EXHIBIT 10.4
CONFIDENTIAL
     Execution Copy
LICENSE AGREEMENT
By And Between
ATHERSYS, INC.
And
ANGIOTECH PHARMACEUTICALS, INC.
Effective as of May 5, 2006

 

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TABLE OF CONTENTS

                      Page
 
            ARTICLE I. DEFINITIONS     1  
 
            ARTICLE II. LICENSES     3  
2.1
  License Grants By Athersys     3  
2.2
  License Grants to Joint IP     4  
2.3
  Sublicense Grant By Athersys     4  
2.4
  Reservation Of Rights     4  
 
            ARTICLE III. CONSIDERATION     4  
3.1
  Profit Sharing in Lieu of Royalty     4  
 
            ARTICLE IV. CONFIDENTIAL INFORMATION     4  
4.1
  Confidentiality Obligations     4  
 
            ARTICLE V. INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION     5  
5.1
  Ownership Of Intellectual Property     5  
5.2
  Ownership Of New Intellectual Property     5  
5.3
  Patent Prosecution Of Patent Rights Solely Owned     5  
5.4
  Patent Prosecution Of Joint IP     6  
5.5
  Costs Of Patent Prosecution     6  
5.6
  Cooperation     6  
5.7
  Third Party Infringement     7  
5.8
  Defense and Enforcement of Patent Rights     7  
5.9
  Other Intellectual Property Infringement     9  
 
            ARTICLE VI. TERM AND TERMINATION     10  
6.1
  Term     10  
6.2
  Survival Of Obligations     10  
 
            ARTICLE VII. MISCELLANEOUS PROVISIONS     10  
7.1
  Governing Law     10  
7.2
  Assignment     10  
7.3
  Compliance With Laws     10  
7.4
  Further Assurances     11  

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TABLE OF CONTENTS
(continued)

                      Page
 
           
7.5
  Severability     11  
7.6
  Waivers And Amendments; Preservation Of Remedies     11  
7.7
  Headings     11  
7.8
  Counterparts     11  
7.9
  Successors     11  
7.10
  Notices     11  
7.11
  No Consequential Damages     12  
7.12
  Independent Contractor     12  
7.13
  Complete Agreement     13  

SCHEDULES
Schedule 1.5
Schedule 1.6
Schedule 2.1

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LICENSE AGREEMENT
     This License Agreement (this “License Agreement”) is made and entered into
as of May 5, 2006 (the “Effective Date”), by and between Athersys, Inc., a
corporation organized under the laws of Delaware and having a place of business
at 3201 Carnegie Avenue, Cleveland, Ohio 44115 (“Athersys”), and Angiotech
Pharmaceuticals, Inc., a corporation organized under the laws of British
Columbia and having a place of business at 1618 Station Street, Vancouver, BC
Canada, V6A 1B6 (“Angiotech”). In this License Agreement, Athersys and Angiotech
may each be referred to as a “Party” and collectively as the “Parties.”
RECITALS
     A. Concurrently with the execution of this License Agreement, Athersys and
Angiotech are entering into that certain Strategic Alliance Agreement (such
agreement and the exhibits and schedules thereto, the “Strategic Alliance
Agreement”) concerning the alliance between Angiotech and Athersys to research,
develop, manufacture, market and commercialize certain stem cells and stem cell
therapies for certain indications.
     B. The Strategic Alliance Agreement includes a license from Athersys to
Angiotech regarding certain technology and intellectual property owned by
Athersys, and a sublicense to certain technology and intellectual property
licensed to and sublicensable by Athersys, all as set forth below.
     C. Athersys owns or Controls the Intellectual Property of MCL LLC (which
was subsequently transferred by MCL LLC to Regenesys LLC, and then by Regenesys
LLC to Athersys) that pertains to the subject matter of this License Agreement.
AGREEMENT
     NOW, THEREFORE, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
     Any capitalized terms not defined in this License Agreement shall have the
meaning given such term(s) in the Strategic Alliance Agreement. Any references
in this License Agreement to “Sections” shall refer to Sections of this License
Agreement, unless specified to be referring to Sections of the Strategic
Alliance Agreement. For purposes of this License Agreement, the following
capitalized terms in this License Agreement, whether used in the singular or
plural, shall have the following meanings:
     1.1 “Action” has the meaning ascribed to it in Section 5.8(b).
     1.2 “Angiotech” has the meaning ascribed to it in the preamble.
     1.3 “Athersys” has the meaning ascribed to it in the preamble.

 

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     1.4 “Athersys Stem Cells” means any and all stem cells described by or in
the Athersys Stem Cell Technology.
     1.5 “Athersys Stem Cell Technology” means all Intellectual Property that
meets all of the following conditions: (a) is owned or Controlled by Athersys;
(b) is related to, or necessary or useful in, the research, development and/or
exploitation (including, without limitation, characterization, harvesting,
growth, sorting, reproduction, priming, differentiation, storage, use or
application) of stem cells; (c) is existing as of the Effective Date or comes
into existence as a result of Athersys’ and/or its Affiliates’ internal or
collaborative research and development or as a result of an agreement with a
Third Party during the License Agreement Term; and (d) is not Company
Technology, a Company Patent, University Technology, a University Patent, or
Joint IP. Athersys Stem Cell Technology includes, but is not limited to, the
Patent Rights listed on Schedule 1.5.
     1.6 “Company Patent” means a Patent that claims as an invention one or more
aspects of the Company Technology, and that is owned or Controlled by Athersys
during the Term. Company Patents include, but are not limited to, the Patent
Rights listed on Schedule 1.6.
     1.7 “Company Technology” means the Intellectual Property owned by Athersys
through the Ownership Agreement, namely, the “COMPANY Technology,” as defined in
the Ownership Agreement.
     1.8 “Control(s)” or “Controlled” means with respect to any (a) material,
Know-How or other information or documentation, or (b) Intellectual Property,
the possession of (whether by ownership or license, other than pursuant to this
License Agreement), or the ability of a Party or its Affiliates to grant access
to, or a license or sublicense of, such item or right as provided for herein
without violating the terms of any agreement or other arrangement with any Third
Party existing at the time such Party would be required hereunder to grant the
other Party such access or license or sublicense, except to the extent that any
of the foregoing rights arise by virtue of the grant of rights under this
License Agreement.
     1.9 “Declined Action” has the meaning ascribed to it in Section 5.8(c).
     1.10 “Effective Date” has the meaning ascribed to it in the preamble.
     1.11 “Joint IP” has the meaning ascribed to it in Section 5.2.
     1.12 “License Agreement” has the meaning ascribed to it in the preamble.
     1.13 “License Agreement Term” has the meaning ascribed to it in
Section 6.1.
     1.14 “Ownership Agreement” means that certain Ownership Agreement, dated as
of May 17, 2002, by and between the University and MCL LLC.
     1.15 “Party” and/or “Parties” has the meaning ascribed to it in the
preamble.
     1.16 “Prior Third Party Agreement” means those agreements between Athersys
and a Third Party set forth on Schedule 2.1, as such agreements exist as of the
Effective Date.

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     1.17 “Responsible Party” has the meaning ascribed to it in Section 5.3.
     1.18 “Strategic Alliance Agreement” has the meaning ascribed to it in the
Recitals.
     1.19 “University” means the Regents of the University of Minnesota, a
constitutional educational corporation under the laws of the State of Minnesota.
     1.20 “University License Agreement” means that certain Exclusive License
Agreement, dated as of May 17, 2002, by and between the University and MCL LLC.
     1.21 “University Patents” means a Patent Right that claims as an invention
one or more aspects of the University Technology.
     1.22 “University Technology” means the Intellectual Property that is owned
by the University pursuant to the Ownership Agreement, namely, the “University
Technology,” as defined in the Ownership Agreement.
ARTICLE II.
LICENSES
     2.1 License Grants By Athersys. Subject to the provisions of this License
Agreement, the Strategic Alliance Agreement, the applicable provisions of the
Ownership Agreement and University License Agreement, and the Prior Third Party
Agreements, Athersys grants to Angiotech during the License Agreement Term:
          (a) a co-exclusive (meaning that only Athersys, Angiotech and their
Affiliates and permitted subcontractors can act in each country of the
Territory), worldwide, license and sublicense (as the case may be), with the
right to sublicense (through multiple tiers of sublicensing), under the Company
Technology, Company Patents and Athersys Stem Cell Technology to research,
develop, and otherwise use and exploit (but excluding to make and have made)
Cells and Clinical Development Candidates in the Therapeutic Field in the
Territory as necessary or useful to conduct any Clinical Development Program,
Pre-Clinical Development Program and/or New Pre-Clinical Development Program
and/or its activities under any Transaction Agreement;
          (b) an exclusive (even as to Athersys), worldwide, license and
sublicense (as the case may be), with the right to sublicense (through multiple
tiers of sublicensing), under the Company Technology, Company Patents and
Athersys Stem Cell Technology to promote, market, distribute, advertise, sell,
have sold, offer for sale, import and have imported Cell Therapy Products in the
Therapeutic Field in the Territory; and
          (c) in the event that Angiotech obtains rights to manufacture Cells,
Clinical Development Candidates and Cell Therapy Products pursuant to the terms
of the Strategic Alliance Agreement, a co-exclusive (meaning that only Athersys,
Angiotech and their Affiliates and permitted subcontractors can act in each
country of the Territory) worldwide, license and sublicense (as the case may
be), with the right to sublicense (through multiple tiers of sublicensing),
under the Company Technology, Company Patents and Athersys Stem Cell

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Technology to make and have made Cells, Clinical Development Candidates and Cell
Therapy Products in the Therapeutic Field in the Territory.
     2.2 License Grants to Joint IP.
          (a) Athersys hereby grants to Angiotech a non-exclusive, worldwide,
fully paid-up, royalty-free, irrevocable right and license, with the right to
sublicense (through multiple tiers of sublicensing), in all fields under
Athersys’ undivided interest in the Joint IP to research, develop, make, have
made, promote, market, distribute, advertise, sell, have sold, offer for sale,
import, have imported, and otherwise use and exploit products and processes.
          (b) Angiotech hereby grants to Athersys a non-exclusive, worldwide,
fully paid-up, royalty-free, irrevocable right and license, with the right to
sublicense (through multiple tiers of sublicensing), in all fields under
Angiotech’s undivided interest in the Joint IP to research, develop, make, have
made, promote, market, distribute, advertise, sell, have sold, offer for sale,
import, have imported, and otherwise use and exploit products and processes.
     2.3 Sublicense Grant By Athersys. Athersys grants to Angiotech a sublicense
under University Technology and University Patents pursuant to and in accordance
with the terms and conditions of the Sublicense Agreement. The foregoing
includes the right to sublicense (through multiple tiers of sublicensing).
     2.4 Reservation Of Rights. Except as expressly set forth in Sections 2.1,
2.2(b) and 2.3, Athersys reserves all right, title and interest in, to and under
the Company Technology, Company Patents, Athersys Stem Cell Technology, and all
other Intellectual Property owned by or licensed to Athersys or any of its
Affiliates. For the avoidance of doubt, no right or license is granted under
this License Agreement by Athersys or any of its Affiliates to Angiotech or any
of its Affiliates, whether expressly, impliedly, by estoppel or otherwise, in,
to or under the Company Technology, Company Patents, Athersys Stem Cell
Technology, or any other material, technology or intellectual property rights
owned by or licensed to Athersys or any of its Affiliates, except as expressly
set forth in Sections 2.1, 2.2(b) and 2.3.
ARTICLE III.
CONSIDERATION
     3.1 Profit Sharing in Lieu of Royalty. In complete consideration for the
rights granted to Angiotech under this License Agreement, and with respect to
any Cell Therapy Product(s), Athersys shall receive a share of the Profits (as
described in the Strategic Alliance Agreement), and with respect to any Sole
Development Product(s), Athersys shall receive a royalty and share of Sole
Development Income (as described in the Strategic Alliance Agreement).
ARTICLE IV.
CONFIDENTIAL INFORMATION
     4.1 Confidentiality Obligations. All information exchanged by the Parties
pursuant to this License Agreement shall be subject to the obligations of
confidentiality, as applicable, set forth in ARTICLE XIII of the Strategic
Alliance Agreement; provided, however, that any

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disclosure by either Party as required under the Ownership Agreement shall be
deemed a permitted disclosure under Section 13.3 of the Strategic Alliance
Agreement.
ARTICLE V.
INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION
     5.1 Ownership Of Intellectual Property. Athersys shall retain all of its
ownership interests in the Athersys Stem Cell Technology, the Company
Technology, and the Company Patents, as such exist as of the Effective Date.
Angiotech shall retain all of its ownership interests in its Intellectual
Property, as such exists as of the Effective Date, and shall have sole
responsibility for Patent Prosecution related thereto. Nothing in this License
Agreement shall be construed to transfer ownership of any Intellectual Property
rights existing as of the Effective Date from one Party to the other Party.
     5.2 Ownership Of New Intellectual Property. Inventorship of all
Intellectual Property, whether patentable or not, made, created, identified,
conceived, reduced to practice or derived as a direct result of the exercise of
a Party’s rights or performance of a Party’s obligations under any Pre-Clinical
Development Program, Clinical Development Program or any Transaction Agreement
shall be determined in accordance with United States patent laws. As between
Athersys and Angiotech, ownership of Intellectual Property made, created,
identified, conceived, reduced to practice or derived as a result of the
exercise of a Party’s rights or obligations under the Transaction Agreements
shall be determined consistent with inventorship. Any Intellectual Property
jointly owned by the Parties pursuant to this Section 5.2 is referred to herein
as “Joint IP.”
     5.3 Patent Prosecution Of Patent Rights Solely Owned. The responsibility
for Patent Prosecution related to an invention owned solely by Athersys pursuant
to Sections 5.1 or 5.2, or an invention solely owned by Angiotech pursuant to
Section 5.2, shall be the responsibility of the Party owning the invention that
is the subject thereof (“Responsible Party”). With respect to Patent Prosecution
of Patent Rights necessary or useful in connection with Cell Therapy in any
Therapeutic Field, the following obligations shall apply:
          (a) The Responsible Party shall perform Patent Prosecution of all
Patent Rights for which it responsible throughout the Territory, using
Commercially Reasonable Efforts.
          (b) The Responsible Party shall consult with the other Party regarding
Patent Prosecution of all Patents Rights for which it is responsible in the
Territory, and shall provide copies to the other Party of all official
correspondence with patent authorities related thereto.
          (c) The Responsible Party shall give the other Party a reasonable
opportunity to review and provide substantive input for material decisions
relating to the prosecution and maintenance of each application for Patent,
shall consult with the other Party with respect to each such application for
Patent, and shall supply the other Party with a copy of each such application
for Patent as filed, together with notice of its filing date and serial number.
For the avoidance of doubt, the Responsible Party may take ministerial and
non-material procedural actions regarding the Patent Rights for which it is
responsible without obtaining prior input from the other Party.

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          (d) During the Term, the Responsible Party shall keep the JSC and the
other Party informed of the status of all such material Patent Prosecution
activities, shall provide written reports to the other Party at least
semi-annually regarding the status of the Patent Rights for which it is
responsible. The other Party shall have the right to request and promptly
receive additional information regarding such Patent Rights from the Responsible
Party.
          (e) In the event that the Athersys elects to finally abandon the
subject matter of any patent application or issued patent within the Patent
Rights for which it is responsible, Athersys shall give Angiotech at least
thirty (30) thirty days prior written notice of any such planned abandonment.
Angiotech shall then have the right to continue the prosecution of any such
abandoned application or patent and to maintain the same, all at Angiotech’s
sole cost and expense. If Angiotech exercises such right to continue the
prosecution and maintenance of any such patent application or patent to be
abandoned by Athersys, Athersys shall continue to own such patent or patent
application (as applicable) but shall give power of attorney to Angiotech and/or
its legal representative to continue the prosecution and maintenance of such
patent application or patent; provided, however, that all terms and conditions
of the license granted to Angiotech in this License Agreement shall continue to
apply and Angiotech shall have no rights outside of the Therapeutic Field.
Athersys agrees to cooperate in such activities, but shall have no obligation to
incur any expense in connection therewith.
     5.4 Patent Prosecution Of Joint IP. The JSC shall determine whether to
conduct Patent Prosecution with respect to all Joint IP. The JSC will assign
responsibility to one Party to conduct Patent Prosecution of such Patent(s) and
application(s) for Patent(s), and such Party shall thereafter be deemed the
Responsible Party with respect to such Patent(s) and application(s) for
Patent(s); provided, however, that both Parties shall be entitled to actively
participate in such Patent Prosecution in connection with Joint IP, and shall
jointly decide upon the strategy and content of such Patent Prosecution
activities and submissions to governmental authorities associated therewith.
With respect to Patent Prosecution in connection with Joint IP, and subject to
the foregoing sentence, the Responsible Party shall have the obligations set
forth in Section 5.3; provided, however, that such obligations shall not be
limited to Patent Rights necessary or useful in connection with Cell Therapy in
the Therapeutic Field.
     5.5 Costs Of Patent Prosecution. All out-of-pocket Patent Prosecution costs
and expenses, including attorneys’ fees, incurred by a Party in the performance
of Patent Prosecution pursuant to this License Agreement shall be (a) borne
solely by the Responsible Party in the case of Patent Rights owned solely by a
Party, and (b) shared equally by the Parties in the case of Joint IP. In the
case of Joint IP, the Responsible Party shall keep the other Party informed of
such costs and expenses from time to time, including by providing backup
documentation evidencing the out-of-pocket costs and expenses incurred, and the
other Party shall promptly reimburse the Responsible Party for fifty percent
(50%) of such costs and expenses within thirty (30) days after receipt of
written notice thereof, together with documentation supporting such costs and
expenses.
     5.6 Cooperation. With respect to all Patent Prosecution activities under
this License Agreement, each Party shall:

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          (a) execute all further instruments to document its respective
ownership consistent with this ARTICLE V as reasonably requested by the other
Party;
          (b) make its employees, agents and consultants reasonably available to
the other Party (or to the other Party’s authorized attorneys, agents or
representatives), to the extent reasonably necessary to enable the Responsible
Party hereunder to undertake Patent Prosecution;
          (c) cooperate, if necessary and appropriate, with the other Party in
gaining patent term extensions; and
          (d) endeavor in good faith to coordinate its efforts under this
License Agreement with the other Party to minimize or avoid inconsistencies or
interference with the Patent Prosecution of the other Party regarding
Intellectual Property licensed to Angiotech hereunder or Joint IP.
     5.7 Third Party Infringement.
          (a) Notice. Except as provided in Section 5.7(b), and with respect to
any Patent Rights licensed hereunder, each Party shall promptly notify the other
Party in writing of any alleged or threatened infringement of such Patent Rights
of which it becomes aware, and shall provide to the other Party available
evidence thereof. The Parties shall consult with respect to potential strategies
for terminating such alleged or threatened infringement without litigation.
          (b) Notice — ANDA Filing. Each Party shall promptly provide to the
other Party copies of any allegations of alleged patent invalidity or
non-infringement of a Patent Right licensed hereunder pursuant to a
certification under 21 U.S.C. § 355(b)(2)(A)(iv) by a Third Party filing an
Abbreviated New Drug Application thereunder or any supplements or successor
provisions thereto. Such copies shall be provided promptly, but in any event
within ten (10) business days of receipt of such certification.
     5.8 Defense and Enforcement of Patent Rights.
          (a) Defense of Declaratory Judgment Action. In the event of an
assertion of invalidity or unenforceability of the Patent Rights licensed
hereunder, the Party receiving notice of such assertion shall promptly advise
the other Party in writing of such assertion and of all relevant facts and
circumstances known to such Party pertaining to such assertion. Angiotech and
Athersys shall thereafter consult and cooperate fully to determine an
appropriate course of action.
          (b) Action within the Licensed Field. Athersys shall have the first
right, but not the obligation, to commence and control any legal action or
proceeding, or the filing of any counterclaim, related to any alleged
infringement of any Patent Rights licensed to Angiotech hereunder (“Action”)
within any Therapeutic Field. In the event that Athersys elects, in its sole
discretion, to undertake such an Action, (i) Athersys shall reasonably consider
Angiotech’s input with respect to such Action; (ii) Angiotech agrees to
reasonably cooperate with Athersys, including providing access to all necessary
documents, executing all papers and performing such other acts as may be
reasonably required for such Action, including, but not limited to, consenting
to be joined as a Party plaintiff in such Action, at Athersys’ sole expense; and
(iii)

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each Party shall assert and not waive the joint defense privilege with respect
to all communications between the Parties reasonably the subject thereof.
Athersys shall control such Action, and Athersys may enter into settlements,
stipulated judgments or other arrangements respecting such infringement;
provided, however, that without the prior written consent of Angiotech, no
settlement, stipulated judgment or other voluntary final disposition of a suit
under this Section 5.8(b) may be undertaken by Athersys without the consent of
Angiotech if such settlement, stipulated judgment or other voluntary final
disposition would require Angiotech to be subject to an injunction, admit
wrongdoing, make a monetary payment or would otherwise materially adversely
affect Angiotech’s rights under the Transaction Agreements. Athersys shall keep
Angiotech reasonably apprised of the progress of any such Action. Angiotech may,
at its option and sole expense, be represented by counsel of its choice, but all
other costs associated with any such Action shall be at the sole expense of
Athersys.
          (c) Declined Action. If, within ninety (90) days after discovering or
being notified by Angiotech in writing of an alleged infringement that would be
the basis of a potential Action within any Therapeutic Field, Athersys declines
to commence an Action, then Angiotech shall have the right, but not the
obligation, to commence an Action with respect to such alleged infringement
(“Declined Action”); provided that prior to commencing any such Declined Action,
Angiotech shall reasonably consider Athersys’ reasons for declining to commence
the Action. In the event that Angiotech elects, in its sole discretion, to
commence such Declined Action, (i) Angiotech shall reasonably consider Athersys’
input with respect to such Declined Action; and (ii) Athersys agrees to
reasonably cooperate with Angiotech, including providing access to all necessary
documents, executing all papers and performing such other acts as may be
reasonably required for such Declined Action, such as consenting to be joined as
a party plaintiff in such Declined Action, at Angiotech’s sole expense; and
(iii) each Party shall assert and not waive the joint defense privilege with
respect to all communications between the Parties reasonably the subject
thereof. Angiotech shall control such Action, and Angiotech may enter into
settlements, stipulated judgments or other arrangements respecting such
infringement; provided, however, that without the prior written consent of
Athersys, no settlement, stipulated judgment or other voluntary final
disposition of a suit under this Section 5.8(c) may be undertaken by Angiotech
without the consent of Athersys if such settlement, stipulated judgment or other
voluntary final disposition would require Athersys to be subject to an
injunction, admit wrongdoing, make a monetary payment or would otherwise
materially adversely affect Athersys’ rights under the Transaction Agreements or
the Patent Rights licensed to Angiotech hereunder. Angiotech shall keep Athersys
reasonably apprised of the progress of any such Declined Action. Athersys may,
at its option and sole expense, be represented by counsel of its choice, but all
other costs associated with any such Declined Action shall be at the sole
expense of Angiotech.
          (d) Action Outside of the Licensed Field. Athersys shall have the
first right, but not the obligation, to commence and control any Action that is
not addressed in Section 5.8(b) or (c); provided, however, where such Action
could reasonably be expected to adversely effect Angiotech’s rights under the
Transaction Agreements, Athersys shall reasonably consider the interests of
Angiotech and shall not settle or make any agreement that would have a material
adverse effect on Angiotech’s rights in any Therapeutic Field under this License
Agreement, without the prior written consent of Angiotech.

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          (e) Recoveries. In any Action or Declined Action pursuant to
Section 5.8(b) or (c), any damages or other recovery, including compensatory and
other non-compensatory damages or recovery actually received from a Third Party,
shall be allocated first to reimburse the costs and expenses, including
reasonable attorneys’ fees and expert witness fees, of the Party commencing such
Action or Declined Action and then to reimburse the other Party for such costs
and expenses, if any. Such reimbursement shall be made first from any
compensatory damages, including attorneys’ fees and costs recovered. If any
balance remains of the damages or other recovery made from the Third Party after
such reimbursement, any remaining compensatory damages that are attributable to
lost sales of Cell Therapy Products shall be considered Profit and subject to
the sharing of Profits pursuant to the Strategic Alliance Agreement. Any
remaining balance of damages or other recovery, if any, shall be payable to the
Party commencing such Action or Declined Action (as applicable).
     5.9 Other Intellectual Property Infringement.
          (a) Notice.
          (i) Each Party shall notify the other in writing of any allegations it
receives from a Third Party that the manufacture, production, use, development,
sale or distribution of Clinical Development Candidates, Cell Therapy Products
or any technology or Intellectual Property licensed to Angiotech under this
License Agreement infringes the Intellectual Property rights of such Third
Party. Such notice shall be provided promptly, but in no event after more than
fifteen (15) business days, following receipt of such allegations.
          (ii) In the event that a Party receives notice that it or any of its
Affiliates have been individually named as a defendant in a legal proceeding by
a Third Party alleging infringement of a Third Party patent or other
Intellectual Property right as a result of the manufacture, production, use,
development, sale or distribution of Clinical Development Candidates, Cell
Therapy Products or any technology or Intellectual Property licensed to
Angiotech under this License Agreement, such Party shall immediately notify the
other Party in writing and in no event notify such other Party later than ten
(10) business days after the receipt of such notice. Such written notice shall
include a copy of any summons or complaint (or the equivalent thereof) received
regarding the foregoing. Each Party shall assert and not waive the joint defense
privilege with respect to all communications between the Parties reasonably the
subject thereof.
          (b) Settlement. The Parties shall keep each other informed of the
status of and of their respective activities regarding any litigation or
settlement thereof initiated by a Third Party concerning a Party’s manufacture,
production, use, development, sale or distribution of Clinical Development
Candidates, Cell Therapy Products or any technology or Intellectual Property
licensed to Angiotech under this License Agreement; provided, however, that no
settlement, stipulated judgment or other voluntary final disposition of a suit
under this Section 5.9 may be undertaken by a Party without the consent of the
other Party if such settlement, stipulated judgment or other voluntary final
disposition would require the other Party to be subject to an injunction, admit
wrongdoing, make a monetary payment or would otherwise adversely affect the
other Party’s rights under this License Agreement.

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          (c) Use Of Name And Trademarks. Unless required by law or an order of
a court or governmental agency, Angiotech shall not use the name or trademarks
of Athersys or the University, or any of the University’s faculty, staff, or
student body members in promoting or advertising any Cells, Clinical Development
Candidates or Cell Therapy Product without the prior written approval of
Athersys and, with respect to the name or the trademarks of the University or
any of the University’s faculty, staff or student body members, the prior
written approval of the University.
ARTICLE VI.
TERM AND TERMINATION
     6.1 Term. This License Agreement shall commence on the Effective Date and
shall terminate upon the expiration or termination of the Strategic Alliance
Agreement (except as provided for in Section 16.3 of the Strategic Alliance
Agreement). The period of time from the Effective Date until termination is the
“License Agreement Term.”
     6.2 Survival Of Obligations. The termination or expiration of this License
Agreement shall not relieve the Parties of any obligations accruing prior to
such termination, and any such termination shall be without prejudice to the
rights of either Party against the other. In addition, the provisions of
Article I, to the extent definitions are embodied in the following listed
Articles and Sections of this Agreement; Article IV; and Sections 2.2, 2.4, 5.1
— 5.6, this 6.2, 7.1 and 7.4 — 7.13 shall survive any termination of this
License Agreement for any reason.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
     7.1 Governing Law. The Transaction Agreements shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of laws.
     7.2 Assignment. Neither Party shall be permitted to assign or otherwise
transfer any of its rights or obligations under the Transaction Agreements
without the prior written consent of the other Party; provided, however, that,
subject to Section 16.2(e) of the Strategic Alliance Agreement, a Party may
assign or otherwise transfer all of its rights and obligations under the
Transaction Agreements without the prior written consent of the other Party
(a) in connection with a sale of all or substantially all of its business or
assets, whether by merger, sale of stock, sale of assets or otherwise or (b) to
an Affiliate of such Party. Notwithstanding the foregoing, in the event of any
such permitted assignment or other transfer, all rights and obligations under
the Transaction Agreements must be assigned or otherwise transferred together in
their entirety to such assignee or successor.
     7.3 Compliance With Laws. Each Party shall comply with all applicable laws,
rules and regulations in connection with its performance of its obligations and
exercise of its rights under the Transaction Agreements. Each Party shall
furnish to the other Party any information reasonably requested or required by
the requesting Party during the License Agreement Term to enable the requesting
Party to comply with the requirements of any United States or foreign federal,
state, and/or government agency.

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     7.4 Further Assurances. At any time, or from time to time, following the
date of this License Agreement, each Party shall, at the request of the other
Party (a) deliver or cause to be delivered to the requesting Party any records,
data or other documents consistent with the provisions of this License
Agreement, (b) duly execute and deliver, or cause to be duly executed or
delivered, all such consents, assignments, documents or further instruments of
transfer or license as required by this License Agreement, and (c) take or cause
to be taken all such actions, in each case as the requesting Party may
reasonably deem necessary in order for the requesting Party to obtain the full
benefits of this License Agreement and the transactions contemplated hereby.
     7.5 Severability. In the event that any provision of the Transaction
Agreements is determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Transaction Agreements shall remain in full
force and effect without said provision. In such event, the Parties shall in
good faith attempt to negotiate a substitute clause for any provision declared
invalid or unenforceable, which substitute clause shall most nearly approximate
the intent of the Parties in agreeing to such invalid provision, without itself
being invalid.
     7.6 Waivers And Amendments; Preservation Of Remedies. This License
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms and conditions hereof may be waived, only by a written instrument
signed by the Parties or, in the case of a waiver, the Party waiving compliance.
No delay on the part of any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any Party of any right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder, preclude any other or other
exercise thereof hereunder. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which any Party may
otherwise have at law or in equity.
     7.7 Headings. The captions to the several Articles and Sections hereof are
not a part of the Transaction Agreements, but are included merely for
convenience of reference only and shall not affect its meaning or
interpretation.
     7.8 Counterparts. The Transaction Agreements may be executed by original or
facsimile signature in any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, and all of which counterparts
together shall constitute one instrument.
     7.9 Successors. This License Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns.
     7.10 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, by fax, sent by nationally recognized
overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the Parties at the addresses set forth below (or
at such other address for such party as shall be specified by like notice). All
such notices and other communications shall be deemed to have been given and
received (a) in the case of personal delivery, on the date of such delivery,
(b) in the case of delivery by facsimile transmission, on the date of such
delivery, (c) in the case of delivery by nationally recognized

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express courier, on the date of such delivery, and (d) in the case of mailing
within the United States, on the fifth (5th) business day following such
mailing.
If to Angiotech:
Angiotech Pharmaceuticals, Inc.
1618 Station Street
Vancouver, BC Canada V6A 1B6
Fax: 604-221-2330
Attn: Vice President Business Development
with a required copy to:
Angiotech Pharmaceuticals, Inc.

1618 Station Street
Vancouver, BC Canada V6A 1B6
Fax: 604-221-2330
Attn: General Counsel
If to Athersys:
Athersys, Inc.
3201 Carnegie Avenue
Cleveland, OH 44115-2634
Fax: (216) 361-9495
Attn: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Jones Day
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Fax: (216) 579-0212
Attn: Thomas A. Briggs, Esq.
     7.11 No Consequential Damages. EXCEPT IN CONNECTION WITH A PARTY’S
OBLIGATIONS UNDER ARTICLE XV OF THE STRATEGIC ALLIANCE AGREEMENT, IN NO EVENT
SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR
REVENUE.
     7.12 Independent Contractor. Neither Party shall be construed to be a
partner, joint venturer, franchisee, employee, principal, agent, representative
or participant of or with the other Party for any purpose whatsoever by virtue
of the Transaction Agreements. No Party has any

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right or authority to assume or to create any obligation or responsibility,
express or implied, on behalf of or in the name of the other Party in any manner
by virtue of the Transaction Agreements.
     7.13 Complete Agreement. This License Agreement, together with its
Schedules and Exhibits, and any Pre-Clinical Development Plans and Clinical
Development Plans approved by the Parties, the Strategic Alliance Agreement,
Sublicense Agreement, Note and Purchase Agreement, and the Mutual Confidential
Disclosure Agreement between the Parties dated July 20, 2005, along with any
other letters or agreements signed by both Parties and of even date herewith,
constitute the entire agreement, both written and oral, between the Parties with
respect to the subject matter hereof, and all prior agreements respecting the
subject matter hereof, either written or oral, expressed or implied, are merged
and canceled, and are null and void and of no effect.
[Signature page follows]

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     IN WITNESS WHEREOF, the Parties have caused this License Agreement to be
executed by their duly authorized officers, effective as of the Effective Date.

            ATHERSYS, INC.
   
 
                  By:           Name:   Gil Van Bokkelen        Title:  
President and Chief Executive Officer     
 
                  ANGIOTECH PHARMACEUTICALS, INC.
   
 
                  By:           Name:           Title: