EX-10.6



 





EXHIBIT 10.6



ATHERSYS, INC.




AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT




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




WITNESSETH:




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




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




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




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




     1. Definitions.



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




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




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





 









 








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




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




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




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




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




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





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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



13









 







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




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



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



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




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




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




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



14









 







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



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



     11. Financial Statements; Inspection.




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




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




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




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




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



15









 







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




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



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



     13. Miscellaneous.




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




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




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




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



16









 







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




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




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




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




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




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




     (j) Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if delivered
personally, telecopied, sent by nationally recognized overnight courier (charges prepaid) or
mailed by registered or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses specified in the Class F Stock Purchase Agreement (or at such other
address for a party as shall be specified by like notice).




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



17









 







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




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



[BALANCE OF PAGE LEFT BLANK INTENTIONALLY]




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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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