Document:

<PAGE>   1
                                                                   Exhibit 10.10

                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

             SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT

                              ELAN CORPORATION, PLC
         (ACTING THROUGH ITS DIVISION ELAN PHARMACEUTICAL TECHNOLOGIES)

                                       AND

                        ELAN INTERNATIONAL SERVICES, LTD.

                                       AND

                        ELAN PHARMA INTERNATIONAL LIMITED

                                       AND

                                 ATHERSYS, INC.

                                       AND

                               ATHERSYS NEWCO LTD

<PAGE>   2

                                      INDEX

CLAUSE 1    DEFINITIONS

CLAUSE 2    BUSINESS

CLAUSE 3    REPRESENTATIONS AND WARRANTIES

CLAUSE 4    AUTHORIZATION AND CLOSING

CLAUSE 5    DIRECTORS; MANAGEMENT AND R&D COMMITTEES

CLAUSE 6    THE BUSINESS PLAN AND REVIEWS

CLAUSE 7    RESEARCH AND DEVELOPMENT

CLAUSE 8    COMMERCIALIZATION

CLAUSE 9    SUBLICENSE AND ASSIGNMENT RIGHTS

CLAUSE 10   OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS

CLAUSE 11   INTELLECTUAL PROPERTY RIGHTS

CLAUSE 12   EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD

CLAUSE 13   REGULATORY

CLAUSE 14   MANUFACTURING

CLAUSE 15   TECHNICAL SERVICES AND ASSISTANCE

CLAUSE 16   AUDITORS, BANKERS, REGISTERED OFFICE,
            ACCOUNTING REFERENCE DATE; SECRETARY

CLAUSE 17   TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS;
            DRAG ALONG RIGHTS

CLAUSE 18   MATTERS REQUIRING PARTICIPANTS' APPROVAL

CLAUSE 19   DISPUTES

<PAGE>   3

CLAUSE 20   TERMINATION

CLAUSE 21   SHARE RIGHTS

CLAUSE 22   CONFIDENTIALITY

CLAUSE 23   COSTS

CLAUSE 24   GENERAL

<PAGE>   4

THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT (the "Agreement")
is made and entered into this 21st day of October, 1999.

BETWEEN:

(1)      ELAN CORPORATION, PLC, a public limited company incorporated under the
         laws of Ireland, acting through its division Elan Pharmaceutical
         Technologies and having its registered office at Lincoln House, Lincoln
         Place, Dublin 2, Ireland ("ELAN, PLC");

(2)      ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
         company incorporated under the laws of Bermuda that is wholly owned by
         Elan, plc, and having its registered office at Clarendon House, Church
         St., Hamilton, Bermuda ("EIS");

(3)      ELAN PHARMA INTERNATIONAL LIMITED a private limited company
         incorporated under the laws of Ireland that is wholly owned by Elan,
         plc, and having its registered office at WIL House, Shannon Business
         Park, Shannon, County Clare, Ireland ("EPIL");

(4)      ATHERSYS, INC., a corporation duly incorporated and validly existing
         under the laws of Delaware and having its principal place of business
         at 11000 Cedar Avenue, Cleveland, Ohio 44106 ("ATHERSYS"); and

(5)      ATHERSYS NEWCO LTD. a Bermuda exempted limited liability company
         incorporated under the laws of Bermuda by EIS and Athersys on the 18th
         day of October, 1999 and having its registered office at Clarendon
         House, Church St., Hamilton, Bermuda ("NEWCO").

RECITALS:

A.       Newco desires to issue and sell to the Stockholders (as defined below),
         and the Stockholders desire to purchase from Newco, for aggregate
         consideration of $15,000,000, apportioned between them as set forth
         herein, 12,000 ordinary shares of Newco's common stock, par value $1.00
         per share (the "COMMON STOCK"), to Athersys and 2,980 shares of Newco's
         non-voting convertible preferred stock, par value $1.00 per share (the
         "Preferred Stock"), to EIS.

B.       As of the date hereof, Elan, plc and EPIL have entered into a license
         agreement with Newco, and Athersys has entered into a license agreement
         with Newco, in

<PAGE>   5

         connection with the license to Newco of the Elan Intellectual Property
         and the Athersys Intellectual Property, respectively (each as defined
         below).

C.       Elan, plc, EPIL and Athersys have agreed to co-operate in the research,
         development and commercialization of the Products solely for use in the
         Field based on their certain respective technologies.

D.       Elan and Athersys have agreed to enter into this Agreement to establish
         the terms and conditions regulating their relationship with each other,
         with respect to the Licensed Technologies and with Newco.

In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, IT IS HEREBY AGREED AS FOLLOWS:

                                    CLAUSE 1

                                   DEFINITIONS

1.1.     In addition to the terms defined elsewhere in this Agreement, the
         following terms shall, unless the context clearly requires otherwise,
         have the following meanings respectively.

         "AAA" shall mean the American Arbitration Association.

         "AFFILIATE" shall mean, with respect to Elan, EIS, Athersys or Newco,
         any corporation or entity (other than Newco and entities controlled by
         Newco) controlling, controlled by or under the common control with such
         Party, as the case may be, and, with respect to Newco, any corporation
         or entity under control of Newco. For the purpose of this definition,
         "control" shall mean (a) direct or indirect ownership of fifty percent
         (50%) or more of the stock or shares entitled to vote for the election
         of directors, or (b) the actual ability to control and direct the
         management of the applicable entity. Notwithstanding the previous two
         sentences, it is understood that Newco shall not be deemed to be an
         Affiliate of Elan or EIS for the purposes of this Agreement.

         "AGREEMENT" shall mean this Subscription, Joint Development And
         Operating Agreement, together with the Recitals and the Schedules
         hereto.

         "ATHERSYS DIRECTORS" has the meaning set forth in Clause 5.

         "ATHERSYS IMPROVEMENTS" has the meaning assigned thereto in the
         Athersys License Agreement.

                                       2
<PAGE>   6

         "ATHERSYS INTELLECTUAL PROPERTY" has the meaning assigned thereto in
         the Athersys License Agreement.

         "ATHERSYS LICENSE AGREEMENT" shall mean the License Agreement between
         Athersys and Newco, of even date herewith, a copy of which is attached
         hereto in Schedule 2.

         "ATHERSYS PATENT RIGHTS" has the meaning assigned thereto in the
         Athersys License Agreement.

         "ATHERSYS SECURITIES PURCHASE AGREEMENT" shall mean that certain
         Securities Purchase Agreement of even date herewith, by and between
         Athersys and EIS.

         "BOARD" shall mean the board of directors of Newco.

         "BUSINESS" shall mean the research, development and Commercialization
         activities and business of Newco with respect to Products, as specified
         in the Business Plan.

         "BUSINESS PLAN" shall mean the plan and program for the research,
         development and Commercialization of Products by Newco during a
         particular Financial Year, established by the Management Committee and
         approved by the Board as provided in Clause 6.1, as such plan may be
         amended, updated and/or modified as provided in Clause 6.2.

         "CERTIFICATE OF INCORPORATION" shall mean that certain Amended and
         Restated Certificate of Incorporation of Athersys as on file with the
         Delaware Secretary of State as of the Effective Date hereof, which
         includes the preferences and rights of the Class E Preferred Stock of
         Athersys.

         "CLOSING" shall mean the completion of execution and delivery by the
         Parties of all the Transaction Documents and the closing of the
         transactions effected thereby.

         "CLOSING DATE" shall mean the date of the Closing.

         "COMMERCIALIZATION" shall mean the manufacture, have manufactured,
         promotion, distribution, import, use, marketing and sale of the
         Products, by or on behalf of Newco, for use in the Field.

         "COMMON STOCK EQUIVALENTS" shall mean any options, warrants, rights or
         any other securities convertible, exercisable or exchangeable, in whole
         or in part, for or into Common Stock.

         "CONVERTIBLE NOTE" shall mean that certain convertible promissory note,
         of even date herewith, by and between Athersys and EIS.

                                       3
<PAGE>   7

         "DIRECTORS" shall mean, at any time, the directors of Newco.

         "EIS DIRECTOR" has the meaning set forth in Clause 5.

         "ELAN" shall mean Elan, plc and EPIL.

         "ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan
         License Agreement.

         "ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
         Elan License Agreement.

         "ELAN LICENSE AGREEMENT" shall mean the license agreement between Elan,
         plc, EPIL and Newco, of even date herewith, attached hereto in Schedule
         1.

         "ELAN PATENT RIGHTS" has the meaning assigned thereto in the Elan
         License Agreement.

         "ENCUMBRANCE" shall mean any liens, charges, encumbrances, equities,
         claims, options, proxies, pledges, security interests, or other similar
         rights of any nature.

         "EXCHANGE RIGHT" has the meaning assigned to such term in the
         Certificate of Incorporation.

         "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
         amended.

         "FIELD" shall mean the subcutaneous administration of the Selected
         Protein produced using RAGE via the MEDIPAD(R) Drug Delivery System to
         treat the Selected Indication.

         "FINANCIAL YEAR" shall mean a year commencing on January 1 (or in the
         case of the first Financial Year, the date hereof) and expiring on
         December 31 of such year.

         "FULLY DILUTED COMMON STOCK" shall mean all of the issued and
         outstanding Common Stock, assuming the conversion, exercise or exchange
         of all outstanding Common Stock Equivalents.

         "FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
         date hereof, between EIS and Athersys.

                                       4
<PAGE>   8

                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

         [***](1)

         [***](2)

         "INITIAL INDICATION" shall mean the treatment of [***](3)

         "LICENSE AGREEMENTS" shall mean collectively, the Elan License
         Agreement and the Athersys License Agreement.

         "LICENSED TECHNOLOGIES" shall mean, collectively, the Elan Intellectual
         Property and the Athersys Intellectual Property.

         "MEDIPAD(R) DRUG DELIVERY SYSTEM" shall have the meaning assigned
         thereto in the Elan License Agreement.

         "NEWCO INTELLECTUAL PROPERTY" shall mean all Newco Program Technology
         and all technology licensed or acquired by Newco (excluding all Elan
         Intellectual Property and all Athersys Intellectual Property) or
         developed by Newco outside of the Project and all intellectual property
         rights in or appurtenant to any of the foregoing.

         "NEWCO MEMORANDUM OF ASSOCIATION AND BYE-LAWS" shall mean the
         Memorandum of Association and Bye-Laws of Newco, in the form attached
         as Schedule 3 hereto.

         "NEWCO PROGRAM TECHNOLOGY" shall mean any and all Program Technology,
         excluding all Elan Improvements and all Athersys Improvements.

         "PARTICIPANT" shall mean Athersys or Elan, as the case may be, and
         "PARTICIPANTS" shall mean both of the Participants together.

         "PARTY" shall mean Elan, plc, EPIL, Athersys, EIS or Newco, as the case
         may be, and "PARTIES" shall mean all five such entities together.

----------------------------

(1) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(2) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(3) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       5
<PAGE>   9

         "PERSON" shall mean an individual, partnership, corporation, limited
         liability company, business trust, joint stock company, trust,
         unincorporated association, joint venture, governmental entity or
         authority or other entity of whatever nature.

         "PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
         EIS or Athersys, to whom this Agreement may be assigned, in whole or in
         part, pursuant to Clause 17.1 hereof or in the case of Elan and EIS, a
         special purpose financing or similar entity created by Elan or EIS.

         "PRODUCT" shall mean the Selected Protein produced using RAGE and
         incorporated within or packaged with the Medipad(R) Drug Delivery
         System.

         "PROJECT" shall mean all activities undertaken by or on behalf of Newco
         relating to the development and/or Commercialization of the Products
         for use in the Field, in accordance with the Business Plan.

         "PROGRAM TECHNOLOGY" has the meaning assigned thereto in the License
         Agreements.

         "RAGE" shall mean the technology owned or licensed by Athersys related
         to randomly activated gene expression techniques.

         "RESEARCH AND DEVELOPMENT TERM" shall mean the research and development
         stage of the Business Plan, which stage shall be deemed terminated upon
         the first commercial launch of a Product by Newco.

         "REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
         Agreements of even date herewith relating, one to Newco and the other
         to Athersys, respectively.

         "REGULATORY APPLICATION" shall mean any regulatory application or any
         other application for marketing approval for a Product, for use in the
         Field that Newco files in any country of the Territory, including any
         supplements or amendments thereto.

         "REGULATORY APPROVAL" shall mean the final approval of any governmental
         or quasi-governmental entity to market a Product in any country of the
         Territory and any other approval of any governmental or
         quasi-governmental entity which is required to launch the Product in
         the normal course of business.

         "RHA" shall mean any relevant governmental health authority (or
         successor agency thereof) in any country of the Territory whose
         approval is required to market a Product in the relevant country of the
         Territory.

         "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

                                       6
<PAGE>   10

                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

         "SELECTED INDICATION" shall mean the Initial Indication, unless and
         until a Substitute Indication is designated to be the subject of the
         Project pursuant to the designation of a Substitute Protein/Indication
         under the provisions of Clause 7.2 or 7.3, in which case the term
         "Selected Indication" shall mean such Substitute Indication.

         "SELECTED PROTEIN" shall mean [***](4) unless and until a Substitute
         Protein is designated to be subject of the Project pursuant to the
         designation of a Substitute Protein/Indication under the provisions of
         Clause 7.2 or 7.3, in which case the term "Selected Protein" shall mean
         such designated Substitute Protein.

         "SHARES" shall mean, collectively, the shares of Common Stock and
         shares of Preferred Stock of Newco.

         "STOCKHOLDER" shall mean any of EIS, Athersys, any Permitted Transferee
         or any other Person who subsequently becomes bound by this Agreement as
         a holder of Shares, and "STOCKHOLDERS" shall mean all of the
         Stockholders together.

         "SUBSTITUTE INDICATION" shall mean [***](5).

         "SUBSTITUTE PROTEIN" shall mean [***](6).

         "SUBSTITUTE PROTEIN/INDICATION" shall as designated pursuant to the
         terms of Clause 7.2 or 7.3.

         "TECHNOLOGICAL COMPETITOR OF ELAN" has the meaning assigned thereto in
         the Elan License Agreement.

         "TERM" shall mean the term of this Agreement.

         "TERRITORY" shall mean all of the countries of the world.

--------------------------

(4) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(5) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(6) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       7
<PAGE>   11

         "TRANSACTION DOCUMENTS" shall mean this Agreement, the Funding
         Agreement, Elan License Agreement, the Athersys License Agreement, the
         Convertible Note, the Stockholder's Agreement, the Senior Note, the
         Athersys Securities Purchase Agreement, the Registration Rights
         Agreements, the Certificate of Designations and associated
         documentation of even date herewith, by and between Athersys, Elan, EIS
         and Newco, as applicable.

         "UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
         of the United States of America.

1.2      In addition, the following definitions have the meanings in the Clauses
         corresponding thereto, as set forth below.

         DEFINITION                                       CLAUSE

         "Common Stock"                                   Recitals
         "Confidential Information"                       22.1
         "Co-Sale Notice"                                 17.4
         "Elan/Newco Option"                              8.4
         "Expert"                                         19.3
         "Management Committee"                           5.2.1
         "Notice of Exercise"                             17.3
         "Notice of Intention"                            17.3
         "Offered Shares"                                 17.3
         "Offer Price"                                    17.3
         "Preferred Stock"                                Recitals
         "R&D Committee"                                  5.2.3
         "Remaining Stockholders"                         17.4
         "Relevant Event"                                 20.2
         "Selling Stockholder"                            17.3
         "Services Agreement"                             15.1
         "Tag-Along Right"                                17.4
         "Transaction Proposal"                           17.3
         "Transfer"                                       17.1
         "Transferee Terms"                               17.4
         "Transferring Stockholders"                      17.4

1.3      Words importing the singular shall include the plural and vice versa,
         where applicable.

1.4      Unless the context otherwise requires, reference to a recital, article,
         paragraph, provision, clause or schedule is to a recital, article,
         paragraph, provision, clause or schedule of or to this Agreement.

                                       8
<PAGE>   12

1.5      Reference to a statute or statutory provision includes a reference to
         such statute or statutory provision as from time to time amended,
         extended or re-enacted.

1.6      The headings in this Agreement are inserted for convenience only and do
         not affect its construction.

1.7      Unless the context or subject otherwise requires, references to words
         in one gender include references to both genders.

1.8      Capitalized terms used but not defined herein shall have the meanings
         ascribed in the Transaction Documents, if defined therein.

                                    CLAUSE 2

                                    BUSINESS

2.1      The primary objective of this Agreement is to regulate the business of
         the development, testing, registration, manufacture, Commercialization
         and licensing of Products for use in the Field in the Territory and to
         achieve the other objectives set out in this Agreement. The focus of
         the Business will be to develop the Products using the Elan
         Intellectual Property, the Athersys Intellectual Property and the Newco
         Intellectual Property to agreed-upon specifications and timelines and
         to conduct the Commercialization of Products for use in the Field upon
         achieving Regulatory Approval.

2.2      The central management and control of Newco shall be exercised in
         Bermuda and shall be vested in the Directors and such Persons as they
         may delegate the exercise of their powers in accordance with the Newco
         Memorandum of Association and Bye-Laws. Subject to the provisions of
         Clause 9.2, the Participants shall use their best endeavors to ensure
         that to the extent required pursuant to applicable law and to ensure
         the sole residence of Newco in Bermuda, all meetings of the Directors
         are held in Bermuda or other jurisdictions outside the United States
         and generally to ensure that Newco is treated as resident for taxation
         purposes in Bermuda.

                                    CLAUSE 3

                         REPRESENTATIONS AND WARRANTIES

3.1      REPRESENTATIONS AND WARRANTIES OF NEWCO: Newco hereby represents and
         warrants to each of the Stockholders as follows, as of the date hereof:

         3.1.1    ORGANIZATION. Newco is an exempted Bermuda company duly
                  organized, validly existing and in good standing under the
                  laws of Bermuda, and has

                                       9
<PAGE>   13

                  all the requisite corporate power and authority to own and
                  lease its properties, to carry on its business as presently
                  conducted and as proposed to be conducted, and to carry out
                  the transactions contemplated hereby.

         3.1.2    CAPITALIZATION. As of the date hereof, the authorized capital
                  stock of Newco consists of 12,000 shares of Common Stock and
                  2,980 shares of Preferred Stock. Prior to the Closing, no
                  shares of capital stock of Newco have been issued.

         3.1.3    AUTHORIZATION. The execution, delivery and performance by
                  Newco of this Agreement, including the issuance of the Shares,
                  have been duly authorized by all requisite corporate action;
                  this Agreement has been duly executed and delivered by Newco
                  and is the valid and binding obligation of Newco, enforceable
                  against it in accordance with its terms except as limited by
                  applicable bankruptcy, insolvency, reorganization, moratorium
                  and other laws of general application affecting the
                  enforcement of creditors' rights generally, and except as
                  enforcement of rights to indemnity and contribution hereunder
                  may be limited by United States federal or state securities
                  laws or principles of equity or public policy. The Shares,
                  when issued as contemplated hereby, will be validly issued and
                  outstanding, fully paid and non-assessable and not subject to
                  preemptive or any other similar rights of the Stockholders or
                  others.

         3.1.4    NO CONFLICTS. The execution, delivery and performance by Newco
                  of this Agreement, the issuance, sale and delivery of the
                  Shares, and compliance with the provisions hereof by Newco,
                  will not:

                  (i)      violate any provision of applicable law, statute,
                           rule or regulation applicable to Newco or any ruling,
                           writ, injunction, order, judgment or decree of any
                           court, arbitrator, administrative agency or other
                           governmental body applicable to Newco or any of its
                           properties or assets;

                  (ii)    conflict with or result in any breach of any of the
                          terms, conditions or provisions of, or constitute
                          (with notice or lapse of time or both) a default (or
                          give rise to any right of termination, cancellation or
                          acceleration) under its charter or organizational
                          documents or any material contract to which Newco is a
                          party; or

                  (iii)    result in the creation of, any Encumbrance upon any
                           of the properties or assets of Newco.

         3.1.5    APPROVALS. No permit, authorization, consent or approval of or
                  by, or any notification of or filing with, any Person is
                  required in connection with the execution, delivery or
                  performance of this Agreement by Newco. Newco

                                       10
<PAGE>   14

                  has full authority to conduct its business as contemplated in
                  the Business Plan and the Transaction Documents.

         3.1.6    DISCLOSURE. Newco is not aware of any material contingency,
                  event or circumstance relating to its business or prospects,
                  which could have a material adverse effect thereon, or that
                  would be material to the decision by any Stockholder to enter
                  into the transactions contemplated by the Transaction
                  Documents.

         3.1.7    NO BUSINESS; NO LIABILITIES. Newco has not conducted any
                  business or incurred any liabilities or obligations prior to
                  the date hereof, except for the liabilities which were entered
                  into solely in connection with its organization and formation.

3.2      REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS: Each of the
         Stockholders hereby severally represents and warrants to Newco as
         follows as of the date hereof:

         3.2.1    ORGANIZATION. Such Stockholder is a corporation duly organized
                  and validly existing under the laws of its jurisdiction of
                  organization and has all the requisite corporate power and
                  authority to own and lease its respective properties, to carry
                  on its respective business as presently conducted and as
                  proposed to be conducted and to carry out the transactions
                  contemplated hereby.

         3.2.2    AUTHORITY. Such Stockholder has full legal right, power and
                  authority to enter into this Agreement and to perform its
                  obligations hereunder, which have been duly authorized by all
                  requisite corporate action. This Agreement is the valid and
                  binding obligation of such Stockholder, enforceable against it
                  in accordance with its terms except as limited by applicable
                  bankruptcy, insolvency, reorganization, moratorium and other
                  laws of general application affecting the enforcement of
                  creditors' rights generally, and except as enforcement of
                  rights to indemnity and contribution hereunder may be limited
                  by United States federal or state securities laws or
                  principles of equity or of public policy.

         3.2.3    NO CONFLICTS. The execution, delivery and performance by such
                  Stockholder of this Agreement, the purchase of the Shares, and
                  compliance with the provisions hereof by such Stockholder will
                  not:

                  (i)      violate any provision of applicable law, statute,
                           rule or regulation applicable to such Stockholder or
                           any ruling, writ, injunction, order, judgment or
                           decree of any court, arbitrator, administrative
                           agency or other governmental body applicable to such
                           Stockholder or any of its properties or assets; or

                                       11
<PAGE>   15

                  (ii)    conflict with or result in any breach of any of the
                          terms, conditions or provisions of, or constitute
                          (with notice or lapse of time or both) a default (or
                          give rise to any right of termination, cancellation or
                          acceleration) under the charter or organizational
                          documents of such Stockholder or any material contract
                          to which such Stockholder is a party, except where
                          such violation, conflict or breach would not,
                          individually or in the aggregate, have a material
                          adverse effect on such Stockholder.

         3.2.4    APPROVALS. No permit, authorization, consent or approval of or
                  by, or any notification of or filing with, any Person is
                  required in connection with the execution, delivery or
                  performance of this Agreement and the transactions
                  contemplated hereby by such Stockholder.

         3.2.5    INVESTMENT REPRESENTATIONS. Such Stockholder is sophisticated
                  in transactions of this type and, is capable of evaluating the
                  merits and risks of its investment in Newco. Such Stockholder
                  has not been formed solely for the purpose of making the
                  investment in Newco and such Stockholder is acquiring the
                  Common Stock and Preferred Stock as the case may be, for
                  investment for its own account, not as a nominee or agent, and
                  not with the view to, or for resale in connection with, any
                  distribution of any part thereof. Such Stockholder understands
                  that the Shares have not been registered under the Securities
                  Act or applicable state and foreign securities laws by reason
                  of a specific exemption from the registration provisions of
                  the Securities Act and applicable state and foreign securities
                  laws, the availability of which depends upon, among other
                  things, the bona fide nature of the investment intent and the
                  accuracy of such Stockholders' representations and warranties
                  as expressed herein. Such Stockholder understands that no
                  public market now exists for any of the Shares and that there
                  is no assurance that a public market will ever exist for such
                  Shares.

         3.3      REPRESENTATIONS AND WARRANTIES OF ELAN. Elan, plc hereby
                  represents and warrants to Athersys that the representations
                  and warranties of Elan, plc made to Newco on a best knowledge
                  basis in Clauses 8.1 and 8.2 of the Elan License Agreement are
                  all true and correct, and Elan, plc makes the foregoing
                  warranty with the understanding that Athersys is relying on
                  such warranty to enter into the Transaction Documents.

         3.4      REPRESENTATIONS AND WARRANTIES OF ATHERSYS. Athersys hereby
                  represents and warrants to Elan that the representations and
                  warranties of Athersys made to Newco on a best knowledge basis
                  in Clauses 8.1 and 8.2 of the Athersys License Agreement are
                  all true and correct, and Athersys

                                       12
<PAGE>   16

                  makes the foregoing warranty with the understanding that Elan
                  is relying on such warranty to enter into the Transaction
                  Documents.

                                    CLAUSE 4

                            AUTHORIZATION AND CLOSING

4.1      Newco has authorized the issuance to (i) EIS of 2,980 shares of
         Preferred Stock and (ii) Athersys of 12,000 shares of Common Stock,
         issuable as provided in Clause 4.4 hereof.

4.2      Athersys and EIS hereby subscribe for the number of Shares set forth in
         Clause 4.1 and shall pay to Newco in consideration therefor, by wire
         transfer of immediately available funds (to a bank account established
         by Newco in connection with Closing) the subscription amounts each as
         provided in Clause 4.4.1.

4.3      The Closing shall take place at the offices of Brock Silverstein LLC at
         800 Third Avenue, New York, New York 10022 on the date hereof or such
         other places if any, as the Parties may agree and shall occur
         contemporaneously with the closing under the Athersys Securities
         Purchase Agreement.

4.4      At the Closing, each of the Stockholders shall take or (to the extent
         within its powers) cause to be taken the following steps at directors
         and shareholder meetings of Newco, or such other meetings or locations,
         as appropriate:

         4.4.1    Newco shall issue and sell to EIS, and EIS shall purchase from
                  Newco, upon the terms and subject to the conditions set forth
                  herein, 2,980 shares of Preferred Stock for an aggregate
                  purchase price of $2,985,000. Newco shall issue and sell to
                  Athersys, and Athersys shall purchase from Newco, upon the
                  terms and conditions set forth herein, 12,000 shares of Common
                  Stock for an aggregate purchase price of $12,015,000;

         4.4.2    the Parties shall execute and deliver to each other, as
                  applicable, certificates in respect of the Common Stock and
                  Preferred Stock described above and any other certificates,
                  resolutions or documents that the Parties shall reasonably
                  require;

         4.4.3.   the adoption by Newco of the Newco Memorandum of Association
                  and Bye-Laws;

         4.4.4.   the appointment of Kevin Insley, Dr. Gil Van Bokkelen and Dr.
                  James Kovach as Directors of Newco;

                                       13
<PAGE>   17

         4.4.5.   the resignation of all directors and the secretary of Newco
                  holding office prior to the execution of this Agreement and
                  delivery of written confirmation under seal by each Person so
                  resigning that he has no claim or right of action against
                  Newco and that Newco is not in any way obligated or indebted
                  to him; and

         4.4.6.   the transfer to Newco of the share register.

4.5      EXEMPTION FROM REGISTRATION:

         The Shares will be issued under an exemption or exemptions from
         registration under the Securities Act. Accordingly, the certificates
         evidencing the Shares shall, upon issuance, contain the following
         legend:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") OR ANY
         SECURITIES LAWS OF A STATE OR OTHER JURISDICTION AND MAY NOT UNDER ANY
         CIRCUMSTANCES BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER
         THAN TO AN AFFILIATE OF THE ORIGINAL HOLDER OR AS OTHERWISE PERMITTED
         IN THE AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO
         (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
         ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, OR (II) TO THE EXTENT
         APPLICABLE, RULE 144 UNDER THE SECURITIES ACT (OR ANY SIMILAR RULE
         UNDER THE SECURITIES ACT RELATING TO THE DISPOSITION OF SECURITIES)
         TOGETHER WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
         CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
         APPLICABLE STATE SECURITIES LAWS.

4.6.     EIS and Athersys shall use reasonable efforts to file any documents
         that are required to be filed with the Registrar of Companies in
         Bermuda within the prescribed time limits.

4.7.     In the event that EIS exercises the Exchange Right prior to the second
         anniversary of the date hereof, Newco shall, immediately upon receipt
         from Athersys of shares of Common Stock for conversion to Preferred
         Stock for purposes of effecting the Exchange Right, issue to EIS a
         number of shares of Preferred Stock equal to the number of shares of
         Common Stock delivered by Athersys to Newco. Such

                                       14
<PAGE>   18

         Preferred Stock issued to EIS, if and when so issued, will be duly
         authorized, validly issued, fully paid and nonassessable shares of
         Preferred Stock and will be free and clear of all Encumbrances other
         than any Encumbrance created by EIS. In the event that EIS exercises
         the Exchange Right on or after the second anniversary of the date
         hereof, Newco shall, immediately upon receipt of notification of the
         exercise of the Exchange Right, transfer legal and beneficial ownership
         of the number of shares of Common Stock set forth in such notice from
         Athersys to EIS. In connection with the foregoing, Newco and the
         Stockholders shall take all necessary or appropriate steps to ensure
         such ownership by EIS of such Common Stock or Preferred Stock, as the
         case may be.

                                    CLAUSE 5

                    DIRECTORS; MANAGEMENT AND R&D COMMITTEES

5.1.     DIRECTORS:

         5.1.1    Prior to the exercise of the Exchange Right, the Board shall
                  be composed of three Directors.

                  Athersys shall have the right to nominate two directors of
                  Newco, ("ATHERSYS DIRECTORS") and EIS shall have the right to
                  nominate one Director of Newco ("EIS DIRECTOR") which
                  Director, save as further provided herein, shall only be
                  entitled to 15% of the votes of the Board.

                  In the event that the Exchange Right is exercised by EIS
                  within 2 years following the Closing Date, the EIS Director
                  shall only be entitled to 15% of the votes of the Board until
                  the expiry of 2 years from the Closing Date.

                  In the event that the Exchange Right is exercised by EIS at
                  any time after two years following the Closing Date or upon
                  the expiry of 2 years following the Closing Date where the
                  Exchange Right has been exercised by EIS within 2 years
                  following the Closing Date, each of Athersys, and EIS shall
                  cause the Board to be reconfigured so that an equal number of
                  Directors are designated by EIS and Athersys and that each of
                  the Directors has equal voting power.

         5.1.2    If EIS removes the EIS Director, or Athersys removes any of
                  the Athersys Directors, EIS or Athersys, as the case may be,
                  shall indemnify the other Stockholder against any claim by
                  such removed Director arising from such removal.

         5.1.3    The Directors shall meet not less than three times in each
                  Financial Year and all Board meetings shall be held in Bermuda
                  to the extent required pursuant

                                       15
<PAGE>   19

                  to the laws of Bermuda or to ensure the sole residence of
                  Newco in Bermuda.

         5.1.4    At any such meeting, the presence of the EIS Director and at
                  least one of the Athersys Directors shall be required to
                  constitute a quorum and, subject to Clause 18 hereof, the
                  affirmative vote of a majority of the Directors present at a
                  meeting at which such a quorum is present shall constitute an
                  action of the Directors. In the event of any meeting being
                  inquorate, the meeting shall be adjourned for a period of
                  seven days. A notice shall be sent to the EIS Director and the
                  Athersys Directors specifying the date, time and place where
                  such adjourned meeting is to be held and reconvened.

         5.1.5    On the Closing Date, Athersys may appoint one of the Athersys
                  Directors to be the chairman of Newco. The chairman of Newco
                  shall hold office until:

                  (i)      the first meeting of the Board following the exercise
                           by EIS of the Exchange Right, where the Exchange
                           Right has been exercised by EIS after two years
                           following the Closing Date; or

                  (ii)     the first meeting of the Board following the expiry
                           of 2 years following the Closing Date where the
                           Exchange Right has been exercised by EIS within 2
                           years following the Closing Date

                  (in each case the "CHAIRMAN STATUS BOARD MEETING")

                  After the Chairman Status Board Meeting, each of EIS and
                  Athersys, beginning with EIS at the Chairman Status Board
                  Meeting, shall have the right, exercisable alternatively, of
                  nominating one Director to be chairman of Newco for a term of
                  one year.

                  If the chairman is unable to attend any meeting of the Board
                  held prior to the Chairman Status Board Meeting, the Athersys
                  Directors shall be entitled to appoint another Athersys
                  Director to act as chairman in his place at the meeting.

                  If the chairman of Newco is unable to attend any meeting of
                  the Board held after the Chairman Status Board Meeting, the
                  Directors shall be entitled to appoint another Director to act
                  as chairman of Newco in his place at the meeting.

         5.1.6    In case of an equality of votes at a meeting of the Board, the
                  chairman of Newco shall not be entitled to a second or casting
                  vote. In the event of continued deadlock, the Board shall
                  resolve the deadlock pursuant to the provisions set forth in
                  Clause 19.

                                       16
<PAGE>   20

5.2      MANAGEMENT AND R&D COMMITTEES:

         5.2.1 Newco hereby appoints a management committee (the "Management
Committee") which shall initially consist of four members, two of whom (the
"Elan Representatives") shall be nominated by Elan and two of whom (the
"Athersys Representatives") shall be nominated by Athersys and each of whom
shall be entitled to one vote, whether or not present at any Management
Committee meeting. Each of the Elan members of the Board and the Athersys
members of the Board shall be entitled to remove any of their representatives to
the Management Committee and appoint a replacement in place of any
representative so removed. The number of members of the Management Committee may
be altered if agreed to by the Board; provided that Elan and the Athersys shall
be entitled at all times to appoint an equal number of members to the Management
Committee.

                  Decisions of the Management Committee shall require approval
                  by at least one Elan Representative and one Athersys
                  Representative. If the Management Committee cannot resolve any
                  issue or matter, the dispute will be referred to the President
                  of Elan Pharmaceutical Technologies and the Chief Executive
                  Officer of Athersys, and thereafter, in the event of continued
                  deadlock, pursuant to the deadlock provisions set forth in
                  Clause 19.

         5.2.2 The Management Committee shall inter alia, devise, implement and
review strategy for the Project and for the business and operation of Newco as
it relates to the Field, the licensed use of the Licensed Technologies and the
conduct of the Business Plan, and, in particular, devise Newco's strategy for
research, development and Commercialization of Products for use in the Field and
to monitor and supervise the implementation of the Business Plan. The Management
Committee shall report all significant developments to the Board on the
occurrence thereof and, in addition shall report at quarterly intervals to the
Board.

         5.2.3 The Management Committee shall appoint a research and development
committee (the "R&D Committee"), which shall initially be comprised of four
members, with an equal number being nominated by the Elan Representatives and by
the Athersys Representatives, and each of whom shall have one vote, whether or
not present at an R&D Committee meeting. Decisions of the R&D Committee shall
require approval by at least one Elan representative on the R&D Committee and
one Athersys representative on the R&D Committee. The Elan Representatives and
the Athersys Representatives shall be entitled to remove any of their respective
representatives to the R&D Committee and appoint a replacement in place of any
such representative so removed. The number of members of the R&D Committee may
be altered if agreed to by the Management Committee; provided that Elan and
Athersys shall be entitled to appoint an equal number of members to the R&D
Committee.

                                       17
<PAGE>   21

         5.2.4 The R&D Committee shall (a) design that portion of the Business
Plan that relates to the research and development program for Products for
consideration and approval by the Management Committee, and (b) implementing
such portion of the approved Business Plan that relates to such research and
development program. The R&D Committee shall appoint a project team (the
"Project Team"), a leader of the Project Team, and a program manager. The R&D
Committee shall meet at least once each calendar quarter alternately at the
offices of Elan and Athersys (except where otherwise agreed) to monitor the
progress of that portion of the Business Plan that relates to the research and
development program and to report on their progress to the Management Committee.

         5.2.5    In the event of any dispute amongst the R&D Committee, the R&D
                  Committee shall refer such dispute to the Management Committee
                  whose decision on the dispute shall be binding on the R&D
                  Committee. If the Management Committee cannot resolve the
                  matter, the dispute will be referred to the President of Elan
                  Pharmaceutical Technologies and the Chief Executive Officer of
                  Athersys, and thereafter, in the event of continued deadlock,
                  pursuant to the deadlock provisions set forth in Clause 19.1.

                                    CLAUSE 6

                          THE BUSINESS PLAN AND REVIEWS

         6.1      The Management Committee shall meet together as soon as
                  reasonably practicable after the Closing Date and shall agree
                  upon, subject to approval of the Board, the Business Plan for
                  the current Financial Year and for the Financial Year
                  commencing January 1, 2000 as soon as practicable, in any
                  event within 60 days from the Closing Date (with respect to
                  the current Financial Year) or January 1, 2000 (with respect
                  to the Financial Year commencing January 1, 2000). In
                  addition, at least (60) days prior to the commencement of each
                  subsequent Financial Year, the Management Committee will agree
                  upon and submit to the Board for Board approval the Business
                  Plan for such Financial Year, and may solicit recommendations
                  from the R & D Committee and/or appropriate Elan and Athersys
                  representatives with respect thereto.

         6.2      During any particular Financial Year the Business Plan
                  applicable thereto shall be subject to ongoing review by the
                  Management Committee and the R & D Committee and, on a
                  quarterly basis, the unanimous approval of the Board. If
                  appropriate based on the results of the Project or other
                  developments or changes, the R & D Committee may recommend to
                  the Management Committee modifications or amendments to the
                  Business Plan. The Management Committee will review any such

                                       18
<PAGE>   22

                  recommendations, and may discuss its own amendments, changes
                  or modifications to the Business Plan, and any amendments,
                  changes or modifications submitted to and approved by the
                  Board will be deemed incorporated into the Business Plan upon
                  such Board approval.

         6.3      Funding of Newco's activities under the Business Plan shall be
                  provided in accordance with the terms of the Funding
                  Agreement.

                                    CLAUSE 7

                          RESEARCH AND DEVELOPMENT WORK

7.1      Research and development work related to the Products and the Newco
         Intellectual Property for use in the Field shall be conducted by or on
         behalf of Newco in accordance with the research and development program
         developed by the R&D Committee and approved by the Management Committee
         as part of the Business Plan.

7.2      Within forty-five (45) days of the Effective Date, the Parties shall
         jointly determine in their good faith and reasonable judgment whether
         the research, development and commercialization of the Product for
         treatment of the Initial Indication is commercially viable. If the
         Parties determine within such time that such research, development and
         commercialization of the Product for the treatment of the Initial
         Indication is not commercially viable, then the Parties will in good
         faith select and designate, by the date that is sixty (60) days after
         the Effective Date, a Substitute Protein/Indication to be pursued by
         Newco. The selection of the Substitute Protein/Indication shall be
         subject, inter alia, to the then-existing contractual arrangements of
         Elan and Athersys and such discussions as Elan and Athersys are having
         with one or more third parties at the time of such selection, as well
         as any intellectual property assessment conducted with regard to the
         proposed commercialization of such Substitute Protein/Indication. If
         the Parties designate a Substitute Protein/Indication for pursuit by
         Newco, then the Parties shall promptly thereafter negotiate in good
         faith such amendments as are required to the Elan License, the Athersys
         License and the research and development budgeted costs for the Project
         to substitute such Substitute Protein/Indication for the existing
         Product and Field, including without limitation appropriate amendments
         to the definition of Product and Field (if any are needed). If no such
         substitution is made as contemplated in the foregoing, then Newco will
         proceed under the Business Plan to research, develop and commercialize
         the Product for use in treating the Initial Indication.

7.3      If the Parties determine in their good faith and reasonable judgment
         that the Product does not meet the pre-determined performance criteria
         established by the Management Committee, whether from a pharmaceutical,
         pharmacokinetic,

                                       19
<PAGE>   23

         clinical or commercial standpoint, then the Parties by mutual agreement
         may, within sixty (60) days of such determination, designate a
         Substitute Protein/Indication to be pursued by Newco, which designation
         shall be subject, inter alia, to availability of resources at Newco to
         pursue such new project and to then-existing contractual arrangements
         of Elan and Athersys and such discussions Elan and Athersys are having
         with one or more third parties at the time of such selection, as well
         as any intellectual property assessment conducted with regard to the
         proposed commercialization of such Substitute Protein/Indication. If
         the Parties designate a Substitute Protein/Indication for pursuit by
         Newco, then the Parties shall promptly thereafter negotiate in good
         faith such amendments as are required to the Elan License, the Athersys
         License and the research and development budgeted costs for the Project
         to substitute such Substitute Protein/Indication for the existing
         Product and Field, including without limitation appropriate amendments
         to the definition of Product and Field (if any are needed).

7.4      Subject to the provisions of Clause 6.3, Elan and Athersys, at Newco's
         request and subject to appropriate Service Agreements (as defined in
         Clause 15.1) covering such work agreed to by the Parties, may undertake
         research and development work related to the development and
         Commercialization of the Products, as articulated in the Business Plan,
         in furtherance of the development and Commercialization of the Products
         and cultivation of patent rights and know-how related to the Elan
         Intellectual Property, Athersys Intellectual Property and Newco
         Intellectual Property. The cost of such development work shall be
         Elan's and Athersys', as the case may be, fully-burdened actual costs
         in respect thereof, plus 30% of such costs, which shall be reimbursed
         by Newco according to the terms of the applicable Services Agreements
         (as defined below in Clause 15.1). Research and development activities
         that are outsourced to third party providers shall be charged to Newco
         at fully burdened actual costs.

7.5      Elan and Athersys shall use reasonable efforts in undertaking any such
         research and development work undertaken for Newco hereunder to conduct
         such research and development work in a professional and timely manner.

7.6      Elan and Athersys shall permit Newco or its duly authorized
         representative on reasonable notice and at any reasonable time during
         normal business hours to have access to inspect and audit the accounts
         and records of Elan or Athersys and any other book, record, voucher,
         receipt or invoice relating to the calculation or the cost of the
         Research and Development Program and to the accuracy of the reports
         which accompanied them. Any such inspection of Elan's or Athersys'
         records, as the case may be, shall be at the expense of Newco, except
         that if such inspection reveals an overpayment in the amount paid to
         Elan or Athersys, as the case may be, for the Research and Development
         Program hereunder in any Financial Year of 5% or more of the amount due
         to Elan or Athersys, as the case may be, then the expense of such
         inspection shall be borne solely by Elan or Athersys, as the case may
         be, instead of by Newco. Any surplus over the sum properly payable by

                                       20
<PAGE>   24

         Newco to Elan or Athersys, as the case may be, shall be paid promptly
         by Elan or Athersys, as the case may be, to Newco. If such inspection
         reveals a deficit in the amount of the sum properly payable to Elan or
         Athersys, as the case may be, by Newco, Newco shall pay the deficit to
         Elan or Athersys, as the case may be.

                                    CLAUSE 8

                                COMMERCIALIZATION

8.1      Newco shall diligently pursue research, prosecution, development, and
         Commercialization of the Products, solely for use in the Field, in
         accordance with the Business Plan, which may include establishing
         strategic partnerships with pharmaceutical companies interested in
         sub-licensing the Product for use in the Field, or the right under the
         Licensed Technologies to develop and commercialize the Product for use
         in the Field. At any time during the development of the Product, Newco
         may, subject to the other provisions of this Agreement, license the
         rights to the Product to one or more marketing partners for use solely
         in the Field, or otherwise Commercialize the Product for use in the
         Field under an alternative strategy determined by the Management
         Committee.

8.2      Newco shall be responsible for negotiating with third parties
         commercially reasonable terms (e.g., royalties, milestones, fees,
         profit sharing, manufacturing rights, supply terms, etc.) but shall do
         so under a strategy agreed with Elan and Athersys and shall keep the
         Management Committee and Elan and Athersys informed throughout the
         negotiation process.

8.3      If an independent third party and Athersys enter into a binding
         agreement for the research, development and/or commercialization of
         products with respect to the subcutaneous, administration of the
         Selected Protein for an indication other than the Selected Indication,
         and if Athersys and such independent third party desire that Newco
         research, develop and/or commercialize such product for use in such
         indication, then Newco shall negotiate in good faith with Athersys and
         such independent third party with respect to the research, development
         and commercialization of such product for such use by Newco.

8.4      If the Management Committee unanimously agrees that Newco should
         research and develop products for neurological disorders, pain
         management, acute care and/or in the oncology area, then, subject to
         existing contractual commitments, the Participants shall promptly
         thereafter negotiate in good faith such amendments that are required to
         the Elan License Agreement and the Athersys License Agreement and the
         research and development budgeted costs for the Project, including
         without limitation appropriate amendments to the definition of Product
         and Field (if any are needed). If at any time, upon the unanimous
         approval of the Management Committee, Newco in good faith intends to
         commercialize such product for such

                                       21
<PAGE>   25

         indication, then Newco shall so notify Elan in writing. Elan shall have
         a first option to negotiate the terms of any agreement for the
         commercialization of each such product for such indication, which
         option shall be exercised within sixty (60) days of Elan's receipt of
         such written notification from Newco (the "Elan/Newco Option"). If,
         despite good faith negotiations, Elan and Newco do not reach agreement
         on the terms of such an agreement within 120 days from Elan's exercise
         of the Elan/Newco Option, then Newco shall be free to offer a third
         party, other than a Technological Competitor of Elan, to commercialize
         the product for such indication that is subject to the Elan/Newco
         Option in the Territory.

                                    CLAUSE 9

                        SUBLICENSE AND ASSIGNMENT RIGHTS

9.1      Newco shall not be permitted to assign or sublicense the Newco
         Intellectual Property or to enter into agreements with third parties
         for the development of the Newco Intellectual Property to the extent
         related to development or Commercialization of Products except with the
         unanimous approval of the Management Committee.

9.2      Upon thirty (30) days prior notice in writing from Elan to Newco and
         Athersys, Newco shall assign Newco Intellectual Property from Newco to
         a wholly-owned subsidiary of Newco to be incorporated in Ireland, which
         company shall be newly incorporated by Elan and Athersys to facilitate
         such assignment. Such assignment need not be effected if it would
         result in a material adverse effect on Athersys. The expenses for such
         incorporation and assignment will be paid entirely by Elan.

                                    CLAUSE 10

                    OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS

10.1.    The Parties acknowledge and agree that the applicable provisions of the
         Elan License Agreement and the Athersys License Agreement set forth the
         agreement between the parties thereto in relation to the ownership of
         the Elan Intellectual Property, the Athersys Intellectual Property and
         the Newco Intellectual Property.

                                    CLAUSE 11

                          INTELLECTUAL PROPERTY RIGHTS

         The Participants shall discuss in good faith all material issues
         relating to filing, prosecution and maintenance of Elan Patent Rights
         and Athersys Patent Rights

                                       22
<PAGE>   26

         insofar as such patent rights are of relevance to the use thereof in
         the Field and the rights licensed to Newco under the License Agreements
         and any patentable inventions and discoveries within the Elan
         Intellectual Property, Athersys Intellectual Property and Newco
         Intellectual Property that relate to the Field and the rights licensed
         to Newco under the License Agreements. Subject to written mutual
         agreement to the contrary by Athersys and Elan the following provisions
         shall apply:

         11.1     Elan, at its expense, shall make a good faith effort (i) to
                  secure the grant of any material patent applications within
                  the Elan Patent Rights that relate to the Field; (ii) to
                  defend all such applications against third party oppositions
                  and interferences; and (iii) to maintain in force any material
                  issued letters patent within the Elan Patent Rights that
                  relate to the Field (including any letters patent that may
                  issue covering any such Elan Improvements that relates to the
                  Field). Elan shall have the right in its discretion to control
                  such filing, prosecution, defense and maintenance provided
                  that Newco and Athersys at their request shall be provided
                  with copies of all documents relating to such filing,
                  prosecution, defense and maintenance in sufficient time to
                  review such documents and comment thereon prior to filing.

         11.2     Athersys, at its expense, shall make a good faith effort (i)
                  to secure the grant of any material patent applications within
                  the Athersys Patent Rights that relate to the Field; (ii) to
                  defend all such applications against third party oppositions
                  and interferences; and (iii) to maintain in force any material
                  issued letters patent within the Athersys Patent Rights that
                  relate to the Field (including any letters patent that may
                  issue covering any such Athersys Improvements that relate to
                  the Field). Athersys shall have the right in its discretion to
                  control such filing, prosecution, defense and maintenance,
                  provided, that Elan and Newco at their request shall be
                  provided with copies of all documents relating to such filing,
                  prosecution, defense and maintenance in sufficient time to
                  review such documents and comment thereon prior to filing.

         11.3     Newco, at its expense, shall make a good faith effort to (i)
                  file and prosecute patent applications on patentable
                  inventions and discoveries within the Newco Intellectual
                  Property; (ii) defend all such applications against third
                  party oppositions and interferences; and (iii) maintain in
                  force any issued letters patent within any Newco patents
                  (including any patents that issue on patentable inventions and
                  discoveries within the Newco Intellectual Property). Newco
                  shall have the right in its discretion to control such filing,
                  prosecution, defense and maintenance, provided, that Elan and
                  Athersys at their request shall be provided with copies of all
                  documents relating to such filing, prosecution, defense and
                  maintenance in sufficient time to review such documents and
                  comment thereon prior to

                                       23
<PAGE>   27

                  filing. All decisions relating to the filing, prosecution,
                  defense and maintenance of Newco patents shall be made by the
                  Management Committee.

         11.4     Newco, Elan and Athersys shall promptly inform each other in
                  writing of any alleged infringement of any patents within the
                  Elan Patent Rights, the Athersys Patent Rights or Newco
                  patents or any alleged misappropriation of trade secrets
                  within the Elan Intellectual Property, the Athersys
                  Intellectual Property or the Newco Intellectual Property by a
                  third party of which it becomes aware and provide the others
                  with any available evidence of such infringement or
                  misappropriation insofar as such infringements or
                  misappropriation relate solely to the Field.

         11.5     Newco shall have the right to prosecute at its own expense and
                  for its own benefit any infringements of the Elan Patent
                  Rights, the Athersys Patent Rights or misappropriation of the
                  Elan Intellectual Property and the Athersys Intellectual
                  Property, insofar as such infringements or misappropriation
                  relate solely to the Field; provided that with respect to
                  enforcement of Elan Patent Rights against non-Affiliates, Elan
                  consents to such enforcement, and with respect to enforcement
                  of Athersys Patent Rights against non-Affiliates, Athersys
                  consents to such enforcement. In the event that Newco takes
                  such action, Newco shall do so at its own cost and expense. At
                  Newco's request and expense, the Participants shall cooperate
                  with such action. Any recovery remaining after the deduction
                  by Newco of the reasonable expenses (including attorney's fees
                  and expenses) incurred in relation to such infringement
                  proceeding shall belong to Newco. Should Newco decide not to
                  pursue such infringers within forty-five (45) days after
                  receiving written notice of such alleged infringement or
                  misappropriation, then Elan (as to the Elan Intellectual
                  Property) or Athersys (as to the Athersys Intellectual
                  Property), as applicable, may in its discretion initiate such
                  proceedings in its own name, at its expense and for its own
                  benefit, and at such Participant's request and expense, Newco
                  shall cooperate with such action. Alternatively, the
                  Participants may agree to institute such proceedings in their
                  joint names and shall reach agreement as to the proportion in
                  which they shall share the proceeds of any such proceedings,
                  and the expense of any costs not recovered, or the costs or
                  damages payable to the third party. If the infringement of the
                  Elan Patent Rights or the Athersys Patent Rights affects both
                  the Field as well as other products being developed or
                  commercialized by Athersys or Elan or its commercial partners
                  outside the Field, Athersys or Elan, as the case may be, shall
                  endeavor in good faith to agree with Newco as to the manner in
                  which the proceedings should be instituted and as to the
                  proportion in which they shall share the proceeds of any such
                  proceedings, and the expense of any costs not recovered, or
                  the costs or damages payable to the third party, provided that
                  the applicable

                                       24
<PAGE>   28

                  Participant shall be entitled to pursue an action against such
                  infringer for activities outside the Field, in any event.

         11.6     Newco shall have the first right but not the obligation to
                  bring suit or otherwise take action against any alleged
                  infringement of Newco patents or alleged misappropriation of
                  the Newco Intellectual Property. If any such alleged
                  infringement or misappropriation occurs that gives rise to a
                  cause of action inside the Field, Newco, in consultation with
                  the Participants, shall determine the course of action to be
                  taken. In the event that Newco takes such action, Newco shall
                  do so at its own cost and expense and all damages and monetary
                  award recovered in or with respect to such action shall be the
                  property of Newco. Newco shall keep Elan and Athersys informed
                  of any action in a timely manner so as to enable Athersys and
                  Elan to provide input in any such action and Newco shall
                  reasonably take into consideration any such input. At Newco's
                  request, the Participants shall cooperate with any such action
                  at Newco's cost and expense.

         11.7     In the event that Newco does not bring suit or otherwise take
                  action against an infringement of any Newco patents or
                  misappropriation of the Newco Intellectual Property, then (i)
                  if only one Participant determines to pursue such suit or take
                  such action at its own cost and expense, it shall be entitled
                  to all damages and monetary award recovered in or with respect
                  to such action and (ii) if the Participants pursue such suit
                  or action outside of Newco, they shall negotiate in good faith
                  an appropriate allocation of costs, expenses and recovery
                  amounts. At the Participant's request, Newco shall cooperate
                  with any such action at the Participant's cost and expense.

         11.8     In the event that a claim is, or proceedings are, brought
                  against Newco by a third party alleging that the sale,
                  distribution or use of a Product in the Territory or use of
                  the Elan Intellectual Property or the Athersys Intellectual
                  Property, as the case may be, infringes the intellectual
                  property rights of such third party, Newco shall promptly
                  advise the other Participants of such threat or suit, and
                  shall defend any such action at its expense. The Participants
                  shall assist and cooperate reasonably in such defense.

         11.9     Save and except for claims arising in respect of a breach of
                  representation or warranty set forth in Clauses 8.1 and 8.2 of
                  the License Agreements, Newco shall indemnify, defend and hold
                  harmless Elan or Athersys, as the case may be, against all,
                  losses, demands, damages, costs and liabilities (including
                  reasonable attorneys fees) arising from any claim, suit or
                  action by a third party against Elan or Athersys alleging that
                  the manufacture, use or sale of a Product by (or on behalf of)
                  Newco, or the use or practice by

                                       25
<PAGE>   29
                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

                  Newco of the Athersys Intellectual Property or the Elan
                  Intellectual Property, infringes a patent owned or licensed by
                  such third party, provided that Elan or Athersys, as the case
                  may be, shall not acknowledge to the third party or to any
                  other person the validity of any claims of such a third party,
                  and shall not compromise or settle any claim or proceedings
                  relating thereto without the prior written consent to Newco,
                  not to be unreasonably withheld or delayed. At its option,
                  Elan or Athersys, as the case may be, may elect to take over
                  the conduct of such proceedings from Newco provided that (a)
                  Newco's indemnification obligations shall continue; (b) the
                  costs of defending such claim shall be borne by Elan or
                  Athersys, as the case may be and (c) such Participant shall
                  not compromise or settle any such claim or proceeding without
                  the prior written consent of Newco, such consent not to be
                  unreasonably withheld, conditioned or delayed.

                                    CLAUSE 12

                   EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD

         12.1     Newco agrees to grant (i) to Athersys an exclusive,
                  world-wide, royalty free perpetual license of Newco Program
                  Technology exclusively as it relates to randomly activated
                  gene expression for exploitation in all fields outside the
                  Field, and (ii) [***](7) exclusively as it relates to the
                  MEDIPAD(R) Drug Delivery System for exploitation in all
                  fields outside the Field. All such licenses shall, subject
                  to the immediately preceding sentence, be granted pursuant to
                  license agreements to be negotiated in good faith by the
                  applicable Parties which shall contain such customary terms
                  contained in similar licenses in the pharmaceutical industry,
                  as agreed to by the licensee and the unanimous decision of
                  the Management Committee, acting in good faith.

         12.2     In instances where commercialization of the Newco Program
                  Technology outside the Field requires a license to the
                  Athersys Intellectual Property or the Elan Intellectual
                  Property, then a separate license may be negotiated in good
                  faith for those licenses with the other Participant parallel
                  with discussions regarding the Newco Program Technology;
                  provided, however, that neither Participant is under any
                  obligation to grant such a license.

---------------------

(7) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       26
<PAGE>   30
                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

                                    CLAUSE 13

                                   REGULATORY

13.1     Newco shall keep the other Parties promptly and fully advised of
         Newco's regulatory activities, progress and procedures. Newco shall
         inform the other Parties of any dealings it shall have with an RHA, and
         shall furnish the other Parties with copies of all correspondence
         relating to the Products. The Parties shall collaborate to obtain any
         required regulatory approval of the RHA to market the Products.

13.2     Newco shall, at its own cost, file, prosecute and maintain any and all
         Regulatory Applications for the Products in the Territory in accordance
         with the Business Plan.

13.3     Any and all Regulatory Approvals obtained hereunder for any Product
         shall remain the property of Newco, provided that Newco shall allow
         Elan and Athersys access thereto to enable Elan and Athersys to fulfill
         their respective obligations and exercise their respective rights under
         this Agreement. Newco shall maintain such Regulatory Approvals at its
         own cost.

13.4     It is hereby acknowledged that there are inherent uncertainties
         involved in the registration of pharmaceutical products with the RHAs
         insofar as obtaining approval is concerned and such uncertainties form
         part of the business risk involved in undertaking the form of
         commercial collaboration as set forth in this Agreement. Therefore,
         except for liabilities resulting from failure to use reasonable
         efforts, none of Elan, EIS or Athersys shall have any liability to
         Newco solely as a result of any failure of a Product to achieve the
         approval of any RHA.

                                    CLAUSE 14

                                  MANUFACTURING

14.1     Subject to the provisions of Clause 14.2, Newco shall be responsible
         for manufacturing, or having manufactured, all quantities of Products
         required for the development and Commercialization of Products for use
         in the Field.

14.2     Notwithstanding the provisions of Clause 8.2, [***](8) with respect
         to the Product [***](9) negotiated in good faith by Newco and Elan;
         and Athersys shall have the first right to manufacture and supply,
         and/or subcontract the manufacture and supply, of the selected Protein
         produced using RAGE with respect to the

--------------------

(8) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(9) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       27
<PAGE>   31

         Product on standard commercial terms negotiated in good faith by Newco
         and Athersys.

                                    CLAUSE 15

                        TECHNICAL SERVICES AND ASSISTANCE

15.1     The Parties contemplate that, where commercially and technically
         feasible, Newco shall contract with Athersys or Elan, as the case may
         be, to perform such other services as Newco may require, other than
         those specifically dealt with hereunder or in the License Agreements.
         In determining which Party should provide such services, the Management
         Committee shall take into account the respective infrastructure,
         capabilities and experience of Elan and Athersys. There shall be no
         obligation upon either of Athersys or Elan to perform such services.
         Any such services to be performed on behalf of Newco shall be pursuant
         to contracts (each, a "Services Agreement") that are negotiated in good
         faith by the Parties and approved by each of Elan and Athersys.

15.2     Newco shall, if the Participants so agree, conclude an administrative
         support Service Agreement with Elan and/or Athersys on such terms as
         the Parties thereto shall in good faith negotiate. The administrative
         services shall include one or more of the following administrative
         services as requested by Newco:

         15.2.1   accounting, financial and other services;

         15.2.2   tax services;

         15.2.3   insurance services;

         15.2.4   human resources services;

         15.2.5   legal and company secretarial services;

         15.2.6   patent and related intellectual property services; and

         15.2.7   all such other services consistent with and of the same type
                  as those services to be provided pursuant to this Agreement,
                  as may be required.

         The foregoing list of services shall not be deemed exhaustive and may
         be changed from time to time upon written request by Newco.

15.3.    The Parties agree that each Party shall effect and maintain
         comprehensive general liability insurance in respect of all clinical
         trials and other activities performed by them on behalf of Newco. The
         Stockholders and Newco shall ensure that the

                                       28
<PAGE>   32

         industry standard insurance policies shall be in place for all
         activities to be carried out by Newco.

15.4     If Elan or Athersys so requires, Athersys or Elan, as the case may be,
         shall receive, at times and for periods mutually acceptable to the
         Parties, employees of the other Party (such employees to be acceptable
         to the receiving Party in the matter of qualification and competence)
         for instruction in respect of the Elan Intellectual Property or the
         Athersys Intellectual Property, as the case may be, as necessary to
         further the Project.

15.5     The employees received by Elan or Athersys, as the case may be, shall
         be subject to obligations of confidentiality no less stringent than
         those set out in Clause 22 and such employees shall observe the rules,
         regulations and systems adopted by the Party receiving the said
         employees for its own employees or visitors.

                                    CLAUSE 16

                      AUDITORS, BANKERS, REGISTERED OFFICE,
                      ACCOUNTING REFERENCE DATE; SECRETARY

Unless otherwise agreed by the Stockholders in writing and save as may be
provided to the contrary herein:

16.1     the auditors of Newco shall be Ernst & Young of Cleveland, Ohio;

16.2     the bankers of Newco shall be Bank of Bermuda or such other bank as may
         be mutually agreed from time to time;

16.3     the accounting reference date of Newco shall be December 31st in each
         Financial Year; and

16.4     the secretary of Newco shall be I.S. Outerbridge or such other Person
         as may be appointed by the Directors from time to time.

                                    CLAUSE 17

                       TRANSFERS OF SHARES; RIGHT OF FIRST
                   OFFER; TAG ALONG RIGHTS; DRAG ALONG RIGHTS

17.1     GENERAL:

         Until such time as the Common Stock shall be registered pursuant to the
         Exchange Act and be publicly traded in an established securities
         market, no

                                       29
<PAGE>   33

         Stockholder shall, directly or indirectly, sell, assign, pledge,
         dispose of, or otherwise transfer (each, a "TRANSFER") all or any part
         of the Shares held by it except as is expressly permitted by and in
         accordance with the terms of this Agreement. Newco shall not, and shall
         not permit any transfer agent or registrar for any Shares to, transfer
         upon the books of Newco any Shares from any Stockholder to any
         transferee, in any manner, except in accordance with this Agreement,
         and any purported transfer not in compliance with this Agreement shall
         be void.

         During the Research and Development Term, no Stockholder shall,
         directly or indirectly, sell or otherwise Transfer any of its legal
         and/or beneficial interest in the Shares held by it to any other
         Person. After completion of the Research and Development Term, a
         Stockholder may Transfer Shares provided such Stockholder complies with
         the provisions of Clauses 17.3, 17.4 and 17.5.

         Notwithstanding anything contained herein to the contrary, at all
         times, a Stockholder may Transfer Shares held by it to a Permitted
         Transferee; provided, that such Transfer shall be subject to and such
         Permitted Transferee shall agree to be expressly subject to and bound
         by all the limitations and provisions which are embodied in this
         Agreement.

17.2     No Stockholder shall, except with the prior written consent of the
         other Stockholder, create or permit to subsist any Encumbrance over or
         in, all or any of the Shares held by it (other than by a Transfer of
         such Shares in accordance with the provisions of this Agreement).

17.3     RIGHTS OF FIRST OFFER:

         If at any time after the end of the Research and Development Term a
         Stockholder shall desire to Transfer any Shares owned by it (a "SELLING
         STOCKHOLDER"), in any transaction or series of related transactions
         other than a Transfer to a Permitted Transferee, then such Selling
         Stockholder shall deliver prior written notice of its desire to
         Transfer (a "NOTICE OF INTENTION") (i) to Newco and (ii) to the
         Stockholders who are not the Selling Stockholder, as applicable,
         setting forth such Selling Stockholder's desire to make such Transfer,
         the number of Shares proposed to be transferred (the "OFFERED SHARES")
         and the proposed form of transaction (the "TRANSACTION PROPOSAL"),
         together with any available documentation relating thereto, and the per
         share price at which such Selling Stockholder proposes to Transfer the
         Offered Shares (the "OFFER PRICE"). The "Right of First Offer" provided
         for in this Clause 17.3 shall take precedence over "Tag Along Right"
         and "Drag-Along Right" benefiting a Stockholder which may be provided
         for by Clause 17, and if the non-Selling Stockholder does not exercise
         its right to purchase the Offered Shares pursuant to this Clause 17.3,
         then the provisions of Clauses 17.4 and 17.5 shall apply as provided
         therein.

                                       30
<PAGE>   34

         Upon receipt of the Notice of Intention, the Stockholders who are not
         the Selling Stockholder shall have the right to purchase at the Offer
         Price the Offered Shares, exercisable by the delivery of notice to the
         Selling Stockholder (the "NOTICE OF EXERCISE"), with a copy to Newco,
         within 10 business days from the date of receipt of the Notice of
         Intention. If no such Notice of Exercise has been delivered by the
         Stockholders who are not the Selling Stockholder within such
         10-business day period, or such Notice of Exercise does not relate to
         all of the Offered Shares covered by the Notice of Intention, then the
         Selling Stockholder shall be entitled to Transfer all of the Offered
         Shares to the intended transferee; provided, however, the Selling
         Stockholder shall sell the available Offered Shares within 30 days
         after the delivery of such Notice of Intention on terms no more
         favorable to the third party set forth in the Notice of Intention than
         those presented to the non-selling Stockholders. If such sale does not
         occur within such thirty (30) day period, the Offered Shares shall
         again be subject to the Right of First Refusal set forth in this Clause
         17.3.

         In the event that any of the Stockholders who are not the Selling
         Stockholder exercises their right to purchase all of the Offered Shares
         (in accordance with this Clause 17), then the Selling Stockholder shall
         sell all of the Offered Shares to such Stockholder(s), in the amounts
         set forth in the Notice of Intention, after not less than 10 business
         days and not more than 25 business days from the date of the delivery
         of the Notice of Exercise. In the event that more than one of the
         Stockholders who are not the Selling Stockholders wish to purchase the
         Offered Shares, the Offered Shares shall be allocated to such
         Stockholders on the basis of their pro rata equity interests in Newco.

         The rights and obligations of each of the Stockholders pursuant to the
         Right of First Offer provided herein shall terminate upon the date that
         the Common Stock is registered under Section 12(b) or 12(g) of the
         Exchange Act.

         At the closing of the purchase of all of the Offered Shares by the
         Stockholders who are not the Selling Stockholder (scheduled in
         accordance with Clause 17.3), the Selling Stockholder shall deliver
         certificates evidencing the Offered Shares being sold, duly endorsed,
         or accompanied by written instruments of transfer in form reasonably
         satisfactory to the Stockholders who are not the Selling Stockholder,
         duly executed by the Selling Stockholder, free and clear of any adverse
         claims, against payment of the purchase price therefor in cash, and
         such other customary documents as shall be necessary in connection
         therewith.

17.4     TAG ALONG RIGHTS:

         17.4.1   Subject to Clause 17.3, a Stockholder (the "TRANSFERRING
                  STOCKHOLDER") shall not Transfer (either directly or
                  indirectly), in any one transaction or series of related
                  transactions, to any Person or group of Persons, any amount of
                  such Stockholder's Shares which exceeds 10% of the Shares

                                       31
<PAGE>   35

                  owned by such Stockholder and its Permitted Transferees,
                  unless the terms and conditions of such Transfer shall include
                  an offer to the other Stockholders (the "REMAINING
                  STOCKHOLDERS"), to sell Shares at the same price and on the
                  same terms and conditions as the Transferring Stockholder has
                  agreed to sell its Shares (the "TAG ALONG RIGHT").

         17.4.2   In the event a Transferring Stockholder proposes to Transfer
                  any Shares in a transaction subject to Clause 17.4.1, it shall
                  notify, or cause to be notified, the Remaining Stockholders in
                  writing of each such proposed Transfer. Such notice shall set
                  forth: (i) the name of the transferee and the amount of Shares
                  proposed to be transferred, (ii) the proposed amount and form
                  of consideration and terms and conditions of payment offered
                  by the transferee (the "TRANSFEREE TERMS") and (iii) that the
                  transferee has been informed of the Tag Along Right provided
                  for in this Clause 17.4, if such right is applicable, and the
                  total number of Shares the transferee has agreed to purchase
                  from the Stockholders in accordance with the terms hereof.

         17.4.3   The Tag Along Right may be exercised by each of the Remaining
                  Stockholders by delivery of a written notice to the
                  Transferring Stockholder (the "CO-SALE NOTICE") within 10
                  business days following receipt of the notice specified in the
                  preceding subsection. The Co-sale Notice shall state the
                  number of Shares owned by such Remaining Stockholder which the
                  Remaining Stockholder wishes to include in such Transfer;
                  provided, however, that without the written consent of the
                  Transferring Stockholder, the amount of such securities
                  belonging to the Remaining Stockholder included in such
                  Transfer may not be greater than such Remaining Stockholder's
                  percentage beneficial ownership of Fully Diluted Common Stock
                  multiplied by the total number of shares of Fully Diluted
                  Common Stock to be sold by both the Transferring Stockholder
                  and all Remaining Stockholders. Upon receipt of a Co-sale
                  Notice, the Transferring Stockholder shall be obligated to
                  transfer at least the entire number of Shares set forth in the
                  Co-sale Notice to the transferee on the Transferee Terms;
                  provided, however, that the Transferring Stockholder shall not
                  consummate the purchase and sale of any Shares hereunder if
                  the transferee does not purchase all such Shares specified in
                  all Co-sale Notices. If no Co-sale Notice has been delivered
                  to the Transferring Stockholder prior to the expiration of the
                  10 business day period referred to above and if the provisions
                  of this Clause have been complied with in all respects, the
                  Transferring Stockholder shall have the right for a 45 day
                  calendar day period to Transfer Shares to the transferee on
                  the Transferee Terms without further notice to any other
                  party, but after such 45-day period, no such Transfer may be
                  made without again giving notice to the Remaining Stockholders
                  of the proposed Transfer and complying with the requirements
                  of this Clause 17.

                                       32
<PAGE>   36

                  At the closing of any Transfer of Shares subject to this
                  Clause 17.4, the Transferring Stockholder, and the Remaining
                  Stockholder, in the event such Tag Along Right is exercised,
                  shall deliver certificates evidencing such securities as have
                  been Transferred by each, duly endorsed, or accompanied by
                  written instruments of transfer in form reasonably
                  satisfactory to the transferee, free and clear of any adverse
                  claim, against payment of the purchase price therefor.

17.5     DRAG ALONG RIGHTS

         17.5.1   Subject to Clause 17.3, at any time after the latter of (i)
                  the expiration of the Research and Development Term, and (ii)
                  the sixth anniversary of the Closing Date, so long as this
                  Agreement shall remain in effect and a Selling Stockholder and
                  its Affiliates beneficially own, collectively, on a fully
                  diluted basis an aggregate number of Shares not less than a
                  majority of the Shares then outstanding, if a Selling
                  Stockholder receives a bona fide offer from a Person that is
                  not an Affiliate of such Selling Stockholder (a "Third Party")
                  to purchase in an arms'-length transaction all, but not less
                  than all, of the outstanding Shares owned by the Selling
                  Stockholder and such offer is accepted by such Selling
                  Stockholder, then each Stockholder other than the Selling
                  Stockholder hereby agrees that it or he will transfer all
                  Shares owned by it or him to such Third Party on the terms of
                  the offer so accepted by the Selling Stockholder, including
                  the same per share consideration.

         17.5.2   The Selling Stockholder shall give notice (the "Drag-Along
                  Notice") to each of the other Stockholders (other than the
                  Selling Stockholder) of any proposed Transfer giving rise to
                  the rights of the Selling Stockholder set forth in Clause
                  17.5.1 as soon as practicable following the acceptance of the
                  offer referred to in Clause 17.5.1. The Drag-Along Notice
                  shall set forth the number of Shares proposed to be so
                  Transferred, the name of the proposed transferee, the proposed
                  amount and form of consideration (and if such consideration
                  consisting in part or in whole of property other than cash,
                  the Selling Stockholder shall provide such information, to the
                  extent reasonably available to the Selling Stockholder,
                  relating to such consideration as the Stockholders other than
                  the Selling Stockholder may reasonably request in order to
                  evaluate such non-cash consideration) and the other terms and
                  conditions of the offer. The Selling Stockholder shall notify
                  Newco at least 5 days in advance of entering into a definitive
                  agreement in connection with such offer if the Stockholders
                  other than the Selling Stockholder will be required to sign
                  any agreement containing representations, warranties and
                  indemnities and will provide in advance to one counsel acting
                  for the Stockholders other than the Selling Stockholder
                  subject to the Drag-Along Notice (which counsel shall be other
                  than counsel for the Selling Stockholder) a copy of the
                  representations,

                                       33
<PAGE>   37

                  warranties and indemnities proposed to be made by such
                  Stockholders. In any such agreement such Stockholders will be
                  required to make the same representations, warranties and
                  indemnities as the Selling Stockholder so long as they are
                  made severally and not jointly with respect to such
                  Stockholders' Shares only and only concerning such
                  Stockholders' ownership rights in such Shares. Newco shall pay
                  the fees and expenses of counsel for the Stockholders (other
                  than the Selling Stockholder) as well as counsel for the
                  Selling Stockholder in connection with any transactions
                  referred to in this Clause 17.5. If the Transfer referred to
                  in the Drag-Along Notice is not consummated within 120 days
                  from the date of the Drag-Along Notice and the Selling
                  Stockholder still desires to Transfer its Shares, then it must
                  again comply first with the provisions of Clause 17.3 and then
                  with the provisions of Clause 17.4 and this Clause 17.5 as if
                  the Notice of Intention, Co-Sale Notice and Drag-Along Notice
                  had not been previously delivered.

         17.6     Notwithstanding the foregoing, this Clause 17 shall not apply
                  to any sale of Common Stock pursuant to an effective
                  registration statement under the Securities Act in a bona fide
                  public offering.

                                    CLAUSE 18

                    MATTERS REQUIRING PARTICIPANTS' APPROVAL

18.1     In consideration of Athersys and Elan agreeing to enter into the
         License Agreements, the Parties hereby agree that Newco shall not,
         without the prior approval of the EIS Director and at least one (1)
         Athersys Director:

         18.1.1.  make a material Newco determination outside the ordinary
                  course of business, including, among other things,
                  acquisitions or dispositions of intellectual property and
                  licenses or sublicenses, material changes in the Business;
                  entry into joint ventures and similar arrangements as they
                  relate to the Licensed Technologies; and changes to the
                  Business Plan as they relate to the Licensed Technologies;

         18.1.2.  issue any unissued Shares or Common Stock Equivalents or
                  create or issue any new shares (including a split of the
                  Shares) or Common Stock Equivalents, except as expressly
                  permitted by the Newco Memorandum of Association and Bye-Laws;

         18.1.3.  alter any rights attaching to any class of shares in the
                  capital of Newco or alter the Newco Memorandum of Association
                  and Bye-Laws;

         18.1.4.  consolidate, sub-divide or convert any of Newco's share
                  capital or in any

                                       34
<PAGE>   38

                  way alter the rights attaching thereto;

         18.1.5.  dispose of all or substantially all of the assets of Newco;

         18.1.6.  do or permit or suffer to be done any act or thing whereby
                  Newco may be wound up (whether voluntarily or compulsorily),
                  save as otherwise expressly provided for in this Agreement;

         18.1.7.  enter into any contract or transaction except in the ordinary
                  and proper course of the Business on arm's length terms;

         18.1.8.  sub-license any of the Elan Intellectual Property, the
                  Athersys Intellectual Property, or the Newco Intellectual
                  Property;

         18.1.9.  amend or vary the terms of the Athersys License Agreement or
                  the Elan License Agreement;

         18.1.10. permit a Person other than Newco to own a regulatory approval
                  relating to the Product(s);

         18.1.11. amend or vary the Business Plan or the Newco budget; 18.1.12.
                  alter the number of Directors; and

         18.1.13. determine whether any Shares of Newco will be registered for
                  public trading with any governmental authority for public
                  trading in any securities market.

                                    CLAUSE 19

                                    DISPUTES

19.1     During the Term of this Agreement, should any dispute or difference
         arise amongst the members of the Management Committee, or between Elan
         and Athersys, or between Elan or Athersys and Newco, the appropriate
         representatives of the applicable Parties shall use good faith efforts
         to resolve such dispute or difference promptly and to the mutual
         satisfaction of the affected Parties. If with respect to any such
         dispute or difference (but excluding from the remaining provisions of
         this Clause 19 any dispute or difference relating to (i) the
         interpretation or enforcement of any provision of this Agreement or the
         License Agreements, (ii) the interpretation or application of law, or
         (iii) the ownership of any intellectual property, which disputes or
         differences shall be resolved, if at all, by arbitration pursuant to
         Clause 24.7), such representatives cannot reach a resolution to such
         dispute or difference within a reasonable period, then any Party

                                       35
<PAGE>   39

         may forthwith give notice to the other Parties that it wishes such
         dispute or difference to be referred to the chief executive officer of
         Athersys and the President of Elan Pharmaceutical Technologies.

19.2     In any event of a notice being served in accordance with Clause 19.1,
         each of the Participants shall within 14 days of the service of such
         notice prepare and circulate to the chief executive officer of each
         Participant a memorandum or other form of statement setting out its
         position on the matter in dispute and its reasons for adopting that
         position. Each memorandum or statement shall be considered by the chief
         executive officers of the Participants who shall endeavor using good
         faith diligent efforts to resolve the dispute. If the chief executive
         officers of the Participants agree upon a resolution or disposition of
         the matter, they shall each sign a statement which sets out the terms
         of their agreement. The Participants agree that they shall exercise the
         voting rights and other powers available to them in relation to Newco
         to procure that the agreed terms are fully and promptly carried into
         effect.

19.3     The chief executive officers of the Participants shall, if they are
         unable to resolve a dispute or difference when it is referred to them
         under Clause 19.1, within sixty (60) days of such referral, refer the
         matter to an independent expert in pharmaceutical product development
         and marketing (including clinical development and regulatory affairs)
         jointly selected by the chief executive officers of the Participants
         (the "EXPERT"). In the event the chief executive officers of the
         Participants cannot agree upon the designation of the Expert, the
         Participants shall request the American Arbitration Association
         ("AAA"), sitting in the City of New York to select the Expert. In each
         case, the Expert shall be selected having regard to his suitability to
         determine the particular dispute or difference on which the Expert is
         being requested to determine. Unless otherwise agreed between the chief
         executive officers, the following rules shall apply to the appointment
         of the Expert. The fees of the AAA and the Expert shall be shared
         equally by the Participants. The Expert shall be entitled to inspect
         and examine all documentation and any other material which the Expert
         may consider to be relevant to the dispute. The Expert shall afford
         each Party a reasonable opportunity (in writing or orally) of stating
         reasons in support of such contentions as each Party may wish to make
         relative to the matters under consideration. The Expert shall give
         notice in writing of his determination to the Parties within such time
         as may be stipulated in his terms of appointment or in the absence of
         such stipulation as soon as practicable but in any event within four
         weeks from the reference of the dispute or difference to him.

19.4     Any determination by the Expert of a dispute or difference shall not be
         final and binding on the Parties.

                                       36
<PAGE>   40

                                    CLAUSE 20

                                   TERMINATION

20.1     This Agreement shall govern the operation and existence of Newco until
         (i) terminated by written agreement of all Parties hereto or (ii)
         otherwise terminated in accordance with this Clause 20.

20.2     For the purpose of this Clause 20, a "RELEVANT EVENT" is committed or
         suffered by a Party if:

         20.2.1   such Party commits a material breach of its obligations under
                  this Agreement and fails to cure or remedy such breach within
                  60 days of being specifically required in writing to do so by
                  the other Party; provided, that if the breaching Party has
                  proposed a course of action to remedy or cure the breach and
                  is acting in good faith to rectify or cure same but has not
                  cured the breach by the 60th day, such period shall be
                  extended by such period as is reasonably necessary to permit
                  the breach to be rectified so long as such breaching Party
                  continues to exert good faith efforts to recitify or cure the
                  breach; or

         20.2.2   it ceases wholly or substantially to carry on its business,
                  otherwise than for the purpose of a reconstruction or
                  amalgamation, without the prior written consent of the other
                  Participant (such consent not to be unreasonably withheld);

         20.2.3   upon appointment, as to such Party, of a liquidator, receiver,
                  administrator, examiner, trustee or similar officer with
                  authority or over all or substantially all of its assets under
                  the law of any applicable jurisdiction, including without
                  limitation, the United States of America, Bermuda or Ireland;
                  or

         20.2.4   an application or petition for bankruptcy, corporate
                  re-organization, composition, administration, examination,
                  arrangement or any other procedure similar to any of the
                  foregoing under the law of any applicable jurisdiction,
                  including without limitation, the United States of America,
                  Bermuda or Ireland, is filed by a Party, and is not discharged
                  within 60 days, or all or substantially all the assets and/or
                  the business of a Party are for any reason seized, confiscated
                  or condemned.

20.3     If either Participant commits a Relevant Event, the other Stockholder
         shall have in addition to all other legal and equitable rights and
         remedies hereunder, the right to terminate this Agreement upon 30 days'
         written notice, so long as such termination notice is provided within
         180 days of the date of such Relevant Event.

                                       37
<PAGE>   41

         If this Agreement is terminated pursuant to this Clause 20.3, the
         License Agreements shall automatically terminate.

20.4     In the event of a termination of the Elan License Agreement and/or the
         Athersys License Agreement, both parties will negotiate in good faith
         to determine whether this Agreement should be terminated and if so,
         which provisions should survive termination.

20.5     The provisions of Clauses 1, 3, 5.1, 9, 10, 11, 12, 17, 20.5, 22, 23,
         and 24 shall survive the termination of this Agreement under this
         Clause 20 or by mutual consent pursuant to Clause 20.1 in accordance
         with their terms; all other terms and provisions of this Agreement
         shall cease to have effect and be null and void upon the termination of
         this Agreement under this Clause 20 or by mutual consent.

20.6     Should the Parties determine to terminate this Agreement in its
         entirety then in such case the Parties hereto will ensure that Newco
         shall be wound up in accordance with the provisions of the Bermuda
         Companies Act of 1981.

                                    CLAUSE 21

                                  SHARE RIGHTS

21.1     The Stockholders agree that the Common Stock and the Preferred Stock
         shall be separate classes of shares and shall carry the respective
         rights and be subject to the restrictions on the transfer and
         distribution of assets provided in the Newco Memorandum of Association
         and Bye-laws and as set forth in this Agreement.

21.2.    Except as otherwise provided in the Bermuda Companies Act of 1981 and
         in the Newco Memorandum of Association and Bye-Laws, the Participants
         agree that for a period of two years from the Closing, the Preferred
         Stock issued to EIS shall not carry voting rights in Newco.

                                    CLAUSE 22

                                 CONFIDENTIALITY

22.1     The Parties and/or Newco acknowledge and agree that it may be
         necessary, from time to time, to disclose to each other confidential
         and/or proprietary information, including without limitation,
         inventions, works of authorship, trade secrets, specifications,
         designs, data, know-how and other information, relating to the Field,
         the Products, present or future products, the Newco Intellectual
         Property, the Elan Intellectual Property or the Athersys Intellectual
         Property, as the case

                                       38
<PAGE>   42

         may be, methods, compounds, research projects, work in process,
         services, sales suppliers, customers, employees and/or business of the
         disclosing Party, whether in oral, written, graphic or electronic form
         (collectively "CONFIDENTIAL INFORMATION").

22.2     Any Confidential Information revealed by a Party to another Party shall
         be maintained as confidential and shall be used by the receiving Party
         exclusively for the purposes of fulfilling the receiving Party's rights
         and obligations under this Agreement, and for no other purpose.
         Confidential Information shall not include:

         22.2.1   information that is generally available to the public;

         22.2.2   information that is made public by the disclosing Party;

         22.2.3   information that is independently developed by the receiving
                  Party, as evidenced by such Party's records, without the aid,
                  application or use of the disclosing Party's Confidential
                  Information;

         22.2.4   information that is published or otherwise becomes part of the
                  public domain without any disclosure by the receiving Party,
                  or on the part of the receiving Party's directors, officers,
                  agents, representatives or employees;

         22.2.5   information that becomes available to the receiving Party on a
                  non-confidential basis, whether directly or indirectly, from a
                  source other than the disclosing Party, which source did not
                  acquire this information on a confidential basis; or

         22.2.6   information which was already in the possession of the
                  receiving Party at the time of receiving such information, as
                  evidenced by its records, provided such information was not
                  previously provided to the receiving party from a source which
                  was under an obligation to keep such information confidential;
                  or

         22.2.7   information that is the subject of a written permission to
                  disclose, without restriction or limitation, by the disclosing
                  Party.

22.3     Further, a receiving Party may disclose the Confidential Information of
         the other Party to the extent it is required to disclose such
         information pursuant to:

         (i)      a valid order of a court or other governmental body; or

         (ii)     any other requirement of law;

         provided that if the receiving Party becomes legally required to
         disclose any Confidential Information, the receiving Party shall give
         the disclosing Party prompt notice of such fact so that the disclosing
         Party may obtain a protective

                                       39
<PAGE>   43

         order or other appropriate remedy concerning any such disclosure. The
         receiving Party shall fully co-operate with the disclosing Party in
         connection with the disclosing Party's efforts to obtain any such order
         or other remedy. If any such order or other remedy does not fully
         preclude disclosure, the receiving Party shall make such disclosure
         only to the extent that such disclosure is legally required

22.4     Each Party agrees to disclose Confidential Information of another Party
         only to those employees, representatives and agents requiring knowledge
         thereof in connection with their duties directly related to the
         fulfilling of the Party's obligations under this Agreement, so long as
         such persons are under an obligation of confidentiality no less
         stringent than as set forth herein. Each Party further agrees to inform
         all such employees, representatives and agents of the terms and
         provisions of this Agreement and their duties hereunder and to obtain
         their consent hereto as a condition of receiving Confidential
         Information. Each Party agrees that it will exercise the same degree of
         care and protection to preserve the proprietary and confidential nature
         of the Confidential Information disclosed by a Party, as the receiving
         Party would exercise to preserve its own Confidential Information. Each
         Party agrees that it will, upon request of another Party, return all
         documents and any copies thereof containing Confidential Information
         belonging to or disclosed by such other Party. Each Party shall
         promptly notify the other Parties upon discovery of any unauthorized
         use or disclosure of the other Parties' Confidential Information.

22.5     Notwithstanding the above, each Party may use or disclose Confidential
         Information disclosed to it by another Party to the extent such use or
         disclosure is reasonably necessary in filing or prosecuting patent
         applications, prosecuting or defending litigation, complying with
         patent applications, prosecuting or defending litigation, complying
         with applicable governmental regulations or otherwise submitting
         information to tax or other governmental authorities, conducting
         clinical trials, or granting a permitted sub-license or otherwise
         exercising its rights hereunder; provided, that if a Party is required
         to make any such disclosure of the other Party's Confidential
         Information, other than pursuant to a confidentiality agreement, such
         Party shall inform the third party recipient of the terms and
         provisions of this Agreement and their duties hereunder and shall
         obtain their consent hereto as a condition of releasing to the third
         party recipient the Confidential Information.

22.6     Any breach of this Clause 22 by any employee, representative or agent
         of a Party is considered a breach by the Party itself.

22.7     The provisions relating to confidentiality in this Clause 22 shall
         remain in effect during the Term and for a period of seven years
         following the termination of this Agreement.

                                       40
<PAGE>   44

22.8     The Parties agree that the obligations of this Clause 22 are necessary
         and reasonable in order to protect the Parties' respective businesses,
         and each Party expressly agrees that monetary damages would be
         inadequate to compensate a Party for any breach by the other Party of
         its covenants and agreements set forth herein. Accordingly, the Parties
         agree and acknowledge that any such violation or threatened violation
         will cause irreparable injury to a Party and that, in addition to any
         other remedies that may be available, in law or in equity or otherwise,
         any Party shall be entitled to obtain injunctive relief against the
         threatened breach of the provisions of this Clause 22, or a
         continuation of any such breach by the other Party, specific
         performance and other equitable relief to redress such breach together
         with its damages and reasonable counsel fees and expenses to enforce
         its rights hereunder, without the necessity of proving actual or
         express damages.

                                    CLAUSE 23

                                      COSTS

23.1     Each Stockholder shall bear its own legal and other costs incurred in
         relation to preparing and concluding this Agreement and the Transaction
         Documents. For the avoidance of doubt, Newco shall not bear any of the
         costs and expenses incurred in the negotiation and preparation of the
         Transaction Documents.

23.2     All other costs, legal fees, registration fees and other expenses
         relating to the transactions contemplated hereby, including the costs
         and expenses incurred in relation to the incorporation of Newco, shall
         be borne by Newco.

                                    CLAUSE 24

                                     GENERAL

24.1     FURTHER ASSURANCE:

         At the request of any of the Parties, the other Party or Parties shall
         (and shall use reasonable efforts to procure that any other necessary
         parties shall) execute and perform all such documents, acts and things
         as may reasonably be required subsequent to the signing of this
         Agreement for assuring to or vesting in the requesting Party the full
         benefit of the terms hereof.

24.2     NO REPRESENTATION:

         Each of the Parties hereto hereby acknowledges that in entering into
         this Agreement it has not relied on any representation or warranty
         except as expressly set forth herein or in any document referred to
         herein.

                                       41
<PAGE>   45

24.3     FORCE MAJEURE:

         No Party to this Agreement shall be liable for delay in the performance
         of any of its obligations hereunder if such delay is caused by or
         results from causes beyond its reasonable control, including without
         limitation, acts of God, fires, strikes, acts of war (whether war be
         declared or not), insurrections, riots, civil commotions, strikes,
         lockouts or other labor disturbances or intervention of any relevant
         government authority; provided that the Party whose performance is
         delayed or prevented continues to use good faith diligent efforts to
         mitigate, avoid or end such delay or failure in performance as soon as
         practicable.

24.4     RELATIONSHIP OF THE PARTIES:

         Nothing contained in this Agreement is intended or is to be construed
         to constitute Elan/EIS and Athersys as partners, or Elan/EIS as an
         employee or agent of Athersys, or Athersys as an employee or agent of
         Elan/EIS.

         No Party hereto shall have any express or implied right or authority to
         assume or create any obligations on behalf of or in the name of another
         Party or to bind another Party to any contract, agreement or
         undertaking with any third Party.

24.5     COUNTERPARTS:

         This Agreement may be executed in any number of counterparts, each of
         which when so executed shall be deemed to be an original and all of
         which when taken together shall constitute this Agreement.

24.6     NOTICES:

         Any notice to be given under this Agreement shall be sent in writing by
         registered or recorded delivery post or reputable overnight courier
         such as Federal Express or telecopied to:

         Elan/EIS at:

         Elan Corporation, plc
         C/o Elan International Services, Ltd.
         102 St. James Court
         Flatts, Smiths FL04
         Bermuda
         Attention:        President
         Telephone:        441-292-9169
         Fax:              441-292-2224

                                       42
<PAGE>   46

         and

         Elan International Services, Ltd.
         102 St. James Court
         Flatts, Smiths FL04
         Bermuda
         Attention:        President
         Telephone:        441-292-9169
         Fax:              441-292-2224

         with a copy to:

         Brock Silverstein LLC
         800 Third Avenue, 21st Floor
         New York, NY 10022  United States of America
         Attention:  David Robbins, Esq.
         Telephone         212-371-2000
         Fax:              212-371-5500

         Athersys at:

         11000 Cedar Avenue
         Cleveland, Ohio 44106
         Attention:        President and Chief Executive Officer
         Telephone:        (216) 231-9911
         Fax:              (216) 231-0905

         with a copy to:

         Cooley Godward LLP
         Five Palo Alto Square
         3000 El Camino Real
         Palo Alto, CA  94306-2155
         Attention:        Barclay James Kamb, Esq.
         Telephone:        (650) 843-5000
         Fax:              (650) 857-0663

         and to:

         Jones, Day, Reavis & Pogue
         901 Lakeside Avenue
         Cleveland, OH  44114
         Attention:        Christopher M. Kelley, Esq.
         Telephone:        (216) 586-1238
         Fax:              (216) 579-0212

                                       43
<PAGE>   47

         Newco at:

         102 St. James Court
         Clarendon House
         Church St.
         Hamilton, Bermuda

         Attention:        Secretary
         Telephone:        441-295-1422
         Fax:              441-292-4720

         with a copy to:

         Mello, Hollis, Jones & Martin
         Reid House
         31 Church Street
         Hamilton Bermuda
         HM12
         Attention: Wendell Hollis
         Facsimile: (441) 292-9151

         or to such other address(es) as may from time to time be notified by
         any Party to the others hereunder.

         Any notice sent by mail shall be deemed to have been delivered within
         three Business Days after dispatch or delivery to the relevant courier
         and any notice sent by telecopy shall be deemed to have been delivered
         upon confirmation of receipt. Notices of change of address shall be
         effective upon receipt. Notices by telecopy shall also be sent by
         another method permitted hereunder.

24.7     GOVERNING LAW; ARBITRATION

24.7.1    This Agreement shall be governed by and construed in accordance with
          the laws of the State of New York, excluding its conflicts of laws
          provisions or principles.

24.7.2   In the event there is a dispute and the Parties after good faith
         negotiation between their respective executives in accordance with
         Clause 19 do not reach a mutually acceptable resolution, the Parties
         agree to consider other dispute resolution mechanisms including
         mediation.

24.7.3   Any dispute or difference under this Agreement or the License
         Agreements which is not settled by mutual consent which relates to (i)
         the interpretation or enforcement of any provision of this Agreement or
         the License Agreements, (ii) the interpretation or application of law,
         or (iii) the ownership of any intellectual

                                       44
<PAGE>   48

         property shall be finally settled by binding arbitration, conducted in
         accordance with the Commercial Arbitration Rules of the AAA by three
         arbitrators appointed in accordance with said rules. Such arbitrators
         shall be reasonably satisfactory to each of the Parties; provided, that
         if the Parties are unable to agree upon the identity of such
         arbitrators within 15 days of demand by a Party, then any Party shall
         have the right to request the AAA to appoint the arbitrator.

         The arbitration shall be held in New York, New York.

         The arbitrator shall determine what discovery will be permitted,
         consistent with the goal of limiting the cost and time which the
         Parties must expend for discovery; provided the arbitrator shall permit
         such discovery as they deem necessary to permit an equitable resolution
         of the dispute.

         Any written evidence originally in a language other than English shall
         be submitted in English translation accompanied by the original or a
         true copy thereof.

         The costs of the arbitration, including administrative and arbitrators'
         fees, shall be shared equally by the Parties and each Party shall bear
         its own costs and attorneys' and witness' fees incurred in connection
         with the arbitration, except that the Arbitrators may decide to
         establish a sharing of such costs between the parties that is other
         than equal.

         In rendering judgment, the arbitrators may not provide for punitive or
         similar exemplary damages.

         A disputed performance or suspended performances pending the resolution
         of the arbitration must be completed within 30 days following the final
         decision of the arbitrators or such other reasonable period as the
         arbitrators determine in a written opinion.

         Any arbitration under this Agreement shall be completed within one year
         from the filing of notice of a request for such arbitration.

         The arbitration proceedings and the decision shall not be made public
         without the joint consent of the Parties and each Party shall maintain
         the confidentiality of such proceedings and decision unless otherwise
         permitted by the other Party.

         The Parties agree that the decision shall be the sole, exclusive and
         binding remedy between them regarding any and all disputes,
         controversies, claims and counterclaims presented to the arbitrator.
         Application may be made to any court having jurisdiction over the Party
         (or its assets) against whom the decision is rendered for a judicial
         recognition of the decision and an order of enforcement.

                                       45
<PAGE>   49

24.8     SEVERABILITY:

         If any provision in this Agreement is agreed by the Parties to be,
         deemed to be or becomes invalid, illegal, void or unenforceable under
         any law that is applicable hereto, such provision will be deemed
         amended to conform to applicable laws so as to be valid and enforceable
         or, if it cannot be so amended without materially altering the
         intention of the Parties, it will be deleted, with effect from the date
         of such agreement or such earlier date as the Parties may agree, and
         the validity, legality and enforceability of the remaining provisions
         of this Agreement shall not be impaired or affected in any way.

24.9     AMENDMENTS:

         No amendment, modification or addition hereto shall be effective or
         binding on any Party unless set forth in writing and executed by a duly
         authorized representative of all Parties.

24.10    WAIVER:

         No waiver of any right under this Agreement shall be deemed effective
         unless contained in a written document signed by the Party charged with
         such waiver, and no waiver of any breach or failure to perform shall be
         deemed to be a waiver of any future breach or failure to perform or of
         any other right arising under this Agreement.

24.11    ASSIGNMENT:

         None of the Parties shall be permitted to assign its rights or
         obligations hereunder without the prior written consent of the other
         Parties except as follows:

         24.11.1    Elan, EIS and/or Athersys shall have the right to assign
                    their rights and obligations hereunder to their respective
                    Affiliates, provided, however, that such assignment does not
                    result in adverse tax consequences for any other Parties.

         24.11.2    Elan and EIS shall have the right to assign their rights and
                    obligations hereunder to a Permitted Transferee.

         24.11.3    Athersys shall be entitled to assign this Agreement to its
                    successor in interest pursuant to acquisition, merger,
                    consolidation or purchase of all or substantially all of the
                    assets of Athersys. For the avoidance of doubt, nothing in
                    this Clause 24.11.3 shall prejudice Elan's rights under the
                    Elan License Agreement, including Elan's right to terminate
                    the Elan License Agreement in accordance with Clause 9.4
                    thereof.

                                       46
<PAGE>   50

         24.11.4    Elan shall be entitled to assign this Agreement to its
                    successor in interest pursuant to acquisition, merger,
                    consolidation or purchase of all or substantially all of the
                    assets of Elan.

24.12    WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:

         This Agreement (including the Schedules attached hereto) the
         Transaction Documents and the Confidentiality Agreement (as defined in
         the Stock Purchase Agreement) set forth all of the agreements and
         understandings between the Parties with respect to the subject matter
         hereof, and supersedes and terminates all prior agreements and
         understandings between the Parties with respect to the subject matter
         hereof. There are no agreements or understandings with respect to the
         subject matter hereof, either oral or written, between the Parties
         other than as set forth in this Agreement and the Transaction
         Documents.

         In the event of any ambiguity or conflict arising between the terms of
         this Agreement and those of the Newco Memorandum of Association and
         Bye-Laws, the terms of this Agreement shall prevail except with respect
         to Clause 21 in which case the Newco Memorandum of Association and
         Bye-Laws shall prevail.

         No provision of this Agreement shall be construed so as to negate,
         modify or affect in any way the provisions of any other agreement
         between any of the Parties unless specifically referred to, and solely
         to the extent provided herein. In the event of a conflict between the
         provisions of this Agreement and the provisions of the License
         Agreements, the terms of this Agreement shall prevail unless this
         Agreement specifically provide otherwise.

24.13    SUCCESSORS:

         This Agreement shall be binding upon and inure to the benefit of the
         Parties hereto, their successors and permitted assigns.

                                       47
<PAGE>   51

                  IN WITNESS WHEREOF, the Parties hereto have caused their duly
authorized representatives to execute this Agreement on the day first set forth
above.

                                             SIGNED

                                             BY: /s/ Kevin Insley
                                             ---------------------------------
                                             for and on behalf of
                                             ELAN CORPORATION, PLC

in the presence of: /s/ Kim Burgess
                    ---------------

                                             SIGNED

                                             BY: /s/ Kevin Insley
                                             ---------------------------------
                                             for and on behalf of
                                             ELAN INTERNATIONAL SERVICES, LTD.

in the presence of: /s/ Kim Burgess
                    ---------------

                                             SIGNED

                                             BY: /s/ Kevin Insley
                                             ---------------------------------
                                             for and on behalf of
                                             ELAN PHARMA INTERNATIONAL LIMITED

in the presence of: /s/ Kim Burgess
                    ---------------

                                       48
<PAGE>   52

                                             SIGNED

                                             BY: /s/ Gil Van Bokkelen
                                                -----------------------

                                             for and on behalf of
                                             ATHERSYS, INC.
in the presence of: /s/ James J. Kovach
                   --------------------

                                             SIGNED

                                             BY: /s/ I. S. Outerbridge
                                                -----------------------

                                             for and on behalf of
                                             ATHERSYS NEWCO LTD.
in the presence of:____________________

                                       49<PAGE>   1
                                                                   Exhibit 10.11

                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

                                LICENSE AGREEMENT

                                     BETWEEN

                                  ATHERSYS, INC

                                       AND

                               ATHERSYS NEWCO LTD.

<PAGE>   2

                                TABLE OF CONTENTS

1.    DEFINITIONS.............................................................3

2.    ATHERSYS LICENSE TO NEWCO..............................................11

3.    SUBSTITUTE INDICATIONS/PRODUCTS........................................12

4.    INTELLECTUAL PROPERTY..................................................12

5.    AFTER ACQUIRED TECHNOLOGY..............................................15

6.    FINANCIAL PROVISIONS...................................................15

7.    RIGHT OF INSPECTION AND AUDIT..........................................16

8.    REPRESENTATIONS AND WARRANTIES.........................................17

9.    TERM AND TERMINATION...................................................19

10.   CONFIDENTIAL INFORMATION...............................................21

11.   GOVERNING LAW AND JURISDICTION.........................................23

12.   IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE...........................23

13.   ASSIGNMENT.............................................................23

14.   NOTICES................................................................24

15.   MISCELLANEOUS..........................................................25

                                       2
<PAGE>   3

THIS LICENSE AGREEMENT is made and entered into as of this 21st day of October
1999

BY AND BETWEEN:

(1)      ATHERSYS, INC., a Delaware corporation having its principal place of
         business at 11000 Cedar Avenue, Cleveland, Ohio 44106; and

(2)      ATHERSYS NEWCO LTD., a Bermuda exempted limited liability company
         incorporated under the laws of Bermuda and having its registered office
         at Clarendon House, Church St., Hamilton, Bermuda.

RECITALS:

A.       Simultaneously herewith, Athersys, Elan, EIS, and Newco (capitalized
         terms used herein are defined below) are entering into the JDOA which
         establishes inter alia, the terms and conditions of the joint venture
         and of regulating their relationship with each other and certain
         aspects of the affairs of, and their dealings with Newco.

B.       Newco desires to enter into this Agreement with Athersys so as to
         permit Newco to utilize the Athersys Intellectual Property in making,
         having made, importing, using, offering for sale and selling the
         Product for use in the Field in the Territory.

C.       Simultaneously herewith Newco and Athersys are entering into the
         Athersys License Agreement relating to Newco's use of the Athersys
         Intellectual Property.

         Now, Therefore, the Parties agree as follows:

1.      DEFINITIONS

         As used in this Agreement, the following capitalized terms shall have
         the following meanings. Capitalized terms used in this Agreement and
         not otherwise defined in this Clause 1 or elsewhere in this Agreement
         shall have the meanings ascribed to such terms in the JDOA or the Elan
         License Agreement, as applicable.

1.1.     "AFFILIATE" shall mean with respect to Elan or Athersys, any
         corporation or entity other than Newco (and entities controlled by it)
         controlling, controlled by or under the common control of Elan or
         Athersys, as the case may be, and, with respect to Newco, any
         corporation or entity under control of Newco. For the purpose of this
         definition, "control" shall mean (a) direct or indirect ownership of
         fifty percent (50%) or more of the stock or shares entitled to vote for
         the election of directors, or (b) the actual ability to control and
         direct the management of the applicable entity.

1.2.     "AGREEMENT" shall mean this License Agreement (which expression shall
         be deemed to include the Recitals and Schedules hereto).

                                       3
<PAGE>   4

1.3.     "ATHERSYS" shall mean Athersys, Inc., a Delaware corporation having its
         principal place of business at 11000 Cedar Avenue, Cleveland, Ohio
         44106, its successors and permitted assigns.

1.4.     "ATHERSYS IMPROVEMENTS" shall mean any improvements to the Athersys
         Know-How and/or the Athersys Patent Rights developed (a) by or on
         behalf of Athersys whether or not pursuant to the Project, (b) by
         Newco, or by Elan or any third party under contract with Newco,
         pursuant to the Project, and/or (c) jointly by any combination of
         Athersys, Elan or Newco pursuant to the Project. Except as limited by
         agreements with independent third parties in existence at any time
         during the term of the Athersys License, Athersys Improvements shall be
         deemed part of and shall be included in the term "Athersys Intellectual
         Property" and shall be deemed, immediately upon development, to be
         included in the license of the Athersys Intellectual Property granted
         to Newco hereunder. If the inclusion of an Athersys Improvement in the
         license of Athersys Intellectual Property granted to Newco hereunder is
         restricted or limited by a third party agreement, then Athersys shall
         use reasonable commercial efforts to exclude or where applicable to
         minimize any such restriction or limitation.

1.5.     "ATHERSYS INTELLECTUAL PROPERTY" shall mean the Athersys Improvements,
         Athersys Know-How and/or the Athersys Patent Rights.

1.6.     "ATHERSYS KNOW-HOW" shall mean Know-How that is Controlled by Athersys
         and relates to the Selected Protein produced using RAGE.

1.7.     "ATHERSYS LICENSE" shall mean have the meaning as such term is defined
         in Clause 2.1 of this Agreement.

1.8.     "ATHERSYS PATENT RIGHTS" shall mean any and all Patent Rights that are
         Controlled by Athersys relating to the Selected Protein produced using
         RAGE. The primary examples of the Athersys Patent Rights existing as of
         the date hereof are set forth on Schedule 1, which listing is not
         necessarily exhaustive.

1.9.     "ATHERSYS TRADEMARK(S)" shall mean if requested by Newco, one or more
         trademarks, trade names, or service marks that are owned or licensed by
         or on behalf of Athersys that Athersys may nominate and approve in
         writing from time to time for use in connection with the sale or
         promotion of the Product by Newco.

1.10.    "BOLUS DRUG DELIVERY SYSTEM" shall mean Elan's bolus drug delivery
         system having a drug reservoir volume of up to 1 ml. and a delivery
         rate of between 1 second and 1 hour, embodiments of which are disclosed
         in the Elan Patent Rights.

1.11.    "BUSINESS PLAN" shall have the meaning, as such term is defined in the
         JDOA.

                                       4
<PAGE>   5

                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

1.12.    [***](1)

1.13.    "COMMERCIALIZATION" shall mean the manufacture, have manufactured,
         promotion, distribution, import, use, marketing and sale of the Product
         in accordance with the terms of this Agreement.

1.14.    "CONFIDENTIAL INFORMATION" shall have the meaning, as such term is
         defined in Clause 10.

1.15.    "CONTINUOUS DRUG DELIVERY SYSTEM" shall mean Elan's ambulatory,
         micro-infusion system, having a flexible drug reservoir and capable of
         delivering pre-programmed continuous amounts of drug upon activation,
         embodiments of which are disclosed in Elan Patent Rights.

1.16.    "CONTROLLED" shall mean, with respect to a particular item of
         information, material or intellectual property right, that the
         applicable Party owns or has a license to such item of information,
         material or intellectual property right and has the ability to grant to
         the other Party access to and a license or sublicense under such item
         as contemplated herein.

1.17.    "EFFECTIVE DATE" shall mean the date of this Agreement as set forth in
         the first line of the Agreement.

1.18.    "EIS" shall mean Elan International Services, Limited, a Bermuda
         exempted limited liability company incorporated under the laws of
         Bermuda and having its registered office at Clarendon House, Church
         St., Hamilton, Bermuda, and wholly-owned by Elan, plc.

1.19.    "ELAN" shall mean Elan, plc and EPIL, and their respective successors
         and permitted assigns.

1.20.    "ELAN, PLC" shall mean Elan Corporation, plc, a public limited company
         incorporated under the laws of Ireland acting through its division Elan
         Pharmaceutical Technologies.

1.21.    "ELAN IMPROVEMENTS" shall have the meaning as such term is defined in
         the Elan License Agreement.

1.22.    "ELAN INTELLECTUAL PROPERTY" shall have the meaning as such term is
         defined in the Elan License Agreement.

1.23.    "ELAN LICENSE" shall have the meaning set forth in Clause 2.1 of the
         Elan License Agreement.

--------------------------

(1) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       5
<PAGE>   6
                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

1.24.    "ELAN LICENSE AGREEMENT" shall mean that certain License Agreement, of
         even date herewith, entered into between Athersys and Newco.

1.25.    "EPIL" shall mean Elan Pharma International Limited, a private limited
         company incorporated under the laws of Ireland that is wholly-owned by
         Elan, plc.

1.26.    "FIELD" shall mean the subcutaneous administration of the Selected
         Protein produced using RAGE via the MEDIPAD(R) Drug Delivery System to
         treat the Selected Indication.

1.27.    "FINANCIAL YEAR" shall mean each year commencing on 1 January (or in
         the case of the first Financial Year, the Effective Date) and expiring
         on 31 December of each year.

1.28.    [***](2)

1.29.    [***](3)

1.30.    "INITIAL INDICATION" shall mean the treatment of  [***](4)

1.31.    "IN MARKET" shall mean the sale of the Product by Newco or its
         Affiliates, or where applicable by a permitted sub-licensee or
         distributor, to an unaffiliated third party such as (i) an end-user
         consumer of the Product or (ii) a wholesaler, distributor, managed care
         organization, hospital or pharmacy or other third party payor for final
         commercial sale by such party to the consumer, and shall exclude in any
         event the transfer pricing of the Product by Newco to an Affiliate.

1.32.    "JDOA" shall mean that certain Subscription, Joint Development And
         Operating Agreement, of even date herewith, by and between Elan,
         Athersys, EIS and Newco.

1.33.    "KNOW-HOW" shall mean any and all information and know-how, whether
         patentable or not, including but not limited to discoveries,
         inventions, substance, data, techniques, processes, systems,
         formulations, designs and commercial information.

----------------------

(2) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(3) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(4) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       6
<PAGE>   7

1.34.    "LICENSES" shall mean the Elan License and the Athersys License.

1.35.    "MANAGEMENT COMMITTEE" shall have the meaning, as such term is defined
         in the JDOA.

1.36.    "MEDIPAD(R) DRUG DELIVERY SYSTEM" shall mean the Bolus Drug Delivery
         System and/or Continuous Drug Delivery System, as the case may be.

1.37.    "NET SALES" shall mean an amount equal to the aggregate gross amount
         invoiced to the purchasers for In Market sales of the Products by Newco
         and its Affiliates and permitted sub-licensees, less the following
         deductions to the extent actually incurred or allowed with respect to
         such sales:

         (i)      transportation charges or allowances, if any, included in such
                  invoiced price;

         (ii)     trade, quantity or cash discounts, broker's or agent's
                  commissions, if any, allowed or paid;

         (iii)    credits or allowances, if any, given or made on account of
                  price adjustments, returns, bad debts, promotional discounts,
                  rebates and any and all federal, state or local government
                  rebates whether in existence now or enacted at any time during
                  the term of the Licenses; and

         (iv)     any tax, excise or governmental charge upon or measured by the
                  sale, transportation, delivery or use of the Product.

1.38.    "NEWCO" shall mean Athersys Newco Ltd., an exempted Bermuda limited
         liability company incorporated under the laws of Bermuda by EIS and
         Athersys on October 18, 1999 and having its registered office at 102
         St. James Court, Flatts, Smiths FL04, Bermuda, its successors and
         permitted assigns.

1.39.    "NEWCO INTELLECTUAL PROPERTY" shall mean all Newco Program Technology
         and all technology licensed or acquired by Newco (other than Elan
         Intellectual Property and Athersys Intellectual Property) or developed
         by Newco outside of the Project, and all intellectual property rights
         in or appurtenant to any of the foregoing.

1.40.    "NEWCO PROGRAM TECHNOLOGY" shall mean any and all Program Technology,
         excluding all Elan Improvements and all Athersys Improvements.

1.41.    "PARTY" shall mean Athersys or Newco, as the case may be, and "PARTIES"
         shall mean Athersys and Newco.

1.42.    "PATENT RIGHTS" shall mean any and all patents and patent applications,
         and all rights therein, and including all extensions, continuations,
         continuations-in-part, divisionals, patents-of-additions,
         re-examinations, re-issues, supplementary protection certificates

                                       7
<PAGE>   8

                                            CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                            AND EXCHANGE COMMISSION.
                                            ASTERISKS DENOTE SUCH OMISSIONS.

         and foreign counterparts of such patents and patent applications and
         any patents issuing thereon and extensions of or supplemental
         protection certificates with respect to any patents.

1.43.    "PROGRAM TECHNOLOGY" shall mean all Know-How and technology developed
         by or on behalf of Newco, whether by Elan, Athersys, a third party or
         jointly by any combination thereof, pursuant to the Project;

1.44.    "PRODUCT" shall mean the Selected Protein produced using RAGE and
         incorporated within or packaged with the MEDIPAD(R) Drug Delivery
         System.

1.45.    "PROJECT" shall mean all activities undertaken by Newco (and/or by Elan
         or Athersys pursuant to a contract with Newco) relating to the
         development and Commercialization of the Product for use in the Field
         in accordance with the Plan.

1.46.    "RAGE" shall mean the technology Controlled by Athersys' related to
         randomly activated gene expression techniques.

1.47.    "SELECTED INDICATION" shall mean the Initial Indication, unless and
         until a Substitute Indication is designated to be the subject of the
         Project pursuant to the designation of a Substitute Protein/Indication
         under the provisions of Clauses 7.2 and 7.3 of the JDOA, in which case
         the term "Selected Indication" shall mean such designated Substitute
         Indication.

1.48.    "SELECTED PROTEIN" shall mean [***](5), unless and until a Substitute
         Protein is designated to be the subject of the Project pursuant to the
         designation of a Substitute Protein/Indication under the provisions of
         Clauses 7.2 and 7.3 of the JDOA, in which case the term "Selected
         Protein" shall mean such designated Substitute Protein.

1.49.    "SUBSTITUTE INDICATION" shall mean [***](6)

1.50.    "SUBSTITUTE PROTEIN" [***](7)

1.51.    "SUBSTITUTE PROTEIN/INDICATION" shall mean either: [***]8 as designated
         pursuant to the terms of Clauses 7.2 and 7.3 of the JDOA.

--------------------------

(5) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(6) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(7) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(8) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       8
<PAGE>   9
                                               CONFIDENTIAL MATERIAL OMITTED AND
                                            FILED SEPARATELY WITH THE SECURITIES
                                                        AND EXCHANGE COMMISSION.
                                                ASTERISKS DENOTE SUCH OMISSIONS.

 "TECHNOLOGICAL COMPETITOR"

         1.52.1   "TECHNOLOGICAL COMPETITOR OF ATHERSYS" shall mean any entity
                  listed on Schedule 2 hereto, subject to Clause 1.52.3 and
                  amendment from time to time upon mutual written agreement of
                  Newco, Athersys and Elan.

         1.52.2   "TECHNOLOGICAL COMPETITOR OF ELAN" shall mean any entity
                  listed on Schedule 3 hereto, subject to Clause 1.52.3 and
                  amendment from time to time upon mutual written agreement of
                  Newco, Athersys and Elan.

         1.52.3   The Technological Competitor of Elan and Technological
                  Competitor of Athersys shall include any and all divisions or
                  subsidiaries and successors of such entities subject to the
                  following: except for [***](9) (in whatever name or corporate
                  or non-corporate form in which [***](10) may exist), which in
                  any and all events shall remain a Technological Competitor of
                  Elan, (a) if a Technological Competitor of Elan or Athersys,
                  as the case may be, shall enter into any transaction of
                  merger, reorganization or consolidation, or transfer, sale,
                  assignment or other disposition or acquisition of the capital
                  stock or substantially all of the assets, of another
                  Technological Competitor of Elan or Athersys as the case may
                  be, then the successor entity shall also be considered a
                  Technological Competitor of Elan or Athersys as the case may
                  be, and (b) if a Technological Competitor of Elan or Athersys
                  as the case may be, shall enter into a transaction of merger,
                  reorganization or consolidation, or transfer, sale, assignment
                  or other disposition or acquisition of the capital stock or
                  substantially all of the assets, of an entity other than a
                  Technological Competitor of Elan or Athersys as the case may
                  be, then the successor entity shall also be considered a
                  Technological Competitor of Elan or Athersys, as the case may
                  be, only if such Technological Competitor of Elan or Athersys
                  is the surviving entity. Notwithstanding anything to the
                  contrary herein, the parties agree that [***](11) and any of
                  its subsidiaries or affiliates (other than

         [***](12) (in whatever name or corporate or non-corporate form in which
         [***](13) may exist)), is not a Technological Competitor of Elan.

1.53.    "TERM" shall have the meaning set forth in Clause 9.

(9) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(10) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(11) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(12) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

(13) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       9
<PAGE>   10

1.54.    "TERRITORY" shall mean all the countries of the world.

1.55.    "UNITED STATES DOLLAR" and "US$" shall mean the lawful currency for the
         time being of the United States of America.

1.56.    In this Agreement:

         1.56.1   The singular includes the plural and vice versa, and the
                  masculine includes the feminine and vice versa and the neuter
                  includes the masculine and the feminine.

         1.56.2   Any reference to a Clause or Schedule shall, unless otherwise
                  specifically provided, be to the Clause or Schedule of this
                  Agreement.

         1.56.3   The headings of this Agreement are for ease of reference only
                  and shall not affect its construction or interpretation.

2.       ATHERSYS LICENSE TO NEWCO

2.1.     Athersys hereby grants to Newco for the Term an exclusive world-wide
         license (including the limited right to grant sublicenses under Clause
         2.5) (the "ATHERSYS LICENSE") of the Athersys Intellectual Property
         solely to research, develop and otherwise engage in the
         Commercialization of the Product solely for use in the Field.

2.2.     If Athersys would owe a third party royalty or other compensation
         obligations based on the practice of the Athersys Intellectual Property
         by Newco in connection with the Project, Athersys will inform Newco and
         Elan of such royalty or compensation obligation. If Newco and Elan
         agree to utilize such Athersys Intellectual Property in connection with
         the Project, Newco will be responsible for the payment of such royalty
         or other compensation obligations incurred based on such use.

         For the avoidance of doubt, royalties, milestones or other payment
         obligations of Athersys that arise from the practice of the Athersys
         Intellectual Property by Newco in connection with the Project (for
         example, a milestone payment payable upon successful completion of
         Phase II clinical trials, the filing of an NDA application, obtaining
         NDA approval, or first commercial sale) shall be payments for which
         Newco will be responsible under this Clause 2.2, provided that such
         payment obligations were disclosed to Newco by Athersys as required
         above.

2.3.     Elan shall be a third party beneficiary under this Agreement and shall
         have the right to cause Newco to enforce Newco's rights under this
         Agreement against Athersys.

2.4.     Notwithstanding anything contained in this Agreement to the contrary,
         Athersys shall retain all rights to fully exploit and grant licenses
         and sublicenses with respect to the Athersys Intellectual Property
         except as such rights are exclusively licensed to Newco under the
         Athersys License. Newco hereby covenants that it shall not practice,
         use or sublicense the Athersys Intellectual Property except as
         expressly permitted under the Athersys License.

                                       10
<PAGE>   11

2.5.     Newco shall not assign any of its rights under the Athersys License
         relating to the Athersys Intellectual Property, or any of its rights
         under the Newco Intellectual Property relating to the Product for use
         in the Field, without the prior written consent of Elan and Athersys.

         Newco shall not sublicense any of its rights under the Athersys License
         relating to the Athersys Intellectual Property, or license any of its
         rights under the Newco Intellectual Property relating to the Product
         for use in the Field, without the prior written consent of Elan and
         Athersys, which consent shall not be unreasonably withheld or delayed;
         provided, however, that the consent of Elan or Athersys may be withheld
         in Elan's or Athersys's sole discretion in the case of a proposed
         sublicense of such rights to a Technological Competitor of Elan or a
         Technological Competitor of Athersys, as the case may be.

2.6.     Newco shall not enter into any agreement with any third party for
         development of the Athersys Intellectual Property without the prior
         written consent of Athersys, which consent may be withheld in
         Athersys's sole discretion. Any agreement between Newco and any
         permitted third party for the development or exploitation of the
         Athersys Intellectual Property shall be limited expressly to
         development or exploitation relating solely to the research,
         development and/or Commercialization of the Product in the Field and
         shall require such third party to maintain the confidentiality of all
         information concerning the Athersys Intellectual Property, and shall
         expressly provide that any Athersys Improvements shall belong to
         Athersys.

2.7.     Insofar as the obligations owed by Newco to Athersys are concerned,
         Newco shall remain responsible for all acts and omissions of any
         permitted sub-licensee, that violate the terms of this Agreement,
         including Elan, as if they were acts and omissions by Newco.

3.       SUBSTITUTE INDICATIONS/PRODUCTS

3.1.     The Parties acknowledge that the provisions relating to the selection
         and designation of a Substitute Protein/Indication are set forth in
         Clauses 7.2 and 7.3 of the JDOA.

4.       INTELLECTUAL PROPERTY

4.1.     OWNERSHIP OF INTELLECTUAL PROPERTY:

         4.1.1    All rights, title, and interest to any Athersys Improvements
                  shall be the property of Athersys; and Newco and Elan shall
                  execute and deliver documents, and take such other actions as
                  Athersys may reasonably request, to effect or evidence such
                  ownership.

         4.1.2    The Parties agree that Newco shall own all rights, title, and
                  interest in and to the Newco Intellectual Property.

                                       11
<PAGE>   12

         4.1.3    Athersys shall own and retain all rights, title, and interests
                  in and to the Athersys Intellectual Property, subject only to
                  the license rights granted to Newco under Clause 2.

4.2.     TRADEMARKS.

         4.2.1    Athersys hereby grants to Newco for the Term a non-exclusive,
                  royalty free license in the Territory to use and display the
                  Athersys Trademarks to promote and sell the Product in the
                  Field in the Territory. The following provisions shall apply
                  as regards the use of the Athersys Trademarks by Newco
                  hereunder:

                  (1)      Newco shall ensure that each reference to and use of
                           an Athersys Trademark by Newco is in a manner
                           approved by Athersys (such approval not to be
                           unreasonably withheld) and accompanied by an
                           acknowledgement, in a form approved by Athersys, that
                           the same is a trademark (or registered trademark) of
                           Athersys.

                           From time to time, upon the reasonable request of
                           Athersys, Newco shall submit samples of the Product
                           to Athersys or its duly appointed agent to ensure
                           compliance with quality standards and specifications
                           reasonably determined by Athersys relating to RAGE or
                           the Selected Protein. Athersys, or its duly appointed
                           agent, shall have the right to inspect the premises
                           of Newco where the Product is manufactured, held or
                           stored, and Newco shall permit such inspection, upon
                           reasonable advance notice and at a time reasonably
                           convenient to Newco, of the methods and procedures
                           used in the manufacture, storage and sale of the
                           Product, which inspection shall be subject to
                           appropriate and reasonable restrictions and
                           limitations regarding safety and confidentiality.
                           Newco shall not sell or otherwise dispose of any
                           Product bearing the Athersys Trademarks that fails to
                           comply with the quality standards and specifications
                           referred to in this Clause 4.2.

                  (2)      Newco shall not use an Athersys Trademark in any way
                           that might materially prejudice its distinctiveness
                           or validity or the goodwill of Athersys therein.

                  (3)      The Parties recognize that the Athersys Trademarks
                           have considerable goodwill associated therewith.
                           Newco shall not use in relation to the Product any
                           trademarks other than the Athersys Trademarks (except
                           the Elan Trademarks licensed to Newco under the Elan
                           License Agreement) without obtaining the prior
                           consent in writing of Athersys, which consent may not
                           be unreasonably withheld. However, such use must not
                           conflict with the use and display of the Athersys
                           Trademark and such use and display must be approved
                           by Athersys.

                  (4)      Newco shall not use in the Territory any trademarks
                           or trade names so resembling the Athersys Trademark
                           as to be likely to cause confusion or deception.

                                       12
<PAGE>   13

                  (5)      Newco shall promptly notify Athersys in writing of
                           any alleged infringement or unauthorized use of which
                           it becomes aware by a third party of the Athersys
                           Trademarks and provide Athersys with any applicable
                           evidence of infringement or unauthorized use.

                  (6)      Newco shall favorably consider promoting and using
                           the Athersys Trademarks in each country of the
                           Territory and provide proof of such use upon request
                           by Athersys.

                  (7)      Newco shall not be permitted to assign or sublicense
                           any of its rights under the Athersys Trademarks
                           without the prior written consents of Athersys, which
                           consent shall not be unreasonably withheld or
                           delayed.

         4.2.2    Athersys shall, at its sole expense and discretion, file and
                  prosecute applications to register and maintain registrations
                  of the Athersys Trademarks in the Territory. Newco shall
                  reasonably co-operate with Athersys in such efforts. If
                  Athersys decides to withdraw a mark from further prosecution
                  or fails to maintain such mark, Newco may request Athersys to
                  continue such prosecution or maintenance at Newco's expense.
                  Athersys may comply with Newco's request unless Athersys
                  believes such action is without merit.

         4.2.3    Athersys will be entitled to conduct all enforcement
                  proceedings relating to the Athersys Trademarks and shall at
                  its sole discretion decide what action, if any, to take in
                  respect to any enforcement proceedings of the Athersys
                  Trademarks or any other claim or counter-claim brought in
                  respect to the use or registration of the Athersys Trademarks.
                  Any such proceedings shall be conducted at Athersys's expense
                  and for its own benefit. Newco shall reasonably cooperate with
                  Athersys in such efforts. If Athersys decides to withdraw a
                  mark from further prosecution or fails to maintain such mark,
                  Newco may request Athersys to continue such prosecution or
                  maintenance at Newco's expense. Athersys may comply with
                  Newco's request unless Athersys believes such action is
                  without merit.

         4.2.4    Newco shall promptly notify Athersys in writing in the event
                  that any Athersys Trademark has been challenged by a third
                  party in a judicial or administrative proceeding in a country
                  in the Territory as infringing on the rights of a third party
                  and Athersys shall have the first right to decide whether or
                  not to defend such allegations, or to adopt an alternative
                  mark. If Athersys decides not defend the Athersys Trademark,
                  then Newco may request Athersys to defend the Athersys
                  Trademark, at Newco's expense, unless such requested defense
                  is believed by Athersys to be unsubstantiated and without
                  merit. In such a case, Athersys may elect not initiate defense
                  proceedings.

         4.2.5    Newco will have no ownership rights in respect of the Athersys
                  Trademarks or of the goodwill associated therewith, and Newco
                  hereby acknowledges that, except as expressly provided in this
                  Agreement, it shall not acquire any rights in respect thereof
                  and that all such rights and goodwill are, and will remain,
                  vested in Athersys.

                                       13
<PAGE>   14

         4.2.6    Nothing in this Agreement shall be construed as a warranty on
                  the part of Athersys regarding the Athersys Trademarks,
                  including without limitation, that use of the Athersys
                  Trademarks in the Territory will not infringe the rights of
                  any third parties. Accordingly, Newco acknowledges and agrees
                  that Athersys makes no such warranty.

         4.2.7    Athersys assumes no liability to Newco or to any third parties
                  with respect to the quality, performance or characteristics of
                  any of the goods manufactured or sold by Newco under the
                  Athersys Trademarks pursuant to this Agreement.

5.       AFTER ACQUIRED TECHNOLOGY

5.1.     If after the Effective Date Athersys acquires Know-How or Patent Rights
         from a third Party relating to the Athersys Intellectual Property, or
         if Athersys acquires or merges with a third party entity that owns or
         has license rights to Know-How or Patent Rights relating to the
         Athersys Intellectual Property, then Athersys shall offer to license
         such Know-How and Patent Rights to Newco (subject to existing
         contractual obligations) solely for Newco to research, develop and
         otherwise engage in the Commercialization of the Product solely for use
         in the Field (for purposes of this Clause 5.1, the "Field of Use"), on
         such terms as would be offered to an independent third party
         negotiating in good faith on an arms-length basis.

         If the Elan representatives on the Management Committee determine that
         Newco should not acquire such license, or if the parties are unable to
         reach agreement on such commercial terms within 120 days from
         Athersys's offer to Newco or within another mutually agreeable period,
         then Athersys shall be free to fully exploit such Know-How and Patent
         Rights in such Field of Use, and to grant to third parties licenses and
         sublicenses with respect thereto. Notwithstanding the foregoing,
         Athersys shall retain all rights to exploit and license any such
         acquired Know-How and Patent Rights for all purposes outside of such
         Field of Use.

6.       FINANCIAL PROVISIONS

6.1.     ROYALTIES:

         The intent of the Parties and Elan is to provide for equivalent
         economic benefit to each of Athersys and Elan. Accordingly, prior to
         the Commercialization of the Product, the Management Committee shall
         consider and if appropriate, determine reasonable royalties with
         respect to the Commercialization of the Product by Newco that shall be
         payable by Newco to Elan and Athersys, and shared by Elan and Athersys
         pro rata with Elan's and Athersys's respective percentage ownership of
         stock (whether common stock and/or preferred stock) in Newco.

6.2.     Payment of royalties pursuant to Clause 6.1 shall be made quarterly in
         arrears during each Financial Year within 60 days after the expiry of
         the applicable calendar quarter. The method of payment shall be by wire
         transfer to an account specified by Athersys. Each payment made to
         Athersys shall be accompanied by a true accounting of all

                                       14
<PAGE>   15

         Product sold by Newco, its Affiliates and permitted sublicensees, if
         any, during such quarter.

         Such accounting shall show, on a country-by-country and
         Product-by-Product basis, Net Sales (and the calculation thereof) and
         each calculation of royalties with respect thereto, including the
         calculation of all adjustments and currency conversions.

6.3.     Newco shall maintain and keep clear, detailed, complete, accurate and
         separate records for a period of 3 years:

         6.3.1    to enable any royalties on Net Sales that shall have accrued
                  hereunder to be determined; and

         6.3.2    to enable any deductions made in the Net Sales calculation to
                  be determined.

6.4.     All payments due hereunder shall be made in United States Dollars.
         Payments due on Net Sales of any Product for each calendar quarter made
         in a currency other than United States Dollars shall first be
         calculated in the foreign currency and then converted to United States
         Dollars on the basis of the exchange rate in effect on the last working
         day for such quarter for the purchase of United States Dollars with
         such foreign currency quoted in the Wall Street Journal (or comparable
         publication if not quoted in the Wall Street Journal) with respect to
         the currency of the country of origin of such payment.

6.5.     If, at any time, legal restrictions in the Territory prevent the prompt
         payment when due of royalties or any portion thereof, the Parties shall
         meet to discuss suitable and reasonable alternative methods of paying
         Athersys the amount of such royalties. In the event that Newco is
         prevented from making any payment under this Agreement by virtue of the
         statutes, laws, codes or government regulations of the country from
         which the payment is to be made, then such payments may be paid by
         depositing them in the currency in which they accrue to Athersys's
         account in a bank acceptable to Athersys in the country the currency of
         which is involved or as otherwise agreed by the Parties.

6.6.     Athersys and Newco agree to co-operate in all respects necessary to
         take advantage of any double taxation agreements or similar agreements
         as may, from time to time, be available.

6.7.     Any taxes payable by Athersys on any payment made to Athersys pursuant
         to this Agreement shall be for the account of Athersys. If so required
         by applicable law, any payment made pursuant to this Agreement shall be
         made by Newco after deduction of the appropriate withholding tax, in
         which event the Parties shall co-operate to obtain the appropriate tax
         clearance as soon as is practicable. On receipt of such clearance,
         Newco shall forthwith arrange payment to Athersys of the amount so
         withheld.

7.       RIGHT OF INSPECTION AND AUDIT

7.1.     No more than once every twelve months and upon reasonable advance
         notice requested by Athersys, Newco shall permit Athersys or its duly
         authorized

                                       15
<PAGE>   16

         representatives, at any reasonable time during normal business hours,
         to have access to inspect and audit the accounts and records of Newco
         and any other book, record, voucher, receipt or invoice relating to the
         calculation of the royalty payments on Net Sales submitted to Athersys.
         Such inspection shall be of records relating to a time period not
         previously audited hereunder, and in no event older than three years.

         Any such inspection of Newco's records shall be at the expense of
         Athersys, except that if any such inspection reveals a deficiency in
         the amount of the royalty actually paid to Athersys hereunder during
         the period inspected of 5% or more of the amount of any royalty
         actually due to Athersys hereunder for such period, then the expense of
         such inspection shall be borne solely by Newco. Any amount of
         deficiency shall be paid promptly to Athersys by Newco.

         If such inspection reveals a surplus in the amount of royalties
         actually paid to Athersys by Newco, Athersys shall reimburse Newco the
         surplus within 15 days after determination.

7.2.     In the event of any unresolved dispute regarding any alleged deficiency
         or overpayment of royalty payments hereunder, the matter will be
         referred to an independent firm of chartered accountants chosen by
         agreement of Athersys and Elan for a resolution of such dispute. Any
         decision by the said firm of chartered accountants shall be binding on
         the Parties.

8.       REPRESENTATIONS AND WARRANTIES

8.1.     Athersys represents and warrants to Newco that, as of the Effective
         Date, to Athersys' best knowledge:

         (a)      Athersys has the right to grant the Athersys License;

         (b)      Schedule 1 contains the primary examples of Athersys Patent
                  Rights existing as of the date hereof, which listing is not
                  necessarily exhaustive;

         (c)      there are no agreements between Athersys and any third parties
                  that would conflict with or would prevent Athersys from
                  granting the Athersys License to Newco;

         (d)      Athersys is the owner or licensee of all rights, title and
                  interest in the Athersys Intellectual Property,

         (e)      Athersys has no knowledge of any pending or threatened action,
                  suit, proceeding or claim by others challenging Athersys'
                  rights in or to such Athersys Intellectual Property as related
                  to the Field, which would have a material adverse effect on
                  the ability of Newco to conduct the Project; and

         (f)      the Athersys Intellectual Property constitutes all
                  intellectual property owned or licensed by Athersys that are
                  reasonably applicable to the Project as it relates to the
                  Selected Protein produced using RAGE.

                                       16
<PAGE>   17

8.2.     Athersys further represents and warrants to Newco as follows:

         (a)      there are no existing or claimed defaults by Athersys, and to
                  Athersys' best knowledge by any other party, under any license
                  agreement pursuant to which Athersys has obtained any license
                  rights to any Athersys Intellectual Property; and no event,
                  act or omission has occurred which (with or without notice,
                  lapse of time or the happening or occurrence of any other
                  event) would result in a default under such license agreements
                  by Athersys, or to Athersys's best knowledge by any other
                  party, and

         (b)      Athersys shall, during the term of the Licenses, comply with
                  the material terms and conditions of such license agreements
                  and will if appropriate enforce its rights under such license
                  agreements.

8.3.     In addition to any other indemnities provided for herein, Athersys
         shall indemnify and hold harmless Newco and its Affiliates and their
         respective employees, agents, officers and directors from and against
         any claims, losses, liabilities or damages (including reasonable
         attorney's fees and expenses) incurred or sustained by Newco arising
         out of or in connection with any:

         8.3.1    breach of any representation, covenant, warranty or obligation
                  by Athersys hereunder; or

         8.3.2    act or omission on the part of Athersys or any of its
                  respective employees, agents, officers and directors in the
                  performance of this Agreement.

8.4.     In addition to any other indemnities provided for herein, Newco shall
         indemnify and hold harmless Athersys and its Affiliates and their
         respective employees, agents, officers and directors from and against
         any claims, losses, liabilities or damages (including reasonable
         attorney's fees and expenses) incurred or sustained by Athersys arising
         out of or in connection with any:

         8.4.1    breach of any representation, covenant, warranty or obligation
                  by Newco hereunder; or

         8.4.2    act or omission on the part of Newco or any of its agents or
                  employees in the performance of this Agreement.

8.5.     The Party seeking an indemnity shall:

         8.5.1    fully and promptly notify the other Party of any claim or
                  proceeding, or threatened claim or proceeding;

         8.5.2    permit the indemnifying Party to take full care and control of
                  such claim or proceeding;

         8.5.3    co-operate in the investigation and defense of such claim or
                  proceeding;

                                       17
<PAGE>   18

         8.5.4    not compromise or otherwise settle any such claim or
                  proceeding without the prior written consent of the other
                  Party, which consent shall not be unreasonably withheld
                  conditioned or delayed; and

         8.5.5    take all reasonable steps to mitigate any loss or liability in
                  respect of any such claim or proceeding.

8.6.     EXCEPT AS SET FORTH IN THIS CLAUSE 8, ATHERSYS IS GRANTING THE ATHERSYS
         LICENSE HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR
         WARRANTY WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF
         MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF
         THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.

8.7.     NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER
         ATHERSYS NOR NEWCO SHALL BE LIABLE TO THE OTHER BY REASON OF ANY
         REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OF THIS AGREEMENT
         OR THE JDOA OR ANY DUTY OF COMMON LAW, FOR ANY INDIRECT, CONSEQUENTIAL,
         SPECIAL, INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF
         PROFITS OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE
         BREACHING PARTY, ITS EMPLOYEES OR AGENTS OR OTHERWISE.

9.       TERM AND TERMINATION

9.1.     TERM

         9.1.1    The term of this Agreement ("the Term") shall commence as of
                  the Effective Date and shall, subject to Clause 9.1.2 and
                  early termination of the Agreement pursuant to the other
                  provisions of this Clause 9, expire on a country-by-country
                  basis on the last to occur of:

                  (a)      15 years starting from the date of the first
                           commercial sale of the Product in the country
                           concerned; or

                  (b)      the date of expiration of the last to expire of the
                           Patents Rights included in the Athersys Patent Rights
                           and/or Athersys Improvements.

         9.1.2 In no event shall the Term exceed twenty-five (25) years from the
         Effective Date.

9.2.     TERMINATION

         If either Party commits a Relevant Event, the other Party shall have,
         in addition to all other legal and equitable rights and remedies
         hereunder, the right to terminate this Agreement upon 30 days' prior
         written notice to the defaulting Party, such notice to be provided if
         at all within 180 days after the occurrence of such Relevant Event.

                                       18
<PAGE>   19

9.3.     For the purpose of this Clause 9, a "RELEVANT EVENT" is committed or
         suffered by a Party if:

         9.3.1    such Party commits a material breach of its obligations under
                  this Agreement and fails to cure or remedy such breach within
                  60 days of being specifically required in writing to do so by
                  the other Party; provided, that if the breaching Party has
                  proposed a course of action to rectify or cure the breach and
                  is acting in good faith to rectify or cure same but has not
                  cured the breach by the 60th day, such period shall be
                  extended by such period as is reasonably necessary to permit
                  the breach to be rectified so long as such breaching Party
                  continues to exert good faith efforts to rectify or cure the
                  breach; or

         9.3.2    such Party ceases wholly or substantially to carry on its
                  business, otherwise than for the purpose of a reconstruction
                  or amalgamation, without the prior written consent of the
                  other Party (such consent not to be unreasonably withheld);

         9.3.3    upon the appointment, as to such Party, of a liquidator,
                  receiver, administrator, examiner, trustee or similar officer
                  with authority over all or substantially all of its assets
                  under the law of any applicable jurisdiction, including
                  without limitation, the United Sates of America, Bermuda or
                  Ireland; or

         9.3.4    an application or petition for bankruptcy, corporate
                  re-organization, composition, administration, examination,
                  arrangement or any other procedure similar to any of the
                  foregoing under the law of any applicable jurisdiction,
                  including without limitation, the United States of America,
                  Bermuda or Ireland, is filed by a Party, and is not discharged
                  within 60 days, or all or substantially all of the assets,
                  rights, revenues and/or business of a Party are for any reason
                  seized, confiscated or condemned.

9.4.     If Elan terminates the Elan License Agreement in accordance with Clause
         9.4 thereof due to a Change of Control of Athersys/Newco, then Athersys
         shall have the right, at its election, to terminate this Agreement upon
         ten business days prior written notice to Elan.

9.5.     Upon expiration or termination of this Agreement:

         (a)      any sums that were due from Newco to Athersys on Net Sales in
                  the Territory or in such particular country or countries in
                  the Territory (as the case may be) prior to the expiration or
                  termination of this Agreement as set forth herein shall be
                  paid in full within 60 days after the expiration or
                  termination of this Agreement for the Territory or for such
                  particular country or countries in the Territory (as the case
                  may be);

         (b)      any provisions that expressly survive termination or
                  expiration of this Agreement, including without limitation
                  this Clause 9, shall remain in full force and effect;

                                       19
<PAGE>   20

         (c)      all representations, warranties and indemnities shall insofar
                  as are appropriate remain in full force and effect;

         (d)      the rights of inspection and audit set out in Clause 7 shall
                  continue in force for a period of one year;

         (e)      all rights and licenses granted to Newco pursuant to this
                  Agreement and to the Athersys Intellectual Property pursuant
                  to the JDOA (including the rights of Newco pursuant to Clause
                  11 of the JDOA with respect to patent prosecution and
                  maintenance) shall cease for the Territory or for such
                  particular country or countries in the Territory (as the case
                  may be) and shall revert to or be transferred to Athersys, and
                  Newco shall not thereafter use in the Territory or in such
                  particular country or countries in the Territory (as the case
                  may be) any such rights covered by this Agreement;

         (f)      Subject to Clause 9.5.(g) and to such license, if any, granted
                  by Newco to Athersys pursuant to the provisions of Clause 12
                  of the JDOA (entitled "Exploitation Outside the Field"), all
                  rights to Newco Intellectual Property shall be automatically
                  licensed, on a world-wide, non-exclusive, perpetual
                  royalty-free basis, to each of Athersys and Elan, and each of
                  Elan and Athersys may independently and separately exploit
                  such Newco Intellectual Property pursuant to such
                  non-exclusive license (with the right to sublicense) without
                  accounting to the other;

         (g)      the rights of permitted third party sub-licensees in and to
                  the Athersys Intellectual Property shall survive the
                  termination of the license and sublicense agreements granting
                  said intellectual property rights to Newco; and Newco, Elan
                  and Athersys shall in good faith agree upon the form most
                  advantageous to Elan and Athersys in which the rights of Newco
                  under any such licenses and sublicenses are to be held (which
                  form may include continuation of Newco solely as the holder of
                  such licenses or assignment of such rights to a third party or
                  parties, including an assignment to both Elan and Athersys).
                  Any sublicense agreement between Newco and such permitted
                  sublicensee shall permit an assignment of rights by Newco to
                  Elan and Athersys and shall contain appropriate
                  confidentiality provisions.

10.      CONFIDENTIAL INFORMATION

10.1.    The Parties agree that it will be necessary, from time to time, to
         disclose to each other confidential and proprietary information,
         including without limitation, inventions, works of authorship, trade
         secrets, specifications, designs, data, know-how and other proprietary
         information relating to the Field, the Product, processes, services and
         business of the disclosing Party.

         The foregoing shall be referred to collectively as "CONFIDENTIAL
         INFORMATION".

10.2.    Any Confidential Information disclosed by one Party to another Party
         shall be used by the receiving Party exclusively for the purposes of
         fulfilling the receiving Party's obligations under this Agreement and
         the JDOA and for no other purpose.

                                       20
<PAGE>   21

         10.3.    Each Party shall disclose Confidential Information of the
                  other Party only to those employees, representatives and
                  agents requiring knowledge thereof in connection with
                  fulfilling the Party's obligations under this Agreement. Each
                  Party further agrees to inform all such employees,
                  representatives and agents of the terms and provisions of this
                  Agreement and their duties hereunder and to obtain their
                  agreement hereto as a condition of receiving Confidential
                  Information. Each Party shall exercise the same standard of
                  care as it would itself exercise in relation to its own
                  confidential information (but in no event less than a
                  reasonable standard of care) to protect and preserve the
                  proprietary and confidential nature of the Confidential
                  Information disclosed to it by the other Party. Each Party
                  shall, upon request of the other Party, return all documents
                  and any copies thereof containing Confidential Information
                  belonging to, or disclosed by, such other Party.

10.4.    Any breach of this Clause 10 by any person informed by one of the
         Parties is considered a breach by the Party itself.

10.5.    The obligations of a Party under this Clause 10 with respect to the
         Confidential Information of the other Party shall not apply to:

         10.5.1   information that is in the public domain;

         10.5.2   information that is made public through no breach of this
                  Agreement;

         10.5.3   information that is independently developed by a Party without
                  reliance on any of the other Party's Confidential Information,
                  as evidenced by such Party's records;

         10.5.4   information that becomes available to a Party on a
                  non-confidential basis, whether directly or indirectly, from a
                  source other than a Party, which source did not acquire this
                  information on a confidential basis; or

10.6.    Further, a receiving Party may disclose the Confidential Information of
         the other Party to the extent it is required to disclose such
         information pursuant to:

                  (i)      a valid order of a court or other governmental body;
                           or

                  (ii)     any other requirement of law;

                  provided that if the receiving Party becomes legally required
                  to disclose any Confidential Information, the receiving Party
                  shall give the disclosing Party prompt notice of such fact so
                  that the disclosing Party may obtain a protective order or
                  other appropriate remedy concerning any such disclosure. The
                  receiving Party shall fully co-operate with the disclosing
                  Party in connection with the disclosing Party's efforts to
                  obtain any such order or other remedy. If any such order or
                  other remedy does not fully preclude disclosure, the receiving
                  Party shall make such disclosure only to the extent that such
                  disclosure is legally required.

                                       21
<PAGE>   22

10.7.    The provisions relating to confidentiality in this Clause 10 shall
         remain in effect during the term of this Agreement, and for a period of
         7 years following the expiration or earlier termination of this
         Agreement.

10.8.    The Parties agree that the obligations of this Clause 10 are necessary
         and reasonable in order to protect the Parties' respective businesses,
         and each Party agrees that monetary damages would be inadequate to
         compensate a Party for any breach by the other Party of its covenants
         and agreements set forth herein.

         Accordingly, the Parties agree that any such violation or threatened
         violation shall cause irreparable injury to a Party and that, in
         addition to any other remedies that may be available, in law and equity
         or otherwise, each Party may be entitled to obtain injunctive relief
         against the threatened breach of the provisions of this Clause 10, or a
         continuation of any such breach by the other Party, specific
         performance and other equitable relief to redress such breach together
         with its damages and reasonable counsel fees and expenses to enforce
         its rights hereunder, without the necessity of proving actual or
         express damages.

11.      GOVERNING LAW AND JURISDICTION

11.1.    This Agreement shall be governed by and construed in accordance with
         the substantive laws of the State of New York, without giving effect to
         the provisions thereof relating to the conflict of laws.

11.2.    The Parties will attempt in good faith to resolve any dispute arising
         out of or relating to this Agreement promptly by negotiation between
         executives of the Parties. In the event that such negotiations do not
         result in a mutually acceptable resolution, the Parties agree to
         consider other dispute resolution mechanisms including mediation.

         In the event that the Parties fail to agree on a mutually acceptable
         dispute resolution mechanism, any such dispute shall be settled in
         accordance with the terms of Clauses 19 and 24.7 of the JODA.

12.      IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE

         Neither Athersys nor Newco shall be liable for delay or failure in the
         performance of any of its obligations hereunder if such delay results
         from causes beyond its reasonable control, including, without
         limitation, acts of God, fires, strikes, acts of war, intervention of a
         government authority, provided that the Party whose performance is
         delayed or prevented continues to use good faith diligent efforts to
         mitigate, avoid or end such delay or failure in performance as soon as
         practicable.

13.      ASSIGNMENT

         Each Party shall not be permitted to assign its rights or obligations
         hereunder without the prior written consent of the other Party except
         as follows:

                                       22
<PAGE>   23

13.1.    The Parties shall have the right to assign their rights and obligations
         hereunder to their respective Affiliates, provided, however, that such
         assignment does not result in adverse tax consequences for the other
         Party.

13.2.    Athersys shall be entitled to assign this Agreement to its successor in
         interest pursuant to acquisition, merger, consolidation or purchase of
         all or substantially all of the assets of Athersys. For the avoidance
         of doubt, nothing in this Clause 13 shall prejudice Elan's rights under
         the Elan License Agreement, including Elan's right to terminate the
         Elan License Agreement in accordance with Clause 9.4 thereof.

14.     NOTICES

14.1.    Any notice to be given under this Agreement shall be sent by registered
         airmail or telefaxed to the following addresses:

         If to Newco at:

         Clarendon House
         Church St.
         Hamilton, Bermuda
         Attention:        Secretary
         Telephone:        441 292 9169
         Fax:              441 292 2224

         with a copy to Elan at:

         Elan Corporation, plc
         C/o Elan International Services. Ltd.
         102 St. James Court
         Flatts
         Smiths FL04 Bermuda
         Attention:        Secretary
         Telephone:        441 292 9169
         Telefax:          441 292 2224

         If to Athersys at:

         11000 Cedar Avenue
         Cleveland, Ohio 44106
         USA
         Attention:        President and Chief Executive Officer
         Telephone:        (216) 231-9911
         Fax:              (216) 231-0905

         with a copy to:

         Cooley Godward LLP
         Five Palo Alto Square
         3000 El Camino Real

                                       23
<PAGE>   24

         Palo Alto, CA 94306
         Attention:        Barclay James Kamb, Esq.
         Telephone         (650) 843-5052
         Fax:              (650) 857-0663

         If to Elan at:

         Elan Corporation, plc
         C/o Elan International Services. Ltd.
         102 St. James Court
         Flatts
         Smiths FL04 Bermuda
         Attention: Secretary
         Telephone:  441 292 9169
         Telefax:      441 292 2224

         or to such other address(es) and telefax numbers as may from time to
         time be notified by either Party to the other hereunder.

14.2.    Any notice sent by mail shall be deemed to have been delivered within
         seven 7 working days after dispatch and any notice sent by telex or
         telefax shall be deemed to have been delivered within twenty 24 hours
         of the time of the dispatch. Notice of change of address shall be
         effective upon receipt.

15.      MISCELLANEOUS

15.1.    WAIVER:

         No waiver of any right under this Agreement shall be deemed effective
         unless contained in a written document signed by the Party charged with
         such waiver, and no waiver of any breach or failure to perform shall be
         deemed to be a waiver of any other breach or failure to perform or of
         any other right arising under this Agreement.

15.2.    SEVERABILITY:

         If any provision in this Agreement is agreed by the Parties to be, or
         is deemed to be, or becomes invalid, illegal, void or unenforceable
         under any law that is applicable hereto:

         (a)      The Parties shall attempt in good faith to amend the Agreement
                  to provide an alternate to such provision to conform to
                  applicable laws so as to be valid and enforceable; and retain
                  the intent of the Parties relating to such provision; or

         (b)      If the Parties cannot so amend the Agreement without
                  materially altering the intention of the Parties, it will be
                  deleted, with effect from the date of such agreement or such
                  earlier date as the Parties may agree, and the validity,
                  legality and enforceability of the remaining provisions of
                  this Agreement shall not be impaired or affected in any way.

                                       24
<PAGE>   25

15.3.    FURTHER ASSURANCES:

         At the request of any of the Parties, the other Party or Parties shall
         (and shall use reasonable efforts to procure that any other necessary
         parties shall) execute and perform all such documents, acts and things
         as may reasonably be required subsequent to the signing of this
         Agreement for assuring to or vesting in the requesting Party the full
         benefit of the terms hereof.

15.4.    SUCCESSORS:

         This Agreement shall be binding upon and inure to the benefit of the
         Parties hereto, their successors and permitted assigns.

15.5.    NO EFFECT ON OTHER AGREEMENTS/CONFLICT:

         No provision of this Agreement shall be construed so as to negate,
         modify or affect in any way the provisions of any other agreement
         between the Parties unless specifically referred to, and solely to the
         extent provided herein.

         In the event of a conflict between the provisions of this Agreement and
         the provisions of the JDOA, the terms of the JDOA shall prevail unless
         this Agreement specifically provides otherwise.

15.6.    AMENDMENTS:

         No amendment, modification or addition hereto shall be effective or
         binding on any Party unless set forth in writing and executed by a duly
         authorized representative of each Party and Elan.

15.7.    COUNTERPARTS:

         This Agreement may be executed in any number of counterparts, each of
         which when so executed shall be deemed to be an original and all of
         which when taken together shall constitute this Agreement.

15.8.    NO RELIANCE:

         Each Party hereby acknowledges that in entering into this Agreement it
         has not relied on any representation or warranty save as expressly set
         out herein or in any document referred to herein.

15.9.    RELATIONSHIP OF THE PARTIES:

         Nothing contained in this Agreement is intended or is to be construed
         to constitute Athersys and Newco as partners, or Athersys as an
         employee of Newco, or Newco as an employee of Athersys.

                                       25
<PAGE>   26

         Neither Party hereto shall have any express or implied right or
         authority to assume or create any obligations on behalf of or in the
         name of the other Party or to bind the other Party to any contract,
         agreement or undertaking with any third party.

                                       26
<PAGE>   27

         IN WITNESS WHEREOF the Parties hereto have executed this Agreement.

SIGNED

BY: /s/ Gil Van Bokkelen
    ---------------------------------------
for and on behalf of
ATHERSYS, INC.

SIGNED

BY: /s/ I. S. Outerbridge
    ---------------------------------------
For and on behalf of
ATHERSYS NEWCO LTD.

CONSENTED AND AGREED TO:

SIGNED

BY: /s/ Kevin Insley
    ---------------------------------------
For and on behalf of
ELAN CORPORATION, PLC, ACTING THROUGH
ITS DIVISION ELAN PHARMACEUTICAL
TECHNOLOGIES

SIGNED

BY: /s/ Kevin Insley
    ---------------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED

                                       27

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