EXHIBIT 10.6
ATHERSYS, INC.
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
          THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
“Agreement”), dated as of the 28th day of April, 2000, is by and among Athersys,
Inc. (the “Company”), Primus Capital Fund IV Limited Partnership, Primus
Executive Fund Limited Partnership, Blue Chip Capital Fund II Limited
Partnership, Miami Valley Venture Fund L.P., Sentron Medical Incorporated,
Warburg Dillon Read LLC, Ohio Innovation Fund I, L.P., The EBTC Foundation,
Athersys Investors II, LLC, Hoegh Invest, AS and NeoMed Innovation, ASA
(collectively, the “Class C Investors”), and the investors listed on Schedule A
attached hereto (collectively the “Class F Investors” with the Class C Investors
and Class F Investors collectively being referred to as the “Investors”),
Biotech 3 Investment L.L.C. (“Biotech”), and each of the stockholders of the
Company listed on Schedule B attached hereto (individually, a “Stockholder” and
collectively, the “Stockholders”).
WITNESSETH:
          WHEREAS, the Class F Investors and the Company executed that certain
Securities Purchase Agreement dated as of March 30, 2000 (the “Securities
Purchase Agreement”), pursuant to which the Class F Investors agreed to purchase
from the Company shares of the Company’s Class F Convertible Preferred Stock,
par value $.01 per share, on certain terms and conditions contained in the
Securities Purchase Agreement (the “Purchase”); and
          WHEREAS, in connection with the Purchase the parties hereto execute
this Agreement to amend and restate the Amended and Restated Registration Rights
Agreement, dated March 30, 2000, by and among the Company, Biotech, the Class C
Investors, certain Class F Investors and the Stockholders; and
          WHEREAS, the Company desires to induce Class F Investors to consummate
the Purchase by executing this Agreement.
          NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements contained herein, the parties agree as follows:
     1. Definitions.
          “Agreement” has the meaning set forth in the Recitals.
          “Amended Certificate” means the Amended and Restated Certificate of
Incorporation of the Company.
          “Biotech” has the meaning set forth in the Preamble to this Agreement.

 

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          “Biotech Shares” means (i) any equity securities of the Company issued
or issuable upon the conversion of Preferred Shares held by Biotech or any
transferee, successor or assign of Biotech; (ii) any shares of equity securities
of the Company held as the date hereof or acquired hereafter by Biotech;
(iii) any equity securities of the Company issued or issuable with respect to
the securities referred to in clauses (i) and (ii) by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization; and (iv) any other shares of
equity securities of the Company held by persons holding securities referred to
in clauses (i), (ii) and (iii); provided, however, that Biotech Shares shall not
include any securities the sale of which has been registered pursuant to the
Securities Act or sold to the public pursuant to Rule 144 promulgated by the
Commission under the Securities Act. For purposes of this Agreement, a Person
will be deemed to be a Holder of Biotech Shares whenever such Person holds a
security exercisable for or convertible into such Biotech Shares, whether or not
such exercise or conversion has actually been effected.
          “Class C Investors” has the meaning set forth in the Preamble to this
Agreement.
          “Class C Investors’ Shares” means, at any time, the following shares
held by any Class C Investors: (i) any shares of Common Stock then outstanding
that were issued upon conversion of the Class C Preferred; (ii) any shares of
Common Stock then issuable upon conversion of the Class C Preferred; (iii) any
shares of Common Stock then outstanding which were issued as, or were issued
directly or indirectly upon the conversion or exercise of other securities
issued as, a dividend or other distribution with respect to or in replacement of
other Class C Investors’ Shares; (iv) any shares of Common Stock then issuable
directly or indirectly upon the conversion or exercise of other securities which
were issued as a dividend or other distribution with respect to or in
replacement of other Class C Investors’ Shares; and (v) any other Shares held by
a Class C Investor; provided, however, that Class C Investors’ Shares shall not
include any shares of Common Stock the sale of which has been registered
pursuant to the Securities Act or sold to the public pursuant to Rule 144
promulgated by the Commission under the Securities Act. For purposes of this
Agreement, a Person will be deemed to be a Holder of Class C Investors’ Shares
whenever such Person holds a security exercisable for or convertible into such
Class C Investors’ Shares, whether or not such exercise or conversion has
actually been effected.
          “Class C Preferred” means the Class C Convertible Preferred Stock, par
value $.01, of the Company.
          “Class F Preferred” means the Class F Convertible Preferred Stock, par
value $.01, of the Company.
          “Class F Investors’ Shares” means, at any time, the following shares
held by any Class F Investors: (i) any shares of Common Stock then outstanding
that were issued upon conversion of the Class F Preferred; (ii) any shares of
Common Stock then issuable upon conversion of the Class F Preferred; (iii) any
shares of Common Stock then outstanding which were issued as, or were issued
directly or indirectly upon the conversion or exercise of other securities
issued as, a dividend or other distribution with respect to or in replacement of
other Class F Investors’ Shares; (iv) any shares of Common Stock then issuable
directly or indirectly upon the conversion or exercise of other securities which
were issued as a dividend or other distribution with respect to or in
replacement of other Class F Investors’ Shares; and (v) any

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other Shares held by a Class F Investor; provided, however, that Class F
Investors’ Shares shall not include any shares of Common Stock the sale of which
has been registered pursuant to the Securities Act or sold to the public
pursuant to Rule 144 promulgated by the Commission under the Securities Act. For
purposes of this Agreement, a Person will be deemed to be a Holder of Class F
Investors’ Shares whenever such Person holds a security exercisable for or
convertible into such Class F Investors’ Shares, whether or not such exercise or
conversion has actually been effected.
          “Common Stock” means common stock, par value $.01, of the Company.
          “Company” has the meaning set forth in the Preamble to this Agreement.
          “Demand Registrations” means, collectively, Long-Form Demand
Registrations and Short-Form Demand Registrations.
          “Demanding Shareholders” has the meaning set forth in Section 3(d).
          “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder, all as the same
shall be in effect at that time.
          “Holder” means any holder of Investors’ Shares or Registrable
Securities who is a party to this Agreement (or becomes a party hereto pursuant
to Section 12 hereof) or is a successor or assign or subsequent holder
contemplated by Section 13(e) hereof.
          “Investors” has the meaning set forth in the Preamble to this
Agreement.
          “Investors’ Shares” means, collectively, Class C Investors’ Shares and
Class F Investors’ Shares.
          “IPO” means the Company’s first underwritten public offering of shares
of common stock consummated pursuant to a registration statement declared
effective under the Securities Act, other than a registration statement relating
solely to the sale of securities to participants in a company stock plan or a
registration relating solely to a Rule 145 transaction.
          “Long-Form Demand Registration” has the meaning set forth in
Section 3(a)(v).
          “Long-Form Registration” has the meaning set forth in Section 3(a)(i).
          “Person” means any individual, sole proprietorship, partnership,
corporation, limited liability company, unincorporated society or association,
trust or other entity.
          “Piggyback Registration” has the meaning set forth in Section 2(a).
          “Preferred Shares” means the Class A Convertible Preferred Stock, $.01
par value, the Class B Convertible Preferred Stock, $.01 par value, the Class C
Convertible Preferred

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Stock, $.01 par value, the Class D Convertible Preferred Stock, $.01 par value,
the Class F Convertible Preferred Stock, $.01 par value, the Class G Convertible
Preferred Stock, $.01 par value, and any Blank Check Preferred Stock, $.01 par
value, now or hereafter issued.
          “Purchase” has the meaning set forth in the Preamble to this
Agreement.
          “Registrable Securities” means, collectively the Class C Investors’
Shares, the Class F Investors’ Shares and the Biotech Shares.
          “Registration Expenses” has the meaning set forth in Section 6(a).
          “S-2 Short-Form Registration” has the meaning set forth in
Section 3(a)(iii).
          “S-3 Short-Form Registration” has the meaning set forth in
Section 3(a)(iii).
          “SEC” means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
          “Shares” means shares of capital stock of the Company.
          “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder, all as the same shall
be in effect at that time.
          “Securities Purchase Agreement” has the meaning set forth in the
Preamble to this Agreement.
          “Short-Form Demand Registration” has the meaning set forth in
Section 3(a)(v).
          “Short-Form Registration” has the meaning set forth in
Section 3(a)(iii).
          “Stockholder” and “Stockholders” have the meanings set forth in the
Preamble to this Agreement.
     2. Piggyback Registrations.
     (a) Right to Piggyback. Whenever the Company proposes to register any of
its securities under the Securities Act, and the registration form to be used
may be used for the registration of Registrable Securities, the Company will
give prompt written notice to Biotech, the Investors and the Stockholders of its
intention to effect such a registration (a “Piggyback Registration”). The
Company will include in such registration (i) all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within fifteen (15) days after the receipt of the Company’s notice, and
(ii) such other securities of the Company held by the Stockholders with respect
to which the Company has received written requests for inclusion therein within
fifteen (15) days after the receipt of the Company’s notice; provided, however,
that no registration of securities held by the Stockholders or any other
stockholders pursuant to this Section 2 shall be at the exclusion of any
Registrable Securities.

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     (b) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company will include in such registration shares
in the following order until such limitation has been met: first, the securities
the Company proposes to sell; second, the Registrable Securities requested to be
included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Shares owned by each such holder;
third, the securities requested to be included in such registration by the
Stockholders; and fourth, other securities requested to be included in such
registration; provided that in any event, after the IPO, the Holders of the
Registrable Securities shall be entitled to have their Shares represent at least
twenty-five percent (25%) of the total shares included in any such registration.
     (c) Expiration of Piggyback Registration Rights. The “piggyback”
registration rights granted to Holders of Registrable Securities under this
Section 2 shall expire at the later of (i) ninety (90) days after all
Registrable Securities are freely tradeable to the public through a broker,
dealer or market maker in compliance with Rule 144(k) under the Securities Act,
without limitation (or any similar rule then in force) or (ii) five (5) years
after the closing of the IPO.
     3. Demand Registration.
     (a) Requests for Registration.
     (i) Subject to the terms and conditions of this Agreement, the Holders of a
majority of the then outstanding Class C Investors’ Shares at any time after the
earlier of (i) the consummation of the IPO or (ii) October 31, 2000 may request
registration under the Securities Act of all or part of their Class C Investors’
Shares on Form S-1 or any similar long-form registration statement (“Long-Form
Registration”) by delivering a written request to the Company to that effect;
provided, however, that, in the case of any such Long-Form Registration, the
aggregate offering value of all of the shares to be offered must be reasonably
expected to equal at least Five Million Dollars ($5,000,000).
     (ii) Subject to the terms and conditions of this Agreement, the Holders of
at least twenty-five percent (25%) of the then outstanding Class F Investors’
Shares at any time after the earlier of (i) the consummation of an IPO or
(ii) October 31, 2000, may request a Long Form Registration by delivering a
written request to the Company to that effect; provided, however, that, in the
case of any such Long Form Registration, the aggregate offering value of all of
the shares to be offered must be reasonably expected to equal at least Five
Million Dollars ($5,000,000).
     (iii) Subject to the terms and conditions of this Agreement, the Holders of
at least twenty-five percent (25%) of the then outstanding Class C Investors’

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Shares and Biotech Shares at any time may request registration under the
Securities Act of all or part of their Registrable Securities on Form S-2 (“S-2
Short-Form Registration”) or S-3 (“S-3 Short-Form Registration”) or any similar
short-form registration statement (collectively, a “Short-Form Registration”),
if available, by delivering a written request to the Company to that effect;
provided, however, that, in the case of any such Short-Form Registration, the
aggregate offering value of the Class C Investors’ Shares and Biotech Shares
requested to be included in such registration pursuant to Section 3(a),
including, without limitation, Section 3(a)(v), must be reasonably expected to
equal at least Five Hundred Thousand Dollars ($500,000).
     (iv) Subject to the terms and conditions of this Agreement, the Holders of
the then outstanding Class F Investors’ Shares at any time may request a S-3
Short-Form Registration of their Class F Investors’ Shares, if available, by
delivering a written request to the Company to that effect; provided, however,
that, in the case of any such S-3 Short-Form Registration, the aggregate
offering value of the Class F Investors’ Shares requested to be included in such
registration pursuant to Section 3(a), including, without limitation,
Section 3(a)(v), must be reasonably expected to equal at least Five Hundred
Thousand Dollars ($500,000).
     (v) If the Holders of Registrable Securities initiating a registration
pursuant to Section 3(a) intend to distribute the Registrable Securities by
means of an underwriting, they shall so advise the Company in their written
notice. Within ten (10) days after receipt of any written request pursuant to
(i), (ii), (iii) or (iv) above, the Company will give written notice of such
request to all of the Investors and Biotech, and will include, subject to the
terms of Section 3(d), in any such registration that constitutes a Demand
Registration all securities with respect to which the Company has received
written requests from the Investors and Biotech, for inclusion therein within
fifteen (15) days after receipt of the Company’s notice. Any
Long-Form Registration and any Short-Form Registration requested pursuant to
this Section 3(a), other than a registration in which the Company sells any of
its securities in a primary offering, are referred to herein, respectively, as a
“Long-Form Demand Registration”, and a “Short-Form Demand Registration”. The
Company may elect to include its securities in a primary offering in any
registration requested pursuant to this Section 3(a); provided, however, that if
the Company sells any of its securities in a primary offering, such offering
shall not be deemed to be a Demand Registration and shall be considered a
Piggyback Registration and will be governed by Section 2.
     (b) Long-Form Demand Registrations. The Holders of Class C Investors’
Shares may request one Long-Form Demand Registration pursuant to
Section 3(a)(i), and the Holders of Class F Investors’ Shares may request two
(2) Long-Form Demand Registrations pursuant to Section 3(a)(ii). The Company
will pay the Registration Expenses therefor of the Company and the Holders of
Investors’ Shares. A registration will not count as a Long-Form Demand
Registration under this Section 3 until (i) it has become effective (and is not
the subject of any stop order, injunction or other order or

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requirement of the SEC or other governmental agency or court for any reason);
(ii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration
statement are satisfied and (iii) the Holders are able to register and sell at
least seventy-five percent (75%) of their desired Shares. Notwithstanding the
terms of the preceding sentence, a registration which does not become effective
after the Company has filed a registration statement with respect thereto solely
by reason of the refusal to proceed of the Holders of Investors’ Shares (unless
such refusal is due to the disclosure of adverse information concerning the
Company after such demand is made) shall be deemed to have been effected by such
Holders and count as a Long-Form Demand Registration under this Section 3,
unless the Holders of Investors’ Shares making such demand shall have elected to
pay the Registration Expenses of the Holders of Investors’ Shares incurred in
connection therewith.
     (c) Short-Form Demand Registration. The Holders of Registrable Securities
will be entitled to request pursuant to Section 3(a)(iii) or Section 3(a)(iv),
respectively, no more than two (2) Short-Form Demand Registrations in any twelve
(12) month period. The Company will pay the Registration Expenses therefor of
the Company and the Holders of Registrable Securities in connection with any
such registration. A registration will not count as one of the Short-Form Demand
Registrations under this Section 3(c) until it has become effective; provided
that in any event the Company will pay the Registration Expenses of the Company
and the Holders of Registrable Securities in connection with any such
registration initiated as a Short-Form Demand Registration. Notwithstanding the
terms of the preceding sentence, a registration that does not become effective
after the Company has filed a registration statement with respect thereto solely
by reason of the refusal to proceed of the Holders of Registrable Securities
(unless such refusal is due to the disclosure of adverse information concerning
the Company after such demand is made) shall be deemed to have been effected by
such Holders and count as a Short-Form Demand Registration under this
Section 3(c), unless the Holders of Registrable Securities making such demand
shall have elected to pay the Registration Expenses of the Holders of
Registrable Securities incurred in connection therewith.
     (d) Priority on Demand Registrations. If a Demand Registration is an
underwritten public offering and the managing underwriters advise the Company
that in their opinion the number of Registrable Securities and other securities
requested to be included exceeds the number of Registrable Securities and other
securities which can be sold in an orderly manner in such offering without
materially adversely affecting the price of the Shares to be sold in such
registrations, the Company will include in such registration shares in the
following order until such limitation has been met: first, the number of
securities requested to be included therein by the Holders of Registrable
Securities pro rata among Holders of Registrable Securities on the basis of the
number of Shares owned by such Holders (the “Demanding Shareholders”), second,
securities requested by the Company to be included in such registration pursuant
to “piggyback” rights hereunder; and third, other securities requested by the
Stockholders to be included in such registration.
     (e) Restrictions on Registrations.

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     (i) The Company may postpone for a reasonable period, not to exceed an
aggregate of one hundred twenty (120) days in any twelve (12) month period, the
filing or the effectiveness of a registration statement for a Demand
Registration, if the Company determines reasonably and in good faith that such
filing would have a material adverse effect on any proposal or plan of the
Company to engage in any transaction, provided that in such event the Holders of
Investors’ Shares initially requesting such Demand Registration will be entitled
to withdraw such request and, if such request is withdrawn, such Demand
Registration will not count as a permitted Demand Registration hereunder, and
the Company will pay all Registration Expenses in connection with such withdrawn
registration. In addition, the Company shall not be required to effect any
registration in accordance with the terms of this Agreement within one hundred
eighty (180) days after the effective date of the IPO or ninety (90) days after
the effective date of any subsequent primary offering (or combined primary and
secondary offering) of its securities (other than a registration statement on
Form S-8, or any successor forms or a registration on Form S-4 or relating to a
Rule 145 transaction). The Company may only provide the Delay Notice only once
in any twelve (12) month period.
     (ii) The rights granted under Section 3(a)(iii) and Section 3(a)(iv) shall
expire ninety (90) days after all Registrable Securities are freely tradeable to
the public through a broker, dealer or market maker in compliance with Rule
144(k) under the Securities Act, without limitation (or any similar rule than in
force).
     (iii) The Company shall not be required to effect a Long-Form Demand
Registration unless it is a firmly underwritten offering by an underwriter of
nationally recognized standing (but not limited to “Tier 1” or “Tier 2”
underwriters). The Company shall have the sole right to select such underwriter;
provided, that in the event the Company has not selected an underwriter within
thirty (30) days of the request for Demand Registration, the Demanding
Shareholders may select such underwriter subject to approval of the Company not
to be unreasonably withheld.
     (f) The Company shall give prompt notice to all holders of Registrable
Securities of the receipt of a request for registration pursuant to this
Section 3.
     4. Holdback Agreements.
     (a) Biotech, the Investors and each Stockholder agree not to effect any
public sale or distribution (including sales pursuant to Rule 144 promulgated
pursuant to the Securities Act) of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities
without the prior written consent of the Company or the managing underwriter for
such period of time (not to exceed the period beginning seven days prior to and
during the 180-day period beginning on the effective date of the registration
statement of the IPO) (except for sales of (i) securities as part of such IPO,
(ii) securities purchased in the IPO or (iii) securities purchased on the open
market after the IPO and as otherwise permitted under Rule 144(k)), unless the

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underwriters managing the IPO otherwise agree; provided that all officers and
directors of the Company and, the holders of at least one percent (1%) of the
Company’s capital stock enter into similar agreements; further, provided, that
the Company and the managing underwriter shall agree not to release any of those
other persons from the lock-up prior to the release of all of the Investors and
Biotech.
     (b) The Company agrees not to effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Piggyback
Registration (except as part of such underwritten registration or pursuant to
registrations on Form S-8 or Form S-4 or any successor form), unless the
underwriters managing the registered public offering otherwise agree.
     5. Registration Procedures. Whenever the Holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will expeditiously as
possible:
     (a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities, and use its best efforts to cause such registration
statement to become effective and remain effective until the earlier of (i) the
date when all Registrable Securities covered by the registration statement have
been sold, or (ii) 180 days from the effective date of the registration
statement; provided, however, that such 180-day period shall be extended for a
period of time equal to the period the holder refrains from selling any
securities included in such registration at the request of the Company or an
underwriter of any securities of the Company pursuant to Section 5(e); provided,
further, that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish to the counsel
selected by the Holders of a majority of the Registrable Securities covered by
such registration statement copies of all such documents proposed to be filed
including documents that are to be incorporated by reference into such
registration statement or supplement, which documents will be subject to the
review of such counsel, and which proposed registration statement or amendment
or supplement thereto shall not be filed by the Company if the Holders of a
majority of the Registrable Securities covered by such statement, amendment or
supplement reasonably object to such filing;
     (b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to make and to keep such registration statement effective for the
period referred to in Section 5(a) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
     (c) Furnish to each Holder of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus

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included in such registration statement (including each preliminary prospectus)
and any other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder;
     (d) Use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as may be
reasonably necessary and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder;
     (e) Promptly notify each Holder of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such Holder, the Company will
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; provided
that, at the request of the Company or the underwriter, each Holder shall
refrain from selling securities included in such registration until notified by
the Company or the underwriter that such prospectus has been supplemented or
amended and no longer contains an untrue statement of material fact nor omits
any fact necessary to make the statements therein not misleading;
     (f) Promptly notify the Holders of Registrable Securities and the
underwriters of the following events: (i) the filing of the prospectus or any
prospectus supplement and the registration statement and any amendment or
post-effective amendment thereto and, with respect to the registration statement
or any post-effective amendment thereto, the declaration of the effectiveness of
such documents; (ii) any requests by the SEC for amendments or supplements to
the registration statement or the prospectus or for additional information;
(iii) the issuance or threat of issuance by the SEC of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings for that purpose; and (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or threat
of initiation of any proceeding for such purpose;
     (g) Cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the NASD automated quotation system and, if
listed on the NASD automated quotation system, use its best efforts to secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ “national market system security” within the meaning of
Rule 11Aa2-1 under the Exchange Act, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;

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     (h) Provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
     (i) Enter into any customary agreements (including, without limitation,
underwriting agreements in customary form), and take all other actions as the
Holders of a majority of the Registrable Securities being sold or the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
     (j) Make available for inspection to any Holder of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
Holder or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Holder, underwriter, attorney, accountant or
agent in connection with such registration statement, provided that, each such
Holder or underwriter, shall, upon the reasonable request of the Company,
execute and deliver to the Company a confidentiality and nondisclosure agreement
relating to such information, provided that such agreement shall contain such
reasonable terms and conditions relating to confidentiality and nondisclosure
matters mutually agreeable to such Holder or underwriter and the Company;
     (k) Otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve (12) months beginning with the first day of the Company’s first full
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
     (l) Permit any Holder of Registrable Securities to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, which in the
reasonable judgment of such Holder and its counsel should be included;
     (m) Make every reasonable effort to prevent the entry of any order
suspending the effectiveness of the registration statement and, in the event of
the issuance of any such stop order, or of any order suspending or preventing
the use of any related prospectus or suspending the qualification of any
security included in such registration statement for sale in any jurisdiction,
the Company will use its best efforts promptly to obtain the withdrawal of such
order;
     (n) Use its best efforts to cause such Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the Holders
thereof to consummate the disposition of such Registrable Securities;
     (o) Cooperate with the selling Holders of Registrable Securities and the
underwriters to facilitate the timely preparation and delivery of certificates
representing

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Registrable Securities to be sold and not bearing any restrictive legends, and
enable such Registrable Securities to be in such lots and registered in such
names as the underwriters may request at least two business days prior to any
delivery of Registrable Securities to the underwriters;
     (p) Provide a CUSIP number for all Registrable Securities not later than
the effective date of the registration statement;
     (q) Prior to the effectiveness of the registration statement and any
post-effective amendment thereto and at each closing of an underwritten
offering, obtain “cold comfort” letters and updates thereof from the Company’s
independent certified public accountants addressed to the selling Holders of
Registrable Securities and the underwriters, such letters to be in customary
form and covering matters of the type customarily covered in “cold comfort”
letters by underwriters in connection with primary underwritten offerings; and
     (r) Take all such other actions either necessary or appropriate to permit
the Registrable Securities of a Holder to be registered and disposed of in
accordance with the method of disposition described herein.
     6. Registration Expenses.
     (a) All expenses incident to the Company’s performance of or compliance
with this Agreement including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company, fees and disbursements of one counsel selected by the participating
Holders of Investors’ Shares in an amount not to exceed Twenty Thousand Dollars
($20,000) for a Long-Form Demand Registration and Fifteen Thousand Dollars
($15,000) for each Short-Form Demand Registration and Piggyback Registration,
and all independent certified public accountants, underwriters (excluding
discounts and commissions) and other persons retained by the Company (all such
expenses being herein called “Registration Expenses”), will be borne by the
Company and the Company will pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or on the NASD
automated quotation system.
     (b) To the extent Registration Expenses are not required to be paid by the
Company, each Holder of securities included in any registration hereunder will
pay those expenses (including discounts and commissions) allocable to the
registration of such Holder’s securities so included, and any expenses
(including discounts and commissions) not so allocable will be borne by all
sellers of securities included in such registration in proportion to the
aggregate selling price of the securities to be so registered.
     7. Indemnification.

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     (a) The Company agrees to indemnify to the extent permitted by law, each
Holder of Registrable Securities, its officers, directors and partners, as the
case may be, and each person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or allegedly untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such Holder
expressly for use therein or by such Holder’s failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such Holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers, directors and partners, as the case
may be, and each person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities.
     (b) In connection with any registration statement in which a Holder of
Registrable Securities is participating, each such Holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will, severally and not jointly,
if Registrable Securities held by such Holder are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, its directors and officers and each person who controls
the Company (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or allegedly
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information so furnished in writing by such Holder; provided, that the
obligation to indemnify will be individual to each Holder and will be limited to
the net amount of proceeds received by such Holder from the sale of Registrable
Securities pursuant to such registration statement.
     (c) Any person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party’s reasonable
judgment a conflict of interest between such indemnified party and the
indemnifying party may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed by the
indemnifying party, the indemnified party will not be subject to any liability
for any settlement made by the indemnifying party without its consent (but such
consent will not be unreasonably withheld); provided, however, that any consent
to entry of any judgment or entry into any settlement must include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a full release

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from all liability in respect to such claim or litigation. An indemnifying party
who is not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. The failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying party
of its obligations under this Section 7 unless the failure to give such notice
is materially prejudicial to an indemnifying party’s ability to defend such
action, and then in such case, it shall be relieved only to the extent of such
material prejudice.
     (d) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of securities, the completion of
any offering of Registrable Securities in a registration statement and the
termination of this Agreement. The Company also agrees to make such provisions,
as are reasonably requested by an indemnified party, for contribution to such
party in the event the Company’s indemnification is unavailable for any reason.
     8. Participation in Underwritten Registrations. No person may participate
in any registration hereunder that is underwritten unless such person (a) agrees
to sell such person’s securities on the basis provided in any underwriting
arrangements approved by the person or persons entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
     9. Reports Under the Securities Laws. With a view to making available to
the Holders of Registrable Securities the benefits of Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit such Holder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:
     (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
subsequent to ninety (90) days after the effective date of any registration
statement covering an underwritten public offering filed under the Securities
Act by the Company;
     (b) File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act, at any
time after it is subject to such registration requirements; and
     (c) Furnish to any such Holder so long as such Holder owns any of the
Registrable Securities forthwith upon request a written statement by the Company
that it has complied with the reporting requirements of Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act any time after it has
become subject to such reporting requirements), a

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copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as may be reasonably
requested by any such Holder in availing any such Holder of any rule or
regulation of the SEC permitting the selling of any such securities without
registration.
     10. Certain Limitations in Connection with Future Grants of Registration
Rights. From and after the date of this Agreement, the Company shall not enter
into any agreement with any holder or prospective holder of any securities of
the Company providing for the granting to such holder of registration rights
unless such agreement is approved by the Holders of seventy-five percent (75%)
of the Registrable Securities then outstanding. Notwithstanding the foregoing,
any amendments or agreements that affect the rights of the Class C Preferred or
grant rights which are senior to or pari passu to the rights of the Class C
Preferred must be approved by Holders of at least seventy-five percent (75%) of
the Class C Preferred, and any amendments or agreements that affect the rights
of the Class F Preferred or grant rights which are senior to or pari passu to
the rights of the Class F Preferred must be approved by Holders of at least
seventy-five percent (75%) of the Class F Preferred.
     11. Financial Statements; Inspection.
     (a) Delivery of Financial Statements. The Company shall deliver to each
Holder of at least 100,000 Class F Investors’ Shares (subject to adjustments for
stock splits and the like) (a “Major Class F Holder”):
               (i) Monthly Reports. As soon as available and in any event within
thirty (30) days after the end of each of the first eleven (11) months of each
fiscal year of the Company, consolidated balance sheets of the Company and its
subsidiaries as of the end of such months and consolidated statements of income
and cash flows of the Company and its subsidiaries for such month and for the
period commencing at the beginning of the fiscal year, and ending with the end
of such month setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to monthly budgets, all in reasonable detail; and
               (ii) Annual Reports. As soon as available and in any event within
ninety (90) days after the end of each fiscal year of the Company, a copy of the
annual audit report for such year for the Company and its subsidiaries,
including therein consolidated balance sheets of the Company and its
subsidiaries as of the end of such fiscal year and consolidated statements of
income and cash flows of the Company and its subsidiaries for such fiscal year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year; and
               (iii) Budgets. As soon as available after approval by the Board
of Directors, but in any event at least thirty (30) days prior to the beginning
of each fiscal year, a business plan and operating budgets (prepared on a
monthly basis) for the forthcoming fiscal year.
     (b) Inspection. The Company shall permit each Major Class F Holder, with
such Holder to pay its own expenses, to visit and inspect the Company’s
properties

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during normal working hours, to examine its books of account and records and
make copies thereof and to discuss the Company’s affairs, finances and accounts
with its officers, all at such reasonable times, and upon reasonable notice, as
may be requested by such Holder and all such queries to be reasonably related to
the Holder’s investment in the Company; provided, however, that the Company
shall not be obligated pursuant to this Section 11(b) to provide access to any
information which it deems in good faith to be a trade secret or other
confidential or proprietary information.
     (c) Termination of Information and Inspection Rights. The rights set forth
in Section 11(a) and (b) shall terminate as to each Holder and be of no further
force or effect when the Company is required to file reports (and does so)
pursuant to Section 13 or 15(d) of the Exchange Act.
     12. Transfer of Registration Rights. Provided that the Company is given
written notice by the Holder of Registrable Securities prior to, at the time of
or reasonably soon after such transfer stating the name and address of the
transferee and identifying the securities with respect to which the rights under
this Agreement are being assigned, and provided that to the Company’s reasonable
satisfaction, such proposed transferee is not a competitor or potential
competitor of the Company, the rights granted to Holders hereunder may be
transferred to any transferee acquiring, in the aggregate, shares representing
at least 100,000 Shares (subject to adjustments for stock splits and the like).
     13. Miscellaneous.
     (a) No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Holders of Registrable Securities in this
Agreement.
     (b) Adjustments Affecting Registrable Securities. The Company will not take
any action, or permit any change to occur, with respect to its securities which
would materially and adversely affect the ability of the Holders of Registrable
Securities to include such Registrable Securities in a registration undertaken
pursuant to this Agreement or which would materially and adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
     (c) Remedies. Any person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
     (d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written

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consent of the Company and Holders of at least seventy-five percent (75%) of the
Registrable Securities (excluding all Registrable Securities held by the
Company). Notwithstanding the foregoing, any amendments or agreements that
affect the rights of the Class C Preferred or grant rights which are senior to
or pari passu to the rights of the Class C Preferred must be approved by Holders
of at least seventy-five percent (75%) of the Class C Preferred, and any
amendments or agreements that affect the rights of the Class F Preferred or
grant rights which are senior to or pari passu to the rights of the Class F
Preferred must be approved by Holders of at least seventy-five percent (75%) of
the Class F Preferred.
     (e) Successors and Assigns. All covenants and agreements in this Agreement
by or on behalf of any of the parties hereto will bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, whether or not any express assignment has been
made, the provisions of this Agreement which are for the benefit of purchasers
or Holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent Holder of Registrable Securities.
     (f) Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
     (g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which constitutes an original and all of which
counterparts taken together shall constitute one and the same Agreement.
     (h) Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the word “including” in this Agreement shall be by way of
example rather than limitation.
     (i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
     (j) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, telecopied, sent by nationally recognized
overnight courier (charges prepaid) or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the addresses
specified in the Class F Stock Purchase Agreement (or at such other address for
a party as shall be specified by like notice).
     (k) Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party to this Agreement, whether or not upon any
breach or default of the other party, shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of any similar breach or default
thereafter occurring; nor shall any waiver of

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any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing, shall be effective only
to the extent specifically set forth in such writing and comply with Section
13(d) above. All remedies, either under this Agreement, or by law or otherwise
afforded to any Holder, shall be cumulative and not alternative.
     (l) Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and any other written or oral agreements between the
parties hereto are expressly canceled.
[BALANCE OF PAGE LEFT BLANK INTENTIONALLY]

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

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

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

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