Document:

EX-10.3

 

EXHIBIT
10.3

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS OF THIS EXHIBIT, AND SUCH
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

EXTENDED COLLABORATION AND LICENSE AGREEMENT

     This Extended Collaboration and License Agreement (the “Agreement”) is made and
entered into as of January 1, 2006 (the “Effective Date”), by and between Athersys, Inc.,
a Delaware corporation having its principal offices at 3201 Carnegie Avenue, Cleveland, Ohio 44115
(“Athersys”), and Bristol-Myers Squibb Company, a Delaware corporation having offices at
Route 206 and Province Line Road, Princeton, New Jersey 08543 (“BMS”). Athersys and BMS may be
referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals

     A. Athersys has developed and owns technology and intellectual property rights relating to
methods for activating gene or protein expression in cells, referred to by Athersys as the Random
Activation of Gene Expression or RAGE technology, which includes the RAGE-VT technology useful for
creating cell lines that express particular desired proteins.

     B. BMS desires to engage Athersys to create certain such cell lines, using the RAGE-VT
technology, each of which expresses a specific cell surface or cellular protein of interest to BMS,
and to obtain license rights to use such cell lines for internal research, development and
commercialization of pharmaceutical products.

     C. Athersys is willing to create and provide BMS with the desired cell lines pursuant to the
terms of this Agreement.

     D. The Parties entered into a Research Collaboration and License Agreement, dated December 8,
2000 (the “Original Agreement”) and subsequently entered into a Cell Line Collaboration and License
Agreement dated July 1, 2002 (the “Prior Agreement”), each related to the creation of cell lines by
Athersys for use by BMS.

     E. Concurrently with entering into this Agreement, Athersys and BMS are amending the Prior
Agreement to acknowledge that BMS has fulfilled its obligation to propose and accept a minimum
number of cell lines as set forth in the Prior Agreement.

     F. For avoidance of doubt, all cell lines nominated by BMS after July 1, 2002 and prior to the
Effective Date of this Agreement shall be governed by the Prior Agreement and all cell lines
nominated by BMS prior to July 1, 2002 shall be governed by the Original Agreement and not this
Agreement. All cell lines nominated by BMS after the Effective Date of this Agreement shall be
governed by this Agreement.

     Now, Therefore, in consideration of the foregoing and the covenants and promises
contained in this Agreement, the Parties agree as follows:

 

 
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	1.	 	Definitions

     As used herein, the following capitalized terms shall have the following meanings (with terms
defined in the singular having the same meanings when used in the plural):

     1.1 “Accepted Cell Line” shall have the meaning assigned to such term in Section 2.3(a).

     1.2 “Affiliate” shall mean, with respect to a Party, any corporation or other entity that,
directly or indirectly, controls, is controlled by or is under the common control with such Party.
For the purpose of this definition, “control” shall mean (a) the direct or indirect ownership of
fifty percent (50%) or more of the outstanding shares or other voting rights of the subject entity
to elect directors, or (b) if such amount of ownership of a foreign entity is not permitted by law,
ownership of the maximum amount of such entity as permitted by law, or (c) the actual ability to
control and direct the management of the subject entity.

     1.3 “Athersys Know-How” shall mean the Information that is Controlled by Athersys during the
term of this Agreement and relates directly to Collaboration Cell Lines or their method of
manufacture or use in the Field or for Counterscreening, as applicable, but excluding Athersys
Patents.

     1.4 “Athersys Patents” shall mean all Patents that are Controlled by Athersys during the term
of the Agreement and contain a Valid Claim covering a Collaboration Cell Line or its method of
manufacture or use in the Field or for Counterscreening, as applicable.

     1.5 “Athersys Technology” shall mean the Athersys Know-How and Athersys Patents collectively.

     1.6 “Candidate Compound” shall mean:

          (a) any compound that has activity, with respect to the target protein expressed by the
applicable Accepted Cell Line, which activity is initially discovered or detected by using an
Accepted Cell Line or materials or assays derived from an Accepted Cell Line, where such activity
is potentially useful for therapeutic or prophylactic use, or

          (b) any compound that is an analog, homolog, isomer or other chemical derivative of a compound
that meets the criteria in subsection (a) above (the “Parent Compound”), provided that such
compound (i) was made by or on behalf of BMS or its Affiliate or sublicensee based on information
relating to the Parent Compound, and (ii) has activity that is potentially useful for therapeutic
or prophylactic use and is similar or related to the activity of such Parent Compound (with the
understanding that such activity may be superior to the activity of the Parent Compound, in any
appropriate criteria).

     1.7 “Collaboration Cell Line” shall have the meaning assigned to such term in Section 2.1(b).

     1.8 “Confidential Information” shall mean (a) any proprietary or confidential information or
material of a Party in tangible form disclosed hereunder that is (i) marked as

 

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“Confidential” at
the time it is delivered to the receiving Party, or (ii) designated as confidential or proprietary
in a written memorandum provided to the receiving Party by the disclosing Party within thirty (30)
days of such disclosure, or (b) any proprietary or confidential information of a Party disclosed
orally hereunder that is identified as confidential or proprietary when disclosed and designated as
confidential or proprietary in a written memorandum provided to the receiving Party by the
disclosing Party within thirty (30) days of such oral disclosure by the disclosing Party. Further,
it is agreed that if Athersys discloses to BMS that it is working on a particular protein or gene
target, such information shall be treated by BMS as the Confidential Information of Athersys.
Still further, it is agreed that Athersys shall treat the fact that BMS has nominated a specific
target under Section 2.1 and the fact that Athersys has provided BMS with a corresponding
Collaboration Cell Line under Section 2.2 as Confidential Information of BMS.

     1.9 “Controlled” shall mean, with respect to any material, Information or intellectual
property right, that a Party owns or has a license to such material, Information or intellectual
property right and has the ability to grant to the other Party the licenses or sublicenses thereto
as provided for herein without violating the terms of any agreement with any Third Party.

     1.10 “Counterscreening” shall mean testing a BMS compound, which has known activity against
one target, for activity against another target that is expressed in an Accepted Cell Line, for the
purpose of determining the relative selectivity and potency of the BMS compound for the first
target.

     1.11 “Counterscreening Cell Line” shall mean an Accepted Cell Line that was selected by BMS to
be used in Counterscreening as provided in Section 2.5.

     1.12 “Counterscreening License” shall have the meaning assigned to it in Section 3.3.

     1.13 “Field” shall mean use of the Accepted Cell Lines by BMS solely for BMS’s internal
discovery, research, development and/or commercialization of Products. For the avoidance of doubt,
subject to Section 3.5(b), the Field shall include BMS’s use of the Accepted Cell Lines in
connection with any bona fide collaboration between BMS and an academic and/or corporate
collaborator, provided that any compounds initially discovered or detected pursuant to such
collaboration by using an Accepted Cell Line or materials or assays derived from an Accepted Cell
Line shall be deemed to be Candidate Compounds. The Field expressly excludes the use of Accepted
Cell Lines by BMS for Counterscreening.

     1.14 “HTS” shall mean high throughput screening using BMS’ test deck of compounds in primary
screening of the Accepted Cell Line. HTS shall be deemed “completed” when BMS has screened the
test deck, confirmed positive responses, and completed standard data analysis.

     1.15 “Improvement” shall mean any improvement, modification or enhancement to the Athersys
Know-How or the inventions claimed in the Athersys Patents (and/or the practice thereof), and any
Information and intellectual property rights relating thereto, that the possessing Party has the
right to disclose to the other Party without violating contractual obligations to a Third Party.
For the avoidance of doubt, the following shall be owned by BMS and shall not

 

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comprise
Improvements: (i) Information comprising the results of any assays or other screening or testing
generated by BMS through use of the Accepted Cells Lines under the terms of this Agreement, and any
Information developed based on evaluating or using such results (which shall exclude, for clarity,
any such Information that relates to the manufacture of such Accepted Cell Lines via the RAGE-VT
method or use of same); (ii) any methodology, process or tool, whether previously existing or
created during the Term (without use of an Accepted Cell Line), that is proprietary to BMS and that
BMS uses to generate the Information referred to in clause (i); and (iii) any invention based on,
or improvement, modification, or enhancement of, the proprietary know-how of BMS that is created in
connection with the subject matter of this Agreement and the use or practice of which does not
involve the use of any Athersys Technology.

     1.16 “Information” shall mean information, results and/or data of any type whatsoever, in any
tangible or intangible form, including without limitation databases, inventions, practices,
methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill,
experience, test data including pharmacological, biological, chemical, biochemical, toxicological
and clinical test data, analytical and quality control data, stability data, studies and
procedures, and patent and other legal information or descriptions.

     1.17 “License” shall have the meaning assigned to it in Section 3.2.

     1.18 “Net Sales” shall mean the amount invoiced or otherwise billed by BMS or its Affiliate or
licensee for sales or other commercial disposition of a Product to a Third Party purchaser, less
the following to the extent included in such billing or otherwise actually allowed or incurred with
respect to such sales: (i) discounts, including cash, trade and quantity discounts, price reduction
programs, retroactive price adjustments with respect to sales of a product, charge-back payments
and rebates granted to managed health care organizations or to federal, state and local governments
(or their respective agencies, purchasers and reimbursers) or to trade customers, including but not
limited to, wholesalers and chain and pharmacy buying groups; (ii) credits or allowances actually
granted upon rejections or returns of Products, including for recalls or damaged goods; (iii)
freight, postage, shipping and insurance charges actually allowed or paid for delivery of Products,
to the extent billed; (iv) customs duties, tariffs, surcharges and other governmental charges
incurred in connection with the exportation or importation of a Product; (v) bad debts relating to
sales of Products that are actually written off by BMS in accordance with generally accepted
accounting principles, consistently applied, during the applicable royalty calculation period, and
(vi) taxes, duties or other governmental charges levied on, absorbed or otherwise imposed on sale
of Products, including without limitation value-added taxes, or other governmental charges
otherwise measured by the billing amount, when included in billing, as adjusted for rebates and
refunds, but specifically excluding taxes based on net income of the seller; provided that all of
the foregoing deductions are calculated in accordance with generally accepted accounting
principles consistently applied throughout the party’s organization.

Notwithstanding the foregoing, if any Product is sold under a bundled or capitated arrangement with
other BMS products, then, solely for the purpose of calculating Net Sales for royalty purposes
hereunder, any discount on such Product sold under such an arrangement shall be no greater, on a
percentage basis based on the gross selling price prior to discount, than the largest percentage
discount applied on the other pharmaceutical products sold within such bundled

 

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 arrangement for the
applicable accounting period. In case of any dispute as to the applicable discount numbers under
the preceding sentence, the determination of same shall be calculated and certified by BMS’
independent public accountants, whose decision shall be binding.

A sale of a Product is deemed to occur upon the earliest of invoicing or transfer of title in the
Product to the Third Party purchaser. In the event that BMS, after reasonable efforts, cannot
calculate accurately the Net Sales of a sublicensee in a particular country, the Parties will meet
and negotiate in good faith an appropriate means for calculating “Net Sales” in such a situation.

For sake of clarity and avoidance of doubt, sales by BMS, its Affiliates or sublicensees of a
Product to a Third Party distributor of such Product in a given country shall be considered sales
to a Third Party customer, but sales and/or transfers of a Product between or among BMS, its
Affiliates or sublicensees shall not be considered sales to a Third Party customer, so long as such
recipient subsequently resells the Product. Any Products used (but not sold for consideration) for
promotional or advertising purposes or used for clinical or other research purposes shall not be
considered in determining Net Sales hereunder.

In the event a Product is sold as an end-user product consisting of a combination of active
functional elements or as a combined product and/or service, Net Sales, for purposes of determining
royalty payments on such Product, shall be calculated by multiplying the Net Sales of the end-user
product and/or service by the fraction A over A+B, in which A is the gross selling price of the
Product portion of the end-user product and/or service when such Product is sold separately during
the applicable accounting period in which the sales of the end-user product were made, and B is the
gross selling price of the other active elements and/or service, as the case may be, of the
end-user product and/or service sold separately during the accounting period in question. All
gross selling prices of the elements of such end-user product and/or service shall be calculated as
the average gross selling price of the said elements during the applicable accounting period for
which the Net Sales are being calculated. In the event that, in any country or countries, no
separate sale of either such above-designated Product or such above designated elements of the
end-user product and/or service are made during the accounting period in which the sale was made or
if gross retail selling price for an active functional element, component or service, as the case
may be, cannot be determined for an accounting period, Net Sales allocable to the Product in each
such country shall be determined by mutual agreement reached in good faith by the Parties prior to
the end of the accounting period in question based on an equitable method of determining same that
takes into account, on a country by country basis, variations in potency, the relative contribution
of each active agent, component or service, as the case may be, in the combination, and relative
value to the end user of each active agent, component or service, as the case may be.

Notwithstanding the foregoing, it is agreed that drug delivery vehicles, adjuvants, and excipients
shall not be deemed to be “active ingredients” or “active functional elements,” the presence of
which in a Product would be deemed to create a combination product subject to the terms of the
preceding paragraph.

     1.19 “Patents” shall mean all issued United States and foreign patents (including all
reissues, extensions, renewals, substitutions, re-examinations, supplementary protection

 

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certificates and the like, and patents of addition) and pending United States and foreign patent
applications (including, without limitation, all provisional and nonprovisional applications and
all continuations, continuations-in-part and divisions thereof).

     1.20 “Product” shall mean any product containing a Candidate Compound, including any
formulation, dosage form, packaged form or delivery means thereof.

     1.21 “RAGE Technology” shall mean any and all intellectual property, whether or not
patentable, that is owned or licensed by Athersys and relates to Athersys’ techniques for
activating gene expression, which are referred to by Athersys collectively as Random Activation of
Gene Expression or RAGE technology.

     1.22 “Term” shall have the meaning assigned to it in Section 11.1.

     1.23 “Third Party” means any entity other than Athersys, BMS or an Affiliate of either of
them.

     1.24 “Valid Claim” shall mean either (i) a claim of issued and unexpired letters patent which
has not been held permanently revoked, unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal and that is not admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise, or (ii) a claim of a pending patent application that has not been pending for more than
seven (7) years and that has not been abandoned or finally rejected without the possibility of
appeal or refiling.

	2.	 	Collaboration Program

     2.1 Review of Proposed Cell Lines by Athersys.

          (a) Subject to the limits set forth in Section 2.2, Athersys shall create new Accepted Cell
Lines based on RAGE-VT cell lines that BMS proposes, as set forth in Exhibit A, and
Athersys has accepted as provided below. BMS shall use reasonable, good faith efforts to assure
that the aggregate level of technical difficulties and legal risks associated with the cell lines
that BMS nominates is balanced and provides Athersys a reasonable opportunity to perform hereunder.
Athersys shall have the right to review and approve, as provided in Exhibit A, the target
protein to be expressed in each RAGE-VT cell line that BMS proposes be made under this Agreement.
Athersys shall complete such review within forty-five (45) days after the date Athersys receives
information from BMS regarding a proposed target to be expressed in a
RAGE-VT cell line, or upon any other schedule to which the Parties may mutually agree in
writing. Athersys shall use reasonable, good faith efforts to assure that the aggregate level of
technical difficulties and legal risks associated with the cell lines that Athersys accepts is
balanced and provides a reasonable opportunity for the generation of Accepted Cell Lines hereunder.

          (b) While Athersys is completing such review, the Parties shall promptly negotiate specific
Acceptance Criteria for such cell line based upon the Acceptance Criteria as generically set forth
in Exhibit A. Upon agreement by the Parties on the specific Acceptance Criteria for a
particular proposed RAGE-VT cell line, such Acceptance Criteria shall be included

 

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in Exhibit
A, and, subject to review and subsequent approval of the target protein by Athersys under this
Section 2.1, Athersys shall promptly thereafter commence work under Section 2.2 to create a RAGE-VT
cell line based thereon, and any such cell line shall be a “Collaboration Cell Line.”

          (c) If Athersys rejects any of the proposed RAGE-VT cell lines in accordance with the
parameters set forth in Exhibit A, Athersys shall promptly notify BMS, and BMS shall amend
Exhibit A in order to designate a replacement RAGE-VT cell line (for each one of the
RAGE-VT cell lines originally proposed and rejected by Athersys) within sixty (60) days after
receiving notice of the rejection; provided, however, that Athersys shall again have the right to
review and approve any such proposed replacement cell line, as above.

          (d) BMS shall be obligated to propose at least three (3), but not more than seven (7), RAGE-VT
cell lines per year beginning on the Effective Date and ending on the third anniversary of the
Effective Date. If Athersys rejects one or more cell lines subject to this Section 2.1, then BMS
shall replace each rejected cell line with a new proposed cell line, until Athersys has at least 3
cell lines in the current year. BMS shall have sixty (60) days to replace each rejected cell line,
regardless of the deadline for meeting any applicable minimum under this Section 2.1.For avoidance
of doubt, any proposed cell lines in excess of the minimum in a given year may not be applied to
future annual obligations.

     2.2 Supply of Collaboration Cell Lines; Status Reports. Athersys shall use reasonable efforts
to deliver to BMS each Collaboration Cell Line that Athersys approves under Section 2.1 within six
(6) months after such approval. Athersys shall provide BMS with summary reports, which shall be
written, of the status and progress of Athersys’s efforts to provide Collaboration Cell Lines every
eight (8) weeks. Such reports shall be sent to the attention of the BMS Project Coordinator.
Athersys shall not be obligated to supply to BMS more than a total of eight (8) Collaboration Cell
Lines per year over the Term.

     2.3 Review of Collaboration Cell Lines by BMS.

          (a) BMS shall have the right, for a period of forty-five (45) days after receiving a
particular Collaboration Cell Line, to review such Collaboration Cell Line for the purpose of
evaluating whether or not the production of protein meets the specific Acceptance Criteria for the
particular Collaboration Cell Line as agreed by the Parties (pursuant to Section
2.1) and set forth in Exhibit A. Unless BMS provides written notice to Athersys that
such Collaboration Cell Line does not meet such specific Acceptance Criteria within such period,
such Collaboration Cell Line shall be accepted by BMS and shall be an “Accepted Cell Line” for all
purposes hereunder. Even if any Collaboration Cell Line fails to produce the amount of protein
meeting the specific Acceptance Criteria set forth in Exhibit A, BMS shall nonetheless have
the right, but not the obligation, to accept such Collaboration Cell Line as an Accepted Cell Line,
by written notice to Athersys within such forty-five (45) day period. If BMS does not accept a
Collaboration Cell Line, BMS and Athersys shall discuss the reason(s) such Collaboration Cell Line
was not accepted, and if BMS and Athersys agree that modifying the approach to creating a
Collaboration Cell Line is feasible and desirable, Athersys shall make such modification and
present such modified Collaboration Cell Line to BMS for evaluation and acceptance (if applicable)
as provided herein.

 

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          (b) Athersys shall provide the BMS Project Coordinator with at least two (2) weeks’ advance
notice of Athersys’ intent to deliver a Collaboration Cell Line to BMS for review under Section
2.3(a), so that BMS may attempt to allocate internal resources appropriately. In the event
Athersys fails to give such notice with respect to any given Collaboration Cell Line, the BMS
review period therefor shall be extended to sixty (60) days.

     2.4 Infringement by Accepted Cell Lines. If at any time during the term of the License or
Counterscreening License applicable to a particular Accepted Cell Line, such Accepted Cell Line
becomes, or in Athersys’ opinion is likely to become, the subject of a Third Party patent
infringement claim based on BMS’ practice of such License or Counterscreening License, then
Athersys shall use commercially reasonable efforts, at its sole expense, either (i) to procure for
BMS the right to continue using such Accepted Cell Line, or (ii) to replace or modify such Accepted
Cell Line so that it becomes noninfringing while still having substantially the same functionality
and efficacy as prior to such replacement or modification. In the event Athersys is not successful
in its efforts under clause (i) and/or (ii) of the preceding sentence within three (3) months after
any such claim arises, Athersys shall, at BMS’s request, meet to discuss in good faith other
possible solutions to the claim.

     2.5 Selection of Counterscreening Cell Lines. As to a particular cell line that BMS requests
to be made under Section 2.1, BMS may specify in writing, at the time the request for such cell
line is made, that such cell line will be a Counterscreening Cell Line when accepted under Section
2.3, and such cell line then would be used solely for Counterscreening pursuant to the
Counterscreening License. BMS may so specify no more than fifty percent (50%) of the Collaboration
Cell Lines requested in a particular year be used for Counterscreening. For purposes of clarity,
at any time subsequent to a cell line’s designation as a Counterscreening Cell Line, BMS may elect
to initiate an HTS program with respect to such Cell Line, subject to the terms and conditions of
this Agreement with respect to an Accepted Cell Line.

     2.6 Project Coordinators. Each Party shall designate an individual (a “Project Coordinator”)
to coordinate, on such Party’s behalf, the day-to-day interaction of and communication between the
Parties under this Agreement. Each Project Coordinator shall possess the education, training and
experience necessary to make him
or her reasonably technically qualified to serve as a Project Coordinator. Each Party shall
be free to replace its Project Coordinator with new a appointee who has authority to act on behalf
of such Party, upon notice to the other Party.

     2.7 BMS Diligence. BMS agrees that, for each Accepted Cell Line (but excluding all
Counterscreening Cell Lines), BMS shall initiate and use reasonably diligent efforts to complete an
HTS program for such Accepted Cell Line as soon as practicable after the date such cell line is
designated or deemed an Accepted Cell Line. Notwithstanding the preceding sentence, an Accepted
Cell Line shall be deemed to have completed HTS twelve (12) months after acceptance unless the Cell
Line fails to perform as prescribed in Exhibit A. BMS shall provide Athersys with
reasonable reports regarding its progress in conducting such HTS screening.

 

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     2.8 BMS Termination of Cell Lines.

          (a) Prior to Cell Line Acceptance. With respect to Collaboration Cell Lines for which
acceptance has not yet occurred, upon thirty (30) days notice to Athersys, BMS may terminate
Athersys’ development of any Collaboration Cell Line, provided that BMS has paid all milestones
achieved prior to termination pursuant to Section 4.1(a) or 4.1(c), as the case may be, for each
such Collaboration Cell Line.

          (b) Following HTS Completion. With respect to any Accepted Cell Line (other than
Counterscreening Cell Lines) for which HTS completion has occurred and BMS has paid the
corresponding milestone payment under Section 4.1(a), upon thirty (30) days notice to Athersys, BMS
may, for reasonable business, scientific and/or technical reasons (which shall be disclosed to
Athersys, on a confidential basis), terminate its License with respect to such Accepted Cell Line,
which termination shall be effective after payment of the next license fee due under Section
4.1(b). On the due date of such payment the license to such Accepted Cell Line granted under
Section 3.2 shall automatically terminate, and after payment of such license fee BMS shall have no
further payment obligations to Athersys with respect to such Accepted Cell Line subject to the
following covenant. With respect to any such Accepted Cell Line for which BMS has terminated its
license rights pursuant to this Section 2.8(b), BMS covenants that BMS and its Affiliates and
licensees shall not use, develop or commercialize any materials, results, data or information
(including, without limitation, any compound or composition, or any derivative, homolog or isomer
thereof) that was originally created or originally identified through BMS’ prior use of such
Accepted Cell Line; provided, however, that the foregoing covenant shall not preclude BMS and its
Affiliates from continuing to conduct discovery, research, development and commercialization
activities with respect to the target protein expressed by such Accepted Cell Line so long as BMS
and its Affiliates abide by such covenant in so doing.

     2.9 BMS Termination of Collaboration Program. BMS shall have the right to terminate the
collaboration program contemplated by this Section 2 at the end of each year of the collaboration
program, by giving Athersys written notice of such termination at least sixty (60) days prior to
the anniversary of the Effective Date, provided that BMS has accepted an aggregate of at least
fifteen (15) cell lines since July 1, 2002 (i.e., the effective date of the Prior Agreement). BMS
acknowledges that Athersys will incur certain wind-down and FTE re-
allocation costs and expenses in the event of any such early termination and, therefore,
agrees to pay Athersys the sum of $125,000 to help offset such costs. Such payment shall be made
within thirty (30) days after delivery of BMS’ termination notice pursuant to this Section 2.9.

	3.	 	Licenses. 

     3.1 Evaluation License. Subject to the terms of this Agreement, as to each Collaboration Cell
Line provided to BMS by Athersys hereunder, Athersys grants to BMS a royalty-free, non-exclusive,
worldwide license, without the right to sublicense, under the Athersys Technology solely to conduct
internal research evaluation of such Collaboration Cell

 

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Line as provided in Section 2.3 of this
Agreement during the forty-five (45) day period after BMS first receives such Collaboration Cell
Line.

     3.2 Research and Development License. Subject to the terms of this Agreement, and effective
upon BMS’s acceptance of a particular Accepted Cell Line (other than a Counterscreening Cell Line),
Athersys grants to BMS a royalty-bearing, non-exclusive, worldwide license, without the right to
sublicense, under the Athersys Technology solely to use such Accepted Cell Line in the Field (the
“License”).

     3.3 Counterscreening License. Subject to the terms of this Agreement, and effective only upon
BMS’s acceptance of a particular Accepted Cell Line that BMS elected under Section 2.5 to be a
Counterscreening Cell Line, Athersys hereby grants to BMS a non-exclusive, worldwide license (the
“Counterscreening License”), without the right to sublicense, under the Athersys Technology solely
to use each such Counterscreening Cell Line for Counterscreening. For clarity, a particular
Accepted Cell Line may not be used by BMS (or its Affiliate) for use both in the Field and for
Counterscreening except as specified in 4.1 (e).

     3.4 Duration of Athersys Licenses.

          (a) Field License Duration. The License granted in Section 3.2, as to a particular Accepted
Cell Line, shall be perpetual, subject to payment of all applicable fees, unless terminated by BMS
as provided in Section 2.8(b).

          (b) Counterscreening License Duration. Subject to payment of all applicable fees, the
Counterscreening License granted in Section 3.3 shall be perpetual, as to a particular
Counterscreening Cell Line.

     3.5 Negative Covenants.

          (a) No Other Use by BMS. BMS covenants and agrees that it shall not use the Collaboration
Cell Lines for any purpose other than as set forth in Section 3.1 and shall not use the Accepted
Cell Lines or any materials derived therefrom for any purpose other than as set forth in Sections
3.2 and 3.3, as applicable. BMS further covenants and agrees that it shall not use or practice the
Athersys Technology for any purpose except as expressly permitted in the licenses granted to BMS
under Sections 3.1, 3.2 and 3.3, as applicable.

          (b) No Transfer to Third Parties. BMS covenants and agrees that BMS shall not transfer
Collaboration Cell Lines or Accepted Cell Lines or any Information pertaining thereto or any
materials derived therefrom, to any Third Party for any purpose, except that BMS may transfer such
Information and materials to collaborators to the extent necessary for BMS to exercise its right to
use the Accepted Cell Lines in connection with bona fide collaborations with academic and/or
commercial partners in the Field, but may not transfer the Accepted Cell Lines to such entities
except with Athersys’ prior written consent. For clarity, BMS covenants and agrees that BMS shall
not transfer Collaboration Cell Lines or Accepted Cell Lines, or any Information pertaining thereto
or any materials derived therefrom, to any Third Party for Counterscreening.

 

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     3.6 Athersys Reserved Rights. BMS understands and agrees that Athersys owns and reserves to
itself all rights, title and interest in the Athersys Technology, and to the Collaboration Cell
Lines and the Accepted Cell Lines, subject only to the licenses granted in Sections 3.1, 3.2 and
3.3, respectively.

     3.7 Records And Reports.

          (a) Records. BMS shall maintain complete and accurate records that fully and properly reflect
all work done and all results achieved, including raw data, in the evaluation of Collaboration Cell
Lines, the use of Accepted Cell Lines and the discovery, research and development of Candidate
Compounds (“Records”). The Records shall be kept with sufficient detail and in good scientific
manner appropriate for patent and regulatory purposes and shall be kept separate and distinct from
other work conducted by BMS, all in a manner consistent with BMS’ other internal research and
development record keeping.

          (b) Copies and Inspection of Records. Athersys shall have the right, during normal business
hours and upon reasonable notice, to inspect the Records for purposes consistent with this
Agreement. Athersys shall maintain all Information learned from such inspection of the Records in
confidence in accordance with Article 7. All inspections, copying and visits hereunder shall be
conducted in a manner and frequency so as not to disrupt BMS’s business and in a manner so as not
to cause any disclosure of any other BMS Confidential Information.

          (c) Semi-Annual Reports. Within thirty (30) days following the end of each six (6) month
period during the term of the License with respect to each Accepted Cell Line, BMS shall provide to
Athersys a written progress report that shall describe the results and developments of the use of
such Accepted Cell Line, and the discovery, research and development of Candidate Compounds
therewith. With such reports, BMS shall disclose to Athersys in summary form (i.e., in a manner
that does not require BMS to disclose sensitive or competitively-enabling data or information) the
development, making, conception or reduction to practice of all Candidate Compounds that are
discovered, made, investigated, conceived or reduced to practice by use of such Accepted Cell Line
or assays based thereon. In addition, BMS shall fully disclose to Athersys in each such report any
Improvements that BMS may have developed during the period covered by such report.

	4.	 	Payments.

     4.1 License Fees.

          (a) Screening License Fees. For each Collaboration Cell Line requested by BMS that is to be
used in the Field (i.e., excluding the Counterscreening Cell Lines), BMS shall pay Athersys
non-refundable license fees upon achievement of the milestone events as provided in the following
schedule:

 

12

	 	 	 
	Event	 	Payment
	Agreed upon Acceptance Criteria
	 	$[*]
	•    Athersys accepts BMS’ request for the development of a
Collaboration Cell Line, and the Parties mutually agree upon
Acceptance Criteria therefor

	 	 
	Clonal Cell Line Isolated
	 	$[*]
	•    Verified through RT- PCR proof of appropriate vector
integration

	 	 
	 
	 	 
	Cell Line Acceptance (designation of Accepted Cell Line)
	 	$[*]
	•   Achievement, pursuant to Section 2.3(a), of all
specific Acceptance Criteria mutually previously agreed upon
by the Parties for the proposed Accepted Cell Line

	 	 
	 
	 	 
	HTS Completion for Accepted Cell Line
	 	$[*]

 

			
	1	 	Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately with the Securities
and Exchange Commission.

BMS and Athersys shall jointly determine the occurrence of any of the foregoing milestone
events with respect to a particular Collaboration Cell Line, and the applicable payments for each
event shall be due and payable within thirty (30) days of the Parties’ having made such a
determination.

          (b) Additional Annual License Fees. For each Accepted Cell Line that is to be used in the
Field (i.e., excluding the Counterscreening Cell Lines) with respect to which the License has not
terminated due to BMS previously exercising its right to terminate its License under Section
2.8(b), BMS shall also pay Athersys non-refundable license fees upon achievement of the milestone
events as provided in the following schedule:

	 	 	 
	Event	 	Payment
	Six (6) Month Anniversary of Completion of HTS for Accepted Cell
Line
	 	$[*]
	•    Payable at the end of the six (6) month period
beginning on the date BMS completes HTS for such Accepted
Cell Line

	 	 
	 
	 	 
	Twelve (12) Month Anniversary of Completion of HTS for Accepted
Cell Line
	 	$[*]
	•    Payable at the end of the twelve (12) month period
beginning on the date BMS completes HTS for such Accepted
Cell Line

	 	 
	 
	 	 
	Eighteen (18) Month Anniversary of Completion of HTS for Accepted
Cell Line
	 	$[*]
	•    Payable at the end of the eighteen (18) month period
beginning on the date BMS completes HTS for such Accepted
Cell Line

	 	 
	 
	 	 
	Twenty-Four (24) Month Anniversary of Completion of HTS for
Accepted Cell Line
	 	$[*]
	•    Payable at the end of the twenty-four (24) month
period beginning on the date BMS completes HTS for such
Accepted Cell Line

	 	 

 

13

 

			
	1	 	Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately with the Securities
and Exchange Commission.

For clarity, if BMS exercises its right to terminate the License as provided in Section 2.8(b)
as to a particular Accepted Cell Line, BMS shall make the next payment due as provided above after
serving notice of such termination.

          (c) Counterscreening License Fees. For each Counterscreening Cell Line requested to be made by
BMS, BMS shall pay Athersys non-refundable license fees upon achievement of the milestone events as
provided in the following schedule:

	 	 	 
	Event	 	Payment
	Agreed upon Acceptance Criteria
	 	$[*]
	•    Athersys accepts BMS’ request for the development of
a Collaboration Cell Line, and the Parties mutually agree
upon Acceptance Criteria therefor

	 	 
	 
	 	 
	Clonal Cell Line Isolated
	 	$[*]
	•    Verified through RT- PCR proof of appropriate vector
integration

	 	 
	 
	 	 
	Cell Line Acceptance (designation of Counterscreening Cell Line)
	 	$[*]
	•    Achievement, pursuant to Section 2.3(a), of all
specific Acceptance Criteria previously mutually agreed upon
by the Parties for the proposed Counterscreening Cell Line

	 	 

 

			
	1	 	Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately with the Securities
and Exchange Commission.

BMS and Athersys shall jointly determine the occurrence of any of the foregoing milestone
events with respect to a particular Counterscreening Cell Line, and the applicable payments for
each event shall be due and payable within thirty (30) days of the Parties’ having made such a
determination.

          (d) Additional Counterscreening License Fees. For each Accepted Cell Line specified as a
Counterscreening Cell Line pursuant to Section 2.5 that is accepted by BMS pursuant to Section 2.3,
BMS shall pay Athersys a non-refundable license fee of either: (i) an aggregate of [*] dollars ($[*]) license fee, which shall be payable in six (6) installments of [*] dollars ($[*]) each, to be paid at the end of each six (6) month period after the
date of acceptance by BMS of the applicable Accepted Cell Line; or
(ii)  [*] dollars ($[*]) for the use, in perpetuity, of the Counterscreening License, such fee to be
payable on the six (6) month anniversary of the date of acceptance by BMS of the applicable
Accepted Cell Line.

 

14

          (e) Counterscreening License Fee for Accepted Cell Line. For any particular Accepted Cell
Line used in the Field for which BMS has completed payment of all milestone payments under Sections
4.1(a) and (b) (i.e., a total of [*] dollars ($[*]) for such Accepted Cell
Line), BMS may elect in writing to Athersys to obtain the perpetual right to use such Accepted Cell
Line in Counterscreening (under the terms of a Counterscreening License under Section 3.3) by a
one-time payment of [*] dollars ($[*]) to be made within thirty (30)
days of such notice.

 

			
	1	 	Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately with the Securities
and Exchange Commission.

     4.2 Milestone Payments. For each Accepted Cell Line used in the Field, BMS shall pay
Athersys the milestone payments set forth in Exhibit B within thirty (30) days after each
milestone event has been achieved for each Candidate Compound identified for clinical development
by BMS or its Affiliate or sublicensee for the particular Accepted Cell Line.

     4.3 Royalty Payments. BMS shall pay Athersys a royalty equal to [*] percent ([*]%) of Net
Sales of all Products worldwide; provided that BMS may elect, on a Product-by-Product basis and in
its sole discretion, and by giving written notice to Athersys at any time prior to the date which
is ninety (90) days subsequent to the approval of a given Product by Food and Drug Administration,
that BMS will, in lieu of such one and one-half (1.5%) royalty, (i) pay to Athersys a royalty of
[*] ([*]%) of Net Sales of such Product worldwide and (ii) pay to Athersys a one-time sales
milestone of [*] dollars ($[*]) upon the achievement of five hundred million dollars of aggregate
Net Sales for such Product. Each payment of royalties under this Agreement shall be accompanied by
a statement of the amount of the total amounts received and calculated as Net Sales during such
period, and all other information necessary to determine the appropriate amount of such payments.

     4.4 Royalty Term. For each Product, on a country-by-country basis, BMS shall pay to Athersys
royalties under Section 4.3 commencing on the first commercial sale in the applicable country and
continuing until the later of (a) the last to
expire Patent in such country owned or controlled by BMS or its affiliate or licensee
containing a Valid Claim covering such Product or the Candidate Compound therein, or covering the
manufacture, use or formulation of such Product or compound, or (b) ten (10) years from the date of
such first commercial sale in such country.

     4.5 Blocked Currency. In each country where the local currency is blocked and cannot be
removed from the country, at the election of Athersys, royalties accrued in that country shall be
paid to Athersys in such country in local currency by deposit in a local bank designated by
Athersys.

     4.6 Non-Monetary Consideration. In the event BMS (or its Affiliates or sublicensees) receives
any non-monetary consideration in connection with the sale or other commercial disposition of
Products, Athersys’s royalty shall be based on the fair monetary value of such other consideration.
In such case, BMS shall disclose to Athersys, on a confidential basis, the terms of such
arrangement, and the Parties shall agree in good faith on such monetary

 

15

value, which shall then be
included in Net Sales for the period in which it was received by BMS (or its Affiliates or
sublicensees).

	5.	 	Records and Audit.

     5.1 Records and Audit. During the term of this Agreement and for a period of three (3) years
thereafter, BMS shall keep complete and accurate records pertaining to the sale or other
disposition of all Products, in sufficient detail to permit Athersys to confirm the accuracy of all
payments due hereunder. Athersys shall have the right to cause an independent, certified public
accountant to audit such records to confirm BMS’s Net Sales and royalty payments and payments under
Section 4.2; provided, however, that such auditor shall not disclose BMS’s Confidential Information
to Athersys, except to the extent such disclosure is necessary to verify the portion of the amount
of royalties and payments due under this Agreement. Such audits may be exercised once a year,
within three (3) years after the period to which such records relate, upon notice to BMS and during
normal business hours. Athersys shall bear the full cost of such audit unless such audit discloses
a variance of more than five percent (5%) from the amount of royalties and payments under Section
4.2 previously paid for such year. In such case, BMS shall bear the full cost of such audit. The
terms of this Section 5.1 shall survive any termination or expiration of this Agreement for a
period of three (3) years.

	6.	 	Intellectual Property.

     6.1 Ownership.

          (a) Athersys. Athersys shall remain the sole owner of the Athersys Technology, the RAGE
Technology, the Collaboration Cell Lines and the Accepted Cell Lines, including any improvements
thereto made by Athersys. Athersys shall have the sole responsibility, at its discretion, for
patent prosecution and choice of patent counsel in relation to Athersys Patents, and shall pay all
expenses associated therewith. BMS hereby assigns and agrees to assign to Athersys its entire
interest in any Improvements, which shall be deemed to be part of the Athersys Technology.

          (b) BMS. BMS shall be the sole owner of any inventions and information resulting from BMS’
use of the Accepted Cell Lines, including any Products, but excluding all Improvements. BMS shall
have the sole responsibility, at its discretion, for patent prosecution and choice of patent
counsel in relation to such BMS-owned inventions and the Products and shall pay all expenses
associated therewith.

     6.2 Enforcement of Patent Rights. Each Party shall have the sole right, but not the
obligation, to institute, prosecute or control any action or proceeding with respect to
infringement by a Third Party of one or more issued Patents owned by such Party.

	7.	 	Confidentiality; Publicity.

     7.1 Confidential Information. The Parties agree that, for the Term of this Agreement and for
five (5) years thereafter, the receiving Party shall keep completely

 

16

confidential and shall not
publish or otherwise disclose and shall not use for any purpose, except for the purposes expressly
permitted by this Agreement, any Confidential Information furnished to it by the disclosing Party.
The foregoing obligation shall not apply to any information received by a Party to the extent that
it can be established by such receiving Party by competent evidence that such information:

          (a) was already known to the receiving Party, other than under an obligation of
confidentiality, at the time of disclosure;

          (b) was generally available to the public or otherwise part of the public domain at the time
of its disclosure to the receiving Party;

          (c) became generally available to the public or otherwise part of the public domain after its
disclosure and other than through any act or omission of the receiving Party in breach of this
Agreement;

          (d) was independently developed by the receiving Party as demonstrated by competent written
evidence prepared contemporaneously with such independent development; or

          (e) was subsequently lawfully disclosed to the receiving Party by a person other than a Party
hereto.

     7.2 Authorized Disclosure. Notwithstanding the foregoing, a Party may disclose the
Confidential Information of the other Party to the extent such disclosure is necessary to be
disclosed in the following instances:

          (a) Regulatory filings made by BMS;

          (b) Prosecuting or defending litigation or responding to valid subpoenas;

          (c) Complying with applicable governmental regulations;

          (d) Conducting clinical trials of BMS, its Affiliates and sublicensees;

          (e) Disclosure, in connection with the performance of this Agreement, to Affiliates,
employees, consultants, or agents, each of whom prior to disclosure must be bound by similar
obligations of confidentiality and non-use at least equivalent in scope to those set forth in this
Section 7;

          (f) Disclosure that is required by applicable law or governmental regulation; and

          (g) Disclosure of the existence and terms of this Agreement and of general summaries of the
progress made by the Parties under this Agreement (but excluding the identification of any target
nominated by BMS under Section 2.1 and of any Collaboration Cell Line or Accepted Cell Line
developed by Athersys hereunder) to existing or potential investment bankers, investors and/or
merger or acquisition parties, provided that the disclosing Party obtains

 

17

from such recipient prior
to disclosure an agreement to be bound by obligations of confidentiality and non-use at least
similar in scope to those set forth in this Section 7.

     7.3 Disclosure. If a Party is required to make any disclosure of another Party’s Confidential
Information that is authorized under subsections (a), (b), (c), (d) or (f) of Section 7.2, it will
give reasonable advance notice to the latter Party of such disclosure and will afford the latter
Party a reasonable opportunity, and will cooperate reasonably with such Party, to secure
confidential treatment of such information prior to its disclosure (whether through protective
orders or otherwise) and to limit the extent of the disclosure as much as possible. Except as
otherwise required by law, and subject to Section 7.5, neither Party shall issue a press release or
make any other disclosure of the terms of this Agreement or any aspect of the research conducted
pursuant to this Agreement without the prior approval of such press release or disclosure by the
other Party hereto. Each Party shall submit any such press release or disclosure to the other
Party, and the receiving Party shall have ten (10) business days to review and approve any such
press release or disclosure, which approval shall not be unreasonably withheld. If the receiving
Party does not respond within such ten (10) day period, the press release or disclosure shall be
deemed approved. In addition, if a public disclosure is required by law, including without
limitation in a filing with the Securities and Exchange Commission, the disclosing Party shall
provide copies of the disclosure reasonably in advance of such filing or other disclosure for the
nondisclosing Party’s prior review and comment.

     7.4 Confidential Terms. Except as expressly provided herein, each Party agrees not to
disclose any terms of this Agreement or any aspect of the research conducted pursuant to this
Agreement to any Third Party without the consent of the other Party.

     7.5 Initial Press Release. The Parties shall issue a mutually approved, initial press release
promptly after the Effective Date. The Parties agree that this press release shall be in the form
of the press release attached to this Agreement as Exhibit C.

	8.	 	Representations and Warranties.

     8.1 Athersys. Athersys represents and warrants that: (i) it is a corporation duly organized
validly existing and in good standing under the laws of the State of Delaware; (ii) the execution,
delivery and performance of this Agreement have been duly authorized by all necessary corporate
action on the part of Athersys; (iii) the performance of Athersys’s obligations under this
Agreement will not conflict with its charter documents or result in a material breach of any
agreements, contracts or other arrangements to which it is a party; (iv) Athersys will not, during
the Term of this Agreement, enter into any agreements, contracts or other arrangements that would
be materially inconsistent with its obligations under this Agreement; (v) Athersys has sufficient
facilities, experienced personnel and other capabilities reasonably suited to enable it to perform
its obligations under this Agreement; (vi) Athersys is the owner of, or has licensed rights to, all
of the Athersys Patents in existence on the Effective Date, and has the right to grant the licenses
or sublicenses, as the case may be, therefor granted under this Agreement; and (vii) as of the
Effective Date, Athersys is not aware of any asserted or unasserted claim or demand which is being,
or which Athersys believes can be, rightfully enforced by a Third Party against any of the Athersys
Patents that would materially limit, hinder, delay or otherwise adversely affect BMS’s enjoyment of
its rights and satisfaction of its obligations under this Agreement.

 

18

     8.2 BMS. BMS represents and warrants that: (i) it is a corporation duly organized validly
existing and in good standing under the laws of the State of Delaware; (ii) the execution, delivery
and performance of this Agreement have been duly authorized by all necessary corporate action on
the part of BMS; (iii) the performance of BMS’s obligations under this Agreement will not conflict
with its charter documents or result in a material breach of any agreements, contracts or other
arrangements to which it is a party; (iv) BMS has sufficient facilities, experienced personnel and
other capabilities reasonably suited to enable it to perform its obligations under this Agreement;
and (v) BMS will not, during the Term of this Agreement, enter into any agreements, contracts or
other arrangements that would be materially inconsistent with its obligations under this Agreement.

     8.3 Disclaimer of Warranties. THE ATHERSYS KNOW-HOW, ATHERSYS PATENTS AND COLLABORATION CELL
LINES ARE PROVIDED AND LICENSED TO BMS “AS IS”, AND ATHERSYS AND ITS RESPECTIVE AFFILIATES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH
RESPECT THERETO OR TO THE PRODUCTS OR ATHERSYS TECHNOLOGY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF THE PATENT RIGHTS
LICENSED HEREUNDER, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

     8.4 Unknown Biological Properties. BMS understands and agrees that the Collaboration Cell
Lines may have unpredictable and unknown biological and/or chemical properties, that they are to be
used with caution, and that they are not to be used for testing in or treatment of humans. BMS
shall use the Collaboration
Cell Lines in compliance with all applicable laws and regulations, including, but not limited
to, any laws or regulations relating to the research, testing, production, storage, transportation,
export, packaging, labeling or other authorized use of the Collaboration Cell Lines.

	9.	 	Dispute Resolution.

     9.1 Mediation. If a dispute arises out of or relates to this Agreement, or the breach thereof,
and if said dispute cannot be settled through negotiation, the Parties agree first to try in good
faith to settle the dispute by good faith discussions by the Vice President of External Science and
Technology of BMS and the CEO or senior executive officer of Athersys (or each such person’s
designee), and failing resolution thereby by mediation under the Commercial Mediation Rules of the
American Arbitration Association, before resorting to arbitration, litigation, or some other
dispute resolution procedure.

     9.2 Arbitration. Subject to Section 9.1, Athersys and BMS agree that any dispute or
controversy arising out of, in relation to, or in connection with this Agreement, or the validity,
enforceability, construction, performance or breach thereof, shall be settled by binding
arbitration in New York, New York, under the then-current Rules of Commercial Arbitration of the
American Arbitration Association by one (1) arbitrator appointed in accordance with such Rules.
The arbitrator shall determine what discovery will be permitted, based on the principle of

 

19

limiting
the cost and time that the Parties must expend on discovery; provided, however, that the arbitrator
shall permit such discovery as he or she deems necessary to achieve an equitable resolution of the
dispute. The decision and/or award rendered by the arbitrator shall be written, final and
non-appealable, absent manifest error, and may be entered in any court of competent jurisdiction.
The Parties agree that, any provision of applicable law notwithstanding, they will not request, and
the arbitrator shall have no authority to award punitive or exemplary damages against any Party.
The costs of any arbitration, including administrative fees and fees of the arbitrator, shall be
shared equally by the Parties, unless the arbitrator determines otherwise.

	10.	 	Indemnification.

     10.1 By BMS. Subject to Section 10.3, BMS shall indemnify, defend and hold harmless Athersys
and its directors, officers and employees (each an “Athersys Indemnitee”) from and against any and
all liabilities, damages, losses, costs or expenses (including attorneys’ and professional fees and
other expenses of litigation and/or arbitration) (each a “Liability”) resulting from a claim, suit
or proceeding made or brought by a Third Party against an Athersys Indemnitee arising from or
occurring as a result of (i) any breach of the representations and warranties set forth in Section
8.2, or (ii) the performance (or failure to perform) by BMS of its obligations hereunder.

     10.2 By Athersys. Subject to Section 10.3, Athersys shall indemnify, defend and hold harmless
BMS and its directors, officers and employees (each a “BMS Indemnitee”) from and against any and
all Liabilities resulting from a claim, suit or proceeding made or brought by a Third Party against
a BMS Indemnitee arising from or occurring as a result of (i) any breach of the representations and
warranties set forth in
Section 8.1, or (ii) the performance (or failure to perform) by Athersys of its obligations
hereunder.

     10.3 Limitation on Indemnity Obligations.

          (a) Negligence, etc. No Athersys Indemnitee or BMS Indemnitee (each, an “Indemnitee”) shall
be entitled to the indemnification under Section 10.1 or 10.2, as the case may be, to the
comparative extent the Liability for which indemnification is sought was caused by a grossly
negligent, reckless or intentional act or omission by the Party with which such Indemnitee is
affiliated or any of such Party’s Affiliates or sublicensees or any of their respective directors,
officers, employees or authorized agents.

          (b) Target Proteins and Collaboration Cell Lines. Athersys acknowledges and agrees that it
will conduct a reasonable intellectual property investigation of each target protein that is the
basis of a particular Collaboration Cell Line, and of matters relating to the creation of the
Collaboration Cell Line, that BMS selects and Athersys agrees to produce pursuant to Section 2.1,
which shall be in addition to any such investigation that BMS may have conducted. BMS also
acknowledges and agrees that it will conduct a reasonable intellectual property investigation of
each target protein that BMS proposes for selection by Athersys as the basis for producing a
Collaboration Cell Line pursuant to Section 2.1, which shall be in addition to any such
investigation that Athersys may conduct, and shall disclose to Athersys the results of such
investigation. BMS shall not be obligated to provide indemnification under Section 10.1 against
any Liabilities resulting from a claim, suit or proceeding to the extent it is alleged, proven

 

20

or
agreed in such claim, suit or proceeding that any such target protein (or the creation of the
corresponding Collaboration Cell Line) infringes upon or otherwise violates the intellectual
property rights of any Third Party, except to the comparative extent such infringement or violation
results from a grossly negligent, reckless or intentional act or omission by BMS or any of BMS’
Affiliates or any of their respective directors, officers, employees or authorized agents.

     10.4 Procedure. In the event that an Indemnitee intends to claim indemnification under this
Article 10, it shall promptly notify the indemnifying Party in writing of such alleged Liability.
The indemnifying Party shall have the sole right to control the defense and settlement thereof.
The indemnifying Party shall have the right to settle or compromise any Liabilities for which it is
providing indemnification under this Article 10, provided that the consent of the Indemnitee (which
shall not be unreasonably withheld or delayed) shall be required in the event any such settlement
or compromise would adversely affect the interests of such Indemnitee. The Indemnitees shall
cooperate with the indemnifying Party and its legal representatives in the investigation of any
action, claim or liability covered by this Article 10. The Indemnitees shall not, except at their
own cost, voluntarily make any payment or incur any expense with respect to any claim or suit
without the prior written consent of the indemnifying Party, which the indemnifying Party shall not
be required to give.

	11.	 	Term and Termination.

     11.1 Term of Agreement. The term of this Agreement (the “Term”) shall commence on the
Effective Date and continue until expiration
upon the end of all royalty and payment obligations of BMS under Article 4, or until such
earlier date as the Parties agree in writing to terminate the Agreement or the Agreement terminates
as provided below.

     11.2 Termination for Cause. Either Party may terminate this Agreement in the event the other
Party has materially breached or defaulted in the performance of any of its obligations hereunder,
and such default has continued without cure for sixty (60) days after written notice thereof was
provided to the breaching Party by the non-breaching Party. Any termination shall become effective
at the end of such sixty (60) day period unless the breaching Party has cured any such breach or
default prior to the expiration of the sixty (60) day period. Notwithstanding the above, in the
case of a failure to timely pay any amounts due hereunder, the period for cure of any subsequent
default following notice thereof shall be thirty (30) days and, unless payment is made within such
period the termination shall become effective at the end of such period.

     11.3 Effect of Termination.

          (a) Accrued Rights and Obligations. Termination of this Agreement for any reason shall not
release any Party hereto from any liability which, at the time of such termination, has already
accrued to the other Party or which is attributable to a period prior to such termination nor
preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement. It is understood and agreed that monetary
damages may not be a sufficient remedy for any breach of this Agreement and that the non-breaching
Party may be entitled to injunctive relief as a remedy for any such breach.

 

21

          (b) Return of Confidential Information. Upon any termination of this Agreement, each of
Athersys and BMS shall promptly return to the other Party all Confidential Information of the
other; provided that counsel of each Party may retain one (1) copy of such Confidential Information
solely for archival purposes.

          (c) Survival. Sections 3.5 and 11.3, and Articles 4, 5, 6, 7, 9, 10 and 12 of this Agreement
shall survive termination of this Agreement for any reason.

	12.	 	Miscellaneous.

     12.1 Governing Law. This Agreement and any dispute, including without limitation any
arbitration, arising from the performance or breach hereof shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving effect to its
conflict of laws rules and regulations.

     12.2 Independent Contractors. The relationship of the parties hereto is that of independent
contractors. The parties hereto are not deemed to be agents, partners or joint venturers of the
others for any purpose as a result of this Agreement or the transactions contemplated thereby.

     12.3 Assignment. Neither Party may assign its rights or obligations under this Agreement
absent the prior written consent of the other Party, not to be unreasonably withheld; provided,
however, that either Party may assign this Agreement without such consent to any of its Affiliates
or to any successor in interest by merger, acquisition or sale of all or substantially all of its
assets in a manner such that the assignee will be liable and responsible for the performance and
observance of all its duties and obligations hereunder. This Agreement shall be binding upon the
successors and permitted assigns of the Parties. Any attempted delegation or assignment not in
accordance with this Section 12.3 shall be void and of no force or effect. In the case of BMS, if
any such successor in interest had, before its merger with, or acquisition or purchase of, BMS, an
agreement with Athersys providing such entity with a license to the RAGE Technology, then within
ninety (90) day after the effective date of such merger, acquisition or purchase Athersys may
terminate this agreement, upon written notice to such successor in interest.

     12.4 Notices. All notices, requests and other communications hereunder shall be in writing
and shall be personally delivered or sent by telecopy or other electronic facsimile transmission or
by registered or certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in writing to the
other parties hereto:

 

22

	 	 	 
	If to BMS:

	 	Bristol-Myers Squibb Company
	 

	 	Route 206 and Province Line Road
	 

	 	P. O. Box 4000
	 

	 	Princeton, New Jersey 08543-4000
	 

	 	Attn:    Vice President and Senior Counsel,
	 

	 	               Pharmaceutical Research Institute and
	 

	 	               Worldwide Business Development
	 

	 	Fax No.: (609) 252-4232
	 
	 	 
	If to Athersys:

	 	Athersys, Inc.
	 

	 	 3201 Carnegie Avenue
	 

	 	Cleveland, Ohio 44115-2634
	 

	 	Attn: President
	 

	 	Fax No.: (216) 361-9495

     12.5 Force Majeure. Neither Party shall lose any rights hereunder or be liable to the other
Party for damages or losses (except for payment obligations) on account of failure of performance
by the defaulting Party if the failure is occasioned by war or terrorism, strike, fire, Act of God,
earthquake, flood, lockout, embargo, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the reasonable control and not
caused by the negligence, intentional conduct or misconduct of the nonperforming Party has exerted
all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event
shall a Party be required to settle any labor dispute or disturbance.

     12.6 Advice of Counsel. BMS and Athersys have each consulted counsel of their choice
regarding this Agreement, and each
acknowledges and agrees that this Agreement shall not be deemed to have been drafted by one
Party or another and will be construed accordingly.

     12.7 Compliance with Laws. Each Party will comply with all applicable laws and regulations in
connection with its performance under this Agreement. Each Party shall furnish to the other Party
any information requested or required by that Party during the term of this Agreement or any
extensions hereof to enable that Party to comply with the requirements of any U.S. or foreign
federal, state and/or government agency.

     12.8 Severability. In the event that any provisions of this Agreement are determined to be
invalid or unenforceable by a court of competent jurisdiction, the remainder of the Agreement 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.

     12.9 Waiver. It is agreed that no waiver by either Party hereto of any breach or default of
any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent
and/or similar breach or default.

     12.10 Complete Agreement. This Agreement, together with its Exhibits, constitutes the entire
agreement, both written and oral, between the Parties with respect to the subject matter

 

23

hereof,
and that all prior agreements, including the term sheet, 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 as of the Effective Date. No amendment or change hereof or addition hereto shall be
effective or binding on either of the parties hereto unless reduced to writing and duly executed on
behalf of both Parties. For clarity, the cells lines created under the Original Agreement and the
Prior Agreement, and any amendments thereto, are not considered within the subject matter of this
Agreement.

     12.11 Use of Name. Unless otherwise permitted by this Agreement or required by applicable
laws or regulations, neither Party shall use the name or trademarks of the other Party without the
prior written consent of such other Party.

     12.12 Headings. The captions to the several Sections and Articles hereof are not a part of
this Agreement, but are included merely for convenience of reference only and shall not affect its
meaning or interpretation.

     12.13 Counterparts. This Agreement may be executed in two counterparts, each of which shall
be deemed an original and which together shall constitute one instrument.

* * *

 

24

     In Witness Whereof, BMS and Athersys have executed this Agreement by their respective
duly authorized representatives.

	 	 	 	 	 	 	 	 	 	 	 
	Bristol-Myers Squibb Company	 	 	 	Athersys, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	Print Name:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

 

25

Exhibit A

RAGE-VT CELL LINES 

A. Creation of Collaboration Cell Lines

Within ninety (90) days after the Effective Date, BMS shall provide Athersys with an initial list
of specific proteins for which BMS requests that Athersys will create RAGE libraries, for Athersys’
review under Section 2.1(a). If Athersys accepts such proposed proteins as provided therein,
Athersys shall seek to create RAGE libraries, and screen and isolate Collaboration Cell Lines
expressing such proteins after the Parties agree upon Acceptance Criteria for each particular
Collaboration Cell Line. Such list may be supplemented from time to time by mutual agreement of
the Parties or by designation of additional specific proteins by BMS and acceptance of such
proteins by Athersys, as provided in Section 2.1 and in accordance with the procedure provided
below.

From time to time, BMS may nominate specific proteins for consideration by Athersys under Section
2.1 for use in constructing a Collaboration Cell Line using its RAGE technology and other Athersys
Know-How. Any such Collaboration Cell Line shall conform to the general specifications set forth
in Section B below and to any other specific requirements agreed to by the Parties.

Athersys shall have the right, before accepting such request of a particular protein by BMS
hereunder, to review and approve the technical and intellectual property feasibility of
constructing the requested Collaboration Cell Line. If requested by Athersys, BMS shall promptly
provide to Athersys the relevant technical requirements of BMS for the requested Collaboration Cell
Line. Athersys shall make its determination of technical feasibility, intellectual property
analysis and/or conflict with preexisting exclusive research obligations to Third Parties or
preexisting internal research programs for which research has commenced prior to receiving notice
(a “Pre-existing Program”), within forty-five (45) days of the request by BMS. If Athersys
believes that the project is not constrained by any of these considerations or fails to provide any
such notice within such forty-five (45) day period, then the nominated protein (and corresponding
Collaboration Cell Line) shall be deemed to be added to this Exhibit A. If Athersys
believes the project is constrained by any of such considerations and provides such notice within
such forty-five (45) day period, such protein and cell line shall not be added to Exhibit
A; provided that Athersys shall provide to BMS all pertinent information Controlled by Athersys
regarding the basis for its rejection of such request. In that event, BMS shall be entitled to
nominate another protein (with the foregoing process being repeated), until a protein nominated by
BMS hereunder is accepted by Athersys. For purposes of calculating the maximum number of cell
lines permitted under this Agreement, any substitute request made by BMS shall be deemed to have
been made as of the date of the original request.

In addition, in the event Athersys commences a Pre-existing Program with respect to a target
(either internally or with a Third Party), and BMS subsequently proposes such target under Section
2.1, Athersys shall promptly inform BMS of such program and request that BMS propose a substitute
target. In such event, Athersys shall, upon BMS’ request, provide, on a confidential basis, a
reasonable demonstration of such commencement and prosecution of any

 

26

such Pre-existing Program for a given target prior to the date of BMS’ proposal of such target
under Section 2.1.

B. Acceptance Criteria for Collaboration Cell Lines

The Parties shall discuss and agree upon a set of specific Acceptance Criteria for each
Collaboration Cell Line based upon the Generic Criteria set forth below. Such Acceptance Criteria
shall be deemed to constitute a part of this Exhibit A. In each case, BMS and Athersys
shall agree upon one primary assay (with respect to each Collaboration Cell Line, the “Primary
Assay”) as the determining criterion for optimization and proof of target over-expression for
purposes of determining whether a particular Collaboration Cell Line satisfies various of its
Acceptance Criteria. If BMS wishes to have receptor density as determined by radioligand binding
(which may require MTX amplification) as an acceptance criterion, BMS may specify not more than
fifty percent (50%) of the Collaboration Cell Lines in a particular year, for such acceptance
treatment. If BMS wishes Athersys perform multiple assay validation and/or make radioligand
binding determinations in addition to those specified in the preceding sentence, BMS shall bear the
additional cost thereof.

Generic Collaboration Cell Line Acceptance Criteria

	 	 	 	 	 
	 	 	 	 	Testing to determine if
	Category	 	Criteria	 	Criteria are Met by:
	1. Vector integration upstream of
target gene in HEK 293 or HT 1080
cells or other cell lines specified
by the Parties

	 	RT-PCR
demonstrating RIG
vector (RAGE
specific vector)
spliced to target
sequence mRNA
	 	Athersys
	 
	 	 	 	 
	2. Target gene mRNA
over-expression (RAGE vs. parental)

	 	Quantitative PCR
(qPCR)
demonstrating
>10 fold mRNA
increase
	 	Athersys
	 
	 	 	 	 
	3. Target protein over-expression
(RAGE vs. parental) and
functionality (Primary Assay
format)

	 	•     Functional
assay: such as
FLIPR with dose
response,
agonist/antagonist,
cAMP determination
	 	 
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	•     Protein
over-expression: a
ten-fold increase
of Target protein
in RAGE clone
versus parental, as
determined by
Western blot or
FACS analysis

	 	Athersys
	 
	 	 	 	 
	4. RAGE clone robustness

	 	•     Freeze/thaw
	 	 
	 
	 	 	 	 
	 

	 	•     Expression
stability (e.g.
qPCR) over four
weeks

	 	Athersys
	 
	 	 	 	 
	5. RAGE cell line performance in HTS

	 	Performance in
Primary Assay under
simulated HTS
conditions and
general Cell Line
characteristics.
	 	BMS

 

 

Exhibit B

MILESTONE PAYMENTS – CANDIDATE COMPOUNDS

	 	 	 
	Milestone	 	Payment
	Filing of first IND for the Candidate Compound directed against a
designated target expressed by an Accepted Cell Line
	 	$[*]
	Initiation of first Phase II clinical study for the Candidate Compound
	 	$[*]
	Initiation of first Phase III clinical study for the Candidate Compound
	 	$[*]
	Approval of a Product containing the Candidate Compound by Food and
Drug Administration as drug
	 	$[*]

As used in this Exhibit B, the phrase “Initiation of first Phase III clinical study” shall
be deemed to include, if a party conducts a Phase II/III study on a Candidate Compound, the point
during such Phase II/III clinical trial when the party conducting the trial has the regulatory
approval to proceed with such trial as a pivotal trial.

BMS shall promptly notify Athersys of the first occurrence of any milestone with respect to each
Candidate Compound. Milestone payments shall be made only once with respect to any given Candidate
Compound, regardless of the number of indications sought (or approvals obtained) with respect to
such Candidate Compound, whether alone or in combination with other compounds or products, and
regardless of any new dosage strengths, preparations or forms of administration for such Candidate
Compound.

If BMS develops as a back-up Candidate Compound that inhibits or otherwise modulates the activity
of a particular molecular target of a Candidate Compound on which BMS is already making milestone
payments, then BMS may conduct clinical development on such back-up or follow-on Candidate
Compounds and shall not be obligated to make any milestone payments with respect to any such
back-up or follow-on Candidate Compound, except as otherwise provided below. In the event that a
particular Candidate Compound is dropped from active clinical development work or marketing for
safety or efficacy reasons and is specifically replaced with a different Candidate Compound
targeting the same molecular target as such dropped Candidate Compound, such new Candidate Compound
shall be deemed a “Replacement Compound.” BMS shall not be obligated to make milestone payments
that were earlier made with respect to a dropped Candidate Compound and replaced by a Replacement
Compound, but, subject to the preceding paragraph, BMS shall pay all milestone payments for
milestone events achieved by such Replacement Compound that had not been achieved by such dropped
Candidate Compound.

 

			
	1	 	Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately with the Securities
and Exchange Commission.

 

2

Exhibit C

FORM PRESS RELEASE

[Athersys to supply initial draft]EX-10.4

 

EXHIBIT
10.4

CONFIDENTIAL

     Execution Copy

LICENSE AGREEMENT

By And Between

ATHERSYS, INC.

And

ANGIOTECH PHARMACEUTICALS, INC.

Effective as of May 5, 2006

 

 

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	 

-i-

 

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

-ii-

 

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.

 

 

     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.

-2-

 

     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

-3-

 

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

-4-

 

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.

-5-

 

          (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:

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