Document:

EX-10.5

 

EXHIBIT
10.5

CONFIDENTIAL

Execution Copy

SUBLICENSE AGREEMENT

By And Between

ATHERSYS, INC.

And

ANGIOTECH PHARMACEUTICALS, INC.

Effective as of May 5, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE I. DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE II. LICENSE GRANT	 	 	5	 
	 

	 	 	2.1	 	 	License Grants By Athersys	 	 	6	 
	 

	 	 	2.2	 	 	Reservation Of Rights	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE III. PAYMENTS	 	 	6	 
	 

	 	 	3.1	 	 	Payments	 	 	6	 
	 

	 	 	3.2	 	 	Reports	 	 	7	 
	 

	 	 	3.3	 	 	Manner Of Conversion	 	 	7	 
	 

	 	 	3.4	 	 	Records Retention And Audit Rights	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IV. PATENTS	 	 	7	 
	 

	 	 	4.1	 	 	Patent Filing, Prosecution and Commencement or Settlement of Litigation	 	 	7	 
	 

	 	 	4.2	 	 	Patent Infringement	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE V. ADDITIONAL COVENANTS	 	 	8	 
	 

	 	 	5.1	 	 	Compliance	 	 	8	 
	 

	 	 	5.2	 	 	Covenants Regarding The Manufacture Of Licensed Products	 	 	8	 
	 

	 	 	5.3	 	 	Use Of The University’s Name And Trademarks Or The Names Of
University Faculty, Staff Or Students	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VI. TERM AND TERMINATION	 	 	9	 
	 

	 	 	6.1	 	 	Term	 	 	9	 
	 

	 	 	6.2	 	 	Use of Technology Not Covered by University Patent	 	 	9	 
	 

	 	 	6.3	 	 	Termination	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VII. CONFIDENTIALITY	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VIII. REPRESENTATIONS; WARRANTIES; COVENANTS	 	 	10	 
	 

	 	 	8.1	 	 	Authority	 	 	10	 
	 

	 	 	8.2	 	 	Additional Representations, Warranties and Covenants of Athersys	 	 	10	 
	 

	 	 	8.3	 	 	No Conflicts	 	 	11	 
	 

	 	 	8.4	 	 	Disclaimers	 	 	11	 
	 

	 	 	8.5	 	 	Indemnification Of University By Angiotech	 	 	11	 

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TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IX. DISPUTE RESOLUTION	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	11	 
	 

	 	 	10.1	 	 	Governing Law	 	 	11	 
	 

	 	 	10.2	 	 	Minnesota Government Data Practices Act And Trade Secret Information	 	 	12	 
	 

	 	 	10.3	 	 	Assignment	 	 	12	 
	 

	 	 	10.4	 	 	Compliance With Laws	 	 	12	 
	 

	 	 	10.5	 	 	Further Assurances	 	 	13	 
	 

	 	 	10.6	 	 	Severability	 	 	13	 
	 

	 	 	10.7	 	 	Waivers And Amendments; Preservation Of Remedies	 	 	13	 
	 

	 	 	10.8	 	 	Headings	 	 	13	 
	 

	 	 	10.9	 	 	Counterparts	 	 	13	 
	 

	 	 	10.10	 	 	Successors	 	 	13	 
	 

	 	 	10.11	 	 	Notices	 	 	13	 
	 

	 	 	10.12	 	 	No Consequential Damages	 	 	14	 
	 

	 	 	10.13	 	 	Independent Contractor	 	 	14	 
	 

	 	 	10.14	 	 	Complete Agreement	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	SCHEDULES	 	 	 	 
	Schedule 1.15	 	 	 	 
	Schedule 1.31	 	 	 	 
	Schedule 2.1	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	EXHIBITS	 	 	 	 
	Exhibit A	 	 	 	 

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SUBLICENSE AGREEMENT

     This Sublicense Agreement (this “Sublicense 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 Sublicense Agreement, Athersys and Angiotech may each be referred to as
a “Party” and collectively as the “Parties.”

RECITALS

     WHEREAS, MCL LLC and the University (as defined below) entered into an Exclusive License
Agreement, dated May 17, 2002 (“University License Agreement”), and an Ownership Agreement, dated
May 17, 2002 (“Ownership Agreement”);

     WHEREAS, effective as of November 4, 2003, MCL LLC was merged into ReGenesys, LLC, a
subsidiary of Athersys, and thereafter the Ownership Agreement, the University License Agreement
and certain technology, including that which is the subject of the Ownership Agreement and the
University License Agreement, were assigned to Athersys, and as a result thereof, Athersys is the
exclusive licensee of the “University Patents” and “University Technology,” as each is defined in
the University License Agreement;

     WHEREAS, concurrently with the execution of this Sublicense 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;

     WHEREAS, concurrently with the execution of this Sublicense Agreement, Athersys and Angiotech
are entering into that certain License Agreement which grants to Angiotech rights to certain
technology and intellectual property owned by Athersys (the “License Agreement”);

     WHEREAS, collectively, the Strategic Alliance Agreement, the License Agreement and this
Sublicense Agreement are referred to herein as the “Transaction Agreements”; and

     WHEREAS, this Sublicense Agreement sets forth the terms and condition under which Athersys is
granting a sublicense to Angiotech to the technology and intellectual property licensed to Athersys
pursuant to the University License Agreement, including the “University Patents” and “University
Technology,” as further described below.

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

     1.1 “Affiliate” means, with respect to any Party, any corporation or other business entity
which directly or indirectly through one or more intermediaries controls, is controlled by, or is
under common control with such Party, but only for so long as the relationship exists. A
corporation or other entity shall be regarded as in control of another corporation or entity (a) if
it (or any of its subsidiaries or parents) beneficially owns, holds or directly or indirectly
controls more than fifty percent (50%) of the voting capital stock (or such lesser maximum
percentage permitted by applicable law) or other ownership interest of such other corporation or
entity, or (b) if it possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such other corporation or entity, or (c) if it possesses,
directly or indirectly, the power to elect or appoint more than fifty percent (50%) of the members
of the governing body of such other corporation or entity.

     1.2 “Angiotech” has the meaning ascribed to it in the preamble to this Sublicense Agreement.

     1.3 “Athersys” has the meaning ascribed to it in the preamble to this Sublicense Agreement.

     1.4 “Cells” means the following cells identified, developed, and/or intended for use for
treatment and/or prophylaxis of a disease or condition in humans: (a) MAPCs; (b) progeny or
components of any MAPCs; (c) derivatives of any of the foregoing (a) or (b); (d)
genetically-modified MAPCs; and (e) Athersys Stem Cells; and including, without limitation, cells
or tissues that are derived from any of the foregoing, as any of the foregoing cells might be at
the time of treatment (i) in their native, undifferentiated state, (ii) in a partially or fully
pre-differentiated state, (iii) primed for differentiation (for example, through the introduction
of a protein, peptide, gene, polynucleotide, small molecule or other active pharmaceutical
ingredient), or (iv) in a modified form.

     1.5 “Cell Therapy” means the treatment and/or prophylaxis of a disease or condition, by
regional, local, systemic or other delivery, localization and/or administration of Cells. The term
“Cell Therapy” specifically excludes using (a) any of the Cells as reagents; (b) any of the Cells
for diagnostic applications or assays; and (c) any of the Cells for drug and drug target validation
screening. The term “Cell Therapy” specifically includes (x) delivery, localization and/or
administration of a protein, peptide, gene, polynucleotide, small molecule or other active
pharmaceutical ingredient (or any combination of the foregoing) at or near the time of delivery,
localization and/or administration of Cells; (y) delivery, localization and/or administration of
one or more fractions and/or subsets of Cells; and (z) delivery, localization and/or administration
of one or more other cell types at or near the time of delivery, localization or administration of
Cells.

     1.6 “Cell Therapy Product” means a therapeutic and/or prophylactic product for humans that (a)
includes a Cell developed under the Strategic Alliance Agreement that is intended for use or used
as Cell Therapy for at least one Therapeutic Indication, and (b) has obtained Regulatory Approval
in a given country or jurisdiction in the Territory.

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     1.7 “Clinical Development Candidate” means (a) a Cell(s) that meets certain criteria and has
certain characteristics that are necessary and desirable for the submission of an Investigational
New Drug (“IND”) application for use of such Cell(s) in Cell Therapy for at least one Therapeutic
Indication (and, therefore, make such Cell(s) suitable for a Clinical Development Program), as
determined by the JSC; or (b) a Cell(s) that is or has been the subject of an IND for use of such
Cell(s) in Cell Therapy for at least one Therapeutic Indication. The term “Clinical Development
Candidate” shall expressly exclude Cell Therapy Products.

     1.8 “Clinical Development Plan” means, for each Clinical Development Candidate, a detailed
plan that sets forth the responsibilities of, and the activities to be conducted by, each of the
Parties in advancing each such Clinical Development Candidate to regulatory approval for a
Therapeutic Indication (including a detailed budget corresponding to each such plan).

     1.9 “Clinical Development Program” means the clinical development activities conducted by (or
to be conducted by) each Party pursuant to a Clinical Development Plan.

     1.10 “Company Technology” means the technology owned by Athersys through the Ownership
Agreement, namely, the “COMPANY Technology,” as defined in the Ownership Agreement.

     1.11 “Effective Date” has the meaning ascribed to it in the preamble to this Sublicense
Agreement.

     1.12 “License Agreement” has the meaning ascribed to it in the Recitals to this Sublicense
Agreement.

     1.13 “Licensed Patent” means a Patent that claims as an invention one or more aspects of the
Technology.

     1.14 “Licensed Product” means any Technology which is within the scope of one or more claims
of a Licensed Patent and, but for the sublicense granted in this Sublicense Agreement, would
infringe, constitute contributory infringement, or constitute inducement to infringe of one or more
such claims when made by, made for, used, sold, offered for sale, imported, exported, leased or
otherwise disposed of by Angiotech (or its permitted assignees, sublicensees, or transferees).

     1.15 “MAPC” means any multipotent adult progenitor cell, including without limitation those
described in the Patent Rights listed on Schedule 1.15 or described in any Patent Rights
that claim priority to any such Patent Rights listed on Schedule 1.15.

     1.16 “Ownership Agreement” has the meaning ascribed to it in the Recitals to this Sublicense
Agreement.

     1.17 “Party” and “Parties” each has the meaning ascribed to it in the preamble to this
Sublicense Agreement.

     1.18 “Patent” means any and all issued letters patents, including, but not limited to,
implementation, improvement, addition, utility model, or appearance design patents and

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inventors certificates, as well as patents that may issue from any divisions, reissues,
continuation, renewals and extensions of any of the foregoing.

     1.19 “Patent Rights” means rights in (a) issued Patents and pending provisional and
non-provisional applications for Patents, including, without limitation, any continuations,
continuations-in-part or divisions directed to inventions disclosed therein; (b) any
re-examinations, reissues, renewals, substitutions or extensions of any Patents; and (c) foreign
counterparts or equivalents of any of the foregoing.

     1.20 “Pre—Clinical Development Program” means the pre-clinical development activities
conducted by or for a Party in furtherance of advancing a Cell(s) into one or more potential
Clinical Development Candidates for a Therapeutic Indication.

     1.21 “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.

     1.22 “Strategic Alliance Agreement” has the meaning ascribed to it in the Recitals to this
Sublicense Agreement.

     1.23 “Sublicense Agreement Term” shall have the meaning set forth in Section 6.1.

     1.24 “Sublicense Net Sales” shall mean the amount invoiced for sales and other dispositions of
Licensed Products sold during the term of this Sublicense Agreement in any arm’s-length
transactions to any unrelated third-party transferee in any channels of distribution less the
following deductions: (a) all trade, quantity, cash or prompt payment discounts or rebates
actually allowed, (b) all credits and allowances actually granted due to rejections, returns,
defective Licensed Product, replacements, warranty, outdating, billing errors, and retroactive
price reductions, (c) customs duties and tariffs, (d) excise, sale, use, turnover, inventory,
value-added, foreign withholding, and equivalent taxes or other government charges, but not net
income or net profit taxes, (e) outbound transportation, insurance charges separately billed to
buyer or prepaid, and advertising allowances, (f) special outbound packing separately billed to
buyer or prepaid, (g) any sales agents, or brokers commissions paid to non-Affiliates, and (h) all
charges in connection with converting, transmitting, or remitting currency. Sales, credits,
refunds, and uncollectible accounts shall be accounted for when recognized by Angiotech according
to generally accepted accounting principles. Shipments between Angiotech and its Affiliates will
not be considered to be sold or otherwise disposed of until they are sold to a third party customer
of Angiotech or of its Affiliates. If a Licensed Product is sold in combination with another
component, Sublicense Net Sales, for purposes of determining royalties on the combination, will be
calculated by multiplying Sublicense Net Sales of the combination by the fraction A/(A+B), where A
is the invoice price of the Licensed Product if sold separately and B is the invoice price of any
other component(s) in the combination if sold separately. If the Licensed Product and the other
component(s) in the combination are not sold separately, Sublicense Net Sales, for purposes of
determining royalties on the combination, will be calculated by multiplying Sublicense Net Sales of
the combination by the fraction C/(C+D), where C is the direct cost of manufacturing the Licensed
Product and D is the direct cost of manufacturing any other component(s) in the combination. Cost
of manufacturing will be determined in accordance with generally accepted accounting principles.
In the event any

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Licensed Product is leased or sold on an installment basis, Sublicense Net Sales shall mean
the revenue stream as and when recognized as revenue by Athersys in accordance with generally
accepted accounting principles. Sublicense Net Sales shall not include any charitable gift by
Angiotech of any Licensed Product or the transfer of Licensed Product to an Affiliate or
non-Affiliate for conducting research or product development for Angiotech’s or Athersys’ benefit.
Sublicense Net Sales shall also exclude the transfer of Licensed Product to a research or
educational institution for research or educational purposes, provided such transfer was made for
no more than de minimus consideration.

     1.25 “Technology” means Company Technology and University Technology, including but not
limited to, multipotent postnatal derived progenitor cells, precursors, progeny or components
thereof, products and information obtained from the foregoing, processes and products utilized in
production or processing of any of the foregoing, methods of utilizing any of the foregoing, and
any Trade Secret Information or know-how relating to the foregoing. The term “Technology” shall
also include any invention involving multipotent postnatal derived progenitor cells (i) that is the
result of research conducted by or under the direction of Drs. Catherine Verfaillie, Leo Furcht or
Morayama Reyes while at the University or is the result of research conducted at the University by
a University faculty, staff or student using such cells provided by the University pursuant to
Section 3.3(a) of the University License Agreement; (ii) that is owned by the University
pursuant to its policies and agreements with its employees; and (iii) that is disclosed to the
University no later than the seventh (7th) anniversary of the “Effective Date” of the
University License Agreement.

     1.26 “Territory” means the world.

     1.27 “Therapeutic Field” means, as the context requires, a field comprising certain
cardiovascular indications.

     1.28 “Trade Secret Information” means trade secret as defined under the Minnesota Uniform
Trade Secrets Act, Minn. Stat. Section 325C.011 et seq.

     1.29 “University” means the Regents of the University of Minnesota, a constitutional,
educational corporation existing under the laws of the State of Minnesota, U.S.A.

     1.30 “University License Agreement” has the meaning ascribed to it in the Recitals to this
Sublicense Agreement.

     1.31 “University Patents” means a Patent Right that claims as an invention one or more aspects
of the University Technology. University Patents include, but are not limited to, the Patent Rights listed on Schedule 1.31

     1.32 “University Technology” means the technology that is owned by the University pursuant to
the Ownership Agreement, namely, the “University Technology,” as defined in the Ownership Agreement.

ARTICLE II.
LICENSE GRANT

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      2.1 License Grants By Athersys. Subject to the provisions of this Sublicense
Agreement, the applicable provisions of the Ownership Agreement and the University License
Agreement, and the Prior Third Party Agreements, Athersys grants to Angiotech during the Sublicense
Agreement Term:

          (a) a co-exclusive (meaning that only Athersys, Angiotech and their Affiliates can act in each
country of the Territory), worldwide, sublicense, with the right to further sublicense (through
multiple tiers of sublicensing), under the University Patents and University Technology to
research, develop, and otherwise use and exploit (but excluding 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, sublicense, with the right to further
sublicense (through multiple tiers of sublicensing), under the University Patents and University
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, sublicense, with the right to
sublicense (through multiple tiers of sublicensing), under the University Patents and University
Technology to make and have made Cells, Clinical Development Candidates and Cell Therapy Products
in the Therapeutic Field in the Territory.

     2.2 Reservation Of Rights. Except as expressly set forth in Section 2.1,
Athersys reserves all right, title and interest in, to and under the University Technology and
University Patents and all other technologies and intellectual property rights owned by or licensed
to Athersys or any of its Affiliates (other than the licenses granted to Angiotech pursuant to the
License Agreement). No right or license is granted under this Sublicense 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 University Technology or University Patents or any other
material, technology or intellectual property rights licensed to Athersys or any of its Affiliates,
except as expressly set forth in Section 2.1. The University reserves the rights set forth
in Section 3.2 and Section 3.3 of the University License Agreement.

ARTICLE III.

PAYMENTS

     3.1 Payments. All amounts to be paid by Angiotech for the rights granted by Athersys
pursuant to this Sublicense Agreement are included as part of the consideration to be paid by
Angiotech under the Strategic Alliance Agreement. For the avoidance of doubt, Athersys’
obligations to University under ARTICLE 5 of the University License Agreement shall remain
in full force and effect, and Athersys, in its sole responsibility and at its sole expense, shall
make any required payments thereunder.

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     3.2 Reports. The University License Agreement requires reporting of sales, leases or
other dispositions of Licensed Products notwithstanding that no separate payment is required by
Angiotech to Athersys under this Sublicense Agreement with respect thereto. Accordingly, within
forty-five (45) days after the last day of a calendar quarter during the Sublicense Agreement Term,
Angiotech shall deliver to Athersys a written report (a copy of the form of which is attached to
this Sublicense Agreement as Exhibit A), certified by Angiotech’s chief financial officer
as complete and correct, recounting the number and Sublicense Net Sales amount (expressed in United
States Dollars) of all sales, leases or other dispositions of Licensed Products during such
calendar quarter. If the number and Sublicense Net Sales amount of such sales, leases or other
dispositions of Licensed Products in any calendar quarter is zero, then Angiotech shall deliver a
written report to Athersys stating such information.

     3.3 Manner Of Conversion. All computations under this Sublicense Agreement shall be
in United States dollars. For purposes of determining the dollar value of transactions conducted
in non-United States dollar currencies, the exchange rate for the currency in dollars shall be the
rate set by Citibank, N.A., in New York, New York on the last business day of the month in which
the transaction was entered into.

     3.4 Records Retention And Audit Rights.

          (a) Throughout the Sublicense Agreement Term, Angiotech, at its expense, shall keep and
maintain for a period of three (3) years complete and accurate records of all sales, leases and
other dispositions of Licensed Products during the Sublicense Agreement Term.

          (b) On behalf of the University or Athersys, an independent certified public accountant, at
the University’s or Athersys’ expense, shall have the right to inspect and audit, once each year,
Angiotech’s records referred to in Section 3.4(a) at Angiotech’s address set forth in the
preamble of this Sublicense Agreement during Angiotech’s normal business hours. If the independent
certified public accountant, in accordance with the results of such inspection and audit,
determines that Angiotech has underpaid amounts owed to Athersys hereunder by at least five percent
(5%) or Forty-Two Thousand Dollars ($42,000), whichever is smaller, in any annual reporting period,
Angiotech shall reimburse the University or Athersys, whichever performed the audit, for all of the
University’s or Athersys’ reasonable expenses paid or owed to the accountants to inspect and audit
such records, in addition to payment to Athersys of all underpaid amounts.

ARTICLE IV.
PATENTS

     4.1 Patent Filing, Prosecution and Commencement or Settlement of Litigation. To the
extent permitted by the University License Agreement, and in a manner consistent with the Strategic
Alliance Agreement and the License Agreement, Athersys shall consult with Angiotech regarding
preparation, filing, prosecution, maintenance, and commencement or settlement of patent
infringement litigation related to University Patents and actual and potential patent applications
on any of the Technology for which Athersys is responsible, and shall provide copies to Angiotech
all official correspondence with patent authorities or courts related thereto. Athersys shall (a)
give Angiotech a reasonable opportunity to review and provide substantive

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input for material decisions relating to the filing, prosecution, maintenance and patent
infringement litigation commencement or settlement related to, and (b) shall consult with Angiotech
with respect to, each such University Patent and each such actual and potential patent application,
and shall supply Angiotech with a copy of each such University Patent and patent application as
filed, together with notice of its filing date and serial number. For the avoidance of doubt,
Athersys may take ministerial and non-material procedural actions regarding such University Patents
and patent applications without obtaining prior input from Angiotech. Athersys shall keep
Angiotech informed of the status of all such material patent filing, prosecution, maintenance and
patent infringement litigation commencement or settlement activities, shall provide written reports
to Angiotech at least semi-annually regarding the status of all filings, analyses, strategies,
decisions and proceedings involving such University Patents and patent applications. Angiotech
shall have the right to request and promptly receive additional information regarding such
University Patents and patent applications from Athersys.

     4.2 Patent Infringement. To the extent permitted by the University License Agreement,
and in a manner consistent with the Strategic Alliance Agreement and the License Agreement,
Athersys shall grant to Angiotech the same or substantially similar rights regarding enforcement of
University Patents, or defense of third-party claims alleging that the manufacture, production,
use, development, sale or distribution of products or any technology or intellectual property
licensed to Angiotech under this Sublicense Agreement infringes the patent rights of such third
party.

ARTICLE V.
ADDITIONAL COVENANTS

     5.1 Compliance. Each Party is solely responsible for compliance with, and shall
comply with, all applicable international, federal, state and local laws, rules and regulations in
connection with such Party’s use of the Technology, including, without limitation, all
environmental, import/export, security and food and drug laws, rules and regulations.

     5.2 Covenants Regarding The Manufacture Of Licensed Products. To the extent that
Angiotech has a right to manufacture Licensed Products, the following shall apply. Angiotech will
employ commercially reasonable efforts commensurate with the prevailing industry practices
pertaining to the Technology and/or the Licensed Products to minimize Licensed Products that are
defective in design or manufacture. Angiotech will manufacture, sell, or transfer Licensed
Products that comply with all applicable federal and state law, including all federal export laws
and regulations. Angiotech shall manufacture Licensed Products in the United States of America if
(a) the Licensed Product is to be sold in the United States of America and (b) the Licensed Product
embodies or is produced through use of an invention which is subject to the rights of the federal
government of the United States of America, unless Angiotech is granted a waiver of these
restrictions by the United States of America.

     5.3 Use Of The University’s Name And Trademarks Or The Names Of University Faculty, Staff
Or Students. Unless required by law or an order of a court or governmental agency, Angiotech
shall not use the name or trademarks of the University in promoting or advertising Angiotech or any
product of Angiotech or any Cell Therapy Product without the University’s prior written approval.
Angiotech may use the name of any of the University’s

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faculty, staff or student body members, upon obtaining such member’s written approval.
Notwithstanding this provision, Angiotech and its employees shall have the right to make truthful,
fair, good faith, non-promotional statements about the Technology, including the identity of the
University and any individuals involved with the Technology.

ARTICLE VI.
TERM AND TERMINATION

     6.1 Term. This Sublicense Agreement shall commence on the Effective Date and, unless
sooner terminated under Section 6.3, shall expire at the end of the life of the last to
expire University Patent. The period from the Effective Date through expiration or termination of
this Sublicense Agreement is the “Sublicense Agreement Term.”

     6.2 Use of Technology Not Covered by University Patent. During and after the
expiration or earlier termination of this Sublicense Agreement, Angiotech shall continue to have
the right to make, have made, use, sell, offer to sell, import, export, lease, or otherwise dispose
of any Technology that is not covered by a claim of a Licensed Patent.

     6.3 Termination.

          (a) Automatic. This Sublicense Agreement shall automatically terminate upon
termination of the License Agreement (except as provided for in Section 16.3 of the
Strategic Alliance Agreement) or termination of the University License Agreement. Termination of
this Sublicense Agreement due to termination of the University License Agreement does not by itself
automatically terminate the License Agreement.

          (b) Breach. The failure by a Party to substantially comply with any of the material
obligations contained in this Sublicense Agreement shall entitle the other Party to give notice to
have the default cured. If such default is not cured within sixty (60) days after the receipt of
such notice, or if by its nature such default is not capable of cure within such sixty (60)-day
period, the notifying Party shall be entitled, without prejudice to any of its other rights
conferred on it by this Sublicense Agreement, and in addition to any other remedies that may be
available to it, to terminate this Sublicense Agreement.

          (c) Effect Of Termination. Upon expiration or termination of this Sublicense
Agreement for any reason, the provisions of Article I, to the extent definitions are embodied in
the following listed Articles and Sections of this Agreement; Articles VII and IX; and Sections
2.2, 3.2 — 3.3 (solely with respect to Net Sales accrued before termination), 3.4, 6.2, this
6.3(c), 8.4, 8.5, 10.1, 10.2, and 10.5 — 10.14, as well as any obligations accrued, arising or owed
before the termination of this Sublicense Agreement shall survive any termination of this
Sublicense Agreement, as applicable.

ARTICLE VII.
CONFIDENTIALITY

     The terms of this Sublicense Agreement and the activities conducted and information shared
hereunder shall be considered “Confidential Information” under the Strategic Alliance Agreement and
subject to all of the terms and conditions with respect thereto under the Strategic

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Alliance Agreement; provided, however, that any disclosure by either Party as required under
the University License Agreement shall be deemed a permitted disclosure under Section 13.3
of the Strategic Alliance Agreement.

ARTICLE VIII.
REPRESENTATIONS; WARRANTIES; COVENANTS

     8.1 Authority. Each Party represents and warrants that, as of the Effective Date, it
has the full right, power and authority to enter into this Sublicense Agreement and that this
Sublicense Agreement has been duly executed by such Party and constitutes a legal, valid and
binding obligation of such Party, enforceable in accordance with its terms.

     8.2 Additional Representations, Warranties and Covenants of Athersys. Athersys represents,
warrants and covenants that:

          (a) it has provided Angiotech with a complete, current and accurate copy of the University
License Agreement, including all amendments thereto, as such agreement exists on the Effective
Date;

          (b) except as expressly provided in the University License Agreement, the Strategic Alliance
Agreement or the License Agreement, Athersys has no commitments or agreements with any Third Party
which would materially, individually or in the aggregate, interfere with or preclude the
fulfillment of its obligations under this Sublicense Agreement;

          (c) Athersys has carried out all requirements under the University License Agreement that are
necessary to enable it to validly grant sublicenses to Angiotech pursuant to the terms of the
University License Agreement, and that there are no other requirements necessary to enable Athersys
to validly grant sublicenses to Angiotech under the University License Agreement;

          (d) Athersys has received no notice of default under the University License Agreement, and
Athersys is not in default and, to the best of Athersys’ knowledge after due inquiry, there are no
circumstances existing on the Effective Date which, with notice or the passage of time or both,
could result in a default under the University License Agreement;

          (e) to the best of Athersys’ knowledge, the University License Agreement is a legal, valid and
binding agreement, enforceable in accordance with its terms except as enforceability may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors’ rights generally and by general equitable principles;

          (f) Athersys will use commercially reasonable efforts to negotiate and execute a letter
agreement with University that agrees and acknowledges that, should the University License
Agreement terminate through no fault of Angiotech, Angiotech, providing that it is not in default
under its sublicense from Athersys, shall have the right to continue to research, develop, promote,
market, distribute, advertise, sell, have sold, offer for sale, import and have imported and
otherwise use and exploit Licensed Products, as a direct licensee of University on 

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substantially
the same terms as the University License Agreement, to the extent such rights are granted to
Angiotech under this Sublicense Agreement;

          (g) Athersys will not take any action, or fail to take any required action, either of which
results in the termination of the University License Agreement prior to the expiration of its
natural term; and

          (h) within five (5) days of receipt, Athersys will provide Angiotech with copies of all
notices received from the University under Section 8.1.2 of the University License
Agreement, and Angiotech may, at its discretion, take any actions necessary and useful to cure or
prevent a breach of the University License Agreement that would likely lead to termination under
such Section.

     8.3 No Conflicts. Each Party represents and warrants that the execution, delivery and
performance of this Sublicense Agreement and the other Transaction Agreements do not conflict with,
or constitute a breach or default under, any of its charter or organizational documents, any law,
order, judgment or governmental rule or regulation applicable to it, or any material agreement,
contract, commitment or instrument to which it is a party.

     8.4 Disclaimers. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS SUBLICENSE
AGREEMENT OR ANY TRANSACTION AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS NOR EXTENDS ANY
WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, CONCERNING THE TECHNOLOGY,
LICENSED PRODUCTS AND UNIVERSITY PATENTS, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

     8.5 Indemnification Of University By Angiotech. Throughout the Sublicense Agreement
Term and thereafter, Angiotech shall indemnify, defend and hold the University harmless from all
suits, actions, claims, liabilities, demands, damages, losses, or reasonable and necessary expenses
(including reasonable attorneys’ fees and investigative expenses), relating to or arising out of
Angiotech’s acts relating to the manufacture, use, lease, sale or other disposition of Licensed
Product by Angiotech, including, without limitation, breach of contract, warranty, and products
liability claims relating to Licensed Product.

ARTICLE IX.
DISPUTE RESOLUTION

     The Parties shall resolve all disputes under this Sublicense Agreement in accordance with the
rules and procedures specified in the Strategic Alliance Agreement.

ARTICLE X.
MISCELLANEOUS

     10.1 Governing Law. This Sublicense Agreement 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 thereof.

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     10.2 Minnesota Government Data Practices Act And Trade Secret Information. Angiotech
acknowledges that the University is subject to the terms and provisions of the Minnesota Government
Data Practices Act, Minnesota Statutes, §13.01 et seq. (the “Act”). Angiotech further acknowledges
that the Act requires, with certain exceptions, the University to permit the public to inspect and
copy any information which the University shall have collected, created, received, maintained or
disseminated. Angiotech further acknowledges that in connection with the performance of its
obligations to the University, Athersys may deliver to the University certain Trade Secret
Information (as defined by the Act) that Angiotech deems proprietary and confidential and,
notwithstanding anything to the contrary in any agreement between Athersys and Angiotech or their
respective Affiliates, such delivery shall not be a breach of any such agreement. In the event the
University receives a request under the Act for the inspection of information collected, created,
received, maintained or disseminated, including, but not limited to, any Trade Secret Information,
the University should promptly notify Athersys of such request and should refuse to disclose such
information. In no event shall the University be required to commence any action to prohibit the
inspection and copying of any such information. However, the University should cooperate with
Angiotech and Athersys if Angiotech or Athersys commences or defends any action to prohibit such
inspection or copying. Angiotech shall reimburse the University for any of the University’s
reasonable and necessary expenses resulting from such cooperation. Angiotech shall defend,
indemnify and hold harmless the University and each of its regents, officers, employees and agents
from and against any claim, suit, demand or expense (including reasonable attorneys’ fees and
investigation expenses) that arose out of or are related to Angiotech’s request that the University
refuse to divulge any such information. If the University complies with the requirements of this
Section 10.2, Angiotech for itself and its employees and agents waives any claim or cause
of action of whatever nature against the University and each of its regents, officers, employees
and agents that arose out of or is related to a request to inspect or copy any such information and
the University shall not be liable to any person for any expenses or damages, including, but not
limited to, consequential, special or incidental damages, or lost profits, in connection with the
inspection or copying of any such information.

     10.3 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.

     10.4 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 Sublicense 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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     10.5 Further Assurances. At any time, or from time to time, following the date of the
Transaction Agreements, 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 the Transaction Agreements, (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 the Transaction Agreements, 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 the Transaction Agreements and the transactions
contemplated hereby.

     10.6 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.

     10.7 Waivers And Amendments; Preservation Of Remedies. The Transaction Agreements 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.

     10.8 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.

     10.9 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.

     10.10 Successors. This Sublicense Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns.

     10.11 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

-13-

 

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.

     10.12 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.

     10.13 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

-14-

 

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.

     10.14 Complete Agreement. This Sublicense 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, License 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 Sublicense 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:EX-10.6

 

EXHIBIT 10.6

ATHERSYS, INC.

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

          THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of the
28th day of April, 2000, is by and among Athersys, Inc. (the “Company”), Primus Capital Fund IV
Limited Partnership, Primus Executive Fund Limited Partnership, Blue Chip Capital Fund II Limited
Partnership, Miami Valley Venture Fund L.P., Sentron Medical Incorporated, Warburg Dillon Read LLC,
Ohio Innovation Fund I, L.P., The EBTC Foundation, Athersys Investors II, LLC, Hoegh Invest, AS and
NeoMed Innovation, ASA (collectively, the “Class C Investors”), and the investors listed on
Schedule A attached hereto (collectively the “Class F Investors” with the Class C Investors
and Class F Investors collectively being referred to as the “Investors”), Biotech 3 Investment
L.L.C. (“Biotech”), and each of the stockholders of the Company listed on Schedule B
attached hereto (individually, a “Stockholder” and collectively, the “Stockholders”).

WITNESSETH:

          WHEREAS, the Class F Investors and the Company executed that certain Securities Purchase
Agreement dated as of March 30, 2000 (the “Securities Purchase Agreement”), pursuant to which the
Class F Investors agreed to purchase from the Company shares of the Company’s Class F Convertible
Preferred Stock, par value $.01 per share, on certain terms and conditions contained in the
Securities Purchase Agreement (the “Purchase”); and

          WHEREAS, in connection with the Purchase the parties hereto execute this Agreement to amend
and restate the Amended and Restated Registration Rights Agreement, dated March 30, 2000, by and
among the Company, Biotech, the Class C Investors, certain Class F Investors and the Stockholders;
and

          WHEREAS, the Company desires to induce Class F Investors to consummate the Purchase by
executing this Agreement.

          NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained
herein, the parties agree as follows:

     1. Definitions.

          “Agreement” has the meaning set forth in the Recitals.

          “Amended Certificate” means the Amended and Restated Certificate of Incorporation of the
Company.

          “Biotech” has the meaning set forth in the Preamble to this Agreement.

 

 

          “Biotech Shares” means (i) any equity securities of the Company issued or issuable upon the
conversion of Preferred Shares held by Biotech or any transferee, successor or assign of Biotech;
(ii) any shares of equity securities of the Company held as the date hereof or acquired hereafter
by Biotech; (iii) any equity securities of the Company issued or issuable with respect to the
securities referred to in clauses (i) and (ii) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation or other
reorganization; and (iv) any other shares of equity securities of the Company held by persons
holding securities referred to in clauses (i), (ii) and (iii); provided, however, that Biotech
Shares shall not include any securities the sale of which has been registered pursuant to the
Securities Act or sold to the public pursuant to Rule 144 promulgated by the Commission under the
Securities Act. For purposes of this Agreement, a Person will be deemed to be a Holder of Biotech
Shares whenever such Person holds a security exercisable for or convertible into such Biotech
Shares, whether or not such exercise or conversion has actually been effected.

          “Class C Investors” has the meaning set forth in the Preamble to this Agreement.

          “Class C Investors’ Shares” means, at any time, the following shares held by any Class C
Investors: (i) any shares of Common Stock then outstanding that were issued upon conversion of the
Class C Preferred; (ii) any shares of Common Stock then issuable upon conversion of the Class C
Preferred; (iii) any shares of Common Stock then outstanding which were issued as, or were issued
directly or indirectly upon the conversion or exercise of other securities issued as, a dividend or
other distribution with respect to or in replacement of other Class C Investors’ Shares; (iv) any
shares of Common Stock then issuable directly or indirectly upon the conversion or exercise of
other securities which were issued as a dividend or other distribution with respect to or in
replacement of other Class C Investors’ Shares; and (v) any other Shares held by a Class C
Investor; provided, however, that Class C Investors’ Shares shall not include any shares of Common
Stock the sale of which has been registered pursuant to the Securities Act or sold to the public
pursuant to Rule 144 promulgated by the Commission under the Securities Act. For purposes of this
Agreement, a Person will be deemed to be a Holder of Class C Investors’ Shares whenever such Person
holds a security exercisable for or convertible into such Class C Investors’ Shares, whether or not
such exercise or conversion has actually been effected.

          “Class C Preferred” means the Class C Convertible Preferred Stock, par value $.01, of the
Company.

          “Class F Preferred” means the Class F Convertible Preferred Stock, par value $.01, of the
Company.

          “Class F Investors’ Shares” means, at any time, the following shares held by any Class
F Investors: (i) any shares of Common Stock then outstanding that were issued upon conversion of
the Class F Preferred; (ii) any shares of Common Stock then issuable upon conversion of the Class F
Preferred; (iii) any shares of Common Stock then outstanding which were issued as, or were issued
directly or indirectly upon the conversion or exercise of other securities issued as, a dividend or
other distribution with respect to or in replacement of other Class F Investors’ Shares; (iv) any
shares of Common Stock then issuable directly or indirectly upon the conversion or exercise of
other securities which were issued as a dividend or other distribution with respect to or in replacement of other Class F Investors’ Shares; and (v) any

2

 

other Shares held by a Class F Investor; provided, however, that Class F Investors’ Shares shall
not include any shares of Common Stock the sale of which has been registered pursuant to the
Securities Act or sold to the public pursuant to Rule 144 promulgated by the Commission under the
Securities Act. For purposes of this Agreement, a Person will be deemed to be a Holder of Class F
Investors’ Shares whenever such Person holds a security exercisable for or convertible into such
Class F Investors’ Shares, whether or not such exercise or conversion has actually been effected.

          “Common Stock” means common stock, par value $.01, of the Company.

          “Company” has the meaning set forth in the Preamble to this Agreement.

          “Demand Registrations” means, collectively, Long-Form Demand Registrations and Short-Form
Demand Registrations.

          “Demanding Shareholders” has the meaning set forth in Section 3(d).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder, all as the same shall be in effect at that time.

          “Holder” means any holder of Investors’ Shares or Registrable Securities who is a party to
this Agreement (or becomes a party hereto pursuant to Section 12 hereof) or is a successor
or assign or subsequent holder contemplated by Section 13(e) hereof.

          “Investors” has the meaning set forth in the Preamble to this Agreement.

          “Investors’ Shares” means, collectively, Class C Investors’ Shares and Class F Investors’
Shares.

          “IPO” means the Company’s first underwritten public offering of shares of common stock
consummated pursuant to a registration statement declared effective under the Securities Act, other
than a registration statement relating solely to the sale of securities to participants in a
company stock plan or a registration relating solely to a Rule 145 transaction.

          “Long-Form Demand Registration” has the meaning set forth in Section 3(a)(v).

          “Long-Form Registration” has the meaning set forth in Section 3(a)(i).

          “Person” means any individual, sole proprietorship, partnership, corporation, limited
liability company, unincorporated society or association, trust or other entity.

          “Piggyback Registration” has the meaning set forth in Section 2(a).

          “Preferred Shares” means the Class A Convertible Preferred Stock, $.01 par value, the Class B
Convertible Preferred Stock, $.01 par value, the Class C Convertible Preferred

3

 

Stock, $.01 par
value, the Class D Convertible Preferred Stock, $.01 par value, the Class F Convertible Preferred Stock, $.01 par value, the Class G Convertible Preferred Stock, $.01 par value, and any Blank Check
Preferred Stock, $.01 par value, now or hereafter issued.

          “Purchase” has the meaning set forth in the Preamble to this Agreement.

          “Registrable Securities” means, collectively the Class C Investors’ Shares, the Class F
Investors’ Shares and the Biotech Shares.

          “Registration Expenses” has the meaning set forth in Section 6(a).

          “S-2 Short-Form Registration” has the meaning set forth in Section 3(a)(iii).

          “S-3 Short-Form Registration” has the meaning set forth in Section 3(a)(iii).

          “SEC” means the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

          “Shares” means shares of capital stock of the Company.

          “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the SEC promulgated thereunder, all as the same shall be in effect at that time.

          “Securities Purchase Agreement” has the meaning set forth in the Preamble to this Agreement.

          “Short-Form Demand Registration” has the meaning set forth in Section 3(a)(v).

          “Short-Form Registration” has the meaning set forth in Section 3(a)(iii).

          “Stockholder” and “Stockholders” have the meanings set forth in the Preamble to this
Agreement.

     2. Piggyback Registrations.

     (a) Right to Piggyback. Whenever the Company proposes to register any of its
securities under the Securities Act, and the registration form to be used may be used for
the registration of Registrable Securities, the Company will give prompt written notice to
Biotech, the Investors and the Stockholders of its intention to effect such a registration
(a “Piggyback Registration”). The Company will include in such registration (i) all
Registrable Securities with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after the receipt of the Company’s notice, and
(ii) such other securities of the Company held by the Stockholders with respect to which the
Company has received written requests for inclusion therein within fifteen (15) days after
the receipt of the Company’s notice; provided, however, that no registration of
securities held by the Stockholders or any other stockholders pursuant to this
Section 2 shall be at the exclusion of any Registrable Securities.

4

 

     (b) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of securities requested to be
included in such registration exceeds the number that can be sold in an orderly manner in
such offering within a price range acceptable to the Company, the Company will include in
such registration shares in the following order until such limitation has been met: first,
the securities the Company proposes to sell; second, the Registrable Securities requested to
be included in such registration, pro rata among the holders of such Registrable Securities
on the basis of the number of Shares owned by each such holder; third, the securities
requested to be included in such registration by the Stockholders; and fourth, other
securities requested to be included in such registration; provided that in any event, after
the IPO, the Holders of the Registrable Securities shall be entitled to have their Shares
represent at least twenty-five percent (25%) of the total shares included in any such
registration.

     (c) Expiration of Piggyback Registration Rights. The “piggyback” registration
rights granted to Holders of Registrable Securities under this Section 2 shall
expire at the later of (i) ninety (90) days after all Registrable Securities are freely
tradeable to the public through a broker, dealer or market maker in compliance with Rule
144(k) under the Securities Act, without limitation (or any similar rule then in force) or
(ii) five (5) years after the closing of the IPO.

     3. Demand Registration.

     (a) Requests for Registration.

     (i) Subject to the terms and conditions of this Agreement, the Holders of a
majority of the then outstanding Class C Investors’ Shares at any time after the
earlier of (i) the consummation of the IPO or (ii) October 31, 2000 may request
registration under the Securities Act of all or part of their Class C Investors’
Shares on Form S-1 or any similar long-form registration statement (“Long-Form
Registration”) by delivering a written request to the Company to that effect;
provided, however, that, in the case of any such Long-Form Registration, the
aggregate offering value of all of the shares to be offered must be reasonably
expected to equal at least Five Million Dollars ($5,000,000).

     (ii) Subject to the terms and conditions of this Agreement, the Holders of at
least twenty-five percent (25%) of the then outstanding Class F Investors’ Shares at
any time after the earlier of (i) the consummation of an IPO or (ii) October 31,
2000, may request a Long Form Registration by delivering a written request to the
Company to that effect; provided, however, that, in the case of any such Long Form
Registration, the aggregate offering value of all of the shares to be offered must
be reasonably expected to equal at least Five Million Dollars ($5,000,000).

     (iii) Subject to the terms and conditions of this Agreement, the Holders
of at least twenty-five percent (25%) of the then outstanding Class C Investors’

5

 

Shares and Biotech Shares at any time may request registration under the Securities
Act of all or part of their Registrable Securities on Form S-2 (“S-2 Short-Form
Registration”) or S-3 (“S-3 Short-Form Registration”) or any similar short-form
registration statement (collectively, a “Short-Form Registration”), if available, by
delivering a written request to the Company to that effect; provided, however, that,
in the case of any such Short-Form Registration, the aggregate offering value of the
Class C Investors’ Shares and Biotech Shares requested to be included in such
registration pursuant to Section 3(a), including, without limitation,
Section 3(a)(v), must be reasonably expected to equal at least Five Hundred
Thousand Dollars ($500,000).

     (iv) Subject to the terms and conditions of this Agreement, the Holders of the
then outstanding Class F Investors’ Shares at any time may request a S-3 Short-Form
Registration of their Class F Investors’ Shares, if available, by delivering a
written request to the Company to that effect; provided, however, that, in the case
of any such S-3 Short-Form Registration, the aggregate offering value of the Class F
Investors’ Shares requested to be included in such registration pursuant to
Section 3(a), including, without limitation, Section 3(a)(v), must
be reasonably expected to equal at least Five Hundred Thousand Dollars ($500,000).

     (v) If the Holders of Registrable Securities initiating a registration pursuant
to Section 3(a) intend to distribute the Registrable Securities by means of
an underwriting, they shall so advise the Company in their written notice. Within
ten (10) days after receipt of any written request pursuant to (i), (ii), (iii) or
(iv) above, the Company will give written notice of such request to all of the
Investors and Biotech, and will include, subject to the terms of Section
3(d), in any such registration that constitutes a Demand Registration all
securities with respect to which the Company has received written requests from the
Investors and Biotech, for inclusion therein within fifteen (15) days after receipt
of the Company’s notice. Any Long-Form Registration and any Short-Form Registration
requested pursuant to this Section 3(a), other than a registration in which
the Company sells any of its securities in a primary offering, are referred to
herein, respectively, as a “Long-Form Demand Registration”, and a “Short-Form Demand
Registration”. The Company may elect to include its securities in a primary
offering in any registration requested pursuant to this Section 3(a);
provided, however, that if the Company sells any of its securities in a primary
offering, such offering shall not be deemed to be a Demand Registration and shall be
considered a Piggyback Registration and will be governed by Section 2.

     (b) Long-Form Demand Registrations. The Holders of Class C Investors’
Shares may request one Long-Form Demand Registration pursuant to Section 3(a)(i), and the
Holders of Class F Investors’ Shares may request two (2) Long-Form Demand Registrations
pursuant to Section 3(a)(ii). The Company will pay the Registration Expenses
therefor of the Company and the Holders of Investors’ Shares. A registration
will not count as a Long-Form Demand Registration under this Section 3 until
(i) it has become effective (and is not the subject of any stop order, injunction or other
order or

6

 

requirement of the SEC or other governmental agency or court for any reason); (ii)
the conditions to closing specified in the purchase agreement or underwriting agreement
entered into in connection with such registration statement are satisfied and (iii) the
Holders are able to register and sell at least seventy-five percent (75%) of their desired
Shares. Notwithstanding the terms of the preceding sentence, a registration which does not
become effective after the Company has filed a registration statement with respect thereto
solely by reason of the refusal to proceed of the Holders of Investors’ Shares (unless such
refusal is due to the disclosure of adverse information concerning the Company after such
demand is made) shall be deemed to have been effected by such Holders and count as a
Long-Form Demand Registration under this Section 3, unless the Holders of Investors’
Shares making such demand shall have elected to pay the Registration Expenses of the Holders
of Investors’ Shares incurred in connection therewith.

     (c) Short-Form Demand Registration. The Holders of Registrable Securities will
be entitled to request pursuant to Section 3(a)(iii) or Section 3(a)(iv),
respectively, no more than two (2) Short-Form Demand Registrations in any twelve (12) month
period. The Company will pay the Registration Expenses therefor of the Company and the
Holders of Registrable Securities in connection with any such registration. A registration
will not count as one of the Short-Form Demand Registrations under this Section 3(c)
until it has become effective; provided that in any event the Company will pay the
Registration Expenses of the Company and the Holders of Registrable Securities in connection
with any such registration initiated as a Short-Form Demand Registration. Notwithstanding
the terms of the preceding sentence, a registration that does not become effective after the
Company has filed a registration statement with respect thereto solely by reason of the
refusal to proceed of the Holders of Registrable Securities (unless such refusal is due to
the disclosure of adverse information concerning the Company after such demand is made)
shall be deemed to have been effected by such Holders and count as a Short-Form Demand
Registration under this Section 3(c), unless the Holders of Registrable Securities
making such demand shall have elected to pay the Registration Expenses of the Holders of
Registrable Securities incurred in connection therewith.

     (d) Priority on Demand Registrations. If a Demand Registration is an
underwritten public offering and the managing underwriters advise the Company that in their
opinion the number of Registrable Securities and other securities requested to be included
exceeds the number of Registrable Securities and other securities which can be sold in an
orderly manner in such offering without materially adversely affecting the price of the
Shares to be sold in such registrations, the Company will include in such registration shares in the following order until such limitation has been met: first, the number of
securities requested to be included therein by the Holders of Registrable Securities pro
rata among Holders of Registrable Securities on the basis of the number of Shares owned by
such Holders (the “Demanding Shareholders”), second, securities requested by the Company to
be included in such registration pursuant to “piggyback” rights hereunder; and third, other
securities requested by the Stockholders to be included in such registration.

     (e) Restrictions on Registrations.

7

 

     (i) The Company may postpone for a reasonable period, not to exceed an
aggregate of one hundred twenty (120) days in any twelve (12) month period, the
filing or the effectiveness of a registration statement for a Demand Registration,
if the Company determines reasonably and in good faith that such filing would have a
material adverse effect on any proposal or plan of the Company to engage in any
transaction, provided that in such event the Holders of Investors’ Shares initially
requesting such Demand Registration will be entitled to withdraw such request and,
if such request is withdrawn, such Demand Registration will not count as a permitted
Demand Registration hereunder, and the Company will pay all Registration Expenses in
connection with such withdrawn registration. In addition, the Company shall not be
required to effect any registration in accordance with the terms of this Agreement
within one hundred eighty (180) days after the effective date of the IPO or ninety
(90) days after the effective date of any subsequent primary offering (or combined
primary and secondary offering) of its securities (other than a registration
statement on Form S-8, or any successor forms or a registration on Form S-4 or
relating to a Rule 145 transaction). The Company may only provide the Delay Notice
only once in any twelve (12) month period.

     (ii) The rights granted under Section 3(a)(iii) and Section
3(a)(iv) shall expire ninety (90) days after all Registrable Securities are
freely tradeable to the public through a broker, dealer or market maker in
compliance with Rule 144(k) under the Securities Act, without limitation (or any
similar rule than in force).

     (iii) The Company shall not be required to effect a Long-Form Demand
Registration unless it is a firmly underwritten offering by an underwriter of
nationally recognized standing (but not limited to “Tier 1” or “Tier 2”
underwriters). The Company shall have the sole right to select such underwriter;
provided, that in the event the Company has not selected an underwriter within
thirty (30) days of the request for Demand Registration, the Demanding Shareholders
may select such underwriter subject to approval of the Company not to be
unreasonably withheld.

     (f) The Company shall give prompt notice to all holders of Registrable Securities of
the receipt of a request for registration pursuant to this Section 3.

     4. Holdback Agreements.

     (a) Biotech, the Investors and each Stockholder agree not to effect any public sale or
distribution (including sales pursuant to Rule 144 promulgated pursuant to the Securities
Act) of equity securities of the Company, or any securities convertible into or exchangeable
or exercisable for such securities without the prior written consent of the Company or the
managing underwriter for such period of time (not to exceed the period beginning seven days prior to and during the 180-day period beginning on the effective
date of the registration statement of the IPO) (except for sales of (i) securities as part
of such IPO, (ii) securities purchased in the IPO or (iii) securities purchased on the open
market after the IPO and as otherwise permitted under Rule 144(k)), unless the

8

 

underwriters managing the IPO otherwise agree; provided that all officers and directors of the Company
and, the holders of at least one percent (1%) of the Company’s capital stock enter into
similar agreements; further, provided, that the Company and the managing underwriter shall
agree not to release any of those other persons from the lock-up prior to the release of all
of the Investors and Biotech.

     (b) The Company agrees not to effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and during the 180-day period beginning on
the effective date of any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or Form S-4 or any
successor form), unless the underwriters managing the registered public offering otherwise
agree.

     5. Registration Procedures. Whenever the Holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this Agreement, the Company
will use its best efforts to effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto the Company will
expeditiously as possible:

     (a) Prepare and file with the SEC a registration statement with respect to such
Registrable Securities, and use its best efforts to cause such registration statement to
become effective and remain effective until the earlier of (i) the date when all Registrable
Securities covered by the registration statement have been sold, or (ii) 180 days from the
effective date of the registration statement; provided, however, that such 180-day period
shall be extended for a period of time equal to the period the holder refrains from selling
any securities included in such registration at the request of the Company or an underwriter
of any securities of the Company pursuant to Section 5(e); provided, further, that
before filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the counsel selected by the Holders of a majority of
the Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed including documents that are to be incorporated by reference
into such registration statement or supplement, which documents will be subject to the
review of such counsel, and which proposed registration statement or amendment or supplement
thereto shall not be filed by the Company if the Holders of a majority of the Registrable
Securities covered by such statement, amendment or supplement reasonably object to such
filing;

     (b) Prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to make and to
keep such registration statement effective for the period referred to in Section
5(a) and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set forth in
such registration statement;

     (c) Furnish to each Holder of Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus

9

 

included in such registration statement (including each preliminary prospectus) and any other documents
as such Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder;

     (d) Use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as may be reasonably
necessary and do any and all other acts and things that may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder;

     (e) Promptly notify each Holder of such Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the Securities Act, of the
occurrence of any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of any such Holder, the
Company will promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading; provided that, at the request of the Company or
the underwriter, each Holder shall refrain from selling securities included in such
registration until notified by the Company or the underwriter that such prospectus has been
supplemented or amended and no longer contains an untrue statement of material fact nor
omits any fact necessary to make the statements therein not misleading;

     (f) Promptly notify the Holders of Registrable Securities and the underwriters of the
following events: (i) the filing of the prospectus or any prospectus supplement and the
registration statement and any amendment or post-effective amendment thereto and, with
respect to the registration statement or any post-effective amendment thereto, the
declaration of the effectiveness of such documents; (ii) any requests by the SEC for
amendments or supplements to the registration statement or the prospectus or for additional
information; (iii) the issuance or threat of issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the initiation of any
proceedings for that purpose; and (iv) the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threat of initiation of any proceeding for such purpose;

     (g) Cause all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed and, if not so listed, to be
listed on the NASD automated quotation system and, if listed on the NASD automated quotation
system, use its best efforts to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ “national
market system security” within the meaning of Rule 11Aa2-1 under the Exchange Act,
failing that, to secure NASDAQ authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;

10

 

     (h) Provide a transfer agent and registrar for all such Registrable Securities not
later than the effective date of such registration statement;

     (i) Enter into any customary agreements (including, without limitation,
underwriting agreements in customary form), and take all other actions as the Holders of a
majority of the Registrable Securities being sold or the underwriters reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities (including,
without limitation, effecting a stock split or a combination of shares);

     (j) Make available for inspection to any Holder of Registrable Securities, any
underwriter participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such Holder or underwriter, all
financial and other records, pertinent corporate documents and properties of the Company,
and cause the Company’s officers, directors, employees and independent accountants to supply
all information reasonably requested by any such Holder, underwriter, attorney, accountant
or agent in connection with such registration statement, provided that, each such Holder or
underwriter, shall, upon the reasonable request of the Company, execute and deliver to the
Company a confidentiality and nondisclosure agreement relating to such information, provided
that such agreement shall contain such reasonable terms and conditions relating to
confidentiality and nondisclosure matters mutually agreeable to such Holder or underwriter
and the Company;

     (k) Otherwise use its best efforts to comply with all applicable rules and regulations
of the SEC, and make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve (12) months beginning with the
first day of the Company’s first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;

     (l) Permit any Holder of Registrable Securities to participate in the preparation of
such registration or comparable statement and to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment of such Holder and its
counsel should be included;

     (m) Make every reasonable effort to prevent the entry of any order suspending the
effectiveness of the registration statement and, in the event of the issuance of any such
stop order, or of any order suspending or preventing the use of any related prospectus or
suspending the qualification of any security included in such registration statement for
sale in any jurisdiction, the Company will use its best efforts promptly to obtain the
withdrawal of such order;

     (n) Use its best efforts to cause such Registrable Securities covered by such
registration statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the Holders thereof to consummate the
disposition of such Registrable Securities;

     (o) Cooperate with the selling Holders of Registrable Securities and the underwriters
to facilitate the timely preparation and delivery of certificates representing

11

 

Registrable Securities to be sold and not bearing any restrictive legends, and enable such Registrable
Securities to be in such lots and registered in such names as the underwriters may request
at least two business days prior to any delivery of Registrable Securities to the
underwriters;

     (p) Provide a CUSIP number for all Registrable Securities not later than the
effective date of the registration statement;

     (q) Prior to the effectiveness of the registration statement and any post-effective
amendment thereto and at each closing of an underwritten offering, obtain “cold comfort”
letters and updates thereof from the Company’s independent certified public accountants
addressed to the selling Holders of Registrable Securities and the underwriters, such
letters to be in customary form and covering matters of the type customarily covered in
“cold comfort” letters by underwriters in connection with primary underwritten offerings;
and

     (r) Take all such other actions either necessary or appropriate to permit the
Registrable Securities of a Holder to be registered and disposed of in accordance with the
method of disposition described herein.

     6. Registration Expenses.

     (a) All expenses incident to the Company’s performance of or compliance with this
Agreement including, without limitation, all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company, fees and disbursements of one
counsel selected by the participating Holders of Investors’ Shares in an amount not to
exceed Twenty Thousand Dollars ($20,000) for a Long-Form Demand Registration and Fifteen
Thousand Dollars ($15,000) for each Short-Form Demand Registration and Piggyback
Registration, and all independent certified public accountants, underwriters (excluding
discounts and commissions) and other persons retained by the Company (all such expenses
being herein called “Registration Expenses”), will be borne by the Company and the Company
will pay its internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance and the expenses and fees
for listing the securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated quotation system.

     (b) To the extent Registration Expenses are not required to be paid by the Company,
each Holder of securities included in any registration hereunder will pay those expenses
(including discounts and commissions) allocable to the registration of such Holder’s
securities so included, and any expenses (including discounts and commissions) not so
allocable will be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.

     7. Indemnification.

12

 

     (a) The Company agrees to indemnify to the extent permitted by law, each Holder
of Registrable Securities, its officers, directors and partners, as the case may be, and
each person who controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or allegedly untrue
statement of material fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or any omission or
alleged omission of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder expressly for use therein
or by such Holder’s failure to deliver a copy of the registration statement or prospectus or
any amendments or supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same. In connection with an underwritten offering, the
Company will indemnify such underwriters, their officers, directors and partners, as the
case may be, and each person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the indemnification of
the Holders of Registrable Securities.

     (b) In connection with any registration statement in which a Holder of Registrable
Securities is participating, each such Holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in connection with any
such registration statement or prospectus and, to the extent permitted by law, will,
severally and not jointly, if Registrable Securities held by such Holder are included in the
securities as to which such registration, qualification or compliance is being effected,
indemnify the Company, its directors and officers and each person who controls the Company
(within the meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or allegedly untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is contained in
any information so furnished in writing by such Holder; provided, that the obligation to
indemnify will be individual to each Holder and will be limited to the net amount of
proceeds received by such Holder from the sale of Registrable Securities pursuant to such
registration statement.

     (c) Any person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party’s reasonable judgment a
conflict of interest between such indemnified party and the indemnifying party may exist
with respect to such claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party. If such defense is
assumed by the indemnifying party, the indemnified party will not be subject to any
liability for any settlement made by the indemnifying party without its consent (but such
consent will not be unreasonably withheld); provided, however, that any consent to entry of
any judgment or entry into any settlement must include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a full release

13

 

from all liability in respect to such claim or litigation. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to pay the fees
and expenses of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. The failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its obligations under
this Section 7 unless the failure to give such notice is materially prejudicial to an
indemnifying party’s ability to defend such action, and then in such case, it shall be
relieved only to the extent of such material prejudice.

     (d) The indemnification provided for under this Agreement will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified party or any
officer, director or controlling person of such indemnified party and will survive the
transfer of securities, the completion of any offering of Registrable Securities in a
registration statement and the termination of this Agreement. The Company also agrees to
make such provisions, as are reasonably requested by an indemnified party, for contribution
to such party in the event the Company’s indemnification is unavailable for any reason.

     8. Participation in Underwritten Registrations. No person may participate in any
registration hereunder that is underwritten unless such person (a) agrees to sell such person’s
securities on the basis provided in any underwriting arrangements approved by the person or persons
entitled hereunder to approve such arrangements, and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.

     9. Reports Under the Securities Laws. With a view to making available to the Holders
of Registrable Securities the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit such Holder to sell securities of
the Company to the public without registration, the Company agrees to use its best efforts to:

     (a) Make and keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act, at all times subsequent to ninety (90) days
after the effective date of any registration statement covering an underwritten public
offering filed under the Securities Act by the Company;

     (b) File with the SEC in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act, at any time after it is subject
to such registration requirements; and

     (c) Furnish to any such Holder so long as such Holder owns any of the Registrable
Securities forthwith upon request a written statement by the Company that it has complied
with the reporting requirements of Rule 144 (at any time after ninety (90) days after the
effective date of the first registration statement filed by the Company for an offering of
its securities to the general public), and of the Securities Act and the Exchange Act any
time after it has become subject to such reporting requirements), a

14

 

copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by
the Company as may be reasonably requested by any such Holder in availing any such Holder of
any rule or regulation of the SEC permitting the selling of any such securities without
registration.

     10. Certain Limitations in Connection with Future Grants of Registration
Rights. From and after the date of this Agreement, the Company shall not enter into any
agreement with any holder or prospective holder of any securities of the Company providing for the
granting to such holder of registration rights unless such agreement is approved by the Holders of
seventy-five percent (75%) of the Registrable Securities then outstanding. Notwithstanding the
foregoing, any amendments or agreements that affect the rights of the Class C Preferred or grant
rights which are senior to or pari passu to the rights of the Class C Preferred must be approved by
Holders of at least seventy-five percent (75%) of the Class C Preferred, and any amendments or
agreements that affect the rights of the Class F Preferred or grant rights which are senior to or
pari passu to the rights of the Class F Preferred must be approved by Holders of at least
seventy-five percent (75%) of the Class F Preferred.

     11. Financial Statements; Inspection.

     (a) Delivery of Financial Statements. The Company shall deliver to each Holder
of at least 100,000 Class F Investors’ Shares (subject to adjustments for stock splits and
the like) (a “Major Class F Holder”):

               (i) Monthly Reports. As soon as available and in any event within thirty (30)
days after the end of each of the first eleven (11) months of each fiscal year of the
Company, consolidated balance sheets of the Company and its subsidiaries as of the end of
such months and consolidated statements of income and cash flows of the Company and its
subsidiaries for such month and for the period commencing at the beginning of the fiscal
year, and ending with the end of such month setting forth in each case in comparative form
the corresponding figures for the corresponding period of the preceding fiscal year, and
including comparisons to monthly budgets, all in reasonable detail; and

               (ii) Annual Reports. As soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Company, a copy of the annual audit report for
such year for the Company and its subsidiaries, including therein consolidated balance
sheets of the Company and its subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Company and its
subsidiaries for such fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year; and

               (iii) Budgets. As soon as available after approval by the Board of Directors,
but in any event at least thirty (30) days prior to the beginning of each fiscal year, a
business plan and operating budgets (prepared on a monthly basis) for the forthcoming fiscal
year.

     (b) Inspection. The Company shall permit each Major Class F Holder,
with such Holder to pay its own expenses, to visit and inspect the Company’s properties

15

 

during normal working hours, to examine its books of account and records and make copies
thereof and to discuss the Company’s affairs, finances and accounts with its officers, all
at such reasonable times, and upon reasonable notice, as may be requested by such Holder and
all such queries to be reasonably related to the Holder’s investment in the Company;
provided, however, that the Company shall not be obligated pursuant to this
Section 11(b) to provide access to any information which it deems in good faith to be a
trade secret or other confidential or proprietary information.

     (c) Termination of Information and Inspection Rights. The rights set forth in
Section 11(a) and (b) shall terminate as to each Holder and be of no further force or effect
when the Company is required to file reports (and does so) pursuant to Section 13 or 15(d)
of the Exchange Act.

     12. Transfer of Registration Rights. Provided that the Company is given written
notice by the Holder of Registrable Securities prior to, at the time of or reasonably soon after
such transfer stating the name and address of the transferee and identifying the securities with
respect to which the rights under this Agreement are being assigned, and provided that to the
Company’s reasonable satisfaction, such proposed transferee is not a competitor or potential
competitor of the Company, the rights granted to Holders hereunder may be transferred to any
transferee acquiring, in the aggregate, shares representing at least 100,000 Shares (subject to
adjustments for stock splits and the like).

     13. Miscellaneous.

     (a) No Inconsistent Agreements. The Company will not hereafter enter into any
agreement with respect to its securities which is inconsistent with or violates the rights
granted to the Holders of Registrable Securities in this Agreement.

     (b) Adjustments Affecting Registrable Securities. The Company will not take
any action, or permit any change to occur, with respect to its securities which would
materially and adversely affect the ability of the Holders of Registrable Securities to
include such Registrable Securities in a registration undertaken pursuant to this Agreement
or which would materially and adversely affect the marketability of such Registrable
Securities in any such registration (including, without limitation, effecting a stock split
or a combination of shares).

     (c) Remedies. Any person having rights under any provision of this Agreement
will be entitled to enforce such rights specifically to recover damages caused by reason of
any breach of any provision of this Agreement and to exercise all other rights granted by
law. The parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive relief in
order to enforce or prevent violation of the provisions of this Agreement.

     (d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior written

16

 

consent of the Company and Holders of at least seventy-five percent (75%) of the Registrable Securities
(excluding all Registrable Securities held by the Company). Notwithstanding the foregoing,
any amendments or agreements that affect the rights of the Class C Preferred or grant rights
which are senior to or pari passu to the rights of the Class C Preferred must be approved by
Holders of at least seventy-five percent (75%) of the Class C Preferred, and any amendments
or agreements that affect the rights of the Class F Preferred or grant rights which are
senior to or pari passu to the rights of the Class F Preferred must be approved by Holders
of at least seventy-five percent (75%) of the Class F Preferred.

     (e) Successors and Assigns. All covenants and agreements in this Agreement by
or on behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or not. In
addition, whether or not any express assignment has been made, the provisions of this
Agreement which are for the benefit of purchasers or Holders of Registrable Securities are
also for the benefit of, and enforceable by, any subsequent Holder of Registrable
Securities.

     (f) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.

     (g) Counterparts. This Agreement may be executed in two or more counterparts,
each of which constitutes an original and all of which counterparts taken together shall
constitute one and the same Agreement.

     (h) Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this Agreement.
The use of the word “including” in this Agreement shall be by way of example rather than
limitation.

     (i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.

     (j) 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, telecopied, sent by nationally recognized overnight courier (charges prepaid) or
mailed by registered or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses specified in the Class F Stock Purchase Agreement (or at such other
address for a party as shall be specified by like notice).

     (k) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, whether or not upon any breach or
default of the other party, shall impair any such right, power or remedy of such party nor
shall it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of any similar breach or default thereafter occurring; nor shall any waiver of

17

 

any single breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or character
on the part of any party of any breach or default under this Agreement, or any waiver on the
part of any party of any provisions or conditions of this Agreement, must be made in
writing, shall be effective only to the extent specifically set forth in such writing and
comply with Section 13(d) above. All remedies, either under this Agreement, or by law or
otherwise afforded to any Holder, shall be cumulative and not alternative.

     (l) Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement between the parties hereto pertaining to the subject matter
hereof and any other written or oral agreements between the parties hereto are expressly
canceled.

[BALANCE OF PAGE LEFT BLANK INTENTIONALLY]

18

 

          IN WITNESS WHEREOF, the parties have executed this Amended and Restated Registration Rights
Agreement as of the date first above written.

	 	 	 	 	 
	 	ATHERSYS, INC.

 	 
	 	By:  	/s/  Gil Van Bokkelen	 
	 	 	Name:  	Gil Van Bokkelen, Ph.D. 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

[STOCKHOLDER
SIGNATURES BEGIN ON FOLLOWING PAGE]
*Note: conformed
signatures of Investors, Biotech and the Stockholders intentionally
omitted from this filing

19

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