Document:

exv4w1

Exhibit 4.1

THE ISSUANCE OF THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (REGISTRATION NO. 333-164336).

ATHERSYS, INC.

WARRANT TO PURCHASE COMMON STOCK

Warrant No.:_____________

Number of Shares of Common Stock:____________

Date of Issuance: February 2, 2011 (“Issuance Date”)

     Athersys, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [INVESTOR
NAME], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined
below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any
Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the
“Warrant”), at any time or times on or after the Issuance Date, but not after 5:00 p.m., New York
time, on the Expiration Date (as defined below), [_____ (_____)] (subject to adjustment as provided
herein) fully paid nonassessable shares of Common Stock (the “Warrant Shares”). Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section
16. This Warrant is the Warrant issued pursuant to (i) Section 2 of that certain
Subscription Agreement dated as of January 27, 2011 (the “Subscription Date”), by and between the
Company and the Holder (the “Subscription Agreement” and together with the other subscription
agreements entered into by the Company on the Subscription Date, the “Subscription Agreements”) and
(ii) the Company’s Registration Statement on Form S-3 (Registration No. 333-164336) (the
“Registration Statement”).

     1. EXERCISE OF WARRANT.

          (a) Mechanics of Exercise. Subject to the terms and conditions hereof, this Warrant
may be exercised by the Holder on any day on or after the Issuance Date, in whole or in part, by
delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant. Within two (2) days following the
Exercise Notice, the Holder shall make payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being
exercised (the “Aggregate Exercise Price”) in cash or by wire transfer of immediately available
funds, or provided the conditions for cashless exercise set forth in Section 1(e) are
satisfied, by notifying the Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(e)). Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining
number of Warrant Shares. On or before the first (1st) Business Day following the date on which
the Company has received the Exercise Notice, the Company shall transmit by facsimile an

 

 

acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the
Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd) Business Day
following the date on which the Company has received the Exercise Notice (the “Share Delivery
Date”), the Company shall (X) provided that the Transfer Agent is participating in The Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”), upon the
request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder
is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC
through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not
participating in the FAST Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the Company’s share register in the
name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. The Warrant Shares so purchased shall be deemed to be issued
to the Holder or the Holder’s designee, as the record owner of such Warrant Shares, as of the close
of business on the date of delivery of the Exercise Notice. If this Warrant is submitted in
connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of Warrant Shares
being acquired upon an exercise, then the Company shall as soon as practicable and in no event
later than three (3) Business Days after any exercise and at its own expense, issue a new Warrant
(in accordance with Section 7(d)) representing the right to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional Common Stock are to
be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer
taxes and transfer agent fees which may be payable with respect to the issuance and delivery of
Warrant Shares to the Holder upon exercise of this Warrant.

          (b)
Exercise Price. For purposes of this Warrant,
“Exercise Price” means $3.55, subject
to adjustment as provided herein.

          (c) Disputes. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder
the number of Warrant Shares that are not disputed.

          (d) Limitations On Exercise. The Company shall not effect the exercise of this
Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after
giving effect to such exercise, such Person (together with such Person’s affiliates) would
beneficially own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall exclude shares of
Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of
this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company beneficially owned
by such Person and its affiliates (including, without limitation, any convertible notes or
convertible shares or warrants) subject to a limitation on conversion or

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exercise analogous to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock as reflected in the most recent
of (1) the Company’s most recent Form 10-K, Form 10-Q or other public filing with the Securities
and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company
or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of
Common Stock outstanding. For any reason at any time, upon the written or oral request of the
Holder, the Company shall within two (2) Business Days confirm to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder and its affiliates since the date as of which such number of
outstanding Common Stock was reported. By written notice to the Company, the Holder may from time
to time increase or decrease the Maximum Percentage to any other percentage not less than 4.99% and
not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be
effective until the sixty-first (61st) day after such notice is delivered to the
Company and (ii) any such increase or decrease will apply only to the Holder. The provisions of
this paragraph shall be construed, corrected and implemented in a manner so as to effectuate the
intended beneficial ownership limitation herein contained. The limitations contained in this
paragraph shall apply to any successor Holder of this Warrant.

          (e) Limited Cashless Exercise. Notwithstanding anything contained herein to the
contrary, if a registration statement covering the Warrant Shares that are the subject of the
Exercise Notice (the “Unavailable Warrant Shares”) is not effective (other than if the Company
suspends the use of such registration statement for up to 60 days in any 12-month period if the
Company believes that the suspension is necessary because of some material non-public information
in the Company’s possession) or an exemption from registration is not available for the resale of
such Unavailable Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the
Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive
upon such exercise the “Net Number” of shares of Common Stock determined according to the following
formula (a “Cashless Exercise”):

     Net Number = Y [(A-B)/A]

     where:

Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

A = the VWAP for the five (5) Trading Days immediately prior to (but not including) the date of delivery of the Exercise Notice.

B = the Exercise Price.

          Upon receipt of an Exercise Notice to which this Section 1(e) is applicable, the
Company shall notify the Holder within one (1) Trading Day of such applicability and the
calculation of the Net Number of shares of Common Stock issuable upon the noticed exercise of

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the Warrant utilizing Cashless Exercise, and confirm the Holder’s desire to complete the
exercise of the Warrant pursuant to this Section 1(e).

          For purposes of Rule 144 promulgated under the Securities Act of 1933, as amended, it is
intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding period for the
Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued.

          (f) Company’s Failure to Timely Deliver Securities. If the Company shall fail for any
reason or for no reason to issue to the Holder within the later of (i) three (3) Trading Days after
receipt of the applicable Exercise Notice and (ii) two (2) Trading Days after the Company’s receipt
of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the
"Share Delivery Deadline”), a certificate for the number of Warrant Shares to which the Holder is
entitled and register such shares of Common Stock on the Company’s share register or to credit the
Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of this Warrant, and if on or after such Share Delivery
Deadline the Holder, or any third party on behalf of the Holder or for the Holder’s account,
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the
Holder anticipated receiving from the Company, then, so long as the Holder has paid the Aggregate
Exercise Price, the Company shall, within three (3) Business Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of Common Stock so
purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which
the Holder is entitled upon the Holder’s exercise hereunder, as the case may be (and to issue such
shares of Common Stock), shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such shares of Common Stock or credit the
Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder, as the case may be, and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Sale Price on the Share Delivery Deadline.

     2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

          The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as
follows:

          (a) Adjustment upon Subdivision or Combination of Common Stock. If the Company at any
time on or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of Warrant Shares will be proportionately increased. If the
Company at any time on or after the Subscription Date combines (by any reverse

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stock split, recapitalization or otherwise) one or more classes of its outstanding Common
Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this Section 2(a) shall become effective at
the close of business on the date the subdivision or combination becomes effective.

          (b) Other Events. If any event occurs of the type contemplated by the provisions of
this Section 2 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights or phantom stock rights to all stockholders),
then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of Warrant Shares so as to protect the rights of the Holder; provided that no such
adjustment pursuant to this Section 2(b) will increase the Exercise Price or decrease the
number of Warrant Shares as otherwise determined pursuant to this Section 2.

          (c) Calculations. All calculations made under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a Common Share, as applicable.

     3. RIGHTS UPON DISTRIBUTION OF ASSETS.

          (a) If at any time or from time to time the holders of shares of Common Stock of the Company
(or any other securities at the time receivable upon the exercise of this Warrant) shall have
received or become entitled to receive, without payment therefor:

               (i) shares of Common Stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Common Stock, by way of dividend or other distribution (other
than an issuance due to a subdivision covered in Section 2(a) above);

               (ii) any cash paid or payable, including any declared and paid cash dividends; or

               (iii) shares of Common Stock or additional shares or other securities or property (including
cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate
rearrangement (other than shares of Common Stock pursuant to Section 2(a) above),

then and in each such case, the Holder hereof will, upon the exercise of this Warrant, be entitled
to receive, in addition to the number of shares of Common Stock receivable thereupon, and without
payment of any additional consideration therefor, the amount of shares of Common Stock and other
securities and property (including cash in the cases referred to in clause (iii) above) which such
Holder would hold on the date of such exercise had such Holder been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became entitled to receive
such shares or other securities and property, provided, however, (x) in the event that the holders
of Common Stock have received options, warrants or rights that have expired prior to the date of
exercise of this Warrant, the Holder shall not be entitled to receive such options, warrants or
rights and (y) in the event of a distribution consisting of cash as referred to in clause (ii)
above, the Exercise Price in effect immediately prior to such distribution will be proportionately
reduced by the amount of the distribution per Common Share such Holder would have been entitled to
receive had such Holder been the holder of record of

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such Common Stock as of the date on which holders of Common Stock received or became entitled to
receive such cash distribution.

          (b) Upon the occurrence of each adjustment pursuant to this Section 3, the Company at
its expense will, at the written request of the Holder, promptly compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted number or type of Warrant Shares or other securities issuable
upon exercise of this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is based, including the
expiration date of any applicable options, warrants or rights. Upon written request, the Company
will promptly deliver a copy of each such certificate to the Holder and to the Transfer Agent. All
calculations made under this Section 3(b) shall be made by rounding to the nearest cent or
the nearest 1/100th of any security, as applicable.

     4. FUNDAMENTAL TRANSACTIONS.

          (a)
Fundamental Transactions. The Company shall not consummate a Fundamental Transaction (other than an Involuntary Change
of Control) or permit the consummation of any Involuntary Change of Control unless the Successor
Entity (if a Person other than the Company) assumes in writing all of the obligations of the
Company under this Warrant in accordance with the provisions of this
Section 4(a), including
agreements to deliver to each holder of Warrants in exchange for such Warrants a security of the
Successor Entity evidenced by a written instrument substantially similar in form and substance to
this Warrant, including, without limitation, an adjusted exercise price equal to the value for the
Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a
corresponding number of shares of capital stock equivalent to the Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders
(each such Fundamental Transaction, an “Assumption Fundamental Transaction”). Upon the occurrence
of any Assumption Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Assumption Fundamental Transaction, the
provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall assume all of the obligations of
the Company under this Warrant with the same effect as if such Successor Entity (including its
Parent Entity) had been named as the Company herein. Notwithstanding the foregoing, the Holder may
elect, at its sole option, by delivery of written notice to the Company to waive this Section
4(a) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to
and not in substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for Common Stock (a “Corporate Event”),
the Company shall (or, with respect to any tender offer Involuntary Change of Control, shall use
its reasonable best efforts to) make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at any time after the
consummation of the Fundamental Transaction but prior to the Expiration Date, in lieu of the Common
Stock (or other securities, cash, assets or other property) purchasable upon the exercise of the
Warrant prior to such Fundamental Transaction or the capital stock of the Successor Entity upon an
Assumption Fundamental Transaction, such shares, securities, cash, assets or any other property
whatsoever
(including warrants or other purchase or subscription rights) which the Holder would have been
entitled to receive upon the happening of such Fundamental Transaction had the Warrant been
exercised immediately prior to such Fundamental Transaction. If holders of Common Stock are given
any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the consideration it receives upon any exercise of
this Warrant following such Fundamental Transaction. The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and Corporate Events and shall be
applied without regard to any limitations on the exercise of this Warrant.

          (b) Notwithstanding the foregoing, in the event of a Fundamental Transaction that is
(i) an all cash transaction or (ii) a Fundamental Transaction involving a person or entity whose
securities are not traded on a national securities exchange, including, but not limited to, the
NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market,
at the request of the Holder delivered before the 90th day after such Fundamental Transaction, the
Company (or the Successor Entity) shall purchase this Warrant from the Holder by paying to the
Holder, within five Business Days after such request (or, if later, on the effective date of the
Fundamental Transaction), cash in an amount equal to the Black Scholes Value of the remaining
unexercised portion of this Warrant on the date of such Fundamental Transaction.

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     5. NONCIRCUMVENTION.

          The Company hereby covenants and agrees that the Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
and will at all times in good faith comply with all the provisions of this Warrant and take all
actions consistent with effectuating the purposes of this Warrant. Without limiting the generality
of the foregoing, the Company (i) shall not increase the par value of any Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such
actions as may be reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as this Warrant is outstanding, take all action reasonably necessary to
reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose
of effecting the exercise of this Warrant, 100% of the number of shares of Common Stock issuable
upon exercise of this Warrant then outstanding (without regard to any limitations on exercise).

     6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.

          Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the
holder of share capital of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of
this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of shares,
reclassification of shares, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company.

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     7. REISSUANCE OF WARRANTS; NO FRACTIONAL SHARES.

          (a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company and deliver the completed and executed Assignment Form, in
the form attached hereto as Exhibit B, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total number of Warrant Shares then
underlying this Warrant is being transferred, a new Warrant (in accordance with Section
7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being
transferred.

          (b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.

          (c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will
represent the right to purchase such portion of such Warrant Shares as is designated by the Holder
at the time of such surrender; provided, however, that no Warrants for fractional Common Stock
shall be given.

          (d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase
the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the
Holder which, when added to the number of shares of Common Stock underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new
Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions
as this Warrant.

     8. NOTICES.

          All notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on
the next Business Day, (c) three (3) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a
nationally recognized overnight courier, with written verification of receipt. All communications
shall be sent to the Company at the address listed on the signature page hereto and to Holder at

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the applicable address set forth on the applicable signature page to the Subscription
Agreement or at such other address as the Company or Holder may designate by ten (10) days advance
written notice to the other parties hereto.

     9. AMENDMENT AND WAIVER.

          Except as otherwise provided herein, the provisions of this Warrant may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of Holders owning a majority
in interest of the outstanding Warrants issued under the Subscription Agreements; provided, that
(x) any such amendment or waiver must apply to all Warrants issued by the Company pursuant to the
Subscription Agreements; and (y) the number of Warrant Shares subject to this Warrant, the Exercise
Price and the Expiration Date may not be amended, and the right to exercise this Warrant may not be
altered or waived, without the written consent of the Holder. No waiver of any provision hereunder
shall be effective unless it is in writing and signed by an authorized representative of the
waiving party.

     10. SEVERABILITY.

          If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall
not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so
modified continues to express, without material change, the original intentions of the parties as
to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

     11. GOVERNING LAW.

          This Warrant shall be governed by and construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance of this Warrant
shall be governed by, the internal laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York.

     12. CONSTRUCTION; HEADINGS.

          This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not
be construed against any person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

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     13. DISPUTE RESOLUTION.

          In the case of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise
Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three (3) Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall, within four (4) Business Days
submit via facsimile (a) the disputed determination of the Exercise Price to an independent,
reputable investment bank selected by the Company and approved by the Holder or (b) the disputed
arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The
Company shall cause at its expense the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Holder of the results no
later than ten Business Days from the time it receives the disputed determinations or calculations.
Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be
binding upon all parties absent demonstrable error.

     14. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.

          The remedies provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder
to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

     15. TRANSFER.

          This Warrant may be offered for sale, sold, transferred, hypothecated or assigned without the
consent of the Company. This Warrant and the Warrant Shares have been registered by the Company
with the U.S. Securities and Exchange Commission pursuant to the Registration Statement.

     16. CERTAIN DEFINITIONS.

          For purposes of this Warrant, the following terms shall have the following meanings:

          (a) “Black Scholes Value” means the value of this Warrant based on the Black Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day
of consummation of the applicable Fundamental Transaction for pricing purposes and
reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the remaining term of this Warrant as of the date of the Holder’s request
pursuant to Section 4(b), (ii) an expected volatility equal to the lesser of 75% and the
100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day
immediately prior to the public announcement of the applicable Fundamental Transaction
and, if applicable, (iii) the underlying price per share used in such calculation shall be
the sum of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in the applicable Fundamental Transaction,
and (iv) the remaining option time equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the Expiration Date.

          (b) “Bloomberg” means Bloomberg Financial Markets.

          (c) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.

          (d) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security

10

 

on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to
operate on an extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or the last trade price, respectively, of
such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal
Market is not the principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Sale Price, as the case may be, of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be
resolved pursuant to Section 13. All such determinations to be appropriately adjusted for
any share dividend, share split, share combination or other similar transaction during the
applicable calculation period.

          (e) “Common Stock” means (i) shares of the Company’s common stock, $0.001 par value, and (ii)
any share capital into which such Common Stock shall have been changed or any share capital
resulting from a reclassification of such Common Stock.

          (f) “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., The NYSE
Amex Equities or The NASDAQ Stock Market.

          (g) “Expiration Date” means the date five years following the Issuance Date or, if such
date falls on a day on which trading does not take place on the Principal Market (a “Holiday”), the
next date that is not a Holiday.

          (h) “Fundamental Transaction” means that (A) the Company shall, directly or indirectly, in one
or more related transactions, (i) consolidate or merge with or into (whether or not the Company is
the surviving corporation, unless the holders of the Company’s voting power immediately prior to
such transaction or series of related transactions continue after such transaction or series of
related transactions to have a majority of the voting power of the surviving entity) another Person
or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company to another Person, or (iii) allow another Person to make
a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or
Persons making or party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a securities purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with another Person whereby such other Person acquires more than the 50%
of the outstanding shares of Common Stock (not including any shares of Common Stock held by the
other Person or other

11

 

Persons making or party to, or associated or affiliated with the other Persons making or party
to, such securities purchase or other business combination), or (v) other than as set forth in
Section 2(a), reorganize, recapitalize or reclassify the Common Stock or (B) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by
issued and outstanding Common Stock.

          (i) “Involuntary Change of Control” means any Fundamental Transaction pursuant to clause
(A)(iii) or clause (B) of the definition of Fundamental Transaction herein that does not involve
any prior, direct or indirect, agreement, support or other assistance by the Company or any of its
subsidiaries (or any employee, officer, director, consultant or agent of the Company or any of its
subsidiaries) (other than the Company’s compliance with Regulation 14D under the Exchange Act).

          (j) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

          (k) “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

          (l) “Principal Market” means The NASDAQ Capital Market.

          (m) “Required Holders” means the holders of the Warrants representing at least a majority of
the shares of Common Stock underlying the Warrants then outstanding.

          (n) “Successor Entity” means the Person (or, if so elected by the Required Holders, the Parent
Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so
elected by the Required Holders, the Parent Entity) with which such Fundamental Transaction shall
have been entered into.

          (o) “Trading Day” means any day on which the Common Stock are traded on the Principal Market,
or, if the Principal Market is not the principal trading market in the United States for the Common
Stock, then on the principal securities exchange or securities market in the United States on which
the Common Stock are then traded; provided that “Trading Day” shall not include any day on which
the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any
day that the Common Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

          (p) “VWAP” means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock are then listed or quoted on the Principal Market or an
Eligible Market, the daily volume weighted average price of the Common Stock for

12

 

such date (or the nearest preceding date) on the trading market on which the Common Stock are
then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time), (b) if then quoted on the OTC Bulletin Board, the
volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the OTC Bulletin Board, (c) if the Common Stock are not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported on Pink Quote published by
Pink OTC Markets Inc. (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per Common Share so reported, or (d) in all other cases, the
fair market value of one Common Share as determined by an independent appraiser reasonably
acceptable to the Company and the Holder.

[Signature Page Follows]

13

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.

	 	 	 	 	 
	 	ATHERSYS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

14

 

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

ATHERSYS, INC.

     The undersigned holder hereby exercises the right to purchase                      of
the Common Stock (“Warrant Shares”) of Athersys, Inc., a Delaware corporation (the “Company”),
evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

     1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall
be made as:

          ____________     a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

          ____________     a “Cashless Exercise” with respect to ______________ Warrant Shares.

     2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the
terms of the Warrant.

     3. Delivery of Warrant Shares. The Company shall deliver to the holder ______ Warrant
Shares in accordance with the terms of the Warrant and, after delivery of such Warrant Shares,
____________ Warrant Shares remain subject to the Warrant.

     4. Representations and Warranties. By its delivery of this Exercise Notice, the
undersigned represents and warrants to the Company that in giving effect to the exercise evidenced
hereby the holder will not beneficially own in excess of the number of shares of Common Stock
(determined in accordance with Section 13(d) of the Securities Exchange Act of 1934)
permitted to be beneficially owned under Section 1(d) of the Warrant.

Date: ____________ __, ______

Name of Registered holder

	 	 	 	 	 

	By:

	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

15

 

ACKNOWLEDGMENT

     The Company hereby acknowledges this Exercise Notice and hereby directs Computershare, Inc. to
issue the above indicated number of Common Stock in accordance with the Transfer Agent Instructions
dated [________, ___] from the Company and acknowledged and agreed to by Computershare, Inc.

	 	 	 	 	 
	 	ATHERSYS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

16

 

EXHIBIT B

ASSIGNMENT FORM

ATHERSYS, INC.

     (To assign the foregoing Warrant, execute this form and supply required information. Do not
use this form to purchase shares.)

     FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned
to

	 	 	 	 	 

	Name:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	(Please Print)	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	(Please Print)
	 	 
	 
	 	 	 	 
	Dated: __________________, ______
	 	 	 	 
	 
	 	 	 	 
	Holder’s Signature:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Holder’s Address:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face
of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations
and those acting in a fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.

17exv10w1

Exhibit 10.1

FORM OF SUBSCRIPTION AGREEMENT

Athersys, Inc.

3201 Carnegie Avenue

Cleveland, Ohio 44115-2634

Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with Athersys, Inc., a Delaware
corporation (the “Company”), as follows:

     1. This Subscription Agreement, including the Terms and Conditions for Purchase of Securities
attached hereto as Annex I (collectively, this “Agreement”), is made as of the date set forth below
between the Company and the Investor.

     2. The Company has authorized the sale and issuance to certain investors of up to an aggregate
of (i) 4,366,667 shares (each a “Share,” collectively, the “Shares”) of its common stock, $0.001
par value per share (the “Common Stock”), and (ii) warrants (each, a “Warrant,” collectively, the
“Warrants”) to purchase an aggregate of 1,310,000 shares of Common Stock, with each Warrant
representing the right to purchase 0.3 of a share of Common Stock (the frational amount being
the “Warrant Ratio”), in substantially the form attached hereto as Exhibit A, for a
purchase price of $3.00 per Share (the “Purchase Price”). The shares of Common Stock issuable
upon exercise of the Warrants are referred to herein as the “Warrant Shares” and, together with the
Shares and the Warrants, are referred to herein as the “Securities”).

     3. The offering and sale of the Securities (the “Offering”) are being made pursuant to (a) an
effective Registration Statement on Form S-3, Registration No. 333-164336 (the “Registration
Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”),
including the prospectus contained therein (the “Base Prospectus”), (b) if applicable, certain
“free writing prospectuses” (as that term is defined in Rule 405 under the Securities Act of 1933,
as amended (the “Securities Act”)), that have been or will be filed with the Commission and
delivered to the Investor on or prior to the date hereof (the “Issuer Free Writing Prospectus”),
containing certain supplemental information regarding the Securities, the terms of the Offering and
the Company, and (c) a Prospectus Supplement (the “Prospectus Supplement” and together with the
Base Prospectus, the “Prospectus”) containing certain supplemental information regarding the
Securities, the terms of the Offering and the Company that has been or will be filed with the
Commission and delivered to the Investor (or made available to the Investor by the filing by the
Company of an electronic version thereof with the Commission).

     4. The Company and the Investor agree that the Investor will purchase from the Company and the
Company will issue and sell to the Investor the Shares and Warrants set forth below for the
aggregate purchase price set forth below. The Shares and Warrants shall be purchased pursuant to
the Terms and Conditions for Purchase of Securities attached hereto as Annex I and
incorporated herein by this reference as if fully set forth herein. The Investor acknowledges that
the Offering is not being underwritten by any of the Placement Agents (as

 

 

defined below) named in
the Prospectus Supplement and that there is no minimum offering amount.

     5. The manner of settlement of the Shares purchased by the Investor shall be determined by
such Investor as follows (check one):

			
	[    ]	 	A. Delivery by crediting the account of the Investor’s prime broker (as
specified by such Investor on Exhibit A annexed hereto) with the Depository Trust Company
(“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”) system, whereby Investor’s prime
broker shall initiate a DWAC transaction on the Closing Date using its DTC participant
identification number, and released by Computershare Investor Services, the Company’s transfer
agent (the “Transfer Agent”), at the Company’s direction. NO LATER THAN ONE (1) BUSINESS DAY
AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

	 	(I)	 	DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE
CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE
TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND
	 
	 	(II)	 	REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE
PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING
ACCOUNT:

	 	 	 	[Insert Bank Information]

	 	 	—OR—

			
	[    ]	 	B. Delivery versus payment (“DVP”) through
DTC (i.e., on the Closing Date, the
Company shall issue Shares registered in
the Investor’s name and address as set
forth below and released by the Transfer
Agent directly to the account(s) at either
William Blair & Company, L.L.C. (“William
Blair”) or at First Analysis Securities
Corporation (“First Analysis” and together
with William Blair, the “Placement
Agents”) identified by the Investor; upon
receipt of such Shares, the respective
Placement Agent shall promptly
electronically deliver such Shares to the
Investor, and simultaneously therewith
payment shall be made by the respective
Placement Agent by wire transfer to the
Company). NO LATER THAN ONE (1) BUSINESS
DAY AFTER THE EXECUTION OF THIS AGREEMENT
BY THE INVESTOR AND THE COMPANY, THE
INVESTOR SHALL:

	 	(I)	 	NOTIFY THE RESPECTIVE PLACEMENT AGENT OF THE ACCOUNT OR ACCOUNTS AT
THE RESPECTIVE PLACEMENT AGENT TO BE CREDITED WITH THE SHARES BEING PURCHASED
BY SUCH INVESTOR, AND

 

 

	 	(II)	 	CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT THE RESPECTIVE PLACEMENT
AGENT TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A
MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SECURITIES BEING
PURCHASED BY THE INVESTOR.

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE
PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DWAC OR DVP IN A
TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE SECURITIES OR
DOES NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES AND WARRANTS MAY
NOT BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER.

     6. The executed Warrants shall be delivered in accordance with the terms thereof.

     7. The Investor represents that, except as set forth below, (a) it has had no position, office
or other material relationship within the past three years with the Company or persons known to it
to be affiliates of the Company, (b) it is not a member of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) or an Associated Person (as such term is defined under the FINRA’s NASD
Membership and Registration Rules Section 1011) as of the Closing, and (c) neither the Investor nor
any group of Investors (as identified in a public filing made with the Commission) of which the
Investor is a part in connection with the Offering, acquired, or obtained the right to acquire, 20%
or more of the Common Stock (or securities convertible into or exercisable for Common Stock) or the
voting power of the Company on a post-transaction basis. Exceptions:

(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)

     8. The Investor represents that it has received (or otherwise had made available to it by the
filing by the Company of an electronic version thereof with the Commission) the Base Prospectus,
which is a part of the Company’s Registration Statement, the documents incorporated by reference
therein and any Issuer Free Writing Prospectus (collectively, the “Disclosure Package”), prior to
or in connection with the receipt of this Agreement. The Investor acknowledges that, prior to the
delivery of this Agreement to the Company, the Investor will receive certain additional information
regarding the Offering, including pricing information (the “Offering Information”). Such
information may be provided to the Investor by any means permitted under the Securities Act,
including the Prospectus Supplement, a free writing prospectus and oral communications.

     9. No offer by the Investor to buy Securities will be accepted and no part of the Purchase
Price will be delivered to the Company until the Investor has received the Offering Information and
the Company has accepted such offer by countersigning a copy of this

 

 

Agreement, and any such offer
may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to the
Company (or the Placement Agents on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer. An indication of interest will involve no
obligation or commitment of any kind until the Investor has been delivered the Offering Information
and this Agreement is accepted and countersigned by or on behalf of the Company.

 

 

Number of
Shares:                                         

Aggregate Purchase Price: $                                        

Number of
Warrant Shares:                                         

     Please confirm that the foregoing correctly sets forth the agreement between us by signing in
the space provided below for that purpose.

	 	 	 	 

	 

	 	Dated as of: January 27, 2011
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	INVESTOR
	 
	 	 
	 

	 	By: 

	 

	 	Print Name:

	 

	 	Title:

	 

	 	Address:

	 
	 

	 	 

Agreed and Accepted

this 27th day of January 2011:

	 	 	 	 	 

	ATHERSYS, INC.
 

	 	 
	By:
	 	 	 	 
	 

	 	Title:
	 	 

 

 

ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SECURITIES

     1. Authorization and Sale of the Securities. Subject to the terms and conditions of this
Agreement, the Company has authorized the sale of the Securities.

     2. Agreement to Sell and Purchase the Securities; Placement Agents.

          2.1 At the Closing (as defined in Section 3.1), the Company will sell to the
Investor, and the Investor will purchase from the Company, upon the terms and conditions set forth
herein, the number of Shares and Warrants set forth on the last page of the Agreement to which
these Terms and Conditions for Purchase of Securities are attached as Annex I (the
“Signature Page”) for the aggregate purchase price therefor set forth on the Signature Page.

          2.2 The Company proposes to enter into substantially this same form of Subscription
Agreement with certain other investors (the “Other Investors”) and expects to complete sales of
Securities to them. The Investor and the Other Investors are hereinafter sometimes collectively
referred to as the “Investors,” and this Agreement and the Subscription Agreements executed by the
Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”

          2.3 Investor acknowledges that the Company has agreed to pay the Placement Agents a
fee (the “Placement Fee”) and certain expenses in respect of the sale of Securities to the
Investor.

          2.4 The Company has entered into a Placement Agency Agreement, dated the date hereof
(the “Placement Agreement”), with the Placement Agents that contains certain representations,
warranties, covenants and agreements of the Company that may be relied upon by the Investor, which
shall be a third party beneficiary thereof. Except with respect to the material terms and
conditions of the transactions contemplated by this Agreement, the Placement Agreement and any
other documents or agreements contemplated hereby or thereby, the Company confirms that neither it
nor any other person acting on its behalf has provided the Investor or any Other Investor or its
respective agents or counsel with any information that constitutes or could reasonably be expected
to constitute material, non-public information. The Company understands and confirms that the
Investor will rely on the foregoing representations in effecting transactions in securities of the
Company.

     3. Closings and Delivery of the Securities and Funds.

          3.1 Closing. The completion of the purchase and sale of the Securities (the
“Closing”) shall occur at a place and time (the “Closing Date”) to be specified by the Company and
the Placement Agents (such Closing Date to be the third business day following the date of this
fully signed Agreement), and of which the Investors will be notified in advance by the Placement
Agents, in accordance with Rule 15c6-l promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). At the Closing, (a) the Company shall cause the Transfer Agent to
deliver to the Investor the number of Shares set forth on the Signature Page registered in the name
of the Investor or, if so indicated on the Investor Questionnaire attached hereto as Exhibit
B, in the name of a nominee designated by the Investor, (b) the Company shall cause to be
delivered to the Investor a Warrant to purchase a number of whole Warrant Shares determined

 

 

by multiplying the number of Shares set forth on the signature page by the Warrant Ratio and
rounding down to the nearest whole number and (c) the aggregate purchase price for the Securities
being purchased by the Investor will be delivered by or on behalf of the Investor to the Company.

          3.2 Conditions to the Obligations of the Parties.

     (a) Conditions to the Company’s Obligations. The Company’s obligation to issue
and sell the Securities to the Investor shall be subject to: (i) the receipt by the Company
of the purchase price for the Securities being purchased hereunder as set forth on the
Signature Page and (ii) the accuracy of the representations and warranties made by the
Investor in this Agreement and the fulfillment of those undertakings of the Investor in this
Agreement to be fulfilled prior to the Closing Date.

     (b) Conditions to the Investor’s Obligations. The Investor’s obligation to
purchase the Securities will be subject to (i) the accuracy of the representations and
warranties made by the Company in this Agreement and the fulfillment of those undertakings
of the Company to be fulfilled prior to the Closing Date, including without limitation,
those contained in the Placement Agreement, and (ii) that the Placement Agent shall not
have: (x) terminated the Placement Agreement pursuant to the terms thereof or (y)
determined that the conditions to the closing in the Placement Agreement have not been
satisfied. The Investor’s obligations are expressly not conditioned on the purchase by any
or all of the Other Investors of the Securities that they have agreed to purchase from the
Company. The Investor understands and agrees that, in the event that the Placement Agents
in their sole discretion determine that the conditions to closing in the Placement Agreement
have not been satisfied or if the Placement Agreement may be terminated for any other reason
permitted by such Placement Agreement, then the Placement Agent may, but shall not be
obligated to, terminate such Agreement, which shall have the effect of terminating this
Subscription Agreement pursuant to Section 14 below.

          3.3 Delivery of Funds.

     (a) DWAC Delivery. If the Investor elects to settle the Shares purchased by
such Investor through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) delivery system, no
later than one (1) business day after the execution of this Agreement by the Investor and
the Company, the Investor shall remit by wire transfer the amount of funds equal to the
aggregate purchase price for the Securities being purchased by the Investor to the following
account designated by the Company:

[Insert Bank Information]

     (b) Delivery Versus Payment through The Depository Trust Company. If the
Investor elects to settle the Shares purchased by such Investor by delivery versus payment
through DTC, no later than one (1) business day after the execution of this Agreement by
the Investor and the Company, the Investor shall confirm that the account or accounts at
the respective Placement Agent to be credited with the Securities

 

 

being purchased by the Investor have a minimum balance equal to the aggregate purchase
price for the Securities being purchased by the Investor.

          3.4 Delivery of Shares.

               (a) DWAC Delivery. If the Investor elects to settle the Shares purchased by such
Investor through DTC’s DWAC delivery system, no later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the Investor shall direct the
broker-dealer at which the account or accounts to be credited with the Shares being purchased by
such Investor are maintained, which broker/dealer shall be a DTC participant, to set up a DWAC
instructing the Transfer Agent to credit such account or accounts with the Shares. Such DWAC
instruction shall indicate the settlement date for the deposit of the Shares, which date shall be
provided to the Investor by the Placement Agents. At Closing, the Company shall direct the
Transfer Agent to credit the Investor’s account or accounts with the Shares pursuant to the
information contained in the DWAC.

               (b) Delivery Versus Payment through The Depository Trust Company. If the Investor
elects to settle the Shares purchased by such Investor by delivery versus payment through DTC,
no later than one (1) business day after the execution of this Agreement by the Investor and
the Company, the Investor shall notify the respective Placement Agent of the account or
accounts at the Placement Agent to be credited with the Shares being purchased by such Investor.
On the Closing Date, the Company shall deliver the Shares to the Investor through DTC directly to
the account(s) at the respective Placement Agent identified by Investor and simultaneously
therewith payment shall be made by the respective Placement Agent by wire transfer to the Company.

     4. Representations, Warranties and Covenants of the Investor.

          The Investor acknowledges, represents and warrants to, and agrees with, the Company and the
Placement Agents that:

     4.1 The Investor (a) is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in securities presenting an
investment decision like that involved in the purchase of the Securities, including investments
in securities issued by the Company and investments in comparable companies, (b) has answered
all questions on the Signature Page and the Investor Questionnaire and the answers thereto are
true and correct as of the date hereof and will be true and correct as of the Closing Date and
(c) in connection with its decision to purchase the number of Shares and Warrants set forth on
the Signature Page, has received and is relying only upon the Disclosure Package and the
documents incorporated by reference therein and the Offering Information.

     4.2 (a) No action has been or will be taken in any jurisdiction outside the
United States by the Company or the Placement Agents that would permit an offering of the
Securities, or possession or distribution of offering materials in connection with the issue of
the Securities in any jurisdiction outside the United States where action for that purpose is
required, (b) if the Investor is outside the United States, it will comply with all applicable
laws and

 

 

regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers
Securities or has in its possession or distributes any offering material, in all cases at its
own expense and (c) the Placement Agents are not authorized to make and have not made any
representation, disclosure or use of any information in connection with the issue, placement,
purchase and sale of the Securities, except as set forth or incorporated by reference in the
Base Prospectus, any Issuer Free Writing Prospectus or the Prospectus Supplement.

     4.3 (a) The Investor is either an individual or an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization and has
full right, power, authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, and (b) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law)
and except as to the enforceability of any rights to indemnification or contribution that may be
violative of the public policy underlying any law, rule or regulation (including any federal or
state securities law, rule or regulation). The Investor’s execution, delivery and performance
of this Agreement and the consummation by it of the transactions contemplated hereby do not and
will not (i) conflict with or violate any provision of the Investor’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Investor is subject (including
federal and state securities laws and regulations), or by which any property or asset of the
Investor is bound or affected.

     4.4 The Investor understands that nothing in this Agreement, the Prospectus, the
Disclosure Package, the Offering Information or any other materials presented to the Investor in
connection with the purchase and sale of the Securities constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors and made such
investigation as it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Securities. The Investor also understands that there is no established
public trading market for the Warrants being offered in the Offering, and that the Company does
not expect such a market to develop. In addition, the Company does not intend to apply for
listing of the Warrants on any securities exchange. The Investor understands that without an
active market, the liquidity of the Warrants will be limited.

     4.5 The Investor will maintain the confidentiality of all information acquired as
a result of the transactions contemplated hereby prior to the public disclosure of that
information by the Company in accordance with Section 13 of this Annex.

     4.6 Since the time at which either Placement Agent first contacted such Investor
about the Offering, the Investor has not disclosed any information regarding the Offering to any
third parties (other than its legal, accounting and other advisors) and has not engaged in any
transactions involving the securities of the Company (including, without limitation, any Short

 

 

Sales (as defined herein) involving the Company’s securities). The Investor covenants that
it will not engage in any transactions involving the securities of the Company (including Short
Sales), in each case prior to the time that the transactions contemplated by this Agreement are
publicly disclosed. The Investor agrees that it will not use any of the Securities acquired
pursuant to this Agreement to cover any short position in the Common Stock if doing so would be
in violation of applicable securities laws. For purposes hereof, “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and indirect stock
pledges, forward sales contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through non-U.S. broker
dealers or foreign regulated brokers.

     5. Survival of Representations, Warranties and Agreements; Third Party Beneficiary.
Notwithstanding any investigation made by any party to this Agreement or by the Placement Agents,
all covenants, agreements, representations and warranties made by the Company and the Investor
herein will survive the execution of this Agreement, the delivery to the Investor of the Shares and
Warrants being purchased and the payment therefor. The Placement Agents shall be third party
beneficiaries with respect to the representations, warranties and agreements of the Investor in
Section 4 hereof.

     6. Notices. All notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile or (b) if delivered from outside the United States, by International Federal Express or
facsimile, and will be deemed given (i) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight
carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two
business days after so mailed and (iv) if delivered by facsimile, upon electronic confirmation of
receipt and will be delivered and addressed as follows:

	 	(a)	 	if to the Company, to:
	 
	 	 	 	Athersys, Inc.

3201 Carnegie Avenue

Cleveland, Ohio 44115

Attention: President

Facsimile: (216) 432-2461
	 
	 	 	 	with a copy (which shall not constitute notice) to:
	 
	 	 	 	Jones Day

North Point

901 Lakeside Avenue

Cleveland, Ohio 44114

Attention: Michael J. Solecki

Facsimile: 216-579-0212

 

 

(b) if to the Investor, at its address on the Signature Page hereto, or at such other
address or addresses as may have been furnished to the Company in writing.

     7. Changes. This Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.

     8. Headings. The headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this Agreement.

     9. Severability. In case any provision contained in this Agreement should be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions contained herein will not in any way be affected or impaired thereby.

     10. Governing Law. This Agreement will be governed by, and construed in accordance with, the
internal laws of the State of New York, without giving effect to the principles of conflicts of law
that would require the application of the laws of any other jurisdiction.

     11. Counterparts. This Agreement may be executed in two or more counterparts, each of which
will constitute an original, but all of which, when taken together, will constitute but one
instrument, and will become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties. The Company and the Investor acknowledge and agree that
the Company shall deliver its counterpart to the Investor along with the Prospectus Supplement (or
the filing by the Company of an electronic version thereof with the Commission). Delivery of an
executed counterpart by facsimile or portable document format (pdf) shall be effective as delivery
of a manually executed counterpart thereof.

     12. Confirmation of Sale. The Investor acknowledges and agrees that such Investor’s receipt
of the Company’s signed counterpart to this Agreement, together with the Prospectus Supplement (or
the filing by the Company of an electronic version thereof with the Commission), shall constitute
written confirmation of the Company’s sale of Securities to such Investor.

     13. Press Release. The Company and the Investor agree that, prior to the opening of the
NASDAQ Capital Market on the business day immediately following the date hereof, the Company shall (i) issue a press release announcing
the Offering and disclosing all material information regarding the Offering and (ii) file a Current
Report on Form 8-K with the Commission disclosing all material information regarding the Offering
and including the Placement Agreement and a form of this Agreement as exhibits thereto.

     14. Termination. In the event that the Placement Agreement is terminated by the Placement
Agents pursuant to the terms thereof, this Agreement shall terminate without any further action on
the part of the parties hereto.

 

 

     15. Fees and Expenses. Each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this Agreement.

 

 

EXHIBIT A

ATHERSYS, INC.

INVESTOR QUESTIONNAIRE

Pursuant to Section 3 of Annex I to the Agreement, please provide us with the
following information:

	 	 	 	 	 

	1.

	 	The exact name that your Shares and
Warrants are to be registered in. You
may use a nominee name if appropriate:
	 	___________________________
	 
	2.

	 	The relationship between the
Investor and the registered holder
listed in response to item 1 above:
	 	___________________________
	 
	3.

	 	The mailing address of the
registered holder listed in response
to item 1 above:
	 	___________________________
	 
	4.

	 	The Social Security Number or Tax
Identification Number of the
registered holder listed in the
response to item 1 above:
	 	___________________________
	 
	5.

	 	Name of DTC Participant
(broker-dealer at which the account or
accounts to be credited with the
Shares are maintained):
	 	___________________________
	 
	6.

	 	DTC Participant Number:
	 	___________________________
	 
	7.

	 	Name of Account at DTC Participant
being credited with the Shares:
	 	___________________________
	 
	8.

	 	Account Number at DTC Participant
being credited with the Shares:
	 	___________________________

 

 

EXHIBIT B

FORM OF WARRANT

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