90 Brookdale Dr., Springfield, MA 01104
(“Distributor”), is dated as of November 10, 2005 (the “Effective
Date”).  Osiris and Distributor may
be referred to herein as a “Party” or, collectively, as the “Parties.”

WHEREAS, Osiris wishes
to manufacture and supply the Product and Distributor wishes to purchase and
distribute the Product.

NOW, THEREFORE, in
consideration of the covenants and obligations expressed herein, and intending
to be legally bound, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1           “AAA” shall have the meaning ascribed thereto in
Section 7.2.

1.2           “Affected Party” shall have the meaning ascribed
thereto in Section 10.2.

1.3           “Affiliate” shall mean, when used with reference to
a Party, any individual or entity directly or indirectly controlling,
controlled by or under common control with such Party.  For purposes of this definition, “control”
means (a) the direct or indirect ownership of at least 50% of the outstanding
voting securities of an entity, (b) the right to control the policy decisions
of such entity or (c) has the power to elect or appoint at least 50% of the
members of the governing body of the entity.

1.4           “Agreement” shall mean this Distribution and Supply
Agreement including its Exhibits attached hereto as such may be amended from
time to time.

1.5           “Bankruptcy Event” shall mean the person or entity
in question becomes insolvent, or voluntary or involuntary proceedings by or
against such person or entity are instituted in bankruptcy or under any
insolvency law, or a receiver or custodian is appointed for such person or
entity, or proceedings are instituted by or against such person or entity for
corporate reorganization or the dissolution of such person or entity, which
proceedings, if involuntary, shall not have been dismissed within sixty (60)
days after the date of filing, or such person or entity makes an assignment for
the benefit of its creditors, or substantially all of the assets of such person
or entity are seized or attached and not released within sixty (60) days
thereafter.

1.6           “Business Day” shall mean any day that is not a
Saturday, Sunday or United States federal holiday.

                1.7           “Claim” shall have the meaning
ascribed thereto in Section 9.6.

 

 

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.

1.8           “Confidential Information” shall mean all
proprietary and confidential information of a Party, including, without
limitation, trade secrets, technical information, business information, sales
information, customer and potential customer lists and identities, product
sales plans, sublicense agreements, inventions, developments, discoveries,
software, know-how, methods, techniques, formulae, data, processes and other
trade secrets and proprietary ideas, whether or not protectable under patent,
trademark, copyright or other areas of law, that the other Party has access to
or receives but does not include information that (a) is or becomes publicly
available through no fault of the receiving Party, (b) was already known to the
receiving Party at the time it was disclosed to the receiving Party, as
evidenced by written records of the receiving Party, or (c) is received from a
Third Party who is under no obligation of confidentiality to the disclosing
Party.  For the avoidance of doubt,
information concerning the Product and know-how associated therewith,
including, but not limited to, composition of the Product, methods of handling
and storing the Product, and methods of delivering the Product to patients
shall be considered the Confidential Information of Osiris.

1.9           “Quarter” shall mean each three (3) month period
beginning on January 1, 2006.

1.10         “EXW” or “Ex Works” shall have the meaning
attributed thereto in INCOTERMS 2000.

1.11         “FDA” shall mean the United States Food and Drug
Administration of the United States Department of Health and Human Services and
any successor agency or entity that may be established hereafter.

1.12         “FDCA” shall mean the Federal Food, Drug and Cosmetic
Act (21 U.S.C. section 301 et seq.), as amended from time to time and any
successor acts, together with any rules and regulations or national laws
promulgated thereunder.

1.13         “Field” shall mean the treatment of spinal injuries
or diseases.

1.14         “Firm Commitment” shall have the meaning ascribed
thereto in Section 3.4.2.

1.15         “Force Majeure Event” shall mean any event beyond the
reasonable control of the Party affected by such circumstance and which occurs
without the fault or negligence of such Party or any of its subcontractors or
suppliers, including, but not limited to, an act of God, delay or loss in
transportation, fire, flood, earthquake, storm, war, riot, revolt, act of a
public enemy, embargo, explosion, civil commotion, strike, labor dispute, loss
or shortage of power, impossibility of obtaining or shortage in supply of raw
materials or any law, rule, regulation, order or other action by any public
authority.

1.16         “Governmental Authority” shall mean any applicable
domestic federal, state, municipal, local, territorial or other governmental
department, regulatory authority, judicial or administrative body, but not
limited to, the FDA.

1.17         “Indemnitee” shall have the meaning ascribed thereto
in Section 9.6.

 

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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.

1.18         “Initial Firm Commitment” shall have the meaning
ascribed thereto in Section 3.4.1.

1.19         “Intellectual Property” shall mean any and all trade
secrets, patents, copyrights, trademarks, service marks, tradenames, domain
names, trade dress, URLs, brand features, know- how and similar rights of any
type under the laws of any applicable Governmental Authority, including,
without limitation, all applications and registrations relating to any of the
foregoing.

1.20         “Law” or “Laws” shall mean any applicable
declaration, decree, directive, legislative enactment, order, ordinance,
regulation, rule or other binding restriction of or by any Governmental
Authority, as amended from time to time, including, but not limited to, the
FDCA.

1.21         “Marketing Plan” shall mean the marketing plan
attached hereto as Exhibit A, and as supplemented or amended by mutual
agreement of the Parties from time to time

1.22         “Marketing Trials” shall mean collectively the
marketing trials under the Marketing Trials Plan or any additional marketing
trials regarding the Product done by Distributor.

1.23         “Marketing Trials Plan” shall mean the marketing
trials plan attached hereto as Exhibit B, and as supplemented or amended
by mutual agreement of the Parties from time to time.

1.24         “Notice” shall have the meaning ascribed thereto in
Section 11.5.

1.25         “Osteocel” shall mean a viable bone matrix product
containing stem cells.

1.26         “Packaging Specifications” shall mean the
specifications attached hereto as Exhibit C for packaging and labeling
the Product in each Packaging Type.

1.27         “Packaging Type(s)” shall mean each of the standard
Osiris containers and any additional containers agreed to by the Parties in
which the Product is packaged and labeled.

1.28         “Product” shall mean Osteocel packaged and labeled in
accordance with the Packaging Specifications and all line extensions and
improvements thereof; provided that it is understood and agreed that such line
extensions and improvements do not include Osteocel products that have a
different regulatory path to market than the regulatory path of the Product as
of the Effective Date.

1.29         “Production” shall mean Product that has been
released for distribution.

1.30         “Product Price” shall have the meaning ascribed
thereto in Section 4.1.

1.31         “Production Forecast” shall have the meaning ascribed
thereto in Section 3.4.2.

1.32         “Spinal Implant Manufacturer” shall have the meaning
ascribed thereto in Section

2.2.

 

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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.

1.33         “Term” shall have the meaning ascribed thereto in Section
6.1.

1.34         “Territory” shall mean the United States.

1.35         “Third Party” shall mean any individual or entity
other than a Party or an Affiliate of a Party.

1.36         “Warehousing Cost” shall have the meaning ascribed
thereto in Section 4.2.

ARTICLE 2

DISTRIBUTION

2.1           Appointment of Distributor.  Osiris appoints Distributor, and Distributor
accepts appointment, as a non-exclusive (subject to Section 2.2) distributor of
the Product in the Field in the Territory, with the right to commercially
distribute the Product in the Field within the Territory, including all
activities ancillary thereto including, without limitation, promotional,
advertising, marketing and sales activities. 
Osiris agrees that it shall not enter into any agreement with or grant
any rights to a Third Party that would conflict with or violate the terms of
this Agreement.  Osiris suggested retail
price for Distributor’s distribution of the Product is [**************] per cc
of the Product.

2.2           Exclusive Distribution Right.  Osiris shall not grant any spinal implant
manufacturer (“Spinal Implant Manufacturer”), except for the
Distributor, the right to distribute the Product in calendar year 2005 and any
subsequent Quarter; provided, however, in the event that the Firm Commitment
fails to equal eighty percent (80%) of the Production Forecast for any Quarter
beginning in calendar year 2006, Distributor’s right to be the exclusive Spinal
Implant Manufacturer distributing the Product shall terminate.  In the event Osiris enters into a
distribution agreement with another Spinal Implant Manufacturer, Osiris shall
offer the Product to Distributor at a [************] discount to the price paid
by such other Spinal Implant Manufacturer if such discounted price is less than
the price established pursuant to Section 4.1. 
For the avoidance of doubt, nothing in this Agreement shall prevent or
in any way limit Osiris’ ability to distribute Product itself.

2.3           Reservation of Rights.  Except as expressly provided in this Article
2 and elsewhere in this Agreement, no right, title or interest is granted,
whether express or implied, by Osiris to Distributor, and nothing in this
Agreement shall be deemed to restrict Osiris’ right to exploit technology,
know-how, patents or any other Intellectual Property relating to the Product.

2.4           Market Launch. 
Distributor shall use best efforts to distribute the Product in the
Territory in accordance with the Marketing Plan.  In accordance with the Marketing Plan,
Distributor shall collaborate with Osiris with respect to its market launch
activities with surgeons and shall allow Osiris to offer input regarding these
activities.  Notwithstanding the
foregoing, Distributor shall submit or arrange to be submitted to Osiris, for
Osiris’ written approval prior to release, any advertising, public relations
material, technical descriptions or Product claims, whether oral, written or
electronic, prepared by or for Distributor or any customers which 

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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.

discuss, mention or make reference to the Product or
use or bear an Osiris trade name, logo or trademarks, including, without limitation,
Osteocel and Osiris (collectively, the “Osiris Marks”).  If Osiris provides Distributor with any
update, enhancement, or modification to an Osiris Mark, Distributor shall use
commercially reasonable efforts to incorporate the updated, enhanced, or
modified Osiris Mark in all subsequent materials that are produced by or for
Distributor.

2.5           Regulatory Compliance.  All marketing efforts shall be conducted in a
manner consistent with Laws and the Marketing Plan.  Distributor shall not promote or market the
Product for any use outside the Field or outside the Territory.  Distributor shall not make any false or
misleading representation to customers or others regarding Osiris or the
Product or make any claims, statements or representations that are inconsistent
with or broader than the representations made by Osiris to Distributor with
respect to the Product.

ARTICLE 3

MANUFACTURE AND SUPPLY

3.1           Contact Person. 
As soon as reasonably practicable after the Effective Date, each Party
shall identify a contact person to serve as the primary liaison between the
Parties with regard to manufacture and supply issues.  Each Party may replace its contact person, at
any time, upon written notice identifying the new contact person to the other
Party.

3.2           Manufacture and Supply of the Product.  Distributor shall accept the Product
exclusively from Osiris for distribution in the Field in the Territory.  The Parties acknowledge and agree that Osiris
may use Third Parties to perform any of its obligations under this Agreement

3.3           Packaging. 
Osiris shall package and label the Product in accordance with the
Packaging Specifications. 
Notwithstanding the foregoing, the Packaging Specifications shall
clearly provide that all packaging materials identify Osiris as the manufacturer
of the Product.

3.4           Firm Orders.

3.4.1        Initial Firm Commitment.  Subject to Section 3.6, Distributor commits
to purchase [********] cc of the Product in 2005 (“Initial Firm Commitment”).  Osiris shall use commercially reasonable
efforts to supply Distributor with the Initial Firm Commitment.

3.4.2        Firm Commitment. 
Osiris shall provide a forecast of its estimated Production of the
Product to Distributor (“Production Forecast”), and, subject to Section
3.6, Distributor shall make a firm commitment on the quantity of Product that
it shall purchase in the Quarter (“Firm Commitment”).  Production Forecasts and Firm Commitments
shall be provided as follows:

October
20, 2005 Osiris provides Production Forecast for Ql 2006 November 1, 2005
Distributor provides Firm Commitment for Ql 2006

December
15, 2005 Osiris provides Production Forecast for Q2 2006 Januar 1, 2006
Distributor provides Firm Commitment for Q2 2006

 

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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.

March
15, 2006 Osiris provides Production Forecast for Q3 2006 

April 1, 2006 Distributor provides Firm Commitment for Q3 2006

June
15, 2006 Osiris provides Production Forecast for Q4 2006 

July 1, 2006 Distributor provides Firm Commitment for Q4 2006

3.5           Amounts Supplied. 
Osiris shall supply to Distributor, and Distributor shall be obligated
to purchase, eighty percent (80%) of the Production of Product noted in the
Production Forecast, provided that, unless otherwise agreed to by the Parties,
Distributor shall not be obligated to purchase, and Osiris shall not be
obligated to supply, an amount of Product in excess of the total Initial Firm
Commitment for 2005 or the Firm Commitment for the respective Quarter;
provided, further, however, in the event that Osiris fails to meet the
production forecast in a particular Quarter, Distributor shall not be obligated
to purchase such shortfall amount, if available, in a subsequent Quarter.  Even if Distributor loses its exclusive
distribution rights pursuant to Section 2.2 for failing to meet the eighty
percent (80%) commitment, Distributor shall still have the right to order and
receive an amount of Product equal to the average of the prior four (4) Quarter’s
orders.  An example of such ordering and
average is attached as Exhibit I.

3.6           Packaging Type. 
Along with each Firm Commitment, Distributor shall notify Osiris the
quantity of each Packaging Type that it would like the Production for the
Quarter to be packaged and labeled in. 
As Product is released, Osiris shall use commercially reasonable efforts
to package and label the Product in accordance with the Packaging
Specifications in the Packaging Types requested, provided that it is understood
and agreed that the final amounts of each Packaging Type may vary from the
amounts requested by Distributor based on the packaging runs and timing of the
request.

3.7           Delivery. 
Along with the notification providing the quantity of each Packaging
Type, Distributor shall provide (a) the amount of Product to be delivered to
its designated location in the United States, and the amount of Product, if
any, Distributor desires Osiris to store at its warehouse on behalf of
Distributor on a consignment basis, it being understood that title shall be
with Distributor even though Osiris may be warehousing some of the Product on
Distributor’s behalf.  The Product shall
be delivered to Distributor Ex Works at Osiris’ production facility.  Distributor may request that any Product
warehoused by Osiris on Distributor’s behalf be delivered with any subsequent
shipment.  If Distributor has not
requested delivery of any warehoused amount within nine (9) months from the
date Osiris has placed such quantity of Product into the warehouse, Osiris
shall deliver any such quantities with the next delivery of Product.

3.8           Inspection of Shipment and Notice of Claims.

3.8.1        Inspection. 
Upon receipt of each shipment of the Product, Distributor shall promptly
inspect such shipment to determine whether the full shipment was received and
to determine whether the Product conforms to the Packaging Specifications.  In the event the Distributor has requested
Osiris warehouse the Product, Distributor shall have the right to inspect

 

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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.

each such delivery warehoused at Osiris for a period
of ten (10) days after such warehousing of Product begins.

3.8.2        Notice of Claims. 
Distributor shall inform Osiris in writing of any claim by Distributor
relating to a shipment that contains a shortage of the Product or that fails to
conform to the Packaging Specifications within fifteen (15) Business Days after
Distributor learns, or should reasonably have learned, of such claim.  If Distributor does not provide such notice
to Osiris, Distributor shall be deemed to have accepted the shipment of the
Product as complete and conforming to the Packaging Specifications.  Upon receipt of any such notice, Osiris, at
its sole discretion, may either (a) replace the shortfall or non-conforming
Product or (b) credit Distributor for the shortfall or non-conforming
Product.  The foregoing shall be
Distributor’s sole remedy in the event of a shortfall or a
non-conformance.  Notwithstanding the
foregoing, Osiris shall have no liability in the event that the replacement of
any Product shall have been necessitated by the fault or negligence of
Distributor or the carrier selected by Distributor.

ARTICLE 4

COMMERCIAL TERMS

4.1           Product Supply Price.  During calendar year 2005, the price of
Product supplied to Distributor (the “Product Price”) will be [****] per
cc plus the cost of packaging, labeling, shipping, and any validation or
start-up costs for new packaging requested by Distributor (“Associated Costs”)
and in calendar year 2006 the Product Price will be [****] per cc plus
Associated Costs.  If this Agreement
continues beyond 2006, Osiris shall be entitled to increase the Product Price
each year by up to [*************] to take into account demand, Production
costs and other factors; provided, however, such [*************] cap shall not
be apply in the event of donor supply shortages or regulatory changes.  In the event the Product is shipped to any
third party, there will an additional handling cost of $50 per shipment of the
Product included in the Associated Costs. 
The Product Price and the Associated Costs for each shipment of the
Product shall be paid to Osiris within thirty (30) days after Distributor’s
receipt of Osiris’s invoice for such shipment. 
Osiris shall invoice Distributor for the Product no earlier than the
date of shipment or storage of such Product. 
For the purposes of clarity, regardless of the amounts specified in the
Initial Firm Commitment and any subsequent Firm Commitment, Distributor shall
only be invoiced for the quantity of Product delivered to and warehoused on
behalf of Distributor.

4.2           Warehousing Costs. 
Distributor shall pay Osiris a warehousing cost of one percent (1%) of
the Product Price (“Warehousing Cost”) per month any Product that Osiris
stores on Distributor’s behalf.  Osiris
shall invoice Distributor the Warehousing Cost on a monthly basis and such
Warehousing Cost shall be paid to Osiris within thirty (30) days after
Distributor’s receipt of each invoice.

4.3           Payment Terms. 
All payments due to either Party hereunder shall be made in U.S.
dollars, without set-off or counterclaim. 
Overdue payments shall bear simple interest at the lower of the annual
rate of 18% or the highest rate permitted by law, calculated on the basis of
the number of days actually elapsed in a 365 day year, beginning on the due
date and ending on

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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.

the day prior to the day on which payment is made in
full.  Interest accruing under this
Section shall be due on demand.  The
accrual or receipt by either Party of interest under this Section shall not
constitute a waiver by that Party of any right it may otherwise have to declare
a breach of or a default under this Agreement and to terminate this Agreement.

4.4           Taxes.  All
payments required under this Agreement are exclusive of any applicable federal,
state and local taxes.  Each of the
Parties shall be responsible for the payment of taxes and other assessments for
which it is liable under Laws.

ARTICLE 5

MARKETING TRIALS

5.1           Marketing Trials. 
Distributor shall perform Marketing Trials in accordance with the
Marketing Trials Plan.  The Marketing
Trials shall commence within thirty (30) days of the Effective Date.

5.2           Marketing Trials Plan.  The Parties may from time to time propose
amendments or additional Marketing Trials to the Marketing Trials Plan, which
shall be subject to the review and approval of both Parties and shall
supplement or amend Exhibit B attached hereto.

5.3           Marketing Trials Costs.

5.3.1        Share of Costs. 
Distributor and Osiris shall share equally in the Marketing Trials Costs
in accordance with the budget included in the Marketing Trials Plan.

5.3.2        Reconciliation. 
If, at the end of any Quarter, either Party has paid more than its share
of the cost for the Marketing Trials in the Quarter, such Party shall issue an
invoice to the other Party for reimbursement of such overpayment; provided,
however, if a Party exceeds the budget included in the Marketing Trials Plan by
more than five percent (5%) such Party shall be responsible for any and all
such costs in excess of the budget.  Any
amount owed by one Party to the other under this Section 5.3.2 shall be paid
within thirty (30) days of receipt of the invoice. Notwithstanding anything to
the contrary contained herein, if either Party spends or incurs more than the
budgeted amount for a Marketing Trial, such Party shall be solely responsible for
such excess amount and it shall not be subject to the reconciliation pursuant
to this Section 5.3.2.

5.4           Marketing Trials Data and Reports.

5.4.1        Progress Reports. 
During the Marketing Trials, Distributor shall provide Osiris bi-monthly
reports with the progress and results of each Marketing Trial, as well as
ongoing plans, or proposed changes therein, of the Marketing Trials Plan.

5.4.2        Final Report. 
In addition, the Distributor shall provide Osiris a final written report
within thirty (30) days after completion (or earlier termination) of each
Marketing Trial under the Marketing Trials Plan.  During the performance of the Marketing
Trials, Distributor shall promptly notify Osiris if any Marketing Trial reveals
any unexpected result.  The Parties shall
jointly own all reports, data and results resulting from the activities
conducted under the Marketing Trials Plan, provided, that any reports, data and
results or portion thereof

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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.

shall not be disseminated in any way, including, but
not limited to disclosure to any third party or publication, without the prior
written consent of Osiris.

5.4.3        Failure to Meet Previously Agreed Outcomes.  In the event that the Marketing Trial
identified on Exhibit B as “_____________” fails to meet previously
established outcomes memorialized in writing, Distributor will have the option
to return any and all shipments of Product received ninety (90) days prior to
such results being established; provided that Osiris will have the option to
reject any Product returned that fails to meet Osiris’ safety and quality standards.  Notwithstanding the foregoing, any Product
returned by Distributor shall be subject to a thirty-five percent (35%)
restocking fee and all costs of shipping and handling for such return shall be
at the sole cost of Distributor.

5.5           Additional Marketing Trials.  In the event Distributor performs additional
Marketing Trials with respect to the Product, Osiris shall have the right to
co-sponsor any such Marketing Trial for fifty percent (50%) of the reasonable
costs associated with such Marketing Trial. 
At least sixty (60) days prior to the initiation of any such additional
Marketing Trial, Distributor shall provide Osiris with a proposed plan and
budget for such study.  Osiris shall have
thirty (30) days to review the proposed plan and study and determine if it
wishes to exercise its option to co-sponsor such additional Marketing
Trial.  If Osiris exercises its option
with respect to any Marketing Trial, then it will jointly own all reports and
data compilations resulting from the activities conducted under the Marketing
Trials.

ARTICLE 6

TERM AND TERMINATION

6.1           Term and Renewal. 
This Agreement shall begin on the Effective Date and shall continue
until December 31, 2008 unless terminated earlier in accordance with this
Article 6 (the “Initial Term”). 
The Agreement may be renewed after the Initial Term for one (1) year
periods upon Blackstone achieving the performance objectives set forth on Exhibit
D (each a “Renewal Term”, and collectively with the Initial Term,
the “Term”).

6.2           Termination. 
Either Party may terminate this Agreement immediately upon written
notice to the other Party in the event:

6.2.1        The other Party becomes the subject of a Bankruptcy Event; or

6.2.2        A material breach or default by the other Party of any
provision of this Agreement occurs, and such Party fails to remedy such breach
or default within thirty (30) days after receipt of notice thereof.

6.3           Upon Termination.

6.3.1        General.  Upon
termination of this Agreement, this Agreement shall thereafter have no effect,
except that (a) the provisions of Articles 5, 7, 8, 9 and 11 shall apply, (b)
payment obligations that have accrued and have been invoiced prior to the date
of termination shall remain due and payable in accordance with the terms of
this Agreement, (c)

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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.

payment obligations that have accrued but have not
been invoiced as of the date of termination shall be invoiced and paid in full
within thirty (30) days of receipt of such invoice, (d) except as set forth in
Section 6.3.2, all rights and licenses granted by Osiris to Distributor shall
immediately cease, (e) all rights and licenses granted by Distributor to Osiris
shall immediately cease and (f) except as otherwise set forth herein, neither
Party shall be relieved from liability for any breach of any representation,
warranty or agreement hereunder occurring prior to such termination.

6.3.2        Disposal of Product. 
Upon termination of this Agreement, Distributor shall have six (6)
months to dispose of any Product remaining in its inventory at such time,
provided, that Distributor may only dispose of such Product at commercially
reasonable prices and for use in the Field. 
Any Product remaining in Distributor’s inventory after the six-month
post-termination period shall be destroyed at Distributor’s expense and
Distributor shall certify to such destruction. 
Any Product to be destroyed, and all wastes resulting therefrom, shall
be destroyed in accordance with Laws.

ARTICLE 7

DISPUTE RESOLUTION

7.1           Negotiation and Escalation.  If any controversy or claim arises relating
to this Agreement, the Parties will attempt in good faith to negotiate a
solution to their differences.  If the
representatives of the Parties primarily involved in the controversy or claim
cannot resolve the dispute, then such controversy or claim shall be escalated
to the presidents of Osiris and Distributor. 
If negotiation does not result in a resolution within thirty (30) days
of when one Party first notifies the other of the controversy or claim, either
Party may resort to arbitration under Section 7.2.

7.2           Arbitration. 
Any controversy or claim between the Parties arising out of or relating
to this Agreement or a breach thereof which cannot be resolved by negotiation
pursuant to Section 7.1 will be resolved by binding arbitration administered by
the American Arbitration Association (the “AAA”) under this Section 7.2
and the AAA’s then-current Commercial Arbitration Rules.  If any part of this Section 7.2 is held to be
unenforceable, it will be severed and will not affect either the duty to
arbitrate or any other part of this Section 7.2.  The arbitration will be held in Baltimore,
Maryland, before a sole disinterested arbitrator who is an attorney
knowledgeable in stem cell products and experienced in handling commercial
disputes.  The arbitrator shall be appointed
jointly by the Parties hereto within thirty (30) days following the date on
which the arbitration is instituted.  If
the Parties are unable to agree upon the arbitrator within such thirty (30) day
period, the arbitrator shall be appointed in accordance with the AAA’s rules
for the appointment of an arbitrator from the AAA panel.  The arbitrator’s award will be final and
binding and judgment on the award may be entered in any court having
jurisdiction thereof.  The arbitrator
will not have the power to award punitive or exemplary damages, or any damages
excluded by, or in excess of, any damage limitations expressed in this
Agreement.  Issues of arbitrability will
be determined in accordance solely with the federal substantive and procedural
laws relating to arbitration; in all other respects, the arbitrator will be
obligated to apply and follow the substantive law of fee State of Delaware.

 

10

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.

7.3           Equitable Relief. 
Notwithstanding the provisions of Sections 7.1 and 7.2 above, either of
the Parties may seek from a court of competent jurisdiction any interim or
provisional equitable relief necessary to protect the rights or property of
such Party without the necessity of proving actual damages or posting of bond
or any other security.

ARTICLE 8

CONFIDENTIALITY

8.1           Confidentiality Obligations.  Except as permitted elsewhere under this Agreement,
each Party shall (a) receive and maintain the Confidential Information of the
other Party in strict confidence, (b) not disclose such Confidential
Information to any Third Parties and (c) promptly notify the disclosing Party
upon learning of any Law, rule, regulation or court order that purports to
compel disclosure of any Confidential Information of the disclosing Party and
to reasonably cooperate with the disclosing Party in the exercise of the
disclosing Party’s right to protect the confidentiality of such Confidential
Information.  Neither Party hereto shall
use all or any part of the Confidential Information of the other Party for any
purpose other than to perform its obligations under this Agreement.  Each Party shall ensure that its employees,
representatives and agents comply with this provision.

8.2           Exclusions. 
Nothing contained herein shall prevent a Party from disclosing
Confidential Information pursuant to any Law, provided, that such Party
complies with the notice provisions of Section 8.1(c) to the extent permissible
under Law.  Such disclosure shall not
alter the status of such information hereunder for all other purposes as
Confidential Information.

8.3           Termination. 
Upon termination of this Agreement, all Confidential Information shall
be returned to the disclosing Party or destroyed unless otherwise specified or
permitted elsewhere under this Agreement. 
The confidentiality obligations contained in this Article 8 shall
survive termination of this Agreement for a period of ten years.

8.4           Injunction. 
Each Party acknowledges and agrees that the provisions of this Article 8
are reasonable and necessary to protect the other Party’s interests in its
Confidential Information, that any breach of the provisions of this Article 8
may result in irreparable harm to such other Party and that the remedy at law
for such breach may be inadequate. 
Accordingly, in the event of any breach or threatened breach of the
provisions of this Article 8 by a Party hereto, the other Party, in addition to
any other relief available to it at law, in equity or otherwise, shall be
entitled to seek temporary and permanent injunctive relief restraining the
breaching Party from engaging in or continuing any conduct that would
constitute a breach of this Article 8, without the necessity of proving actual
damages or posting a bond or other security.

8.5           Publicity. 
Except as may be required by Laws (including those arising under any
securities laws), neither Party will originate any publicity, news release or
other public announcement, written or oral, whether to the public press or
otherwise, concerning the relationship between the Parties or the transactions
described in this Agreement without the prior written consent of the other
Party, which consent shall not be unreasonably withheld or delayed.  In the event disclosure is required by Law,
then the Party required to so disclose such

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

information shall, to the extent possible, provide
to the other Party for its approval (such approval not to be unreasonably
withheld) a written copy of such public announcement at least five Business
Days prior to disclosure. 
Notwithstanding the foregoing, either Party shall have the right to make
a press release with respect to its entering into this Agreement, provided,
that such Party provides to the other Party a copy of the proposed press
release no less than five Business Days prior to its proposed release and that
the contents of such press release shall be subject to the other Party’s
consent, which consent shall not be unreasonably delayed or withheld.

ARTICLE 9

REPRESENTATIONS AND WARRANTIES,

LIMITATION OF LIABILITY AND INDEMNIFICATION

9.1           Mutual.  Each
Party hereby represents, covenants and warrants to the other Party that:

9.1.1        it has the corporate power to enter into this Agreement and
to grant the rights and licenses granted herein and otherwise perform this
Agreement;

9.1.2        the entering into of this Agreement by such Party will not
(a) violate any provision of law, statute, rule or regulation or any ruling,
writ, injunction, order, judgment or decree of any court, administrative agency
or other governmental body or (b) conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute a default (or give
raise to any right of termination, cancellation or acceleration) under, or result
in the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of such Party under its organizational documents,
as amended to date, or any material note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or agreement
in which such Party is a party or by which it or any of its properties or
assets is bound or affected;

9.1.3        when executed and delivered by it, this Agreement will
constitute a legal, valid and binding obligation of it, enforceable against it
in accordance with the provisions of this Agreement; and

9.1.4        it shall perform its obligations under this Agreement in
compliance with all Laws.

9.2           Disclaimer of Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, OSIRIS HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PRODUCT, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

9.3           Limitation of Liability.  EXCEPT IN CONNECTION WITH A BREACH BY EITHER
PARTY OF ARTICLE 9 AND THE INDEMNIFICATION OBLIGATIONS UNDER SECTION 9.4,
NEITHER PARTY WILL BE LIABLE FOR ANY SPECIAL, INDIRECT,

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

CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES
ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY
THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.  IN
NO EVENT SHALL OSIRIS’ LIABILITY FOR DAMAGES HEREUNDER EXCEED THE TOTAL CASH
CONSIDERATION ACTUALLY CONFERRED BY DISTRIBUTOR TO OSIRIS UNDER THIS AGREEMENT.

9.4           Indemnification by Distributor.  Distributor shall defend, indemnify and hold
harmless Osiris, its Affiliates and their respective officers, directors,
employees and agents from and against any and all losses, damages, liabilities,
obligations, penalties, judgments, awards, costs, expenses and disbursements,
including without limitation, the costs, expenses and disbursements, as and
when incurred, of investigating, preparing or defending any claim, action,
suit, proceeding or investigation asserted by a Third Party, caused by,
relating to, based upon, arising out of or in connection with (a) negligence,
recklessness or intentional misconduct on the part of Distributor, its
Affiliates or any of their officers, directors, employees, agents, consultants
or subcontractors, (b) Distributor’s breach of this Agreement, or (c) sale,
use, promotion or distribution of the Product.

9.5           Indemnitee Obligations.  Each person seeking to be reimbursed,
indemnified, defended or held harmless under Section 9.4 (each, an “Indemnitee”)
shall (a) provide the Party obliged to indemnify such Indemnitee with prompt
written notice of any claim, suit, demand or other action for which such
Indemnitee seeks to be reimbursed, indemnified, defended or held harmless
(each, a “Claim”), which notice shall include a reasonable
identification of the alleged facts giving rise to such Claim, (b) grant such
Party reasonable authority and control over the defense and settlement of any
such Claim and (c) reasonably cooperate with such Party and its agents in
defense of any such Claim.  Each
Indemnitee shall have the right to participate in the defense of any Claim for
which such Indemnitee seeks to be reimbursed, indemnified, defended or held
harmless, by using attorneys of such Indemnitee’s choice, at such Indemnitee’s
expense.  Any settlement of a Claim for
which any Indemnitee seeks to be reimbursed, indemnified, defended or held
harmless under this Article 10 shall be subject to the prior written approval
of such Indemnitee, such approval not to be unreasonably withheld, conditioned
or delayed.

9.6           Essential Part of Bargain.  The Parties acknowledge that the disclaimers
and limitations set forth in this Article 9 are an essential element of this
Agreement between the Parties and that the Parties would not have entered into
this Agreement without such disclaimers and limitations.

9.7           Adequate Insurance. 
During the term of this Agreement and for a period of five (5) years
after its expiration or termination, each of the Parties shall obtain and
maintain at its sole cost and expense, product liability insurance or
self-insurance that meets the following requirements (a) the insurance shall
insure such Party and its Affiliates against all liability related to the Product,
including liability for bodily injury, property damage, wrongful death and any
contractual indemnity obligations imposed by this Agreement, and (b) the
insurance shall be in amounts, respectively, that are reasonable and customary
in the industry for companies of comparable size and activity.

 

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

ARTICLE 10

FORCE MAJEURE

10.1         Performance Delay.  The performance of a Party
impacted by a Force Majeure Event, other than the satisfaction of payment
obligations that have accrued under this Agreement, is delayed, without
liability, for the duration of a Force Majeure Event.

10.2         Notice.  The
Party whose performance is affected by a Force Majeure Event (the “Affected
Party”) shall give prompt notice to the other Party stating the details and
expected duration of the event.  Once
notice is given of a Force Majeure Event, the Parties shall keep each other
appraised of the situation until the Force Majeure Event terminates or this
Agreement is terminated, whichever occurs first.  If the performance of the Affected Party does
not resume within twelve (12) months of the occurrence of a Force Majeure
Event, the other Party shall have the right to terminate this Agreement without
penalty.  Each Party has full management
discretion in dealing with its own labor issues.

10.3         No Additional Obligation.  Notwithstanding Section 10.2, Osiris shall
have no obligation to obtain the Product from a Third Party in order to replace
Osiris’s excused contractual shortfall.

ARTICLE 11

MISCELLANEOUS

11.1         Governing Law. 
This Agreement shall be governed by and interpreted under the laws of
the State of Delaware, without regard to its conflicts of law provisions.

11.2         No Assignment. 
Except as otherwise set forth herein, neither Party shall transfer,
assign or cede any rights or delegate any obligations hereunder, in whole or in
part, whether voluntarily or by operation of law, without the prior written
consent of the other Party, which consent may be withheld at the other Party’s
reasonable business discretion, provided, that (a) Osiris may transfer this
Agreement without prior written consent of Distributor to an Affiliate or in
connection with a merger or sale of all or substantially all of the stock or
assets of Osiris relating to this Agreement and (b) Distributor may transfer
this Agreement in connection with a merger or sale of all or substantially all
of the stock or assets of Distributor with the prior written consent of Osiris,
such consent not to be unreasonably withheld. 
The obligations of the Parties hereunder shall be binding upon their
respective permitted successors.

11.3         Disparaging Remarks. 
Neither Party shall make any disparaging remarks regarding the other
Party under any circumstances.

11.4         Independent Contractors.  In connection with this Agreement, each Party
is an independent contractor.  This
Agreement does not, and shall not be construed to, create an employer-employee,
agency, joint venture or partnership relationship between the Parties.  Neither Party shall have any authority to act
for or to bind the other Party in any way, to alter any of the terms or
conditions of any of the other Party’s standard forms of invoices, sales
agreements, warranties or otherwise, or to warrant or to execute agreements on
behalf of the 

14

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

other or to represent that it is in any way
responsible for the acts, debts, liabilities or omissions of the other Party.

11.5         Notices.  All
notices, reports, payments and other communications required or permitted to be
given under this Agreement (each, a “Notice”) shall be in writing and
shall be given either by personal delivery against a signed receipt, by express
delivery using a nationally recognized overnight courier or by facsimile.  All Notices shall be properly addressed as
follows, or to such other addresses as may be specified in a Notice given
hereunder:

	
  If to Osiris:

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Osiris
  Corporation

  	
   

  	
  Morgan,
  Lewis & Bokius LLP

  
	
   

  	
  2001
  Aliceanna Street

  	
   

  	
  1701
  Market Street

  
	
   

  	
  Baltimore,
  MD 21231

  	
   

  	
  Philadelphia,
  Pennsylvania 19103

  
	
   

  	
  Attention:

  	
   

  	
  Attention:
  Manya S. Deehr

  
	
   

  	
  Facsimile:

  	
   

  	
  Facsimile:
  (215)963-5001

  
	
   

  	
   

  	
   

  	
   

  
	
  If
  to Distributor:

  	
  with
  a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Blackstone Medical, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
  Attention:

  
	
   

  	
  Facsimile:

  	
   

  	
  Facsimile:

  

 

A Notice shall be deemed to
be effective upon personal delivery or, if sent via overnight delivery, upon
receipt thereof.  A Notice sent via
facsimile is deemed effective on the same day (or if such day is not a Business
Day, then on the next succeeding Business Day) if such facsimile is sent before
5:00 p.m.  Eastern Standard Time and on
the next day (or if such day is not a Business Day, then on the next succeeding
Business Day) if such Notice is sent after 5:00 p.m.  Eastern Standard Time.

11.6         Amendment or Modification.  No subsequent amendment, modification or
waiver of any of the provisions of this Agreement shall be effective unless in
writing and signed by the Parties.

11.7         Entire Agreement. 
This Agreement and the exhibits attached hereto sets out the entire
agreement between the Parties with respect to the subject matter of this
Agreement and supersedes all prior agreements, proposals, arrangements and
communications, whether oral or written, with respect to the subject matter
hereof.  In the event that there is a
conflict between the Exhibits and the Agreement, the terms of the Agreement
shall govern followed by those of the Exhibits.

11.8         Severability. 
If any provision of this Agreement is held by a tribunal of competent
jurisdiction to be illegal, invalid or otherwise unenforceable in any
jurisdiction, then to the fullest extent permitted by law (a) the same shall
not effect the other provisions of this

 

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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.

Agreement, (b) such provision shall be deemed modified
to the extent necessary in the tribunal’s opinion to render such provision
enforceable, and the rights and obligations of the Parties shall be construed
and enforced accordingly, preserving to the fullest extent the intent and
agreements of the Parties set forth herein and (c) such finding of invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction.

11.9         No Waiver. 
Failure to enforce any term of this Agreement is not a waiver of future
enforcement of that or any other term. 
No term or provision of this Agreement will be deemed waived and no
breach excused unless such waiver or excuse is in writing and signed by the
Party against whom enforcement of such waiver or excuse is sought.

11.10       No Third Party Beneficiaries.  Nothing in this Agreement is intended to
confer benefits, rights or remedies unto any person or entity other than the
Parties and their permitted successors and assigns.

11.11       Headings.  The
headings appearing at the beginning of the Sections contained in this Agreement
have been inserted for identification and reference purposes only and shall not
be used to determine the construction or interpretation of this Agreement.  The nomenclature of the defined terms in this
Agreement shall only be used for the construction of this Agreement and are not
to be used for any other purpose, including, but not limited to, interpretation
for accounting purposes.

11.12       Execution in Counterparts, Facsimiles.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.  This Agreement shall become binding when any
one or more counterparts hereof, individually or taken together, bear the
signatures of both Parties hereto.  For
the purposes hereof, a facsimile copy of this Agreement, including the
signature pages hereto, shall be deemed an original.

11.13       Non-Solicitation. 
During the Term and for one year thereafter, neither Party will induce,
solicit, recruit or engage any employee, consultant, agent or distributor of
the other Party or any of its Affiliates with whom it has come in contact in
conducting activities under this Agreement for the purpose of (a) being
employed by or working for, with, or on behalf of such other Party or any of
its Affiliates, or (b) interfering with or terminating his or her employment or
other relationship with a Party, for any purpose or no purpose; provided,
however, that the foregoing provisions shall not apply to (i) a general
advertisement or solicitation program that is not specifically targeted at such
persons, (ii) the solicitation of any employee more than one year after such
time as such employee’s employment has been terminated by the other Party or
its Affiliate, or (iii) if such employee, consultant, agent or distributor
contacts such other Party without being approached by such other Party.

[Signature Page Follows]

 

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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, the
Parties to the Agreement by their duly authorized representatives have executed
this Agreement as of the date first written above.

	
  OSIRIS THERAPEUTICS, INC.

  	
   

  	
  BLACKSTONE MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Cary J. Claiborne

  	
   

  	
  By:

  	
  /s/ William G. Lyons III

  
	
   

  	
  Name: Cary J. Claiborne

  	
   

  	
   

  	
  Name: William G. Lyons III

  
	
   

  	
  Title: CFO

  	
   

  	
   

  	
  Title: Chairman

  

 

 

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

EXHIBIT A

Marketing Plan

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

EXHIBIT B

Marketing Trials Plan

[Note: Requires revisions by both
Parties; also should include a budget for each Marketing Trial]

CONSECUTIVE SERIES STUDY OF INITIAL
PATIENTS

This study would track the first 100 spinal
fusion patients implanted with Osteocel irrespective of type of procedure
performed.  Handling characteristics,
intraoperative techniques, and intraoperative photos would be obtained for
marketing.  Ultimately, all 100 patients
will have x-rays at 6-12 months.  This is
a somewhat anecdotal paper but it will give us:

a.             Data that shows
that Osteocel grows bone in humans

b.             Radiographic
evidence of time to absorb the chips and show new bone.

c.             Intraoperative
photos.

d.             Experience with the
handling characteristics of Osteocel

e.             Ample time to develop Randomized Control Trial (RCT)
protocols.

Rationale:  This allows Blackstone and Osiris some ramp
up time to get distributors and surgeons trained and experienced while
ultimately gleaning some reasonable marketing info and experience from our
earliest cases.  Time required to get this
initial study underway is minimal and as soon as we can get our RCTs written
and through IRBs etc. we will discontinue enrolling patients in this
study.  However, at 6 months after
initiation we would have, at the least, radiographic, although anecdotal data,
documenting safety and efficacy in a variety of human spine fusion patients and
sufficient data for a white paper.

IN WITNESS WHEREOF, the
Parties by their duly authorized representatives have executed this Consecutive
Series Study of Initial Patients.

	
  OSIRIS THERAPEUTICS, INC.

  	
   

  	
  BLACKSTONE MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  	
  Name: 

  
	
   

  	
  Title: 

  	
   

  	
   

  	
  Title: 

  
	
   

  	
  Date:

  	
   

  	
   

  	
  Date:

  

 

 

 

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.

INTERBODY LUMBAR FUSION

OSTEOCEL VS.  AUTOGRAFT

	
  Study Design:

  	
   

  	
  Randomized 1:1,
  controlled, multicenter

  
	
   

  	
   

  	
   

  
	
  Inclusion Criteria:

  	
   

  	
  1 and 2 level ALIF, PLIF
  or TLIF procedures

  
	
   

  	
   

  	
   

  
	
  Exclusion Criteria:

  	
   

  	
  1. >Grade I
  Spondylolisthesis

  
	
   

  	
   

  	
  2. Prior attempted fusion
  at the same level

  
	
   

  	
   

  	
  3. Infection’

  
	
   

  	
   

  	
  4. Tumor

  
	
   

  	
   

  	
  5. BMP, DBM, etc.

  
	
   

  	
   

  	
   

  
	
  Control Group:

  	
   

  	
  1. ALIF, PLIF or TLIF with
  Blackstone interbody spacer of surgeons choice

  
	
   

  	
   

  	
  2. Iliac Crest &/or
  local bone autograft between

  
	
   

  	
   

  	
  and around spacers

  
	
   

  	
   

  	
  3. Pedicle screw fixation
  and/or anterior plating

  
	
   

  	
   

  	
   

  
	
  Treatment Group:

  	
   

  	
  1. &IF, PLIF or TLIF
  with Interbody spacer of surgeon’s choice.

  
	
   

  	
   

  	
  2. Osteocel between and
  around spacers

  
	
   

  	
   

  	
  3. Pedicle screw fixation
  and/or anterior plating

  
	
   

  	
   

  	
   

  
	
  Primary Endpoint:

  	
   

  	
  Radiographic fusion at 12
  mos as determined by:

  
	
   

  	
   

  	
  1. Plain films with
  flexion/extension laterals

  
	
   

  	
   

  	
  2. Thin cut CT scans with
  sagittal and coronal reconstruction

  
	
   

  	
   

  	
  3. An independent
  radiologist

  
	
  Secondary Endpoints:

  	
   

  	
   

  
	
   

  	
   

  	
  1. Patient outcomes such
  as VAS, ODI, etc.

  
	
   

  	
   

  	
  2. Absence of Osteocel
  related complications

  
	
   

  	
   

  	
   

  
	
  Rationale: This is a
  “best case scenario” study as the biologic and biomechanical milieu for
  fusion is the most ideal in the interbody space. Additionally, x-rays and CT
  scans obtained through the interbody space are not obscured by metallic
  implants, easily obtained, and subject to minimal intraobserver disagreement.

  

 

IN WITNESS WHEREOF, the
Parties by their duly authorized representatives have executed this Marketing
Trial Plan entitled “Interbody Lumbar Fusion Osteocel v. Autograft”.

 

	
  OSIRIS THERAPEUTICS, INC.

  	
   

  	
  BLACKSTONE MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  	
  Name: 

  
	
   

  	
  Title: 

  	
   

  	
   

  	
  Title: 

  
	
   

  	
  Date:

  	
   

  	
   

  	
  Date:

  

 

 

 

 

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.

POSTEROLATERAL FUSION

OSTEOCEL VS.  AUTOGRAFT

	
  Study Design:

  	
   

  	
  Internal control
  (randomized to patient’s right and left side)

  
	
   

  	
   

  	
   

  
	
  Inclusion Criteria:

  	
   

  	
  As for Interbody Study

  
	
   

  	
   

  	
   

  
	
  Exclusion Criteria:

  	
   

  	
  As for Interbody Study

  
	
   

  	
   

  	
   

  
	
  Control Side:

  	
   

  	
  1. Interbody fusion of
  surgeon’s choice

  
	
   

  	
   

  	
  2. Pedicle Screws

  
	
   

  	
   

  	
  3. Posteriolateral fusion
  with iliac crest and/or local bone Autograft

  
	
   

  	
   

  	
   

  
	
  Treatment Side:

  	
   

  	
  1. Interbody fusion of
  surgeon’s choice

  
	
   

  	
   

  	
  2. Pedicle Screws

  
	
   

  	
   

  	
  3. Posteriolateral fusion
  with Osteocel

  
	
   

  	
   

  	
   

  
	
  Primary Endpoint:

  	
   

  	
  As for interbody fusion
  study

  
	
   

  	
   

  	
   

  
	
  Secondary Endpoints:

  	
   

  	
  As for interbody fusion
  study

  
	
   

  	
   

  	
   

  
	
  Rationale: This will
  give us a direct side-by-side comparison of autograft vs. Osteocel with the
  patient acting as his own control. Obtaining posterolateral fusion is more
  difficult than interbody fusion and this data will provide surgeons with more
  confidence in Osteocel. This model can also be used to include high risk
  patients such as those with diabetes, history of prior fusion and smokers.

  

 

IN WITNESS WHEREOF, the
Parties by their duly authorized representatives have executed this Marketing
Trial Plan entitled “Posterolateral Fusion v. Autograft”.

	
  OSIRIS THERAPEUTICS, INC.

  	
   

  	
  BLACKSTONE MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  	
  Name: 

  
	
   

  	
  Title: 

  	
   

  	
   

  	
  Title: 

  
	
   

  	
  Date:

  	
   

  	
   

  	
  Date:

  

 

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

Packaging Specifications

[Note: Should include sizes and
descriptions of each Packaging Type and all labeling specifications.]

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 D

Performance Objectives

[Note: To be provided.]

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 E

Example Calculation

Distributor Orders:

	
  Quarter

  	
   

  	
  Amount Ordered

  	
   

  
	
  1st Quarter 2006

  	
   

  	
  20,000
  cc

  	
   

  
	
  2nd Quarter 2006

  	
   

  	
  25,000
  cc

  	
   

  
	
  3rd Quarter 2006

  	
   

  	
  25,000
  cc

  	
   

  
	
  4th Quarter 2006

  	
   

  	
  15,000
  cc

  	
   

  

 

The average cc’s ordered
over the 4 Quarters = 21,250 cc’s

Thus, if Distributor loses the exclusivity in
the first Quarter of 2007, Distributor will still have the right to order and
receive 21,250 cc’s for the first Quarter of 2007.  This right would expire once Distributor
places a Firm Commitment for such Quarter. 
For instance, if Distributor only order 15,000 cc’s for the first
Quarter of 2007, then Distributor does not have the right to order or receive
the balance of the 21,250 cc’s and Osiris shall be free to make such amount
available to other distributors.  This
right to order and receive would be a rolling calculation each Quarter after
Distributor loses its exclusive rights and continue through the rest of the
Term.Exhibit 10.19

 

TECHNOLOGY
TRANSFER AND LICENSE AGREEMENT

Between

CASE
WESTERN RESERVE UNIVERSITY

and

OSIRIS
THERAPEUTICS, INC.

This Agreement, effective as of the 1st
day of January, 1993 (“Effective Date”), is between OSIRIS THERAPEUTICS, Inc., a
corporation domiciled in the State of Ohio having an address at 11000 Cedar
Avenue, Cleveland, OH 44106 (“OSIRIS”), and Case Western Reserve University, an
Ohio non-profit corporation having its principal office at 2040 Adelbert
Road, Cleveland, Ohio (“CWRU”).

BACKGROUND

CWRU, with principal activities in teaching
and scholarship, makes its capabilities available to commercial entities for
research to the extent that it complements and does not conflict with CWRU’s
principal activities.  In this spirit,
CWRU is prepared to continue its development relationship with OSIRIS (a
company created to commercialize the mesenchymal stem cell technology) and to
license the Technology, as that item is defined in Article X below,
including that established by Dr. Arnold I. Caplan while working as a
full-time professor at CWRU.  This
license transfers the state-of-the-art of the mesenchymal stem cell technology
to OSIRIS according to the terms and conditions set forth below.  This state-of-the-art includes patents and
know-how.  Future patents based on this
know-how will be made in the name of CWRU and will be covered by the royalty
agreement stated herein if substantially invented at CWRU in the future.

 

 

AGREEMENT

ARTICLE I:  LICENSE

1.1           Grant
and Subject Matter.  CWRU grants OSIRIS a
sole and exclusive worldwide License, under Technology, Existing Patent Rights (to
the extent not owned by OSIRIS) and Developed Patent Rights (“License”) to
make, have made, use and sell Product and Process (terms defined in Section 10),
including the right to grant sublicenses.

1.2           Term
of Agreement.  This Agreement shall be in
full force and effect from the date first set forth above and shall remain in
effect for twenty-five (25) years or until all patents issued in all countries
in accordance with this License hereunder have expired or until otherwise
terminated by operation of law, whichever is last to occur, or by the acts of
the parties in accordance with the terms of this Agreement.

1.3           Retained
Rights.  CWRU will retain a royalty-free
right to use the Technology and patent rights of the License for any
nonclinical research, testing or educational purpose of CWRU.  In no event shall CWRU have any right to use
the Technology or the patent rights of the License for any commercial purpose
whatsoever.  In addition, the License
will be subject to such rights as are required to be accorded to any
governmental agency as a consequence of prior or contemporaneous funding for
research or development of the subject matter of the License.

1.4           Sublicenses.  OSIRIS agrees to forward to CWRU a copy of
any and all fully executed sublicense agreements, and further agrees to forward
annually a copy of such reports received by OSIRIS from its sublicensees during
the preceding twelve (12) month period under the sublicenses as shall be
pertinent to a royalty accounting to CWRU under said sublicense agreement.

1.5           The
license granted under Existing Patent Rights is royalty-free.

 

2

 

1.6           The
license granted under Developed Patent Rights is royalty-bearing as provided in
Paragraph 8 2.

ARTICLE II:  TITLE

Except as provided in Section 3.1, CWRU
shall retain title to the subject matter of the License.

ARTICLE III:  PATENTS

3.1           To
the extent permitted by existing obligations, CWRU hereby assigns all right,
title and interest in and to Existing Patent Rights to OSIRIS.  OSIRIS shall bear all responsibility for, and
shall take all actions in connection with, the prosecution of the Existing
Patent Rights.  CWRU shall cooperate with
OSIRIS with respect to such prosecutions.

3.2           New
Applications.  CWRU shall own all
Developed Patent Rights.  In the event
either party hereto believes a patent application should be filed with respect
to the Technology, such party shall notify the other party hereto.  If OSIRIS fails to file such application
within sixty (60) days after the date of such notice, CWRU shall have the right
to file the application in its own name, at its own expense; provided, however,
that CWRU’s application must be filed within six (6) months after the
expiration of OSIRIS’ sixty (60) day filing period.

IF CWRU does not file within such six-month
period, CWRU must give a new notice to OSIRIS, and the process described above
must be repeated in its entirety, before CWRU shall have the right to file such
application.

3.3           OSIRIS
shall own any patent application which is directed to an invention made by an
employee of OSIRIS or by an Investigator when the Investigator is working on
the premises of OSIRIS.

3.4           Cost.  OSIRIS will pay the cost of all patent
applications filed by it pursuant to Section 3.2.

 

3

 

3.5           Reports.  The party filing the patent application
pursuant to Section 3.2 above shall keep the other informed in a timely
manner of the status of the application.

3.6           Infringement.  Each party shall promptly notify the other
party if it becomes aware of any infringement of any patents licensed as part
of this Agreement.  Neither OSIRIS nor
CWRU shall have any obligation to initiate litigation to protect any patent or
proprietary right granted under this Agreement. 
However, each party will have the unqualified right to initiate legal
action, or to fully participate in any legal action initiated by the other
party, to protect its interests.  In any
litigation, each party and their respective attorneys will cooperate with the
other party.  If OSIRIS elects to
institute suit against any third party to protect any patent or proprietary
rights granted under this Agreement, fifty percent (50%) of associated costs
(including reasonable attorneys’ fees) which have been paid by OSIRIS may be
offset against royalties owed to CWRU pursuant to Article VI, but such
offsetting shall not exceed fifty percent (50%) of the total royalties owed to
CWRU.  All damages awarded in any suit
will belong exclusively to the party initiating the suit, except that the
amounts offset pursuant to this Section 3.6 will be reimbursed to CWRU
from damages awarded to OSIRIS after OSIRIS’s own legal costs have been
reimbursed.

3.7           In
the event that litigation against OSIRIS is initiated by a third-party charging
OSIRIS with infringement of a patent of the third party as a result of the
manufacture, use or sale by OSIRIS of Product or Process for which royalties
are due to CWRU hereunder, OSIRIS shall promptly notify CWRU in writing
thereof.  OSIRIS’s costs as to any such
defense shall be creditable against any and all payments due and payable to
CWRU under Article VI of this Agreement but no royalty payment after
taking into consideration any such credit shall be reduced by more than 50%.

 

4

 

ARTICLE IV:  CONFIDENTIALITY

4.1           Confidentiality.  CWRU and OSIRIS agree to advise their
respective employees that it is necessary to hold in confidence all information
received from the other party in connection with the License (“Information”)
for a period of two years following disclosure. 
The receiving party will use reasonable efforts to prevent disclosure of
such Information during such period. 
This Section 4.1 shall not apply, however, to Information which:

(i)            is now in or shall
enter the public domain as the result of its disclosure in a publication, the
issuance of a patent or otherwise without the legal fault of the receiving
party;

(ii)           the receiving party
can prove was in its possession in written form at the time of disclosure by
the other party; or

(iii)          comes into the
hands of the receiving party by means of a third party who is entitled to make
such disclosure and who has no obligation of confidentiality toward the
disclosing party.

(iv)          where disclosure is
required under any applicable ruling, regulation or law, including but not
limited to regulatory filings.

(v)           where disclosure is
made through the filing of a patent application.

Notwithstanding the foregoing, OSIRIS can
disclose Information to a third party under an obligation of confidentiality
similar to the obligation of confidentiality under this Agreement.

4.2           Remedies.  Each party shall be entitled to injunctive
relief if there is a threat that Information that is the subject matter of the
License will be disclosed by the other party contrary to the terms of this Agreement.  Each party shall notify the other party in
writing of any proposed release of information thirty (30) days prior to
release of such Information.  The party
receiving

 

5

 

such notice will have thirty (30) days to review the materials and
shall not unreasonably withhold permission for the Information to be released.

4.3           (a)           During the period in which OSIRIS
holds a license, CWRU and Investigators (as defined in Paragraph 10.9)
shall not, without OSIRIS’ prior written approval, distribute or allow Material
(as defined in Paragraph 10.8) to be distributed to for-profit entities or
persons known to be employed thereby or consulting or performing research
therefor.

(b)           CWRU
and Principal Investigator (as defined in Paragraph 10.7) shall have the
right to transfer Material to not-for-profit entities or persons known to be
affiliated therewith provided that such entities or persons sign a material
transfer agreement mutually agreed to by the parties to this Agreement.

(c)           Prior
to any such distribution of any such Material CWRU and OSIRIS shall use best
efforts to consider the patentability of such Material and cooperate to file,
where appropriate, a patent application for such Material prior to its
distribution, in accordance with Article III of this Agreement.

ARTICLE V:  PUBLICATION

CWRU will provide OSIRIS with a copy of any
proposed publication relating to the Technology thirty (30) days prior to their
submission for publication.  OSIRIS will
have thirty (30) days from the date of receipt of each such proposed
publication to review the materials. 
Upon receipt within the thirty-day (30) period of a written notice from
OSIRIS identifying those portions of the proposed publication for which it
wishes publication delayed, CWRU will use its best efforts either to cause the materials
identified to be deleted or to cause publication to be delayed for ninety (90)
days.

 

6

 

ARTICLE VI:  ROYALTIES,
CONSIDERATION AND PAYMENTS

6.1           Payments.
 OSIRIS agrees to pay to CWRU an amount
equal to $83,061 for the licenses and rights granted under this Agreement and
for the filing and prosecution of Existing Patent Rights.  Such amount shall be paid within thirty (30)
days of the initial financing of OSIRIS, which initial financing shall be in an
amount of at least $2,000,000 (“Initial Capitalization”).

6.2           Royalties.
 As consideration for the License, OSIRIS
will pay CWRU a royalty on all Product or Process providing that such Product
or Process where sold is covered by a claim of a granted patent which is a Developed
Patent Right licensed under this Agreement (“Royalty Bearing Product”) as
follows.

(i)            Three percent (3%)
of the Net Sales of Royalty Bearing Products sold by OSIRIS; and

(ii)           Twenty-five percent
(25%) of the royalties received by OSIRIS from its SUBLICENSEES’ sales of a
Royalty Bearing Product.

Provided, however, that with respect to each
Royalty Bearing Product covered under either (i) or (ii) above, no royalty
shall be payable for the first three years in which such Royalty Bearing
Product is sold.  Net Sales shall he
defined as the amount received from sales of all Royalty Bearing Products less
discounts, returns, transportation costs, insurance costs and taxes of any kind
whatsoever.

6.3           Royalty
Payments.  (a) Royalties due will be paid
to CWRU every year for the term of this Agreement on the 31st of March, and shall
be calculated according to the Net Sales of all Royalty Bearing Products during
the calendar year immediately preceding the year in which such royalty payments
are due.  Each royalty payment shall be accompanied
by an accounting showing the calculation of net sales for the calendar year in
question.

 

7

 

6.4           In
the event that royalties are to be paid by OSIRIS to a party who is not an
Affiliate of OSIRIS for Royalty Bearing Product (“Other Royalties”), for which
royalties are also due to CWRU pursuant to Paragraph 6.2 then the royalties to
be paid to CWRU by OSIRIS pursuant to paragraph 6.2 shall be reduced by 50% of
the amount of such Other Royalties, but in no event shall any royalties under
Paragraph 6.2 be reduced by more than fifty percent (50%).

6.5           Equity
Interest to CWRU.  CWRU will be sold 1,200
shares of OSIRIS’ Common Stock based on the Founders’ capitalization in
Appendix A.  The Initial Capitalization
shall mean the first capitalization of the company in which the total capital
contribution is at least two million dollars.  The selling price shall be $0.10 per share.  The shares will be sold in accordance with a
Restricted Stock Purchase Agreement which contains terms among others that
prior to an initial public offering OSIRIS or its designee will have a right of
first refusal with respect to any transfer of the shares; and that the shares
will be subject to underwriter “lock-up” restrictions in any underwritten offering.

6.6           Foreign
currency conversions.  When royalties
accrue for currencies other than United States dollars, payment to CWRU shall
be in United States dollars converted from that foreign currency at the average
of the rates established by BankAmerica for that foreign currency on the last
business day of each month of the calendar year which ended immediately
preceding the day on which OSIRIS pays such royalties to CWRU.

6.7           Audit
Rights.  CWRU has the right to inspect
any books or records of OSIRIS containing information which may be reasonably necessary
for the purpose of verifying the royalties payable to CWRU.  This inspection is to be made by an
independent certified public accountant of CWRU’s choice to whom OSIRIS has no
reasonable objection.  The inspection is

 

8

 

to be done at the expense of CWRU, upon reasonable notice, during
normal business hours and no more than once per year.

6.8           Initial
Capitalization.  If by December 31,
1993, OSIRIS has not received funding of at least $2 million ($2,000,000), this
Agreement shall terminate, unless extended by mutual agreement and OSIRIS
shall, at its sole expense, transfer to CWRU all right, title and interest in
the Existing Patent Rights.

6.9           Minimum
Performance.  If, after the sixth
anniversary of the initial capitalization of CS1RIS, payments due to CWRU under
Article VI fall below Fifty Thousand Dollars ($50,000) per year, the
License granted by this Agreement shall be terminated unless OSIRIS pays CWRU
the difference between the amount due and Fifty Thousand Dollars ($50,000), unless
extended by mutual agreement.

ARTICLE VII:  BREACH
AND TERMINATION

7.1           Breach.
 If either party at any time commits any
material breach of the Agreement and fails to remedy it within thirty (30) days
after receiving written notice of the breach or such additional time as may be
reasonably required to effect the cure so long as the curing party is continuing
to diligently pursue its efforts to cure, the aggrieved party may, at its
option, cancel this Agreement by notifying the other in writing.  This remedy is in addition to any other
remedies to which it may be entitled.  Any failure to cancel this Agreement for any
breach will not constitute a waiver by the aggrieved party of its right to
cancel this Agreement for any other breach whether similar or dissimilar in
nature.

7.2           Bankruptcy.  CWRU may terminate this Agreement if OSIRIS files
or has filed against it a petition in bankruptcy which is not dismissed within
thirty (30) days, or files an assignment for benefit of creditors, or if a
receiver is appointed for all or part of its assets, or if it petitions for or
consents to any relief under any applicable insolvency, moratorium or similar

 

9

 

statute.  All rights and licenses
granted to OSIRIS under or pursuant to this Agreement are, and shall otherwise
be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy
Code, licenses of rights to “intellectual property” as defined under Section 101(60)
of the Bankruptcy Code.  The parties
hereto agree that so long as OSIRIS, as a licensee of such rights under this
Agreement, shall continue to perform all obligations under this Agreement, including
but not limited to the making of timely royalty payments, OSIRIS shall retain and
may fully exercise all of its rights and elections under the Bankruptcy Code,
and pursuant to Section 365(n), OSIRIS shall have the right to receive all
current embodiments of the licensed intellectual property.  The parties hereto further agree that, in the
event that CWRU files or has filed against it a petition in bankruptcy which is
not dismissed within thirty (30) days, or files an assignment for benefit of creditors,
or if a receiver is appointed for all or part of its assets, or if it petitions
for or consents to any relief under any applicable insolvency, moratorium or
similar statue, OSIRIS shall have the right to retain and enforce its rights
under this Agreement with respect to the Technology, Existing Patent Rights and
Developed Patent Rights.

7.3           Force
Majeure.  Each of the parties will be
excused from performance of this Agreement only to the extent that performance is
prevented by conditions beyond the reasonable control of the party affected.  The parties will, however, use their best
efforts to avoid or cure such conditions. 
The party claiming such conditions as an excuse for delaying performance
will give prompt written notice of the conditions, and its intent to delay
performance, to the other party and will resume its performance as soon as
performance is possible.

7.4           Effect
of Termination.  OSIRIS’ License shall
terminate simultaneously with any termination of this Agreement.  Except as provided in Section 6.8 above,
expiration, cancellation or termination of this Agreement will not affect any
previously vested or accrued rights of either

 

10

 

party under this Agreement.  Upon
termination of this Agreement by either party, in whole or as to any specified
patent or any claim of such patent, OSIRIS shall provide CWRU with a written
inventory of all products affected by such termination in process of manufacture,
in use or in stock and shall request each sublicensee to provide such written inventory.
 OSIRIS and its sublicensees shall have
the right to sell off such inventory unless OSIRIS is the subject of a pending
or threatened product liability claim.

7.5           Effect
of termination of this Agreement on sublicenses.  Any sublicense granted by OSIRIS under this
Agreement shall provide for automatic assignment to CWRU of OSIRIS interest
therein upon termination of this Agreement. 
CWRU agrees to accept such assignment and the sublicense shall remain in
full force and effect as a direct license from CWRU in accordance with the
terms and conditions thereof.  CWRU
agrees to confirm in writing its obligations under this Paragraph to a sublicensee
at the request of OSIRIS.

7.6           Termination.  OSIRIS shall have the right to terminate this
Agreement or any of the licenses granted hereunder in any country upon
providing CWRU with sixty (60) days prior written notice.

ARTICLE VIII: 
REPRESENTATIONS AND WARRANTIES

8.1           Agreements.
 Each party represents that to the best
of its knowledge, this Agreement does not violate any of its prior commitments or
Agreements.

8.2           Claims.  Each party represents that, to the best of its
knowledge, there are no legal actions, pending or threatened, which would question
this Agreement or the right of either party to perform its obligations under
this Agreement.

8.3           Authorization
by CWRU.  CWRU warrants that execution
and performance of this Agreement have been duly authorized by all necessary corporate
actions.

 

11

 

8.4           Authorization
by OSIRIS.  OSIRIS warrants that
execution and performance of this Agreement have been duly authorized by all
necessary corporate actions.

8.5           Patentability,
Infringement.  CWRU makes no
representation or warranties of any kind other than those of this Article VIII
including but not limited to warranties of patentability, merchantability or
fitness for a particular purpose.

8.6           CWRU
represents that to the best of its knowledge, CWRU owns all right, title and
interest in and to Existing Patent Rights and that all Investigators will be
obligated to assign all right, title and interest in and to Technology and
Developed Patent Rights to CWRU.

ARTICLE IX:  MISCELLANEOUS

9.1           Indemnification.

(a)           OSIRIS
will defend, indemnify and hold CWRU harmless from any loss, cost, damage, liability
or expense imposed, on CWRU as a result of any third party claim arising from
OSIRIS’ use, application or marketing of any Product or Process arising from
this Agreement.

(b)           CWRU
will defend, indemnify and hold OSIRIS harmless from any loss, cost, damage,
liability or expense imposed on OSIRIS as a result of any claim arising from
CWRU’s breach of any term or provision of this Agreement.

(c)           The
party to be indemnified shall promptly notify the indemnifying party of any
claim to be indemnified.  The indemnifying
arty shall have the right to control the defense, settlement or compromise of
any claim.

9.2           Insurance.
 OSIRIS shall not commence selling on a
commercial basis of any Products in connection with this License until it has
obtained for itself or for CWRU at its own cost or special arrangements and expense,
comprehensive general liability and products liability insurance with limits of
at least $3,000,000 per occurrence/$3,000,000 aggregate, and naming

 

12

 

CWRU as additional insured.  Upon
the start of human clinical trials of any Product OSIRIS shall obtain
comprehensive general liability insurance in accordance with the
foregoing.  Such insurance shall be provided
by insurers of recognized responsibility and well-rated by national
organizations, and each policy shall state that the insurer will not terminate
it or significantly reduce coverage without giving CWRU at least forty-five
(45) days prior written notice.  The
product liability insurance shall provide worldwide coverage and shall be on an
“occurrence” basis.  If such insurance is
not available when OSIRIS is ready to commence human clinical trials or selling
Products, CWRU agrees to waive the insurance requirement until such insurance
becomes available if and only if OSIRIS has and maintains a net worth of at
least $3,000000 as determined by a review of OSIRIS’ books conducted at OSIRIS’
expense by independent firm of certified public accountants mutually satisfactory
to CWRU and OSIRIS.  After the initial
review, CWRU may have further reviews conducted from time to time, but not more
than once each year.

9.3           Sublicense.
 OSIRIS shall require all of its
sublicensees hereunder to indemnify and hold harmless CWRU under the same terms
as stated in Section 9.1(a) and to carry comprehensive general liability insurance
and product liability insurance with limits of at least $3,000,000 per occurrence/$3,000,000
aggregate naming CWRU as an additional insured under the same terms as Section
9.2.

9.4           Independent
Contractors.  OSIRIS and CWRU are
independent contractors, and neither shall have any responsibility for the work
performed by or on behalf of the other except to the extent expressly set forth
in this Agreement.

9.5           Use
of Name.  OSIRIS will not use the name of
CWRU, related schools or departments in any publication or marketing materials
without the written consent of CWRU.

 

13

 

CWRU will not use the name of OSIRIS in any publication or marketing
materials without the written consent of OSIRIS.

9.6           Assignment.
 This Agreement is not assignable or
transferable except with the written consent of both parties; consent will not
be withheld unreasonably, except that OSIRIS without the consent of CWRU may assign
this Agreement to an Affiliate or to a transferee of all or substantially all
of the portion of the business to which this Agreement relates.  Any such assignee or transferee of OSIRIS’
interest shall expressly assume in writing the performance of all of the terms
and conditions of this Agreement to be performed by OSIRIS and such assignment
shall not relieve OSIRIS of any of its obligations under this Agreement.  Any assignment or transfer without such consent
or covered by such exception shall be void.

9.7           Registration.  OSIRIS agrees to register this Agreement when
required by local or federal law and to pay all costs and legal fees connected
with such registration.

9.8           Successors
and Assigns.  The terms and provisions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors, permitted assigns and legal representatives of the parties hereto.

9.9           Choice
of Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of Ohio, excluding
that body of law applicable to choice of law.

9.10         Headings.  The headings and captions used in this
Agreement do not form part of this Agreement, but are included solely for convenience.

9.11         Notices.  All notices required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery to the party to be notified or five (5) days after deposit with the
United States Postal Service, by registered or certified

 

14

 

mall, postage prepaid and addressed to the party to be notified at the address
indicated for such party below, or at such other address as such party may designate
by ten (10) days prior notice to the other party hereto:

	
  If to OSIRIS:

  	
  Copy to:

  
	
   

  	
   

  
	
  OSIRIS Therapeutics, Inc.

  	
  Elliot M. Olstein, Esq.

  
	
  11000 Cedar Avenue

  	
  Careila, Byrne, Bain, Gilfillan,

  
	
  Cleveland, Ohio 44106

  	
  Cecchi & Stewart

  
	
  Attn: President

  	
  6 Becker Farm Road

  
	
   

  	
  Roseland, New Jersey 07068

  

 

If to CWRU:

Dean of Graduate Studies and
Research

Case Western Reserve University

2040 Adelbert Road

Cleveland,
Ohio  44106

9.12         Amendments
and Waivers.  No waiver, amendment or modification
of this Agreement will be effective unless in writing and signed by both
parties.

9.13         Illegality.  If any term or condition of this Agreement is
contrary to applicable law, that term or condition will not apply and will not
invalidate any other part of this Agreement.  However, if its deletion materially and adversely
changes the position of either of the parties, the affected party may terminate
the Agreement by giving thirty (30) days written notice.

9.14         Entire
Agreement.  This Agreement constitutes
the entire understanding and agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior discussions, understandings
and agreements with respect thereto.

ARTICLE X:  DEFINITIONS

10.1         Technology.  The term “Technology” shall mean any and all existing
or future information, technical data, inventions, discoveries or know-how, and
materials whether or not

 

15

 

patented or patentable, related to or useful for the identification,
isolation, purification, propagation or of use of mesenchymal stem cells and/or
cells or products derived from or produced by mesenchymal stem cells, which are
conceived, developed or reduced to practice by an Investigator during the term
of this Agreement while performing research at CWRU.

10.2         Product(s).  The term “Product(s)” shall mean any article,
composition, apparatus, substance, chemical, material, method or service which is,
incorporates or utilizes Technology or the use, manufacture, import or sale of
which is covered by a claim of any patent licensed hereunder.

10.3         Process(es).
 The term “Process(es)” shall mean any
process or method for the production, manufacture or use of any Product or
which is covered by any patent licensed hereunder.

10.4         The
term “Affiliate” as applied to OSIRIS shall mean any company or other legal
entity other than OSIRIS in whatever country organized, controlling, or
controlled by or under common control with OSIRIS.  The term “control” means possession, direct
or indirect, of the powers to direct or cause the direction of the management
and policies whether through the ownership of voting securities, by contract or
otherwise.

10.5         Principal
Investigator.  The term “Principal
Investigator” shall mean either or both of Drs. Arnold I. Caplan and
Stephen E. Haynesworth

10.6         Material.
 The term “Material(s)” shall mean any
material, biologic, or substance which is Techno1ogy, including but not limited
to, cells, cell lines, vectors, antibodies, DNA (RNA) sequences, libraries, plasmids,
cytokines, peptides, and proteins, which is discovered, produced or derived by
an Investigator during the term of this Agreement.

 

16

 

10.7         Investigator.  The term “Investigator” shall mean Principal Investigators,
any other member of CWRU staff, graduate student, undergraduate student or
employee of CWRU who works with or under the direction of a Principal
Investigator.

10.8         “Existing
Patent Rights” shall mean (i) A Method for Isolating, Purifying and
Culturally Expanding Marrow-Derived Mesenchymal Cells (U.S. Patent Application
No. 615,430); (ii) Monoclonal Antibodies Specific for Marrow-Derived
Mesenchymal Cells (U.S. Patent Application No. 716,917); (iii) A
Method and Device for Enhancing the Implantation and Differentiation of Marrow-Derived
Mesenchymal Cells (U.S. Patent Application No. 614,915); and (iv) A
Method and Device for Treating Connective Tissue Disorders (U.S. Patent
Application No. 614,912); any division, continuation, or
continuation-in-part thereof and any foreign patent application or equivalent
corresponding thereto and any Letters Patent or the equivalent thereof in any
country of the world issuing thereon or reissue or reexamination or extension
thereof.

10.9        
“Developed Patent Rights” shall mean any and all patents and patent applications
anywhere in the world which contains one or more claims directed to Technology,
which is not an Existing Patent Right.

IN WITNESS WHEREOF, the undersigned parties
have executed this Agreement on the dates indicated below:

	
  CWRU:

  	
   

  	
  OSIRIS:

  
	
  FOR CASE WESTERN RESERVE

  	
   

  	
  FOR OSIRIS THERAPEUTICS, INC

  
	
  UNIVERSITY:

  	
   

  	
   

  	
   

  
	
  /s/ R. James Henderson

  	
   

  	
  /s/ James S. Burns

  
	
  Name:

  	
  R. James Henderson

  	
   

  	
  Name:

  	
  James S. Burns

  
	
  Title:

  	
  VP Finance & Administration

  	
   

  	
  Title:

  	
  President

  
	
  Date:

  	
  March 25, 1993

  	
   

  	
  Date:

  	
  March 30, 1993

  
						

 

17

 

Appendix
A

OSIRIS
THERAPEUTICS, INC

Founders
& Case Western Reserve University Capitalization

	
  FUNDING SCIENTISTS*

  	
   

  	
  FOUNDERS

  	
   

  
	
  Shareholders

  	
   

  	
  Shares

  	
   

  	
  %

  	
   

  	
  Shareholder

  	
   

  	
  Shares

  	
   

  	
  %

  	
   

  
	
  Arnold I.
  Caplan

  	
   

  	
  15,600

  	
   

  	
  65.0

  	
   

  	
  Arnold I.
  Caplan

  	
   

  	
  15,600

  	
   

  	
  55.7

  	
   

  
	
  Victor M.
  Goldberg

  	
   

  	
  6,720

  	
   

  	
  28.0

  	
   

  	
  Victor M.
  Goldberg

  	
   

  	
  6,720

  	
   

  	
  24.0

  	
   

  
	
  S. E.
  Haynesworth

  	
   

  	
  1,680

  	
   

  	
  7.0

  	
   

  	
  S.
  E. Haynesworth

  	
   

  	
  1,680

  	
   

  	
  6.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Case
  Western R.U.

  	
   

  	
  1,200

  	
   

  	
  4.3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  James S.
  Burns**

  	
   

  	
  2,800

  	
   

  	
  10.0

  	
   

  
	
  TOTAL

  	
   

  	
  24,000

  	
   

  	
  100.0

  	
   

  	
   

  	
   

  	
  28,000

  	
   

  	
  100.0

  	
   

  
															

*                                         Case Western
Reserve University (“CWRU”) purchases 1,200 shares of Osiris Therapeutics, Inc.
Common Stock at a price of $0.10 per share, equivalent to 5.0% of the Common
Stock issued to the Company’s three founding scientists (the “Founding
Scientists”).  Upon issuance of shares of
Osiris Common Stock to Case Western Reserve University, the Founding Scientists
and CWRU will together constitute the Company’s founders (collectively, the “Founders”).

**                                  James S. Burns, the
Company’s Chairman, President & Chief Executive Officer has purchased 2,600
shares of Osiris Common Stock on the same basis as the Founders in exchange for
funding the Company’s initial working capital requirements.  The CEO’s and Founders’ Common Stock will
together constitute the Company’s founding shareholders prior to the sale of
additional shares to key employees, advisors, or investors in the Company’s
Initial Capitalization.

 

A-1

AMENDMENT
TO THE TECHNOLOGY TRANSFER AND LICENSE AGREEMENT

BETWEEN CASE WESTERN RESERVE UNIVERSITY

AND OSIRIS THERAPEUTICS, INC.

This Amendment, effective as of the 18th day of October, 1999, “Amendment
Effective Date” between Osiris Therapeutics, Inc. (“OSIRIS”) and Case Western
Reserve University (“CWRU”).

WHEREAS, OSIRIS and CWRU entered into a Technology Transfer and License
Agreement effective as of January 1, 1993 (the “License Agreement”);

WHEREAS, OSIRIS and CWRU desire to amend the License Agreement with
respect to the manner in which OSIRIS exercises its rights to a license, and to
clarify that a member of CWRU who has only limited contact with a Principal
Investigator is not an Investigator.

WHEREAS, the parties find that it is in their mutual best interests to
amend the License Agreement.

NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, the parties agree as
follows:

1.             DEFINITIONS

1.01         In addition to
the initially capitalized words and phrases defined herein, all initially
capitalized words and phrases shall be defined as defined in the License
Agreement.

2.             AMENDMENTS

 

2.01         Paragraph 1.1
of the License Agreement is amended by adding the following sentence thereto:

—With respect to any
Developed Patent Rights that are based on Technology developed after the
Amendment Effective Date, such Developed Patent Rights shall become licensed to
OSIRIS under this Paragraph 1.1 upon OSIRIS

 

 

exercising OSIRIS’ option
thereto pursuant to the provisions of Paragraph 1.8 of this Agreement.

2.02         The License
Agreement is hereby amended to add the following Paragraphs 1.7 and 1.8;

—1.7       CRWU shall promptly report to OSIRIS in writing any and all
Technology that is potentially patentable.  In reporting such potentially patentable
Technology to OSIRIS, CWRU shall provide sufficient information to OSIRIS to
permit OSIRIS to determine whether or not OSIRIS should exercise its option
under Paragraph 1.8 with respect to such Technology.

1.8(a)      CWRU hereby grants to OSIRIS a sole and
exclusive right and option to obtain a worldwide exclusive license under the
terms and conditions of this Agreement with respect to Developed Patent Rights
that are based on Technology developed after the Amendment Effective Date.

(b)           OSIRIS shall have the right to exercise the option under
Paragraph 1.8(a) with respect to Developed Patent Rights based on Technology
reported to OSIRIS under Paragraph 1.7 of this Agreement by notifying CWRU of OSIRIS’
election to do so within one-hundred and twenty (120) days after OSIRIS
receives a report required by Paragraph 1.7 of this Agreement.  If OSIRIS fails to exercise OSIRIS’ option
within such period with respect to any Technology reported in accordance with
Paragraph 1.7 of this Agreement, then such option shall lapse and OSIRIS shall
have no further interest in Developed Patent Rights that are filed on the
Technology reported to OSIRIS under Paragraph 1.7 for which OSIRIS fails to
exercise the option.  OSIRIS shall
exercise reasonable diligence to patent the Technology for which it has
exercised its option herein.—

2.03         Paragraph 10.7
of the License Agreement is amended in its entirety to read as follows:

—10.07 Investigator.  The term “Investigator” shall mean “Principal
Investigators”, and any CWRU staff member, graduate student, under graduate
student or employee of CWRU who (i) works under the direction of a Principal
Investigator or (ii) who collaborates with a Principal Investigator.  A person who “collaborates with a Principal Investigator”
is a person who is a co-author with a Principal Investigator on a published
work (including papers, abstracts, posters or other scientific presentations),
or is a co-inventor with a Principal Investigator on a patent application.  Nothing in this paragraph shall prejudice the
rights of either party to make any argument as to the meaning and intent of the
original Paragraph 10.07 of the License Agreement.

3.             EFFECTS

 

2

 

The License Agreement is amended as provided hereinabove as of October 18,
1999 in accordance with Paragraph 9.12 of the License Agreement.  All other terms and provisions of the License
Agreement shall be unaffected by this Agreement.

IN WITNESS WHEREOF, the parties through there authorized
representatives, have executed this Amendment effective as of the date first
above written.

	
  CASE WESTERN RESERVE
  UNIVERSITY

  	
   

  	
  OSIRIS THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/  Illegible

  	
   

  	
  BY:

  	
  /s/ Anne Marie Moseley

  
	
  Title:

  	
  Provost

  	
   

  	
  Title:

  	
  Acting Pres./CEO

  
	
  Date:

  	
  10/18/99

  	
   

  	
  Date:

  	
  10/12/99

  

 

 

3

 

Confidential

 

THIRD
AMENDMENT TO TECHNOLOGY TRANSFER

AND LICENSE AGREEMENT

THIS THIRD AMENDMENT TO
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT (the “Amendment”) effective as of
October 27, 2003 (“Amendment Effective Date”), by and between Case Western
Reserve University, an Ohio nonprofit corporation having a place of business at
10900 Euclid Avenue, Cleveland, OH 44106 (“CWRU”) and Osiris Therapeutics,
Inc., a Delaware corporation with an address at 2001 Aliceanna Street,
Baltimore, Maryland 21231-3043 (“OSIRIS”), in exchange for their mutual
covenants herein set forth, hereby agree as follows:

WHEREAS, the Parties entered
into a Technology Transfer and License Agreement effective as of January 1,
1993 (the Effective Date), which was amended on October 18, 1999 and October
27, 2003 (the “Agreement”).

WHEREAS, the Parties desire
to further modify, clarify, and amend certain provisions of the Agreement;

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein, and
intending to be legally bound hereby, the Parties hereby agree as follows:

1.                                       DEFINITIONS.

1.1                                 For purposes of
this Amendment and the Agreement, Capitalized terms shall have the meanings
specified in Article X of the Agreement unless modified herein.

1.2                                 The definition
of “Technology” set forth in Paragraph 10.1 of the Agreement, is amended by
deleting the phrase in the last two lines “during the term of this Agreement
while performing research at CWRU” and replacing it with “prior to April 1,
2002 while performing research at CWRU”. 
Technology shall not include ‘Excluded Patent Rights’ as defined below.”

1.3                                 The definition
of “Material” set forth in Paragraph 10.6 of the Agreement, is amended by
deleting the phrase “during the term of this Agreement” and replacing it with “prior
to April 1, 2002.”

1.4                                 The definition
of “Existing Patent Rights” set forth in Paragraph 10.8 of the Agreement is
deleted in its entirety and replaced as follows:

10.8.        “Existing Patent Rights” shall mean only (i) the patents
identified in Attachment A hereto (the “Existing Patents”); (ii) any
division, continuation, or continuation-in-part of an Existing Patent; and (iii) any
application filed or patent issued in a foreign country equivalent to any of
the foregoing (including any reissue, reexamination, or extension of such
foreign patent(s)).

1.5                                 The definition
of “Developed Patent Rights” set forth in Paragraph 10.9 of the Agreement is
deleted in its entirety and replaced as follows:

 

 

Confidential

 

10.9         “Developed Patent Rights” shall mean only (i) the
patents and patent applications (including any patents maturing or claiming
priority from such applications) identified in Attachment B hereto (the “Developed
Patents”); (ii) any division, continuation, continuation-in-part, reissue,
reexamination or extension thereof; or (iii) any application filed or
patent issued in a foreign country equivalent to any of the foregoing
(including any division, continuation, continuation-in-part, reissue,
reexamination, or extension of such foreign patent(s)) Developed Patent Rights
shall not include “Excluded Patent Rights” as defined below.

1.6                                 The Agreement
is amended by the addition of a new Paragraph 10.10 as follows:

10.10       “Excluded Patents Rights” shall mean only (i) the patents
and patent applications (including any patents maturing or claiming priority
from such applications) identified in Attachment C hereto (the “Excluded
Patents”); (ii) any division, continuation, continuation-in-part, reissue,
reexamination, or extension thereof; or (iii) any application filed or
patent issued in a foreign country equivalent to any of the foregoing
(including any division, continuation, continuation-in-part, reissue,
reexamination or extension of such foreign patent(s)).

2.                                       LICENSE TERMS

2.1                                 Paragraph 1.3
of the Agreement (“Retained Rights”) is amended by the addition of the
following:  “The parties understand and
agree that research (unless funded by a commercial entity in return for a
license to, or ownership interest in, the results of such research) shall not
be considered a commercial purpose.”

2.2                                 Paragraph 1.4
of the Agreement (“Sublicenses”) is amended by the addition of the following
new subparagraph 1.4.1, as follows:

1.4.1.       In the event CWRU notifies OSIRIS in
writing that a third party desires to obtain a sublicense under the licenses
granted to OSIRIS under this Agreement and further provided that (i) the
sublicense is in a field of use that is not being developed by OSIRIS under
this Agreement and a Product in the field of use in which a sublicense is
requested would not have an adverse effect on a product being developed and/or
sold by OSIRIS or by a sublicensee of OSIRIS and (ii) within sixty (60)
days of such notice OSIRIS does not provide CWRU with a development plan for
developing a Product in such requested field of use or thereafter in good faith
does not initiate and continue development of that Product in such requested
field of use and (iii) OSIRIS has the right to grant sublicenses in such
requested field of use and (iv) such third party has the ability to
develop a Product in such requested field of use, then OSIRIS agrees to
negotiate in good faith such sublicense in such requested field of use and to
also negotiate in good faith a license with respect to patents and know-how
owned by OSIRIS in such requested field of use to the extent that such a
license from OSIRIS is reasonably required to exercise the rights granted under
such sublicense.  It is expressly

 

2

 

Confidential

 

understood that OSIRIS is
not obligated by the Agreement to grant any sublicense with respect to a
product(s) where the development and/or commercialization of such product(s) by
a third party would have a potential adverse effect on a product that is being
researched and/or developed and/or commercialized by OSIRIS or a licensee or
sublicensee of OSIRIS.  It is expressly
understood that no person or entity other than CWRU is intended to be a third
party beneficiary or may assert third party beneficiary rights under this
Section 1.4.1.

3.                                       PATENT RIGHTS

3.1                                 Paragraph 3.3
of the Agreement is deleted and replaced as follows:

3.3           Assignment of Patent Rights.

(a)           As requested by OSIRIS, CWRU shall
sign and shall cause the applicable inventors to sign any and all documents and
papers reasonably requested by OSIRIS to evidence and/or perfect the assignment
to OSIRIS of Existing Patent Rights, including, but not limited to, those to be
filed in patent offices in which Existing Patents are pending and/or from which
Existing Patents have been granted.  To
the extent that Developed Patent Rights have been assigned by CWRU to OSIRIS
(although not required by the Agreement), OSIRIS shall reassign such Developed
Patent Rights to CWRU within 30 days of the Amendment Effective Date.

(b)           CWRU shall own any Patent Application
that is directed to an invention made by an employee(s) of CWRU during the week
in which the invention was conceived other than claims relating to an Existing
Patent Right.  OSIRIS shall own any
Patent Application that does not include Excluded Patent Rights, directed to an
invention made by an employee of OSIRIS who was not also an employee of CWRU
during the week in which the invention was conceived.  Inventions made by an employee of OSIRIS, who
was not also an employee of CWRU during the week in which the invention was
conceived, and an employee of CWRU shall be owned jointly by OSIRIS and CWRU.

4.                                       Royalties,
Consideration and Payments

4.1                                 Paragraph 6.9
of the Agreement is deleted and replaced as follows:

6.9           Minimum Performance.  Upon execution of this Amendment, OSIRIS shall
pay and CWRU shall accept one hundred thousand dollars ($100,000) as royalty
payments for the calendar years 2001 and 2002.  For each subsequent calendar year during the
term of this Agreement, if payments due to CWRU under Article VI are less than
fifty thousand dollars ($50,000), OSIRIS shall pay CWRU the difference between
the amount due and fifty thousand dollars ($50,000) on, or before, the due date
for payments under Article VI (i.e. March 31 following the year payment
obligations accrue).  In the event OSIRIS
defaults on its payment obligation, and fails to cure such default within 30
(thirty) days after receiving a notice of default and demand for payment from
CWRU, any and all rights of

 

3

 

Confidential

 

OSIRIS to Developed Patent
Rights under this License Agreement shall be terminated.

5.                                       Miscellaneous

5.1                                 The Agreement
is amended by the addition of the following new Paragraph 9.15 as follows:

9.15         Reporting.  In order
to assist CWRU in its annual Bayh-Dole Invention utilization Reporting to the
NIH, OSIRIS shall submit to CWRU a written report containing the following
information relating to Product(s) or Process(es) developed under the
Agreement:

Name of Product

Latest stage of development
of Product (Basic R&D; Pre-clinical;

Prototype; FDA(NDA/PLA); Clinical Market)

Calendar year of first
commercial sale of Product

Number of sublicensees for Product.

Said report shall be due
annually on March 31 of each year during the term of the Agreement.

5.2                                 The Agreement
is amended by the addition of the following new Paragraph 9.16, as follows:

9.16         No Waiver of Rights.  By entering this Amendment, CWRU does not
waive any right or obligation under any federal or state statute or regulation,
including but not limited to those relating to commercialization and/or
utilization of federally funded inventions, and no inference of any such waiver
shall be drawn from this Amendment.

 

4

 

Confidential

 

5.3                                  IN WITNESS
WHEREOF, the parties have executed this Amendment or caused this Amendment to
be executed on the date first above written.  This Amendment is executed by the parties with
the intent to be legally bound hereby.

	
  CASE WESTERN RESERVE
  UNIVERSITY

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Casey Porto

  	
   

  
	
   

  	
  Casey Porto

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
  Associate Vice President

  	
   

  
	
   

  	
  Technology Transfer

  	
   

  
	
   

  	
  Case Western Reserve
  University

  	
   

  
	
   

  	
   

  	
   

  
	
  OSIRIS THERAPEUTICS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Donald W. Fallon

  	
   

  
	
   

  	
  Donald W. Fallon

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
  VP, Finance & CFO

  	
   

  

 

5

 

Confidential

 

 

Attachment A - Existing Patent
Rights

1.                                       Method for
Enhancing the Implantation and Differentiation of Marrow-Derived Mesenchymal
Cells (U.S. Patent No. 5,197,985).

2.                                       Method for
Treating Connective Tissue Disorders (U.S. Patent No. 5,226,914).

3.                                       Human
Mesenchymal Stem Cells (U.S. Patent No. 5,486,359).

4.                                       Enhancing Bone
Marrow Engraftment Using MSCS (U.S. Patent No. 5,733,542).

5.                                       Connective
Tissue Regeneration Using Human Mesenchymal Stem Cell Preparations (U.S. Patent
No. 5,811,094).

6.                                       Monoclonal
Antibodies for Human Mesenchymal Stem Cells (U.S. Patent No. 5,837,539).

7.                                       Enhancing
Hematopoietic Progenitor Cell Engraftment Using Mesenchymal Stem Cells (U.S.
Patent No. 6,010,696).

8.                                       Monoclonal
Antibodies for Human Mesenchymal Stem Cells (U.S. Patent No. 6,087,113).

9.                                       In any country
of the world, any issued patent or pending patent application that claims the
benefit of the following U.S. Patent Application Numbers:  07/615,430, 07/716,917, 07/614,915, and
07/614,912.

10.                                 Any reissue,
reexamination or extension of any patent application or patent of items 1-9
above.

 

 

Confidential

 

 

Attachment B - Developed Patent
Rights

1.             Transduced Mesenchymal Stem Cells
(U.S. Patent Number 5,591,625).

2.                                       Monoclonal
Antibodies for Human Osteogenic Cell Surface Antigens (U.S. Patent Number
5,643,736).

3.                                       Lineage-Directed
Induction of Human Mesenchymal Stem Cell Differentiation (U.S. Patent Number
5,736,396).

4.                                       Biomatrix for
Soft Tissue Regeneration (U.S. Patent Number 5,855,619).

5.                                       In Vitro
Chondrogenic Induction of Human Mesenchymal Stem Cells (U.S. Patent Number
5,908,784).

6.                                       Lineage-Directed
Induction of Human Mesenchymal Stem Cell Differentiation (U.S. Patent Number
5,942,225).

7.                                       Biomatrix for
Soft Tissue Regeneration Using Mesenchymal Stem Cells (U.S. Patent Number
6,174,333).

8.                                       Biological
Material for the Repair of Connective Tissue Defects Comprising Mesenchymal
Stem Cells and Hyaluronic Acid Derivative (U.S. Patent Number 6,482,231).

9.                                       Hematopoietic
Progenitor Cell Gene Transduction (U.S. Patent Application Number 09/321,655).

10.                                 Myogenic
Differentiation of Human Mesenchymal Stem Cells (PCT Application Number
US96/08722).

11.                                 Osteoarthritis
Cartilage Regeneration Using Human Mesenchymal Stem Cells (US Patent
Application Number 09/078,531).

12.                                 Bone
Regeneration in Osteoporosis Using Human Bone Marrow Mesenchymal Cells (PCT
Application Number US98/01112).

13.                                 Any patent
applications that have matured into one of the Developed Patents specified
above or as to which priority for such Developed Patents is claimed.

14.                                 Any patent
application(s) filed only by CWRU, with Arnold Caplan or Stephen Haynesworth as
one of the inventors, that were filed prior to April 1, 2002 to the extent that
it claims Technology that is not either (a) set forth in items 1-13 above,
(b) within Existing Patent Rights under Attachment A, or (c) within
Excluded Patent Rights under Attachment C.

 

 

Confidential

 

 

Attachment C - Excluded Patent
Rights

1.                                       Multilayer Skin
Or Dermal Equivalent Having A Layer Containing Mesenchymal Stem Cells (U.S.
Patent No. 6,497,875).

2.                                       Any and all
patents that mature or claim priority from future patent applications filed by
CWRU that relate specifically to the use of Mesenchymal Stem Cells for skin
repair, regeneration or treatment which may include but should not be limited to
the use of Mesenchymal Stem Cells in a skin or dermal equivalent.

3.                                       Any and all
patents that relate to cell targeting and/or applications thereof that mature
or claim priority from pending U.S. Patent Application Numbers 60/389,079
and/or 60/457,151, or future patent applications filed by CWRU.

4.                                       Any patent
applications that have matured into an Excluded Patent specified above or as to
which priority for such Excluded Patent is claimed.

 

 

Confidential

 

 

AMENDMENT NUMBER 1

TO

TECHNOLOGY TRANSFER AND LICENSE AGREEMENT

dated
as of January 1, 1993

This Amendment Number 1 is effective as of the date of last
signature and is entered into by and between Osiris Therapeutics, Inc., a
corporation of the State of Ohio, having a place of business at
2001 Aliceanna Street, Baltimore, Maryland 21231 (hereinafter referred to
as “Osiris”), and Case Western Reserve University, an Ohio non-profit
Corporation having its principle office at 10900 Euclid Avenue, Cleveland,
Ohio 44106 (hereinafter referred to as “CWRU”).

Osiris and CWRU hereby agree to revise the Technology Transfer and
License Agreement as follows:

To change Section 6.2 from

6.2 Royalties. 
As consideration of the License, Osiris will pay CWRU a royalty on all
Product or Process providing that such Product or Process where sold is covered
by a claim of a granted patent which is a Developed Patent Right licensed under
this Agreement (“Royalty Bearing Product”) as follows.

(i)            Three
percent (3%) of the Net Sales of Royalty Bearing Products sold by OSIRIS; and

(ii)           Twenty-five
percent (25%) of the royalties received by OSIRIS from its SUBLICENSEES’ sales
of Royalty Bearing Product.

Provided, however, that with respect to each Royalty
Bearing Product covered under either (i) or (ii) above, no royalty shall be
payable for the first three years in which such Royalty Bearing Product is
sold.  Net Sales shall be defined as the
amount received from sales of all Royalty Bearing Products less discounts,
returns, transportation costs, insurance costs and taxes of any kind
whatsoever.

To

6.2 Royalties. 
As a consideration for the License, OSIRIS will pay CWRU a royalty on
all Product or Process providing that such Product or Process where sold is
covered by a claim of a granted patent which is a Developed Patent Right
licensed under this Agreement (“Developed Patent Product”) as follows.

(i)            Three
percent (3%) of the Net Sales of Developed Patent Product sold by OSIRIS; and

(ii)           Twenty-five
percent (25%) of the royalties received by OSIRIS from its SUBLICENSEES sales
of a Developed Patent Product.

 

 

Confidential

 

As further consideration for the Licensee, OSIRIS will pay CWRU a
royalty on all Product or Process providing that such Product or Process where
sold is covered by a claim of a granted patent based upon United States Patent
Application Number 08/377,771, filed January 24, 1995 (“Marrow Transplant
Patent Product”) as follows.

(iii)          One
and One-Half percent (1.5%) of the Net Sales of Marrow Transplant Patent
Products sold by OSIRIS or its sublicensees; and

CWRU agrees that any income received from Marrow
Transplant Patent Products shall be divided evenly and in its entirely between
Dr. Stanton Gerson and Dr. Hillard Lazarus.

Any Marrow Transplant Patent Products or Developed
Patent Products shall be designated hereinafter as a “Royalty Bearing Product.”

Provided, however, that with respect to each Royalty
Bearing Product covered under either (i), (ii) or (iii) above, no royalty shall
be payable for the first three years in which such Royalty Bearing Product is
sold.  Net Sales shall be defined as the
amount received from sales of all Royalty Bearing Products less discounts,
returns, transportation costs, insurance costs and taxes of any kind
whatsoever.

Except as specifically modified herein, all terms and conditions of the
Technology License Agreement dated January 1, 1993 remain unchanged and
constitute the entire agreement between the parties.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
Number 1 of the Technology License and Agreement which is effective as of
the date of the last signature below.

	
  CASE WESTERN
  RESERVE

  	
   

  	
  OSIRIS
  THERAPEUTICS, INC.

  
	
  UNIVERSITY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Casey
  Porto

  	
   

  	
  By:

  	
  /s/ Donald W.
  Fallon

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Casey Porto

  	
   

  	
  Name:

  	
  Donald W.
  Fallon

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Assistant
  Vice President

  	
   

  	
  Title:

  	
  VP, Finance
  & CFO

  
	
   

  	
  Technology
  Transfer

  	
   

  	
   

  	
   

  
	
   

  	
  Case Western
  Reserve University

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  11-3-03

  	
   

  	
  Date:

  	
  10/27/03

  

 

 

2

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