X0202 4 2006-11-01 0 0001360886 OSIRIS THERAPEUTICS, INC. OSIR 0001008317 FRIEDLI PETER C/O OSIRIS THERAPEUTICS, INC. 2001 ALICEANNA STREET BALTIMORE MD 21231-3043 1 0 1 0 Convertible Promissory Note 18 2006-10-30 4 P 0 4500000 18 A 2007-02-09 2009-04-30 Common Stock 25000 1250000 D Convertible promissory note (the "Note") pursuant to a private placement intended to qualify under Regulation S of the Securities Act of 1933, as amended. The Note bears interest at a rate of 10% per annum, with semi-annual payments of accrued interest becoming due and payable on each April 30 and October 30, and, with payment in full on April 30, 2009. Any time after February 9, 2007, at the option of the Holder, the Note may be converted into common stock at the conversion price of $18.00 per share. The Note automatically converts into common stock at the same conversion price if, after February 9, 2007, for ten consecutive trading days on the NASDAQ Global Market, the closing price equals $25.00 per share or greater. The Note is redeemable at any time by the Company upon thirty (30) days written notice to the Holder. The form of Note is included as an exhibit to the Current Report on Form 8-K, filed by the Company with the SEC on October 31, 2006. Includes (i) Warrants to purchase 1,000,000 shares of common stock at $11.00 per share, and (ii) the Note which is convertible into 250,000 shares of common stock at the initial conversion price of $18.00 per share. The 1,000,000 shares represented by the Warrant are subject to a restriction on transfer by the terms of a certain lock-up agreement which is in effect through January 30, 2008. A copy of which agreement may be inspected by the holder of these derivative securities at the principal offices of the corporation, or furnished by the corporation to the holder upon written request, without charge Peter Friedli 2006-11-01