Document:

EX-4.2

 

EXHIBIT 4.2

[First Citizens Banc Corp Letterhead]

September 27, 2007

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Re: Registration Statement on Form S-4 (File No. 333 - 145931)

Ladies and Gentlemen:

First Citizens Banc Corp, an Ohio corporation (“First Citizens”), is today filing Pre-effective
Amendment No. 1 to Form S-4.

Pursuant to the instructions relating to the Exhibits in Item 601(b)(4)(iii) of Regulation S-K,
First Citizens hereby agrees to furnish the Commission, upon request, copies of instruments and
agreements defining the rights of holders of its long-term debt and of the long-term debt of its
consolidated subsidiaries, which are not being filed as exhibits to the Form S-4. None of such
long-term debt exceeds 10% of the total assets of First Citizens and its subsidiaries on a
consolidated basis.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	  	/s/
Richard J. Dutton
 	 
	 	 	Richard J. Dutton	 
	 	 	Senior Vice PresidentEX-10.2

 

EXHIBIT
10.2

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.

CELL LINE COLLABORATION AND LICENSE AGREEMENT

     This Cell Line Collaboration and License Agreement (the “Agreement”) is made and
entered into as of July 1, 2002 (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. Concurrently with entering into this Agreement, Athersys and BMS are amending that certain
Research Collaboration and License Agreement between the Parties dated December 8, 2000 (the
“Original Agreement”), regarding a pilot program relating to Athersys creating certain cell lines
for BMS expressing particular desired proteins using the RAGE-VT technology. For the avoidance of
doubt, the Parties’ respective rights and obligations with respect to such cell lines shall
continue to be governed by the Original Agreement (as may be amended from time to time) and not
this Agreement.

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

	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 “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 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
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 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 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 have the right
to 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 propose RAGE-VT cell lines hereunder from time to time in quantities reasonably
believed (taking into account, among other things, Athersys’ right under this Section 2.1, to
reject cell lines that BMS proposes) to be sufficient for Athersys to generate, and for BMS to
accept (subject to satisfaction of the acceptance criteria agreed upon by the Parties), a minimum
of fifteen (15) Collaboration Cell Lines over a three (3) year period (subject to Section 2.9),
beginning on the Effective Date, with five (5) in year one, five (5) in year two and five (5) in
year three; provided, however, that in the event Athersys rejects a RAGE-VT cell line nominated by
BMS, BMS shall always have a full sixty (60) day period within which to nominate a replacement cell
line, regardless of the deadline for meeting any applicable minimum under this Section 2.1.

     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.

          (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.

     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.

     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 one Collaboration Cell Line per year during the period prior to which the
Collaboration Cell Line is eligible to be deemed an Accepted Cell Line pursuant to Section 2.3(a).
If a Collaboration Cell Line is so terminated, then BMS shall be obligated to pay Athersys fifty
percent (50%) of the payment due for achievement of the milestone subsequent to the last previously
achieved milestone, under Section 4.1(a) or 4.1(c), as the case may be, for 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 the second year of the
collaboration program, by giving Athersys written notice of such termination at least ninety (90)
days prior to the second anniversary of the commencement of the collaboration program. 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 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.

     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:

	 	 	 	 	 
	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

	 	 	 	 

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.

 

			
	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.

 

 

          (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

	 	 	 	 

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.

          (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 $[*] 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 $[*] to be made
within thirty (30) days of such notice.

     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.

 

			
	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.

 

 

     4.3 Royalty Payments. BMS shall pay Athersys a royalty equal to [*] percent ([*]%) of Net
Sales of all Products worldwide. 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 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.

 

			
	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.

 

 

	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 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 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.

     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 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 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.

          (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:

	 	 	 
	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 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 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.

* * *

 

 

     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:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

 

 

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

 

 

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 up to three (3) such
Collaboration Cell Lines in a particular year, and, in the aggregate, not more than fifty percent
(50%) of the Collaboration Cell Lines during the term of this Agreement, 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

	 	Athersys
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

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

	 	•     Freeze/thaw

	 	Athersys
	 
	 	 	 	 
	 

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

 

 

Exhibit C

FORM PRESS RELEASE

Exhibit C

ATHERSYS EXPANDS PARTNERSHIP WITH BRISTOL-MYERS SQUIBB

CLEVELAND, August 5, 2002 - Athersys Inc. today announced that it has successfully
completed the initial phase of its alliance with Bristol-Myers Squibb Company (NYSE: BMY)
and has expanded the collaboration to include the delivery of additional validated drug targets
during the next 3 years, with guaranteed yearly minimums.  The agreement covers the use of the
targets for drug discovery in multiple therapeutic areas.

The companies originally entered into a research and development collaboration in January 2001.
Under the terms of that agreement, Athersys applied its RAGE-VTTM technology to provide
Bristol-Myers Squibb with an initial set of validated drug targets for use in pharmaceutical
screening and development. The collaboration anticipated a potential expansion upon successful
conclusion of the initial phase, at the option of both companies.

Bristol-Myers Squibb plans to use its combinatorial chemistry capabilities to develop small
molecule drug candidates against the validated drug target cell lines produced and optimized for
high-throughput screening by Athersys. In exchange, Athersys will receive license fees for each
target cell line, as well as milestone payments on the development of therapeutic candidates, and
royalty payments on sales of products that are developed by Bristol-Myers Squibb against the
designated drug targets.

“Athersys is committed to partnering with leading pharmaceutical companies like Bristol-Myers
Squibb to provide access to cell lines expressing validated biological targets for applications in
high-throughput drug screening and lead compound optimization. Our relationship with Bristol-
Myers Squibb has been highly successful and the expansion of this collaboration marks an
important landmark for Athersys,” said Gil Van Bokkelen, Ph.D., chairman, president and chief
executive officer of Athersys. “This collaboration is in keeping with our overall business strategy
to improve our partners’ access to drug targets, while using the revenues from these
collaborations to build our in-house pipeline of novel therapeutics.”

Athersys is a functional genomics and biopharmaceutical company engaged in the development,
application and commercialization of novel gene expression tools and therapeutic products. The
company’s research and development programs are focused on its two proprietary platform
technologies: RAGE (Random Activation of Gene ExpressionTM) and SMCTM (Synthetic
MicrochromosomeTM) vector system. RAGE is a novel gene expression system that provides the
unique ability to produce protein from virtually every gene in the
human genome, without  requiring the cloning of individual genes or use of cDNA libraries. RAGE greatly accelerates the
identification and validation of novel drug targets by enabling the direct correlation of a disease
process or characteristic with expression of a specific protein. As a result, RAGE has powerful
applications in functional genomics; the generation of validated drug targets; discovery of novel
antibody drug targets; structural proteomics and rational drug design; and the production of protein
therapeutics. Athersys is developing novel therapeutic products based on its proprietary
technologies, through partnerships and internal research and development programs. This press
release and further information on Athersys, Inc. can be found on the World Wide Web at:
www.athersys.com.

Statements herein that are not descriptions of historical facts are forward-looking and subject to
risk and uncertainties. Actual results could differ materially from those currently anticipated due
to a number of factors, including risks relating to the early stage of products under development;
uncertainties related to patent protection; uncertainties relating to clinical trials; dependence on
third parties, including strategic partners, collaborators and key personnel; and risks relating to
the development and commercialization, if any, of Athersys’ proposed products (such as
effectiveness of our products, marketing, manufacturing, safety, regulatory, patent or product
liability, supply, competition and other risks).

Contacts:

William Lehmann
Executive Vice President
Corporate Development and Finance
Athersys Inc.
(216) 431-9900 
bjlehmann@athersys.com

###

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