exv10w1



 







Exhibit
10.1




LICENSE AGREEMENT




This license agreement is between CYTOTHERAPEUTICS, INC. (“CTI”), a Delaware corporation and
NEUROSPHERES LTD. (“NeuroSpheres”), an Alberta corporation, and NEUROSPHERES HOLDINGS LTD.,
(“NHL”), an Alberta corporation and is dated effective as of April l, 1997.



RECITALS:




	A.	 	CTI and Dr. Samuel Weiss (“Dr. Weiss”) and Dr. Brent A. Reynolds (“Dr. Reynolds”) entered
into an evaluation & option agreement dated July 6, 1992 relating to the evaluation of certain
cells and a consulting agreement. Drs. Weiss and Reynolds subsequently transferred all of
their rights under these agreements to NeuroSpheres. These agreements were terminated on
execution of the Contract Research and License Agreement.
	 
	B.	 	On March 14, 1994 NeuroSpheres and NHL entered into an assignment agreement under which
NeuroSpheres transferred intellectual property rights to NHL (the “Assignment Agreement’’) and
a simultaneous license agreement from NHL to NeuroSpheres providing the exclusive rights to
use such assigned intellectual property rights (the “NS/NHL License”).
	 
	C.	 	CTI and NeuroSpheres entered into a certain Contract Research and License Agreement and CTI
and NHL entered into a backup license agreement on substantially the same terms as the License
Agreement (the “BackUp License”) both dated March 15, 1994.
	 
	D.	 	CTI and NeuroSpheres and NHL have disagreed on the scope of the License Agreement and the
manner in which they would collaborate and on other matters but have agreed to replace any and
all former relationships, agreements except as contemplated hereunder and obligations with
this present license agreement which seeks to clarify terms of the former Contract Research
and License Agreement and permits NeuroSpheres to acquire a co-exclusive interest in the
Field.





NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:




	1.	 	DEFINITIONS





The following capitalized terms used in this Agreement shall have the meanings given below unless
the context clearly requires otherwise.




	1.01	 	“Affiliate” shall mean any corporation, company, partnership, joint venture and/or firm which
controls, is controlled by, or is under common control with a party. For purposes of this
definition, “control” shall mean (a) in the case of corporate entities, direct or indirect
ownership of more than 50% of the stock or shares entitled to vote
for the election of directors; and (b) in the case of
non-corporate entities, direct or indirect ownership of more




 









 






	 	 	than 50% of the equity interest with the power to direct the management and policies of such non-corporate entities.
	 
	1.02	 	“Agent” shall mean any virus, protein, peptide, amino acid, lipid, carbohydrate, nucleic
acid, nucleotide, neurotransmitter, drug, pro-drug or other substance delivered by a
transplanted cell or cells.
	 
	1.03	 	“Cells” shall mean in vitro generated, growth factor responsive neural stem cells to the
extent claimed in the Patent Rights and shall include all progeny and derivatives of such stem
cells (including Progenitor Cells and their progeny and Stem Cells and their progeny) and
“Cell” shall mean one of such cells. An in vitro generated growth factor responsive neural
stem cell shall include a neural stem cell, or its derivatives or progeny, which exhibits one
or more of the following characteristics:






	 	(a)	 	is dependent on the presence of a growth factor for survival and viability,
or
	 
	 	(b)	 	proliferates or differentiates due to the presence of a growth factor,
whether alone or in combination with another biologically active molecule; and






	 	 	An EGF-responsive neuronal stem cell includes:
	 
	 	 	a neuronal stem cell, or its derivatives or progeny, which exhibits one or more of the
following characteristics:






	 	(a)	 	is dependent on the presence of EGF for survival and viability, or
	 
	 	(b)	 	proliferates or differentiates due to the presence of EGF, whether alone or
in combination with another biologically active molecule






	 	 	all to the extent claimed or allowed under the Patent Rights.
	 
	1.04	 	“Cell Replacement Therapy” shall mean the Transplantation of Cells, whether modified or
differentiated in any way, for the replacement of endogenous cells lost to injury or disease.
	 
	1.05	 	“Cell Technology” shall mean all know-how, data, biological materials, inventions and other
proprietary information and technology relating to the manufacture, sale, use or manipulation
of Cells within the Field provided to CTI prior to the Effective Date.
	 
	1.06	 	“Confidential Information” shall mean any and all information of or about a Person including
all information relating to any technology, product, process, business information or other
intellectual property of such Person (including, but not limited to, owned or licensed
intellectual property rights, data, know-how, samples, technical and non-technical materials,
and specifications, as well as any business plan or other confidential commercial information
of or about such Person). Notwithstanding the foregoing, information shall not be considered
“Confidential Information” with respect to such Person to the extent that any other Person




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	 	 	possessing such information can demonstrate by written record or other suitable physical
evidence that:






	 	(a)	 	such specific information was lawfully in such other Person’s possession or
control prior to the time such information was disclosed to such other Person by the
Person to whom the information relates;
	 
	 	(b)	 	such specific information was developed by one or more employees of such
other Person without such employee having access to the Confidential Information;
	 
	 	(c)	 	such specific information was lawfully obtained by such other Person from a
third party under no obligation of confidentiality to the Person to whom such
information relates; or
	 
	 	(d)	 	such specific information was at the time it was disclosed or obtained by
such other Person, or thereafter became, publicly known otherwise than through a
breach by such other Person of such other Person’s obligations to the Person to whom
such information relates.






	1.07	 	“CTI Sublicensee” shall mean any Person, including an Affiliate of CTI, to whom CTI shall
have licensed any or all of its rights under this Agreement provided that during the period in
which NeuroSpheres mayor does acquire a co-exc1usive interest in the Field (as provided in
Section 2.02) CTI may only grant one such sublicense in any specific territory or jurisdiction
for any specific disease indication (for example, only one sublicensee in Canada for Products
and/or Services targeting Parkinson’s disease) and further provided that the restriction on en
granting a single such sublicense shall terminate if NeuroSpheres does not acquire the
co-exclusive right as provided in Article 2.
	 
	1.08	 	“Dollar(s)” (including the symbol “$”) shall mean United States dollar(s).
	 
	1.09	 	“Effective Date” shall mean April 1, 1997.
	 
	1.10	 	“E.g.” shall mean, for example, but not in limitation.
	 
	1.11	 	“Field” shall mean the use of Cells for Transplantation only, including, without limitation:






	 	(a)	 	for Cell Replacement Therapy;
	 
	 	(b)	 	for the purposes of Transplantation anywhere in the human body for the
treatment or prevention of human disease, injury, or disorder;
	 
	 	(c)	 	for augmenting the function of endogenous cells by Transplantation or Cell
Replacement Therapy; and
	 
	 	(d)	 	for the purposes of transplantation therapy in general (e.g., Transplantation of the





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	 	 	 	Cells for delivery of one or more Agents).






	 	 	Subject to the exclusions from the Field set forth in subparagraphs (a) through (e)
below, the definition of the Field applies whether Agents are produced by the Cells alone
or by Cells together with any other tissue or cells (whether or not such other tissue or
cells are employed to stimulate or modify the Cells for the purpose of using said modified
or stimulated Cells for Transplantation or Cell Replacement Therapy to repair or replace
tissue or cells, add cells, augment endogenous cell function, survival, or growth in the
CNS).
	 
	 	 	The Field does not include:






	 	(a)	 	any commercial use of the Cells for designing in vitro models of disease or
injury for the purpose understanding the mechanisms of the disorder or developing
therapies for the disorder; or
	 
	 	(b)	 	any use of the Cells for designing in vitro models for the purpose of
pharmaceutical drug discovery or development; or
	 
	 	(c)	 	intentional modification or manipulation of endogenous Stem cells and
Progenitor Cells in situ; or
	 
	 	(d)	 	the use of Cells for the isolation of receptors, agents, growth factors or
other molecules produced by the Cells; or
	 
	 	(e)	 	rights to NeuroSpheres patents for use outside the Field, except as may be
agreed to by NeuroSpheres.






	 	 	The foregoing exclusions from the Field define exclusions from the rights licensed to CTI
hereunder, and shall have no other meaning (e.g., they are not a contractual prohibition
against CTI from engaging in any activity it would be otherwise entitled to engage in)
except that nothing in this agreement expressly or by implication grants CTI any rights
under any Patent Rights, Cell Technology, technology, or other rights of NeuroSpheres to
engage in any of the foregoing conduct.
	 
	1.12	 	“GAAP” shall mean generally accepted accounting principles in the United States, consistently
applied.
	 
	1.13	 	“Gross Revenues” shall mean the gross revenues received by a party, any Affiliate of a party
and any Sublicensee of a party from the Sale of any Product to or the commercial use of any
Product by any Person other than that party, its Affiliate or Sublicensee, and from the
performance by a party, any Affiliate of a party or any Sublicensee of a party of any
commercial Service. Gross Revenues shall not include any revenues resulting from the use of
Product or performance of any Service by a party or its Affiliates or Sublicensee solely for
research and development (not done for third party compensation (which does not include
expense reimbursement)), regulatory clearance, non-commercial product testing or quality




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	 	 	control purposes.






	1.14	 	“Improvement” shall mean any enhancement of, improvement to, or technology related to, the
intellectual property licensed to CTI hereunder that is made after the Effective Date.
	 
	1.15	 	“Net Sales” means the aggregate Dollar equivalent of Gross Revenues less (a) credits or
allowances. if any, granted on account of price adjustments, recalls, rejection or return of
items previously sold, (b) excises, import and export taxes, sales taxes, duties or other
taxes imposed upon or paid with respect to any sale or use generating such Gross Revenues
(excluding income or franchise taxes of any kind) and (c) the cost of insurance packing and
shipping Product in connection with such sale or use.
	 
	1.16	 	“NeuroSpheres Sublicensee” shall mean any Person, including an Affiliate of NeuroSpheres, to
whom NeuroSpheres shall have licensed any or all of its rights in the Field provided that
NeuroSpheres may only grant one such sublicense in any specific territory or jurisdiction for
any specific disease indication (for example, only one sublicensee in Canada for Products
and/or Services targeting Parkinson’s disease).
	 
	1.17	 	“Outstanding Amount” shall mean four million seven hundred fifty thousand ($4,750,000.00)
dollars.
	 
	1.18	 	“Patent Rights” shall mean (i) any patents and patent applications throughout the world that
NHL owns or has rights to as of the Effective Date of this Agreement (which shall include
patent and patent applications as exemplified in Exhibit “A”), which without the license to
CTI hereunder, would be infringed by the making, using or selling of Products or performing of
Services in the Field, (ii) all foreign counterparts of such patents and patent applications,
and (iii) all substitutions, extensions (including patent term extensions), reissues,
renewals, divisions, continuations, and continuations-in-part in respect of the foregoing
provided that en shall not be licensed under such claims under such continuation-in-part where
such claim or claims are not entitled to a priority date on or before the Effective Date.
	 
	1.19	 	“Payment Period” shall mean the period which ends twelve (12) months after the Effective Date
of this Agreement unless extended pursuant to Section 3.11 of this Agreement.
	 
	1.20	 	“Person” shall mean any individual, corporation, governmental body or other legal entity.
	 
	1.21	 	“Product” shall mean any product utilizing the Cells and the manufacture, use, or sale of
which, but for the license granted to CTI hereunder, would infringe any claim of the Patent
Rights.
	 
	1.22	 	“Progenitor Cell” shall mean an undifferentiated Cell capable of limited proliferation and
the production of differentiated functional progeny.
	 
	1.23	 	“Sale” or “Sell” shall mean any sale, lease or other commercial disposition of the Product in
an arms-length transaction with an unaffiliated third party.






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	1.24	 	“Services” shall mean any use of the Cells or the Cell Technology to perform a service for a
third party for compensation, where such use would, but for the license granted to CTI
hereunder, infringe any claim of the Patent Rights.
	 
	1.25	 	“Stem Cell” shall mean an undifferentiated Cell capable of proliferation, self maintenance
and the production of a large number differentiated functional progeny.
	 
	1.26	 	“Transplantation” shall mean the implantation of Cells, into a patient, but specifically
excludes any such implantation for the specific purpose of modifying endogenous Stem Cells or
Progenitor Cells.
	 
	2.	 	LICENSE AGREEMENT
	 
	2.01	 	Exclusive License 
	 
	 	 	Subject to NeuroSpheres right to acquire a co-exclusive interest as provided in Section
2.02, NeuroSpheres grants to CTI an exclusive, royalty-bearing, worldwide license, with the
right to grant sublicenses to CTI Sublicensees, under the Cell Technology and Patent Rights
to make, have made, use, have used, sell, have sold, and manipulate Products in the Field
and to perform the Services in the Field.
	 
	 	 	Subject to CTI’s compliance with its royalty and other obligations hereunder, NeuroSpheres
grants to CTI and any CTI Sublicensee a worldwide immunity from suit under all
NeuroSpheres’ present and future inventions, patents, trade secrets, copyrights and other
rights any of which are part of the Cell Technology, to the extent that enforcement of such
rights would diminish CTI’s rights under this Agreement or impair the ability of CTI or a
CTI Sublicensee to make, have made, use, have used, Sell and have sold Products in the
Field or perform Services in the Field provided that nothing in this provision grants CTI
any rights under any Improvements made or acquired by NeuroSpheres after the Effective Date
or precludes NeuroSpheres from bringing action to prevent infringement of any such
Improvement.
	 
	 	 	Subject to NeuroSphere’s compliance with its royalty and other obligations hereunder, CTI
grants to NeuroSpheres and any NeuroSpheres Sublicensee a worldwide immunity from suit
under all CTI’s present and future inventions, patents, trade secrets, copyrights and other
rights any of which are part of the Cell Technology, to the extent that enforcement of such
rights would diminish NeuroSpheres’ rights under this Agreement or impair the ability of
NeuroSpheres or a NeuroSpheres Sublicensee to make, have made, use, have used, Sell and
have sold Products in the Field or perform Services in the Field provided that nothing in
this provision grants NeuroSpheres any rights under any Improvements made or acquired by
CTI after the Effective Date or precludes CTI from bringing action to prevent infringement
of any such Improvement. Nothing in the foregoing gives NeuroSpheres any express or implied
license under any CTI patents relating to the use of encapsulated cells.






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	2.02	 	NeuroSpheres’ Right to Acquire a Co-Exclusive Right
	 
	 	 	Provided that NeuroSpheres makes the payment to ell required under Section 3.08
NeuroSpheres shall acquire a non-exclusive, worldwide right, with the right to grant
sublicenses to NeuroSpheres Sublicensees, under the Cell Technology and Patent Rights to
make, have made, use, have used, sell, have sold, and manipulate Products in the Field and
to perform the Services in the Field.
	 
	 	 	NeuroSpheres reserves the right to conduct research and development activities in the Field
either directly and through academic collaborations with one or more researchers or
institutions only to the extent provided in Section 8.02.
	 
	2.03	 	Notice of Sublicenses
	 
	 	 	CTI shall notify NeuroSpheres in writing within 30 days of the grant by CTI to a CTI
Sublicensee of any of its rights hereunder.
	 
	 	 	NeuroSpheres shall notify CTI in writing within 30 days of the grant by NeuroSpheres to a
NeuroSpheres Sublicensee of any of its rights in the Field.
	 
	 	 	Neither CTI nor NeuroSpheres shall grant any sublicense to its rights in the Field to any
more than one sublicensee in any specific territory for any specific disease indication (in
that specific territory). For example, a party may grant a sublicense of rights in the
Field tied to a specific disease indication to ABC in one country and XYZ in another
country but not to both ABC and XYZ in a country.
	 
	2.04	 	Rights Limited to Those Expressed
	 
	 	 	The rights granted to CTI and NeuroSpheres hereunder shall be limited to the rights
expressly stated to be granted hereunder and no additional rights or licenses are implied.
Nothing in this Agreement grants to CTI any right or license to use any Cell Technology or
Patent Rights outside the Field.
	 
	3.	 	ROYALTIES
	 
	3.01	 	CTI Royalties
	 
	 	 	CTI shall pay to NeuroSpheres a two (2%) percent royalty on any and all Net Sales made,
directly or indirectly, by any of CTI, any CTI Affiliates and/or by the CTI Sublicensee,
regardless of where the Sales are made. Any sublicensee or Affiliate shall be obligated to
make royalty payments to NeuroSpheres to the extent CTI does not do so. This royalty rate
is applicable whether the license to CTI is exclusive or co-exclusive.
	 
	3.02	 	NeuroSpheres Payments






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	 	 	If NeuroSpheres acquires a co-exclusive interest in the Field under Section 2.02,
NeuroSpheres shall pay to CTI a two (2%) percent payment on any and all Net Sales made,
directly or indirectly, by any of NeuroSpheres, any NeuroSpheres Affiliates and/or by the
NeuroSpheres Sublicensee, regardless of where the Sales are made. Such payments shall be
referred to as “royalties” for the purposes of this Section 3. Any sublicensee or Affiliate
shall be obligated to make royalty payments to CTI to the extent NeuroSpheres does not do
so.
	 
	3.03	 	Reports and Payments
	 
	 	 	For the purposes of this Section 3, a party entitled to receive a royalty payment is
referred to as the “receiving party” and a party obligated to make a royalty or like
payment is referred to as the “paying party”.
	 
	 	 	Beginning with the calendar quarter (April 1 through June 30) commencing on the Effective
Date, each party shall deliver to the other party within sixty (60) days after the end of
each such calendar quarter, a written report showing all royalties due under this
Agreement. Each report shall include the rates of exchange used to convert such royalties
or payment to U.S. Dollars from the currency in which Net Sales were made. Each report
shall also identify the amount of royalties attributable to Sales or the performance of
Services. For the purposes hereof, the rates of exchange to be used for converting
royalties hereunder to U.S. Dollars shall be those in effect for the purchase of dollars at
New York, New York on the day five (5) business days prior to the date on which payment in
U.S. Dollars of all royalties shown to be due thereon, except as provided in Section 3.04.
Royalties on Net Sales earned by CTI, its Affiliates or CTI Sublicensees in Canadian
Dollars in Canada may be paid to NeuroSpheres in Canadian dollars without requirement of
first converting to U.S. Dollars.
	 
	3.04	 	Foreign Royalties and Withholding Taxes
	 
	 	 	Where royalties are due to a party hereunder for Net Sales in a country where, by reason of
currency regulations or taxes of any kind, it is illegal for the paying party to transfer
royalty payments out of such country for Net Sales in that country, such royalties shall be
deposited in a currency that is permitted for the Person not able to make the transfer for
the benefit or credit of the party entitled to receive such payments.
	 
	3.05	 	Withholding Taxes
	 
	 	 	If a party is required to withhold tax on royalties payable to the other party hereunder,
such taxes shall be deducted, provided that the receiving party shall be furnished at the
time of deduction with suitable documentation for obtaining credits to which the receiving
party may be entitled as a result of such withholding on the income taxes of the receiving
party.
	 
	3.06	 	Records
	 
	 	 	Each party shall keep, and shall require all Affiliates and its Sublicensee(s) to keep,
full true and accurate books of accounts and other records containing all information and
data which





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	 	 	may be necessary to ascertain and verify and royalties payable hereunder. During the term
of this Agreement and for a period of two (2) years following its termination, the
receiving party shall have the right from time to time (not to exceed twice during each
calendar year), to have an accountant or other nonaffiliated (with the receiving party)
representative inspect, at the receiving party’s expense, on a confidential basis, the
books, records and supporting data of the paying party. If such inspection shall reveal
that the paying party has not accurately reported and paid royalties due to the receiving
party, then the paying party shall pay to the receiving party any shortfall in royalties
payable plus interest thereon at the prime rate of the Royal Bank of Canada in effect in
the last day of the calendar year for which such royalties were due, plus 1.5%, or if the
paying party has overpaid royalties, the receiving party shall promptly refund the excess.
Unless challenged within three (3) years after a statement is rendered, royalties
calculated fur the calendar quarter covered by such statement shall be conclusively
presumed to be correct. Upon request by the receiving party no more than once each calendar
year, the paying party shall cause to be performed an audit of the books, records and
supporting data of each Affiliate or its Sublicensee(s), unless the paying party shall have
had an audit of such Affiliate or its Sublicensee(s) performed within the preceding 3 month
period, in which case the paying party shall share the relevant results of such audit with
the receiving party without charge to the receiving party. The reasonable costs of such
requested audit shall be borne by the receiving party unless such audit reveals that the
paying party, its Affiliate or its Sublicensee(s) has under reported Net Sales by more than
5%.






	3.07	 	No Multiple Royalties
	 
	 	 	No multiple royalties shall be payable because any Product, its manufacture, use or sale or
any Service are or shall be covered by more than one patent or invention or otherwise
licensed to CTI hereunder. No multiple royalties shall be payable because any product, its
manufacture, use or sale or any service are or shall be covered by more than one patent or
invention or otherwise licensed to NeuroSpheres hereunder.
	 
	3.08	 	Payment by NeuroSpheres
	 
	 	 	NeuroSpheres shall pay to CTI the sum of five million Dollars ($5,000.000.00) to be paid in
accordance with the following schedule:






	 	(a)	 	on the date this Agreement is signed	 	 	 $250,000.00
	 
	 	(b)	 	on a date which is one or before the end of the Payment Period	 	$	4,750,000.00






	3.09	 	Operation During the Payment Period
	 
	 	 	During the Payment Period, any extension thereof and until NeuroSpheres has paid the
Outstanding Amount (i) no interest shall be payable by NeuroSpheres to CTI on the
Outstanding Amount; (ii) CTI may not sell, license transfer or otherwise convey any rights
under this Agreement, except for its right to grant non-exclusive sublicenses to a CTI
Sublicensee; and (iii) NeuroSpheres may not sell, license transfer or otherwise convey any
rights under this Agreement to Sell Products or perform Services, except that NeuroSpheres




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	 	 	may carry out research and development in the Field itself and through academic
collaborators as provided in Section 8.02.






	3.10	 	After the Payment Period
	 
	 	 	If NeuroSpheres has not paid the Outstanding Amount during the Payment Period then, unless
NeuroSpheres has extended the Payment Period as provided in Section 3.11 then: (i)
NeuroSpheres will have no rights to exploit the Cell Technology and Patent Rights in the
Field, as provided in Section 2.02; (ii) CTI’s rights to exploit the Cell Technology and
Patent Rights in the Field, as provided in Section 2.01, shall remain exclusive; and (iii)
NeuroSpheres shall have no further payment obligation to CTI hereunder.
	 
	3.11	 	Extending the Payment Period
	 
	 	 	At any time during the first twelve (12) months after the Effective Date NeuroSpheres may,
at its option, extend the Payment Period so that the Payment Period becomes eighteen (18)
months after the Effective Date upon giving notice in writing to CTI and the payment to CTI
of one hundred thousand ($100,000.00) dollars. This sum shall not be credited towards
NeuroSpheres obligation to pay the Outstanding Payment. During such extension period
NeuroSpheres shall be obligated to pay the following amounts during the indicated periods
in order to obtain the co-exclusive rights under Section 2.02:





	 	 	 	 	 
	Months After the Effective	 	Additional Amount Payable	 	 
	Date in which payment is made	 	Above the Outstanding Amount	Total Payment in the month
	13
	 	$300,000.00
	 	$5,050,000
	14
	 	$300,000.00
	 	$5,050,000
	15
	 	$300,000.00
	 	$5,050,000
	16
	 	$500,000.00
	 	$5,250,000
	17
	 	$700,000.00
	 	$5,450,000
	18
	 	$900,000.00
	 	$5,650,000







	4.	 	IMPROVEMENTS
	 
	4.01	 	Improvements
	 
	 	 	If after the date this Agreement is signed CTI makes or acquires any Improvement to the
Patent Rights or Cell Technology CTI shall own such Improvement for its own account and
NeuroSpheres shall have no rights therein. NeuroSpheres shall own any Improvement it makes
or acquires to the Patent Rights or Cell Technology for its own account and CTI shall have
no rights therein. The rights granted hereunder shall be limited to the rights expressly
stated to be granted hereunder and no additional rights or licenses are implied. Nothing in
this




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	 	 	Agreement grants to CTI any right or license to use any Cell Technology or Patent Rights
outside of the Field.






	5.	 	CONFIDENTIAL INFORMATION
	 
	5.01	 	Additional Disclosure of Confidential Information
	 
	 	 	The parties do not require or contemplate the disclosure of any Confidential Information of
a party to the other party after the Effective Date. The following provisions apply to such
confidential information either party has passed to the other party prior to the Effective
Date and any Confidential Information that one party may agree in writing, to receive from
the other party after the Effective Date. Information on patents, as provided in Section
6.02, shall be considered Confidential Information.
	 
	5.02	 	Treatment of Confidential Information
	 
	 	 	Each party hereto shall maintain the Confidential Information of the other party in
confidence, and shall not disclose, divulge or otherwise communicate such Confidential
Information to any third party, or use it for any purpose, except pursuant to, and in order
to carry out, the terms and objectives of this Agreement, and hereby agrees to exercise
every reasonable precaution to prevent and restrain the unauthorized disclosure of such
Confidential Information by any of its directors, officers, employees, consultants,
subcontractors, sublicensees or agents.
	 
	5.03	 	Release from Restrictions 
	 
	 	 	The provisions of Section 5.02 shall not apply to any Confidential Information disclosed
hereunder which is: required to be disclosed by the receiving party to comply with
applicable laws, or to comply with governmental regulations (including without limitation
to drug testing, marketing regulations and rules of NASD), in each case only to the extent
required to carry out the work contemplated by this Agreement provided that the receiving
party provides prior written notice of such disclosure to the other party and takes
reasonable and lawful actions to avoid and/or minimize the degree of such disclosure; or by
a party its Affiliates and its Sublicensee reasonably necessary for the marketing of a
Product or Service.
	 
	5.04	 	Confidential Agreements 
	 
	 	 	Each party has employment agreements with their respective employees and representatives
having confidentiality and nonuse commitments consistent with their obligations hereunder
and will require all of their sublicensees, consultants, agents or others who have access
to any of such information to execute confidentiality agreements covering all Confidential
Information subject to Article 5 and will exercise its reasonable best efforts to obtain
compliance therewith.
	 
	6.	 	FILING OF PATENTS: PROSECUTION OF INFRINGERS






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	6.01	 	Filing, Prosecution, and Maintenance of Patents 






	 	(a)	 	NeuroSpheres shall be responsible, in consultation with CTI, for filing,
prosecution and maintenance of all patents or patent applications which are part of
the Patent Rights. During the period in which NeuroSpheres may acquire or if
NeuroSpheres does acquire co-exc1usive rights in the Field under Section 2.02, CTI
shall reimburse NeuroSpheres for fifty (50%) percent of the reasonable out-of-pocket
costs and expenses paid to outside counsel and/or outside patent agents in respect of
preparation, filing, prosecution and maintenance of all such patents and patent
applications reasonably related to the patent provisions affecting the Field including
any such costs or expenses due as at the date this Agreement is signed (provided such
costs shall not exceed $12,500.00).
	 
	 	(b)	 	If NeuroSpheres does not acquire co-exclusive rights in the Field under
Section 2.02, CTI shall reimburse NeuroSpheres for (i) in the case of patents or
patent applications specific to the Field one hundred (100%) percent, and (ii) in the
case of patents or patent applications having applications in the Field and outside
the Field fifty (50%) percent: of the reasonable out-of-pocket costs and expenses paid
to outside counsel and/or outside patent agents in respect of preparation, filing,
prosecution and maintenance of all such patents and patent applications. In such
circumstance and to the extent any prosecution issue relates solely to application in
the Field without adverse impact on any rights outside the Field NeuroSpheres shall
implement such reasonable responses to office actions and other prosecution activities
as requested by CTI. In the event of prosecution issues in case (i) above and which do
not adversely affect any rights outside the Field CTI shall be entitled to engage its
own patent counsel and in all respects control the prosecution of the application(s).






	6.02	 	Documents to be Provided
	 
	 	 	NeuroSpheres shall promptly provide CTI with copies of all material papers, specifications,
amendments, replies, official actions, and other documents relating to the filing,
prosecution, and maintenance of patent applications and patents which form part of the
Patent Rights.
	 
	6.03	 	Infringement of Patents by Third Parties






	 	(a)	 	Notice of Infringement.






	 	 	Each party shall notify the other of any infringement of Patents Rights by third parties of
which it becomes aware.






	 	(b)	 	Prosecution of Infringers.






	 	 	NeuroSpheres may, at its option pursue action against infringers of the Patent Rights to an
extent and degree as it deems appropriate. During the period in which NeuroSpheres may




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	 	 	acquire or if NeuroSpheres does acquire co-exclusive rights in the
Field under Section 2.02, if CTI wishes NeuroSpheres to bring any additional action against
any infringer then the parties shall use reasonable commercial efforts to agree on CTI’s
financial contribution to the costs of the prosecution of that infringer and in such a case
each party will share the benefits and burdens of that action in proportion to their agreed
degree financial contribution, if any.






	 	 	If NeuroSpheres does not acquire co-exclusive rights in the Field under Section 2.02, and
CTI has subsisting exclusive rights in the Field then CTI shall be entitled to prosecute
all infringements of patents exclusively licensed hereunder. NeuroSpheres will co-operate
in the prosecution of such infringers and allow CTI to use its name in any such suit, sue
in NeuroSpheres’ name or join NeuroSpheres if legally required provided that CTI will
indemnify and hold harmless NeuroSpheres from any costs, damage or expenses incurred by
NeuroSpheres in respect of any such acts or co-operation.
	 
	6.04	 	No Challenge to Rights
	 
	 	 	In consideration of the very valuable confidential information which has been disclosed to
CTI by NeuroSpheres, CTI, its Affiliates and any CTI Sublicensee shall not, directly or
indirectly, challenge or impugn nor assist any Person to challenger or impugn the validity
or enforceability of any Patent Rights or the Cell Technology. This provision shall not
apply in any jurisdiction in which it would be unlawful or render the Patent Rights or any
of the Cell Technology unenforceable.
	 
	7.	 	REPRESENTATIONS AND WARRANTIES
	 
	7.01	 	Corporate Representations
	 
	 	 	Each party represents and warrants to the other that:






	 	(a)	 	it has all requisite right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby, and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement; and
	 
	 	(b)	 	the entering into of this Agreement and the performance of its obligations
hereunder does not contravene any agreements to which such party is a party or its
charter documents;
	 
	 	(c)	 	when executed and delivered by it, this Agreement will constitute the legal,
valid and binding obligation of it;
	 
	 	(d)	 	it will provide and cause to be executed at the same time as this Agreement
is signed the releases discontinuances and other such documents as are attached as
Exhibit “B” to this Agreement; and
	 
	 	(e)	 	during the term of the License Agreement neither party has granted any right
to




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	 	 	 	another Person inconsistent with the rights to be exercised by the parties under
Sections 2.01 and 2.02 respectively.






	7.02	 	Intellectual Property Representations 
	 
	 	 	NeuroSpheres represents and warrants as follows:






	 	(a)	 	to NeuroSpheres’ current knowledge, the patent applications listed in Exhibit
“A” are subsisting and no challenge has been taken to them; and
	 
	 	(b)	 	NeuroSpheres has full right power and authority to grant the license in. the
intellectual property herein granted to the extent of NeuroSpheres patent position.






	8.	 	ASSIGNMENT
	 
	8.01	 	Limited Right to Assign
	 
	 	 	Either party shall have the right, in connection with its merger or consolidation or with
the sale of substantially all of its assets utilized in the business to which this
Agreement relates, to assign all of the rights and licenses herein granted, but only to a
party who expressly assumes and agrees to perform all of the obligations of the assigning
party. Such assigning party shall remain liable to the other party for the due performance
of all of its obligations under this Agreement. Except as set forth in the preceding
sentence, neither party may assign this Agreement or any rights hereunder without the
consent of the other. In the event of the assignment hereof, the assigning party shall
notify the other party at least thirty (30) days prior to such transfer.
	 
	8.02	 	Performance by Subcontractors 
	 
	 	 	CTI may perform its obligations hereunder through its Affiliates, consultants or
subcontractors, but shall be responsible to NeuroSpheres for the performance of any such
party. NeuroSpheres may perform its obligations hereunder through it’) Affiliates,
consultants or subcontractors, but shall be responsible to CTI for the performance of any
such party.
	 
	 	 	During the period in which NeuroSpheres may acquire or if NeuroSpheres does acquire
co-exclusive rights under Section 2.02, NeuroSpheres may conduct research and development
in the Field with one or more academic collaborators but not for the benefit of third
parties (including for one disease indication in a specific territory) and CTI shall not
interfere in such relationships or activities provided that until NeuroSpheres has acquired
co-exclusive rights under Section 2.02 NeuroSpheres may not grant any such collaborator any
right to Sell Products or perform commercial Services in the Field.
	 
	9.	 	TERM AND TERMINATION
	 
	9.01	 	Term of License






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	 	 	This Agreement shall continue. unless earlier terminated in accordance with this
Section, until the expiration of all Patent Rights which are or may be licensed to CTI and
the becoming public of all material Cell Technology (without such publication arising from
a breach of the provisions of Article 5).
	 
	9.02	 	Term of Royalties 
	 
	 	 	The obligation of CTI to pay royalties on Net Sales in any country shall expire on the last
to expire of any patents under the Patent Rights which cover any part of a Product or
Service in such country. Royalties shall begin to accrue if and when a patent under the
Patent Rights which covers any part of a Product or Service shall issue in such country.
	 
	9.03	 	Defaults
	 
	 	 	If either party shall fail to perform any of its material obligations hereunder, the other
party may notify the defaulting party in writing of such default, stating in such written
notice the obligation which the defaulting party shall have failed to perform, and, if the
defaulting party shall not have cured such default within sixty (60) days after the giving
of such notice then the other party may at its option and in addition to its other remedies
under law, terminate this Agreement by giving the defaulting party written notice of such
termination.
	 
	9.04	 	Bankruptcy
	 
	 	 	Either party may terminate this Agreement if, at any time, the other party shall file in
any court or agency pursuant to any statute or regulation of any state or country, a
petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of the party or of its assets, or if the other party
proposes a written agreement of composition or extension of its debts, or if the other
party shall be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed or stayed within sixty (60) days after
the filing thereof, or if the other party shall propose or be a party to any dissolution or
liquidation, or if the other party shall make an assignment for the benefit of creditors.
	 
	 	 	Until such time as the restrictions on NHL may be removed under the BackUp License,
NeuroSpheres shall:






	 	(a)	 	abide by the terms of, and fulfill all of its obligations under, each of the
NS/NHL License and Assignment Agreement, and take all action necessary to maintain
each such agreement in full force and effect; and
	 
	 	(b)	 	NeuroSpheres shall pay in full when due any and all expenses, payables and
other liabilities of NHL, whether such expenses, payables, or liabilities arise in the
ordinary course of business or otherwise.
	 
	 	(c)	 	NeuroSpheres will not create or incur or suffer to be created or incurred or
to exist




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	 	 	 	any encumbrance, pledge, lien, charge (floating or fixed) or other security interest of
any kind (each a “lien’’) upon the license rights granted to
NeuroSpheres pursuant to the NS/NHL License, the Cell Technology and the Patent Rights,
provided, NeuroSpheres shall be permitted to grant a lien on its intellectual property,
including the Cell Technology and Patent Rights, to a third party (the “Other Lien
Holder”) if (i) NHL is amalgamated with and into NeuroSpheres (in an amalgamation the
surviving corporation of which is NeuroSpheres) or substantially all of the assets of
NHL (including all of NHL’s intellectual property rights) are acquired by NeuroSpheres,
(ii) NeuroSpheres grants a first priority security interest (the “Security Interest”)
in the Cell Technology and Patent Rights and essentially all other intellectual
property of NeuroSpheres licensed to a third party (including all patent and patent
applications claiming any such intellectual property) (collectively, the “Collateral’’)
to a person or entity (the “Collateral Agent”) for the benefit of all licensees of
NeuroSpheres’ intellectual property including, without limitation, CTI (the
“Licensees”) to secure each Licensee’s license rights in the Collateral, and (iii) the
Other Lien Holder agrees to subordinate its security interest in such intellectual
property (including an agreement not to foreclose on such intellectual property) to the
Security Interest upon terms reasonably satisfactory to the Licensees. The Collateral
Agent shall be selected by the Licensees (with the approval of NeuroSpheres, which
approval shall not be unreasonably withheld) and the Security Interest shall be granted
pursuant to a Security Agreement among NeuroSpheres, the Collateral Agent, and the
Licensees in a form thereof to be negotiated among CTI, NeuroSpheres and the other
Licensees, and shall provide, among other things, upon the occurrence of an Event of
Default (as defined below) that the Collateral Agent shall, subject to the rights of
the Licensees to continue to exercise their license rights in the Collateral, have all
the rights of a holder of a first fixed charge and secured party under the Personal
Property Security Act, and any other law or statute governing the rights of holder’s of
first fixed charges or security interests. The Security Agreement shall also provide
for the filing of all financing statements, assignments and other instruments and
documents the Collateral Agent deems reasonably necessary to perfect the Security
Interest. For purposes of the Security Agreement, each of the following shall
constitute an Event of Default; (a) the termination or limitation of the license
granted to en pursuant to Section 2 of this Agreement (other than a termination of such
license by NeuroSpheres, in accordance with the terms hereof, as a result of a breach
of this Agreement by CTI); (b) if NeuroSpheres passes a resolution or institutes
proceedings for its winding-up, liquidation, or dissolution or consents to the filing
of any petition with respect thereto or files a petition or answer or consent seeking
readjustment, arrangements, composition or similar relief under any Canadian or other
applicable law or consents to the filing of any such petition or to the appointment of
a receiver, liquidator, trustee or similar officer of itself or any part of its
property or makes an assignment for the benefit of creditors or if NeuroSpheres takes
any action pursuant to the Winding-Up Act (Canada) or the Bankruptcy and Insolvency Act
(Canada); (c) any application is made with respect to NeuroSpheres under the Companies
Creditors Arrangement Act (Canada), Bankruptcy and Insolvency Act (Canada) or similar
legislation seeking readjustment, arrangement,





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	 	 	 	composition or similar relief for NeuroSpheres under any Canadian or other applicable
law, or if a proceeding is instituted for the winding up, liquidation or dissolution of
NeuroSpheres or seeking an order adjudging NeuroSpheres insolvent or the appointment of
any
receiver, liquidator, trustee or similar officer of NeuroSpheres or over all or any
part of its property or a petition in bankruptcy is presented against NeuroSpheres
under a bankruptcy or similar statute and if in any such case such application,
proceeding or petition is not dismissed, stayed or withdrawn within 45 days after the
making of such application, institution of such proceeding or filing of such petition
(provided that if in any such proceeding, NeuroSpheres is adjudged bankrupt or
insolvent by a court of competent jurisdiction or any receiver, liquidator or trustee
is appointed for NeuroSpheres or any substantial portion of NeuroSpheres’ assets, an
Event of Default shall be deemed to have occurred); (d) the breach by NeuroSpheres of
any of its obligations under the this Agreement, which breach is not cured within the
time allotted under the terms hereof to cure such breach; and (e) such other Events of
Default to which NeuroSpheres and the Licensees reasonably agree. Upon receipt of a
notice (the “Notice”) from NeuroSpheres that it intends to exercise its rights under
this Section 9.04 (c), which notice shall set forth the identity and address of each
Licensee and the proposed Other Lien Holder, (x) the Licensees shall select a
Collateral Agent and negotiate the terms of the Collateral Agent’s appointment and the
voting mechanism governing the Collateral Agent’s actions (the “Collateral Agent
Agreement”), (y) the Licensees, NeuroSpheres and the Collateral Agent shall negotiate
the terms of a Security Agreement consistent with the terms set forth in this Section
9.04(c), and (z) upon agreement on the terms of the Security Agreement the Licensees
and the Other Lien Holder shall negotiate the terms of an agreement (the “Subordination
Agreement”) pursuant to which the Other Lien Holder agrees to subordinate its security
interest in the Collateral to the Security Interest consistent with the terms set forth
above. If after 30 days from the receipt of the Notice by the last of the Licensees to
receive the Notice, the Licensees are unable to agree on a Collateral Agent or the
terms of the Collateral Agent Agreement, any Licensee may submit the matter to binding
arbitration in accordance with the procedures set forth below, which arbitration shall
be binding upon all of the Licensees. If after 60 days from receipt of the Notice by
the last of the Licensees to receive the Notice, the Licensees, the Collateral Agent
and NeuroSpheres are unable to agree on the terms of a Security Agreement, any Licensee
or NeuroSpheres may submit the matter to binding arbitration in accordance with the
procedures set forth below. If after 90 days from receipt of the Notice by the last of
the Licensees to receive the Notice, the Licensees and the Other Lien Holder are unable
to agree upon the terms of a Subordination Agreement, any Licensee or the Other Lien
Holder (if the Other Lien Holder chooses) may submit the matter to binding arbitration
in accordance with the procedures set forth below. Each such arbitration shall be
conducted in accordance with the rules of, and under the auspices of the International
Chamber of Commerce and the location of the arbitration shall be Toronto, Canada. The
person requesting such arbitration shall send notice to all parties of its intention. A
single arbitrator shall preside and shall be appointed by the International Chamber of
Commerce and shall not be an employee, consultant,










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	 	 	 	officer, director, shareholder of or otherwise associated with any party or an
Affiliate of any party. Each party shall consent to the consolidation of a single
arbitration to decide all issues in dispute.
	 
	 	 	 	Within 15 days after the designation of the arbitrator, the arbitrator and the
parties shall meet at which time each party shall be required to set forth in
writing the issues which need to be resolved and a proposed ruling on each such
issue. The arbitrator shall set a date for a hearing, which shall be no later than
15 days after the submission of written proposals, to discuss each of the issues
identified by the parties. Each party shall have the right to be represented by
counsel. The arbitrator shall have sole discretion with regard to the
admissibility of any evidence. The arbitrator shall use his or her best efforts to
rule on each disputed issue within 10 days after the completion of such hearings.
The arbitrator’s ruling shall be, in the absence of fraud or manifest error,
binding and conclusive upon the parties and may be enforced in a court of
competent jurisdiction. The arbitrator may not award punitive, consequential or
exemplary damages.
	 
	 	 	 	Each party shall bear their own expenses, including legal expenses, in connection
with the legislation, drafting and execution of any transaction or agreement
contemplated above or in connection with any arbitration. The filing fees
associated with the perfection of the Security Interest shall be split evenly
among each Licensee and NeuroSpheres.
	 
	 	 	 	The parties acknowledge that it will be impossible to measure the damages that
would be suffered by CTI if NeuroSpheres fails to comply with the covenants in
this Section 9.04 and that in the event of such failure, CTI will not have an
adequate remedy at law. CTI shall, therefore, be entitled in addition to any other
rights and remedies to obtain specific performance of NeuroSpheres’ obligations
hereunder and to obtain injunctive relief without having to post a bond.
NeuroSpheres shall not urge, as a defense to any proceeding for such specific
performance or injunctive relief, that CTI has an adequate remedy at law.






	9.05	 	Effect of Termination: Survival
	 
	 	 	Upon termination of this Agreement for any reason (provided such termination does not
permit CTI to exercise the rights granted to CTI by NHL pursuant to the Back Up License),
nothing herein shall be construed to release either party from any obligation that matured
prior to the effective date of such termination. CTI and any CTI Sublicensee may, however,
after the effective date of such termination, sell Products in the process of manufacture
at the time of such termination, provided that CTI shall pay to NeuroSpheres the royalties
thereon as required of this Agreement and shall submit the reports required by Section 3
hereof on the Sales of such Products. The provisions of Sections 5, 10 and 11 of this
Agreement shall survive termination or expiration of this Agreement for any reason. Upon
the termination of this Agreement (other than a termination which does not permit CTI to
exercise the rights granted to CTI by NHL pursuant to the BackUp License) CTI shall return
to NeuroSpheres




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	 	 	all physical embodiments of any Confidential Information of NeuroSpheres and NeuroSpheres
shall return to CTI all physical embodiments of any Confidential Information of CTI. If a
termination does permit CTI to exercise the rights granted to CTI by NHL pursuant to the
BackUp License then the provisions of the second sentence of this Section shall not apply.
	 
	10.	 	RESOLUTION OF DISPUTES
	 
	10.01	 	General
	 
	 	 	In the event that any dispute should arise between the parties with respect to any matter
relating to this Agreement, the Parties shall resolve such dispute in accordance with the
procedures set forth in this Section 10.
	 
	10.02	 	Dispute Resolution Process 






	 	(a)	 	Mediation 






	 	 	In the event of any dispute between the parties with respect to any matter relating to
this Agreement, the Parties shall 1irst use their best efforts to resolve such dispute
among themselves. Prior to seeking any third party to resolve a dispute, the Chief
Executive Officers of ell and NeuroSpheres shall meet in private meeting for at least
one-half (1/2) of a day to attempt to resolve the dispute. If the parties are unable to
resolve the dispute within 30 days after the Chief Executive Officers have met, the
parties will then seek the assistance of one or more unaffiliated third parties to assist
in mediating the dispute.






	 	(b)	 	Selection of Arbitrators 






	 	 	In the event that the parties are unable to resolve a dispute within 30 days after the
commencement of mediation efforts, either party may submit the matter to binding
arbitration in accordance with the procedures set forth in this Section 10.2. If a party
intends to commence arbitration to resolve a dispute, such party shall provide written
notice to the other party of such intention, and shall designate one arbitrator. Within 10
days of receipt of such notice, the other party shall designate in writing a second
arbitrator. The two arbitrators so designated shall, within 10 days thereafter, designate
a third arbitrator. The arbitrators so designated shall not be employees, consultants,
officers, directors or shareholders of or otherwise associated with either party or an
Affiliate of either party. The arbitration shall be conducted in accordance with the rules
of, and under the auspices of, the International Chamber of Commerce and the location of
the arbitration shall be Toronto, Canada.






	 	(c)	 	Written Proposals 






	 	 	Within 15 days after the designation of the third arbitrator, the arbitrators and the
parties shall meet at which time each party shall be required to set forth in writing the
issues which need to be resolved and a proposed ruling on each such issue.






-19-









 







	 	(a)	 	Hearing






	 	 	The arbitrators shall set a date for a hearing, which shall be no later than 30 days after
the submission of written proposals, to discuss each of the issues identified to the
parties. Each party shall have the right to be represented by counsel. The arbitrators
shall have sole discretion with regard to the admissibility of any evidence.






	 	(b)	 	Ruling






	 	 	The arbitrators shall use their best efforts to rule on each disputed issues within 30 days
after the completion of the hearings described in subsection (d) above. The arbitrators’
ruling shall be, in the absence of fraud or manifest error, binding and conclusive upon
both parties and may be enforced in a court of competent jurisdiction. The arbitrators may
not award punitive or exemplary damages.
	 
	11.	 	MISCELLANEOUS
	 
	11.01	 	Publicity
	 
	 	 	Neither party may originate any publicity, news release or other public announcement,
written or oral, relating to this Agreement or the existence of an arrangement between the
parties, without the prior written approval of the other party except as otherwise required
by law or the rules of stock exchanges and similar organizations.
	 
	 	 	Neither party will communicate, comment or originate any publicity, news release or other
public announcement, written or oral, relating to the dispute between the parties or the
allegations made by either party in respect of that dispute, without the prior written
approval of the other party except as otherwise required by law or the rules of stock
exchanges and similar organizations.
	 
	11.02	 	Governing Law
	 
	 	 	This Agreement shall be governed by and interpreted in accordance with the laws of the
Province of Alberta, Canada.
	 
	11.03	 	Force Majeure
	 
	 	 	In the event that either party is prevented from performing or is unable to perform any of
its obligations under this Agreement due to any act of God; fire; casualty; flood; war;
strike; lockout; failure of public utilities; injunction or any act, exercise, assertion or
requirement of governmental authority, including any governmental law, order or regulation
permanently or temporarily prohibiting or reducing the level of research, development or
production work hereunder or the manufacture, use or sale of Products; epidemic;
destruction or production facilities; riots; insurrection; inability to procure or use
materials, labor. equipment,




-20-









 






	 	 	transportation or energy sufficient to meet experimentation or manufacturing needs; or any
other cause beyond the reasonable control of the party invoking this Section if such party
shall have used its reasonable best efforts to avoid such occurrence, such party shall give
notice to the other party in writing promptly, and thereupon the affected party’ s
performance shall be excused, and the time for performance shall be extended for the period
of delay or inability to perform due to such occurrence. At the end of such period, the
party whose performance is excused shall give prompt notice to the other party.






	11.04	 	Waiver
	 
	 	 	The waiver by either party of a breach or a default of any provision of this Agreement by
the other party shall not be construed as a waiver of any succeeding breach of the same or
any other provision, nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power or privilege that it has or may have hereunder
operate as a waiver of any right, power or privilege by such party.
	 
	11.05	 	Notices 
	 
	 	 	Any notice or other communication in connection with this Agreement must be in writing and
delivered either personally by facsimile or by certified mail, return receipt requested,
and shall be effective when delivered to the addressee at the address listed below or such
other address as the addressee shall have specified in a notice actually received by the
addressor.
	 
	 	 	If to NeuroSpheres:
	 
	 	 	NeuroSpheres Ltd.

83 Heritage Medical Research Building

3330 Hospital Drive, N.W.

Calgary, Alberta

TIN 4Nl

Canada
	 
	 	 	Attention: President
	 
	 	 	With a contemporaneous copy to:
	 
	 	 	Bennett Jones Verchere

4500, 855 — 2nd Street S.W.

Calgary, Alberta

TIP 4K7

Canada
	 
	 	 	Attention: Martin P.J. Kratz





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	 	 	If to CTI:
	 
	 	 	CytoTherapeutics, Inc.

Two Richmond Square

Providence, RI

02906

USA
	 
	 	 	Attention: President
	 
	 	 	With a copy to:
	 
	 	 	CytoTherapeutics, Inc.

Two Richmond Square

Providence, RI

02906

USA
	 
	 	 	Attention: General Counsel
	 
	11.06	 	No Agency
	 
	 	 	Nothing herein shall be deemed to constitute either party as the agent or representative of
the other party, or both parties as joint ventures or partners for any purpose. Each party
shall be an independent contractor, not an employee or partner of the other. Neither party
shall be responsible for the acts or omissions of the other party, und neither party will
have authority to speak for, represent or obligate the other party in any way without prior
written authority from the other party.
	 
	11.07	 	11.07 Entire Agreement 
	 
	 	 	This Agreement and the Exhibits and Schedules hereto (which Exhibits and Schedules are
deemed to be a part of this Agreement for all purposes) contain the full understanding of
the parties with respect to the subject matter hereof and supersede all prior
understandings and writings relating thereto including, without limitation, all prior
agreements between the parties, or CTI and any of NHL, Dr. Weiss or Dr. Reynolds except for
the BackUp License which shall be superseded to the extent of any inconsistency with this
Agreement. No waiver, alteration or modification of any of the provisions hereof shall be
binding unless made in writing and signed by the parties by their respective officers
thereunto duly authorized.
	 
	11.08	 	BackUp License 
	 
	 	 	The BackUp License is hereby amended as follows (all references are to Section numbers in
the BackUp License):






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	 	(a)	 	Sections 2.1 and 2.2 are deleted.
	 
	 	(b)	 	The following is inserted as Section 2.1.
	 
	 	 	 	NHL grants to CTI a license, subject to Section 2.3, upon the same terms and
conditions set forth in the License Agreement, as such terms and conditions would
read if “NHL” were substituted for and in place of “NeuroSpheres”.
	 
	 	(c)	 	Section 2.2 is intentionally left blank.
	 
	 	(d)	 	Any reference to the “Research and License Agreement” shall mean a reference
to this Agreement.
	 
	 	(e)	 	Any reference to a defined term shall mean a reference to a defined term
under this Agreement.
	 
	 	(f)	 	Section 5.1 (b) is deleted.






	11.09	 	Headings
	 
	 	 	The headings contained in this Agreement are for convenience of reference only and shall
not be considered in construing this Agreement.
	 
	11.10	 	Severability
	 
	 	 	In the event that any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable because it is invalid or in conflict with any law or any
relevant jurisdiction, the validity of the remaining provisions shall not be affected., and
the rights and obligations of the parties shall, in the jurisdictions in which the
particular provisions are held to be unenforceable, he construed and enforced as if the
Agreement did not contain the particular provisions held to he unenforceable.
	 
	11.11	 	Use of Name
	 
	 	 	Neither party shall use the name of the other party in any advertising or promotions
without the consent of the other unless required by law or the rules of stock exchanges or
other bodies regulating securities.
	 
	11.12	 	No Consequential Damages 
	 
	 	 	No party shall be liable to the other hereunder for indirect consequential, special,
speculative, remote or similar such damages or other economic loss.
	 
	11.13	 	Successors and Assigns






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	 	 	This Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and permitted assigns.
	 
	11.14	 	Counterparts
	 
	 	 	This Agreement may be executed in any number of counterparts (which shall include facsimile
counterparts), each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
	 
	11.15	 	Recordation
	 
	 	 	CTI shall have the right, at its cost, at any time, to record, register, or otherwise notify
this Agreement in any applicable patent office or other appropriate facility, and
NeuroSpheres shall provide reasonable assistance to en in effecting such recording.
	 
	11.16	 	Joint Drafting
	 
	 	 	This Agreement was jointly drafted and prepared by all parties hereto and no presumption in
favor of or against any party hereto shall be deemed to exist with respect to the
interpretation of any provision to this Agreement.
	 
	11.17	 	Provision of Encapsulated Cells
	 
	 	 	CTI shall use reasonable best efforts to make available to NeuroSpheres the ability to
purchase encapsulated Cells for use by NeuroSpheres under a separate supply agreement to be
negotiated by the parties.
	 
	11.18	 	Termination of Prior Agreements
	 
	 	 	Upon payment of the Outstanding Amount, the Assignment Agreement and NS/NHL License
agreements may be unilaterally terminated by NeuroSpheres provided that (i) such termination
occurs in conjunction either with an assignment of all NHL’s intellectual property rights to
NeuroSpheres or the amalgamation of NHL with NeuroSpheres such that the successor
corporation holds all of the intellectual property of NHL; and (ii) NeuroSpheres gives
written notice of such termination to CTI and confirms the compliance with the condition (i)
above.
	 
	 	 	The License Agreement, the BackUp License and any other agreements, rights or obligations,
whether in writing or oral and whether enforceable in law or in equity or otherwise, between






	 	(a)	 	CTI, any of its Affiliates or their predecessor organizations and any of their
directors, officers, employees, consultants or advisors; and
	 
	 	(b)	 	any of NeuroSpheres, NHL, any of their Affiliates or their predecessor
organizations




-24-









 






	 	 	 	or any of their directors, officers, employees, consultants or advisors or Dr. Weiss or
Dr. Reynolds or any of them






	 	 	or arising from any relationship or conduct prior to the date this Agreement is signed and
any rights and obligations thereunder are hereby terminated and each of the parties hereby
releases the other from any claims, actions, demands or proceedings in connection therewith.
Each party will immediately terminate any actions, proceedings, demands, arbitration or
other process presently in place or pending and which involves the other party or any
Affiliate or any of their directors, officers, employees, consultants, or advisors.
	 
	11.19	 	Assignment of Limited Interest
	 
	 	 	Subject to approval of NHL’s shareholders, NHL agrees that in the event each and every one
of the following events has occurred: (i) NeuroSpheres is declared bankrupt, and (ii) if CTI
shall in writing demand that NHL to take some action against an infringer of the Patent
Rights in the United States NHL is permitted to do under this Agreement, and (iii) CTI shall
have agreed to unconditionally indemnify and hold harmless NHL from all costs, expense,
damage, actions or claims in respect of taking the said action against an infringer of the
Patent Rights, and (iv) the infringement action is not against any licensee or sublicensee
of NeuroSpheres or NHL under the Patent Rights, and (v) if CTI shall not have standing to
bring the action itself, and (vi) NHL shall confirm in writing that it refuses to do so
after having been given assurance on CTI’s ability to perform on the indemnity and without
having a reasonable excuse not to do so, then NHL shall and does in such circumstances
assign to CTI a limited right and undivided fractional interest under the Patent Rights and
for no other purposes. As consideration for such assignment CTI shall not exercise any such
rights for any purpose other than to permit CTI to take said action and CTI specifically
shall not use any rights other than those expressly provided to CTI · under this Agreement
(excluding this Section 11.19). CTI shall hold any such right in trust for the benefit of
NHL and shall reassign any such right and interest (and does so -hereby) in the event of a
termination of this Agreement or the license granted hereunder to CTI or upon settlement,
discontinuance or the conclusion of such action. To the extent that CTI acquires any rights
outside the scope of its license under this Agreement (other than this Section 11.19) by
virtue of such assignment then CTI shall reassign all such rights to NHL without condition
and on demand by NHL. NHL shall use reasonable efforts to seek to secure approval of its
present shareholders to the provisions of this Section within one (1) month of the Effective
Date and provide a copy of such approval, if given, to CTI. In the event that such approval
is not obtained this Agreement is voidable at the sole option of CTI, and by providing
written notice to NeuroSpheres within ten (l0) days after notification by NeuroSpheres of
approval or non-approval.
	 
	11.20	 	Amendment Subject to Approvals 
	 
	 	 	This Agreement-and its provisions are subject to:






	 	(a)	 	approval of the NeuroSpheres and NHL board of directors which, if given, shall
be




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	 	 	 	communicated to CTI by no later than March 28, 1997; and






	 	(b)	 	approval of three Persons who have agreements with NeuroSpheres which, if
given, shall be communicated to CTI by no later than March 31, 1997; and
	 
	 	(c)	 	approval of the CTJ board of directors which, if given., shall be communicated
to NeuroSpheres and NHL by no later than March 31, 1997.






	11.21	 	Immunity from Suit 
	 
	 	 	NeuroSpheres has disclosed to CTI that it has previously entered into agreements with
certain Persons (which shall include their Affiliates and employees) whereunder those
Persons are to conduct research in the Field, or may have done so, or may have had a right
to do so in the past. During the period that NeuroSpheres has the right to acquire
co-exclusive rights under Section 2.02, CTI agrees that it shall not sue or threaten to sue
these Persons identified in a certain confidential addendum referred to in this Section
11.21 in respect of such research provided such research does not include human clinical
trials or the Sale of Products or Services in the Field. The identity of these Persons shall
be described in a confidential addendum to this Agreement to be provided to CTI upon final
approval and ratification of this Agreement by CTI and its board of directors.





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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in there names by
their properly and duly authorized officers or representatives as of the date first above written.




	 	 	 	 	 
	 	NEUROSPHERES LTD.

 	 
	 	/s/
 	 
	 	Robert Church, Chief Executive Officer 	 	 	 	 
	 	/s/
 	 
	 	Scott Cormack, Chief Operating Officer 	 
	 	 	 	 
	 
	 	 	 
	 	CYTOTHERAPEUTICS, INC.

 	 
	 	By:  	/s/
 	 
	 	 	 	 
	 	Title:	CEO 	 
	 	 	 	 
	 
	 	 	 
	 	NEUROSPHERES HOLDINGS LTD.

 	 
	 	/s/
 	 
	 	Robert Church, Chief Executive Officer 	 
	 	 	 
	 	/s/
 	 
	 	Scott Cormack, Chief Operating Officer 	 
	 	 	 	 
	 




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