Document:

exv10w1

Exhibit 10.1

TENTH AMENDMENT TO FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

     THIS TENTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (herein called
this “Amendment”) made as of the 10th day of November, 2011 by and between Priority Fulfillment
Services, Inc. (“Borrower”) and Comerica Bank (“Bank”),

W I T N E S S E T H:

     WHEREAS, Borrower and Bank have entered into that certain First Amended and Restated Loan and
Security Agreement dated as of December 29, 2004 (as from time to time amended or modified, the
“Original Agreement”) for the purposes and consideration therein expressed, pursuant to which Bank
became obligated to make loans to Borrower as therein provided; and

     WHEREAS, Borrower and Bank desire to amend the Original Agreement to establish a credit line
for equipment financing and for the other purposes set forth herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained herein and in the Original Agreement, in consideration of the loans which may hereafter
be made by Bank to Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I.

Definitions and References

     § 1.1 Terms Defined in the Original Agreement. Unless the context otherwise requires or unless otherwise
expressly defined herein, the terms defined in the Original Agreement shall have the same meanings
whenever used in this Amendment.

     §1.2 Other Defined Terms. Unless the context otherwise requires, the following terms when used in this
Amendment shall have the meanings assigned to them in this §1.2:

     “Amendment” means this Tenth Amendment to First Amended and Restated Loan and
Security Agreement.

     “Loan Agreement” means the Original Agreement as amended hereby

ARTICLE II.

Amendments to Original Agreement

     § 2.1 Credit Extensions. Section 2.1 of the Original Agreement is hereby amended to add the following
subsection (f) thereto:

 

 

     (f) Equipment Advances.

      (i) Subject to and upon the terms and conditions of this Agreement, Bank agrees
to make advances (each an “Equipment Advance” and, collectively, the “Equipment
Advances”) to Borrower in two tranches, Tranche A and Tranche B. Borrower may request
Equipment Advances under Tranche A at any time from the date hereof through the Tranche A
Availability End Date. Borrower may request Equipment Advances under Tranche B at any
time from the Tranche A Availability End Date through the Tranche B Availability End
Date. The aggregate outstanding amount at any time of Tranche A Equipment Advances and
Tranche B Equipment Advances shall not exceed the Maximum Equipment Line Availability.
Each Equipment Advance shall not exceed 100% of the invoice amount of equipment and
software approved by Bank from time to time (which Borrower shall, in any case, have
purchased within 90 days of the date of the corresponding Equipment Advance), including
taxes, shipping, warranty charges, freight discounts and installation expense
(collectively,  “Soft Costs”); provided that the aggregate amount of Equipment Advances made for
Soft Costs shall not exceed 20% of the aggregate principal amount of Equipment Advances.
Borrower will be allowed an initial Equipment Advance for equipment purchased no earlier
than June 1, 2011, subject to the aforementioned conditions.

      (ii) Interest shall accrue from the date of each Equipment Advance at the rate
specified in Section 2.3(a), and shall be payable in accordance with Section 2.3(c). Any
Equipment Advances that are outstanding under Tranche A on the Tranche A Availability End
Date shall be payable in 36 equal monthly installments of principal, plus all accrued
interest, beginning on May 15, 2012, and continuing on the same day of each month
thereafter through April 15, 2015, at which time all amounts due in connection with
Tranche A Equipment Advance made under this Section 2.3(f). shall be immediately due and
payable. Any Equipment Advances that are outstanding under Tranche B on the Tranche B
Availability End Date shall be payable in 30 equal monthly installments of principal,
plus all accrued interest, beginning on November 15, 2012, and continuing on the same day
of each month thereafter through April 15, 2015, at which time all amounts due in
connection with Tranche B Equipment Advance made under this Section 2.1(f) shall be
immediately due and payable. Equipment Advances, once repaid, may not be reborrowed.
Borrower may prepay any Equipment Advances without penalty or premium.

      (iii) When Borrower desires to obtain an Equipment Advance, Borrower shall notify
Bank (which notice shall be irrevocable) by facsimile transmission to be received no
later than 3:00 p.m. Central time on the day on which the Equipment Advance is to be
made. Such notice shall be substantially in the form of   Exhibit C  . The notice
shall be signed by a Responsible Officer or its designee and include a copy of the
invoice for any Equipment to be financed.

     §  2.2 Interest Rates. Section 2.3 of the Original Agreement is hereby amended in its entirety to
read as follows:

          (a) Interest Rates.

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          (i) Advances. Except as set forth in Section 2.3(b), the Advances shall
bear interest on the outstanding daily balance thereof, at a variable rate equal to 2.0%
above the Prime Rate.

          (ii) Equipment Advances. Except as set forth in Section 2.3(b), the Equipment
Advances shall bear interest, on the outstanding daily balance thereof, at a rate equal to
2.25% above the Prime Rate.

          (iii) Standby Letter of Credit. Any drawn amount under the Standby Letter of
Credit shall bear interest, on the outstanding daily balance thereof, at the rates set forth
in the Reimbursement Agreement.

     (b) Late Fee; Default Rate. If any payment is not made within 10 days after
the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i)
5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged
under applicable law. All Obligations shall bear interest, from and after the occurrence
and during the continuance of an Event of Default, at a rate equal to 5 percentage points
above the interest rate applicable immediately prior to the occurrence of the Event of
Default.

     (c) Payments. Interest hereunder shall be due and payable on the
15th of each month during the term hereof. Bank shall charge such interest, all
Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts or
against the Committed Revolving Line, in which case those amounts shall thereafter accrue
interest at the rate then applicable hereunder. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.

     (d) Computation. In the event the Prime Rate is changed from time to time
hereafter, the applicable rate of interest hereunder shall be increased or decreased,
effective as of the day the Prime Rate is changed, by an amount equal to such change in the
Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis
of a 360 day year for the actual number of days elapsed.

     (e) Limitation on Interest. Borrower and Bank intend to contract in strict
compliance with applicable usury law from time to time in effect. In furtherance thereof
such persons stipulate and agree that none of the terms and provisions contained in the
Loan Documents shall ever be construed to provide for interest in excess of the maximum
amount of interest permitted to be charged by applicable usury law from time to time in
effect. If, notwithstanding the foregoing, any amount constituting interest is nonetheless
charged or collected in excess of the maximum amount of interest permitted to be charged by
applicable usury law from time to time in effect, then such excess shall, at the option of
the payee thereof, be credited on the amount of the obligations owed to such payee or
refunded by such payee to the payor thereof.

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     § 2.3 Financial Covenants. Section 6.7 of the Original Agreement is hereby amended in its
entirety to read as follows:

     6.7 Financial Covenants. Borrower shall at all times maintain the following
financial ratios and covenants, measured as of the last day of each calendar month unless
stated otherwise:

     (a) Liquidity Ratio. A ratio of (i) Cash (including all pledged Cash
with Bank for repayment of the Bonds) plus Eligible Accounts plus OLV (as defined
below) to (ii) all Indebtedness to Bank of at least 1.25 to 1.00. As used herein,
the term “OLV” means (i) zero until the completion of Bank’s review and approval of
an appraisal prepared by a third party appraiser satisfactory to Bank of Borrower’s
net fixed assets (the “approved appraisal”) and (ii) at all times thereafter, the
lesser of (x) the sum of 70% of the orderly liquidation value of Borrower’s net
fixed assets as determined by the approved appraisal plus the lesser of (1)
65% of Borrower’s actual cost for the Newly Acquired Fixed Assets or (2) at
Borrower’s sole discretion, 70% of the orderly liquidation value of the Newly
Acquired Fixed Assets as determined by a third party appraiser based on a “desktop”
review of the invoices for such Newly Acquired Fixed Assets or (y) $3,125,000. As
used herein, the term “Newly Acquired Fixed Assets” means those net fixed assets of
Borrower, if any, acquired by Borrower after August 31, 2011.

     (b) EBITDA. Through and including the period ending December 31, 2011,
as of the last day of each calendar month, the variance, if negative, then expressed
as a positive number, between Borrower’s EBITDA and the EBITDA set forth in the
Approved Projections for the twelve (12) calendar month period ending on such date,
shall not exceed $350,000. “Approved Projections” means for the 2011 calendar year,
the projections for such period that have been reviewed by Borrower’s Board of
Directors and delivered to Bank on or about March 9, 2011. Beginning January 1,
2012, the sum of (x) Borrower’s EBITDA for the twelve month period ending on the
date of determination plus (y) the Inflow Transfers completed in the then current
calendar year shall not be less than the sum of (i) the aggregate amount of
scheduled principal and interest payments on all Indebtedness for the twelve month
period ending on the date of determination excluding the annual Bond payment due in
January 2012 plus (ii) Outflow during the then current calendar year plus (ii)
$500,000. As used herein, “EBITDA” shall mean, for any period of calculation,
Borrower’s earnings for such period before interest and taxes plus depreciation,
amortization, non-cash stock compensation and non-cash payment rent expense to the
extent deducted in the calculation of such earnings. As used herein, the term
“Outflow” means cash dividends, cash distributions and cash Investments made by
Borrower to, or in, any entity that is an Affiliate of Borrower.

     (c) Tangible Net Worth. A consolidated Tangible Net Worth of

4

 

Guarantor not less than the greater of $20,000,000 or (ii) $2,000,000 plus the Tangible Net Worth of Guarantor required to be maintained pursuant to the terms
of the loan documents between Borrower and IBM Belgium Financial Services B.V.B.A.,
Wells Fargo Bank, National Association or IBM Credit LLC, as from time to time
amended, modified or restated.

     § 2.4 Negative Covenants. Section 7.12 of the Original Agreement is hereby amended in its
entirety to read as follows:

     7.12 Capital Expenditures. Make capital expenditures in an aggregate amount
greater than (i) $6,000,000 in Borrower’s fiscal year 2011, and (ii) $4,500,000 in each
fiscal year thereafter, provided that in each case, the aggregate amount of such
expenditures purchased with cash (and not financed) shall not exceed $1,500,000; provided
further, that any capital expenditures made by Borrower exclusively from the proceeds of
Permitted Distributions shall not be subject to the foregoing limitations. As used herein,
the term “capital expenditures” does not include (i) any software that is internally
developed by Borrower, whether or not Borrower capitalized the development costs, and (ii)
any equipment ordered, but not yet accepted or paid for, by Borrower.

     § 2.5 Definitions. The definitions of “Credit Extension”, “Maximum Equipment Line Availability”,
“Tranche A Availability End Date” and “Tranche B Availability End Date” in Exhibit A to the
Original Agreement are hereby amended in their entirety to read as follows:

     “Credit Extension” means each Advance, the Equipment Advances, or any other extension
of credit by Bank to or for the benefit of Borrower hereunder.

     “Maximum Equipment Line Availability” means $2,500,000.

     “Tranche A Availability End Date” means April 4, 2012.

     “Tranche B Availability End Date” means October 4, 2012.

     § 2.6 Exhibits. Exhibit E to the Original Agreement is hereby amended in its entirety to read as
set forth in Exhibit E attached hereto.

ARTICLE III.

Conditions of Effectiveness

     § 3.1 Effective Date. This Amendment shall become effective as of the date first above written
when and only when Bank shall have received, at Bank’s office, (a) a counterpart of this Amendment
executed and delivered by Borrower and the attached Consent and Agreement executed and delivered by
Guarantor, and (b) a facility fee for the Equipment Advances paid in good and immediately available
funds in the amount of $12,500.00, which fee shall be fully earned on the date hereof.

5

 

ARTICLE IV.

Representations and Warranties

     § 4.1 Representations and Warranties of Borrower. In order to induce Bank to enter into this
Amendment, Borrower represents and warrants to Bank that:

     (a) The representations and warranties contained in Article 5 of the Original Agreement
are true and correct at and as of the time of the effectiveness hereof, except to the extent
such representations or warranties relate to an earlier date in which case such
representation or warranty shall be true and correct as of such earlier date or as otherwise
disclosed to the Bank in writing.

     (b) Borrower is duly authorized to execute and deliver this Amendment and is and will
continue to be duly authorized to borrow and to perform its obligations under the Loan
Agreement. Borrower has duly taken all corporate action necessary to authorize the
execution and delivery of this Amendment and to authorize the performance of the obligations
of Borrower hereunder.

     (c) The execution and delivery by Borrower of this Amendment, the performance by
Borrower of its obligations hereunder and the consummation of the transactions contemplated
hereby do not and will not conflict with any provision of law, statute, rule or regulation
or of the organizational documents of Borrower, or of any material agreement, judgment,
license, order or permit applicable to or binding upon Borrower, or result in the creation
of any lien, charge or encumbrance upon any assets or properties of Borrower. Except for
those which have been duly obtained, no consent, approval, authorization or order of any
court or governmental authority or third party is required in connection with the execution
and delivery by Borrower of this Amendment or to consummate the transactions contemplated
hereby.

     (d) When duly executed and delivered, each of this Amendment and the Loan Agreement
will be a legal and binding instrument and agreement of Borrower, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency and similar laws applying to
creditors’ rights generally and by principles of equity applying to creditors’ rights
generally.

ARTICLE V.

Miscellaneous

     § 5.1 Ratification of Agreements. The Original Agreement as hereby amended is hereby ratified
and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document shall be
deemed to be a reference to the Original Agreement as hereby amended. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of Bank under the Loan Agreement or any other Loan Document nor
constitute a waiver of any provision of the Loan Agreement or any other Loan Document.

6

 

     § 5.2 Survival of Agreements. All representations, warranties, covenants and agreements of
Borrower herein shall survive the execution and delivery of this Amendment and the performance
hereof, including without limitation the making or granting of the Advances, and shall further
survive until all of the Obligations are paid in full. All statements and agreements contained in
any certificate or instrument delivered by Borrower hereunder or under the Loan Agreement to Bank
shall be deemed to constitute representations and warranties by, or agreements and covenants of,
Borrower under this Amendment and under the Loan Agreement.

     § 5.3 Loan Documents. This Amendment is a Loan Document, and all provisions in the Loan
Agreement pertaining to Loan Documents apply hereto.

     § 5.4 Governing Law. This Amendment shall be governed by and construed in accordance with the
laws of the State of California and any applicable laws of the United States of America in all
respects, including construction, validity and performance.

     § 5.5 Counterparts. This Amendment may be separately executed in counterparts and by the
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to constitute one and the same Amendment.

     THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

[Remainder of this page intentionally left blank]

7

 

     IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.

	 	 	 	 	 
	 	PRIORITY FULFILLMENT SERVICES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

COMERICA BANK

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

[Tenth Amendment — Signature Page]

 

 

	 	 	 	 	 

CONSENT AND AGREEMENT

     PFSWEB, INC., a Delaware corporation, hereby consents to the provisions of this Amendment and
the transactions contemplated herein, and hereby ratifies and confirms the Guaranty dated as of
December 29, 2004, made by it for the benefit of Bank, and agrees that its obligations and
covenants thereunder are unimpaired hereby and shall remain in full force and effect.

	 	 	 	 	 
	 	PFSWEB, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT E

COMPLIANCE CERTIFICATE

	TO:	 	 COMERICA BANK
	 
	FROM:	 	 PRIORITY FULFILLMENT SERVICES, INC.

The undersigned authorized officer of PRIORITY FULFILLMENT SERVICES, INC. hereby certifies that in
accordance with the terms and conditions of the First Amended and Restated Loan and Security
Agreement between Borrower and Bank (the “Agreement”) as amended, (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants, including without
limitation the ongoing registration of intellectual property rights in accordance with Section 6.8,
except as noted below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct in all material respects as of the date hereof. Attached herewith
are the required documents supporting the above certification. The Officer further certifies that
these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an accompanying letter or
footnotes.

Please indicate compliance status by circling Yes/No under “Complies” column.

	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	Monthly financial statements

	 	Monthly within 45 days
	 	Yes
	 	No
	Preliminary income statement

	 	Monthly within 30 days
	 	Yes
	 	No
	Annual (CPA Audited) of Guarantor

	 	FYE within 90 days
	 	Yes
	 	No
	Annual (CPA Audited) of BSD

	 	FYE within 90 days
	 	Yes
	 	No
	10K of Guarantor

	 	FYE within 90 days
	 	Yes
	 	No
	10Q of Guarantor

	 	Quarterly within 45 days
	 	Yes
	 	No
	A/R & A/P Agings, Borrowing Base Cert.

	 	Monthly within 30 days*
	 	Yes
	 	No
	A/R Audit

	 	Semi-Annual
	 	Yes
	 	No
	IP Report

	 	Quarterly within 30 days
	 	Yes
	 	No

 

			
	*	 	Weekly during any period that Tangible Net Worth
is <$21,000,000

	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	Complies
	Maintain on a Monthly Basis:
	 	 	 	 	 	 	 	 
	Liquidity Ratio
	 	1.25:1.00	 	_____:1.00	 	Yes	 	No
	EBITDA
	 	See Section 6.7(b)	 	$	 	Yes	 	No
	 
	 	 	 	 	 	 	 	 
	Minimum Tangible Net Worth of Guarantor
	 	> of $20,000,000	 	 	 	 	 	 
	 
	 	or $2,000,000 plus	 	 	 	 	 	 
	 
	 	IBM et al	 	 	 	 	 	 
	 
	 	requirement	 	$	 	Yes	 	No
	 
	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 

	Comments Regarding
Exceptions: See
Attached.

	 	BANK USE ONLY	 	 	 	 	 	 
	 

	 	Received by:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Sincerely,

	 	AUTHORIZED SIGNER	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 	 	 
	 

	 	 
 	 	 	 	 
	 

	 	Verified:	 	 	 	 	 	 
	 

	 	 
 	 	 	 	 
	SIGNATURE

	 	AUTHORIZED SIGNER	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 	 	 
	 

	 	 
 	 	 	 	 
	 
TITLE

	 	 	 	 	 	 	 	 
	 

	 	Compliance Status
	 	 	 	Yes
	 	NoExhibit 10.1

Exhibit 10.1

TERMINATION AGREEMENT

This Termination Agreement (“Agreement”) is entered into as of November 11, 2011 (“Effective
Date”) by and between Athersys, Inc. and ABT Holding Company (f/k/a Athersys, Inc.), each a
corporation organized under the laws of Delaware and having a place of business at 3201 Carnegie
Avenue, Cleveland, Ohio 44115 (collectively, “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, British Columbia, Canada V6A 1B6 (“Angiotech”). In this Agreement,
Athersys and Angiotech may each be referred to as a “Party” and collectively as the “Parties.”

RECITALS

A. Angiotech and Athersys are parties to that certain Strategic Alliance Agreement dated May
5, 2006 (the “Alliance Agreement”) and certain other agreements entered contemporaneously therewith
or thereafter in furtherance of the transactions contemplated by the Alliance Agreement (the
“Transaction Agreements”, as further defined below).

B. The parties desire to terminate the Transaction Agreements as of the Effective Date upon
the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the covenants and obligations expressed herein, and
intending to be legally bound, the Parties agree as follows:

	1.	 	DEFINITIONS

Capitalized terms used in this Agreement shall have the meaning set forth in the preamble or
Recitals above or as defined in this Section 1 below or this Agreement thereafter.

“Affiliate” means, with respect to a Party, any other person or entity that controls, is
controlled by, or is under common control with such Party.

“Convertible Promissory Note” means the Convertible Promissory Note by and between the Parties
dated as of May 5, 2006.

“License Agreement” means the License Agreement by and between the Parties dated as of May 5,
2006.

“Note Purchase Agreement” means the Note Purchase Agreement by and between the Parties dated as
of May 5, 2006.

 

 

 

“License Fee Payment” means any cash paid to Athersys that is (i) paid by a third party who is
not an Affiliate of Athersys, (ii) for a license or sublicense under intellectual property
controlled by Athersys and required to conduct or participate in
the clinical development of the “Clinical Development Candidate” (as such term is defined in
the Alliance Agreement) that is the subject of IND # 13554 for acute myocardial infarction and
(iii) paid to Athersys within six months after the effective date of the agreement granting
such license or sublicense, excluding any such payments for research, development, or
manufacturing. Examples of License Fee Payments include upfront license fees and the purchase
price for the assets associated with such candidate(s) and indication(s). Examples of payments
that are not License Fee Payments include payments for FTEs for research, development,
conducting clinical trials, or manufacturing, for the supply of cells or other materials, for
reimbursement of out of pocket expenses or other payments to third parties for goods or
services (with such designated payment amounts to be reasonable and customary for a product
development program of this type) and for payments for the purchase of stock of Athersys. It
is expected that such License Fee Payments or other aspects of any agreement relating to the
Clinical Development Candidate will be constructed in accordance with commercially reasonable
and prevailing industry practices as pertains to such agreements.

“Orthopedic Side Letter” means the letter re: Notice Requirements and Option for Orthopedic
Indications from Gil Van Bokkelen, President and CEO of Athersys, to Tom Bailey, Chief
Financial Officer of Angiotech, dated as of May 5, 2006.

“Sublicense Agreement” means the Sublicense Agreement by and between the Parties dated as of
May 5, 2006.

“Subordination Agreement” means the Subordination Agreement by and between the Parties dated as
of May 5, 2006.

“Transaction Agreements” means the Alliance Agreement, License Agreement, Sublicense Agreement,
Orthopedic Side Letter, Note Purchase Agreement, Subordination Agreement, Convertible
Promissory Note and any other agreements, written or oral, between the Parties related to the
foregoing.

	2.	 	TERMINATION

	2.1	 	Termination; No Survival. The Transaction Agreements are hereby terminated as of the
Effective Date. Notwithstanding Section 16.4 of the Alliance Agreement, Section 6.2 of the
License Agreement, Section 6.3 of the Sublicense Agreement, Section 5.1 of the Note Purchase
Agreement, and any other provision in any of the Transaction Agreements specified or
contemplated to survive termination of such agreement, no such provision shall survive. The
only obligations a Party shall have to the other Party with respect to the subject matter of
the Transaction Agreements after the Effective Date are those specified in this Agreement.

	2.2	 	Mutual Release. Each Party does hereby release and forever discharge the other
Party, its Affiliates and each of their respective directors, officers, employees, agents,
servants, representatives, partners, predecessors and successors in interest, assignees and
trustees (“Released Person”) from any and all claims, manner of action, causes of action,
suits, proceedings, debts, accounts, judgments, damages, costs, expenses, liens, attachments,
liabilities, rights, obligations or any other thing whatsoever, whether arising by contract,
at law or equity, civil or criminal,
known or unknown, contingent or non-contingent, that a party has now or may hereafter
acquire or claim to acquire at any time in the future against any Released Person by reason
of, or on account of, or in any way arising under, resulting or to result from, or relating
in any manner whatsoever to the Transaction Agreements.

 

 

 

	2.3	 	Indemnification. Athersys irrevocably and unconditionally indemnifies Angiotech and
each Angiotech Released Person against all losses and liabilities incurred by them, all harm
and damage sustained by them, and all costs or expenses (including legal fees on an indemnity
basis) payable by them, arising after the Effective Date in respect of third party claims
against Angiotech or an Angiotech Released Person based on the development, design and conduct
of the Phase II clinical trial that will evaluate the efficacy of the Clinical Development
Candidate, its successor trials and future development candidates, or out of the
implementation or use of any project or trial related to any other technology described in the
Transaction Agreements.

	3.	 	PAYMENTS AND SHARES

	3.1	 	Final Development Co-funding Payment. In full satisfaction of any and all amounts
due from Angiotech for its obligation to fund the costs of clinical development activities
(pursuant to Section 7.1 of the Alliance Agreement or otherwise), within five days after the
Effective Date, Angiotech shall pay to Athersys One Hundred Sixty Thousand United States
Dollars (USD $160,000.00) by wire transfer in immediately available funds to an account
designated by Athersys in writing.

	3.2	 	Athersys Contingent Payments. Athersys shall pay to Angiotech a share of any License
Fee Payments as follows.

	 	(A)	 	25% of any License Fee Payments paid to Athersys pursuant to any agreement
having an effective date (i) before enrollment of the first patient in the first Phase
II Study (as defined in the Alliance Agreement) and (ii) within 12 months after the
Effective Date; and

	 	(B)	 	15% of any License Fee Payments paid to Athersys pursuant to any agreement
having an effective date (i) during a Phase II Study, (ii) after enrollment of the
first patient in the first Phase II Study, (iii) before there has been Five Million US
Dollars (USD $5,000,000.00) in costs and expenses incurred in such Phase II Study, and
(iv) within 24 months after the Effective Date; and

 

 

 

	 	(C)	 	10% of any License Fee Payments paid to Athersys pursuant to an agreement
having an effective date (i) after enrollment of the first patient in the first Phase
II Study, (ii) after there has been Five Million US Dollars (USD $5,000,000.00) in
costs and expenses incurred in such Phase II Study, and (iii) within 36 months after
the Effective Date; provided,
however, that the amount due to Angiotech hereunder shall not exceed Five Million
US Dollars (USD $5,000,000.00) in aggregate.

	 	(D)	 	Athersys shall pay the amount due within 60 days after the License Fee
Payment subject to sharing with Angiotech is received by Athersys. Such payment(s)
shall be made by wire transfer to an account designated by Angiotech in writing.

	3.3	 	Angiotech Shares of Athersys. Angiotech shall provide to Athersys notice of
Angiotech’s intention to provide to any third party any bona fide offer to sell (which shall
in no event be less than 10 business days) or Angiotech’s receipt of any bona fide offer to
purchase any of the shares of Athersys common stock owned by Angiotech. The Parties shall
reasonably cooperate in connection with any such sale; provided, however, that such
cooperation shall not require Athersys to disclose to Angiotech or the potential purchaser of
stock any information about Athersys or its operations not publicly made available by Athersys
or otherwise take an action or fail to take any action that could be deemed a violation of any
law, regulation, or rule, as determined by legal counsel to Athersys.

	3.4	 	Taxes on Payments. Any withholding of taxes levied by tax authorities on the payments
hereunder shall be deducted by the Party required to make the payment (“Paying Party”) from
the sums otherwise payable by the Paying Party hereunder for payment to the proper tax
authorities on behalf of the other Party (“Payment Recipient”) and shall be paid by the Paying
Party to such proper tax authorities. The Parties agree to cooperate with each other in the
event the Payment Recipient claims exemption from such withholding or seeks deductions under
any double taxation or other similar treaty or agreement from time to time in force, such
cooperation to consist of providing receipts of payment of such withheld tax or other
documents reasonably available to the Parties.

	4.	 	CONFIDENTIALITY

	4.1	 	Confidential Information. “Athersys Confidential Information” means all
“Confidential Information” (as defined in the Alliance Agreement) that Angiotech was obligated
to keep confidential pursuant to the terms of the Transaction Agreements, including pursuant
to Article 13 of the Alliance Agreement, the terms and conditions of this Agreement, and
information related to the exercise of the Parties’ rights or the performance of the Parties’
obligations hereunder. “Angiotech Confidential Information” means all “Confidential
Information” (as defined in the Alliance Agreement) that Athersys was obligated to keep
confidential pursuant to the terms of the Transaction Agreements, including pursuant to
Article 13 of the Alliance Agreement, the terms and conditions of this Agreement, and
information related to the exercise of the Parties’ rights or the performance of the Parties’
obligations hereunder. “Confidential Information” shall mean Athersys Confidential
Information or Angiotech Confidential Information, as applicable. “Disclosing Party” means
Athersys with respect to Athersys Confidential Information and means 

 

 

 

Angiotech with respect to
Angiotech Confidential Information. “Receiving Party” means Athersys with respect to
Angiotech Confidential Information and Athersys with respect to Angiotech Confidential
Information. Notwithstanding the foregoing, the terms “Angiotech Confidential Information,”
“Athersys Confidential Information” and “Confidential Information” shall not include any
information of the Disclosing Party that: (A) was already known by the Receiving Party,
other than under an obligation of confidentiality, at the time of disclosure by the
Disclosing Party; (B) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the Receiving Party; (C) became generally available
to the public or otherwise part of the public domain after its disclosure to the Receiving
Party and other than through any act or omission of the Receiving Party in breach of this
Agreement; (D) was subsequently lawfully disclosed to the Receiving Party by a Third Party
on a non-confidential basis; (E) can be shown by written records of the Receiving Party to
have been independently developed by the Receiving Party without reference to the
Confidential Information of the Disclosing Party, and without breach of any of the
provisions of this Agreement; or (F) is information that the Disclosing Party has
specifically agreed in writing that the Receiving Party may disclose.

	4.2	 	Return or Destruction. Within 60 days after the Effective Date, Angiotech shall
return to Athersys or destroy all Athersys Confidential Information in the possession or
control of Angiotech or any of its Affiliates, in whatever form stored; provided, however,
that Angiotech may retain a copy of all such information in its legal department files for the
purposes of use in connection with any dispute under this Agreement or the Transaction
Agreements or the transactions contemplated hereby and thereby or compliance with law,
regulation, rule or order of any governmental authority.

	4.3	 	Confidentiality Obligations. Except as permitted pursuant to Section 4.4, for 20
years after the Effective Date:

	 	(A)	 	The Receiving Party shall keep completely confidential, and shall not publish
or otherwise disclose, and shall not use for any purpose, any Confidential Information
of the Disclosing Party.

	 	(B)	 	Except to the extent required by law, regulation, rule or order of any
governmental authority, Angiotech shall not make any public announcement or press
release concerning any of the Transaction Agreements or this Agreement, the
transactions contemplated by any of the foregoing, the rights or obligations of the
Parties under any of the foregoing, or any of the activities that have occurred or may
occur hereunder and thereunder.

 

 

 

	4.4	 	Permitted Disclosures. Notwithstanding Section 4.3:

	 	(A)	 	The Receiving Party may disclose Confidential Information of the Disclosing
Party to the extent the Receiving Party is compelled to disclose
such information by a court or other tribunal of competent jurisdiction; provided,
however, that in such case the Receiving Party shall immediately give notice to the
Disclosing Party, so that the Disclosing Party may seek a protective order or other
remedy from said court or tribunal. In any event, the Receiving Party shall
disclose only that portion of the Confidential Information of the Disclosing Party
that, in the opinion of its legal counsel, is legally required to be disclosed, and
will exercise reasonable efforts to ensure that any such Confidential Information
of the Disclosing Party so disclosed will be accorded confidential treatment by
said court or tribunal.

	 	(B)	 	The Receiving Party may disclose the terms and conditions of this Agreement
(including providing a copy hereof or thereof, redacted as appropriate) to any bona
fide potential permitted assignee or successor to a Party’s interest under this
Agreement, to any bona fide potential lender from which a Party is considering
borrowing money, or to any bona fide investor from which it may receive money (for
stock or other consideration), or in the case of Athersys, to any bona fide potential
collaborator; provided, however, in any such case such that the Receiving Party shall
first obtain a written obligation of confidentiality no less stringent than that
imposed on the Receiving Party under this Agreement from the bona fide potential
permitted assignee or successor, bona fide potential lender, bona fide financial
investor or bona fide potential collaborator.

	 	(C)	 	Athersys may disclose the terms and conditions of this Agreement and the
Transaction Agreements (including providing a copy hereof, redacted (as appropriate))
in connection with filings with the U.S. Securities and Exchange Commission or
otherwise pursuant to applicable securities laws and regulations, filings with the
Internal Revenue Service and otherwise pursuant to applicable tax laws and
regulations, or as otherwise required by law or regulation, to the extent that, in the
opinion of its legal counsel, is required or likely required to be disclosed by law or
regulation.

	5.	 	GENERAL

	5.1	 	Governing Law. This 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.

	5.2	 	Assignment. No Party shall be permitted to assign or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of the other
Party; provided, however, that a Party may assign or otherwise transfer all of its rights and
obligations under this Agreement 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 to which this
Agreement relates, 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 this Agreement must be assigned or otherwise
transferred together in their entirety to such assignee or successor.

 

 

 

	5.3	 	Compliance With Laws. Each Party shall comply with all applicable laws, rules and
regulations in connection with its performance of its obligations and exercise of its rights
under this Agreement. Each Party shall furnish to the other Party any information reasonably
requested or required by the requesting Party to enable the requesting Party to comply with
the requirements of any United States or foreign federal, state, and/or government agency.

	5.4	 	Further Assurances. At any time, or from time to time, following Effective Date,
each Party shall, at the request of the other Party (A) deliver or cause to be delivered to
the requesting Party any records, data or other documents consistent with the provisions of
this Agreement, (B) duly execute and deliver, or cause to be duly executed or delivered, all
such consents, assignments, documents or further instruments of transfer or license as
required by this Agreement, and (C) take or cause to be taken all such actions, in each case
as the requesting Party may reasonably deem necessary in order for the requesting Party to
obtain the full benefits of this Agreement and the transactions contemplated hereby.

	5.5	 	Severability. In the event that any provision of this Agreement is determined to be
invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement
shall remain in full force and effect without said provision. In such event, the Parties
shall in good faith attempt to negotiate a substitute clause for any provision declared
invalid or unenforceable, which substitute clause shall most nearly approximate the intent of
the Parties in agreeing to such invalid provision, without itself being invalid.

	5.6	 	Waivers And Amendments; Preservation Of Remedies. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and conditions hereof may
be waived, only by a written instrument signed by the Parties or, in the case of a waiver, the
Party waiving compliance. No delay on the part of any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any
Party of any right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or other exercise thereof hereunder.
The rights and remedies herein provided are cumulative and are not exclusive of any rights or
remedies which any Party may otherwise have at law or in equity.

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

	5.8	 	Counterparts. This Agreement 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.

 

 

 

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

	5.10	 	Notices. All notices, requests, demands, claims and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered personally, by
fax, sent by nationally recognized overnight courier or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the Parties at the addresses set forth below
(or at such other address for such party as shall be specified by like notice). All such
notices and other communications shall be deemed to have been given and received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of delivery by
facsimile transmission, on the date of such delivery, (c) in the case of delivery by
nationally recognized express courier, on the date of such delivery, and (d) in the case of
mailing within the United States or Canada, 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: Chief Executive Officer

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

12265 El Camino Real, Suite 200

San Diego, CA 92130

Fax: 858.314.1250

Attn: Thomas A. Briggs, Esq.

 

 

 

	5.11	 	Independent Contractor. No 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 this Agreement. No Party has any 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 this Agreement.

	5.12	 	Complete Agreement. This Agreement, including any definitions specifically
referenced in the Alliance Agreement, constitutes 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.

[Signatures are on the following page.]

 

 

 

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this
Agreement to be effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ATHERSYS, INC.	 	 	 	ANGIOTECH PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ William O. Lehmann	 	 	 	By:	 	/s/ Thomas Bailey	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	William O. Lehmann
	 	 	 	 	 	Name:
	 	Thomas Bailey	 	 
	 

	 	Title:
	 	President & COO
	 	 	 	 	 	Title:
	 	President / CEO	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ABT HOLDING COMPANY	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ William O. Lehmann	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	William O. Lehmann	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	President & COO

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