Form SC 13D/A ATHERSYS, INC / NEW Filed by: HEALIOS K.K.

September 21, 2021 9:15 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 10)*
 
Athersys, Inc.
(Name of Issuer)
 
Common Stock, par value US$0.001 per share
(Title of Class of Securities)
 
0474L106
(CUSIP Number)

HEALIOS K.K.
Yurakucho Denki Bldg., North Tower 19F
1-7-1 Yurakucho
Chiyoda-ku, Tokyo 100-0006, Japan
Attn: General Manager of Financing
and Accounting Division
 
Kenton King, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue
Palo Alto, CA 94301
(650) 470-4500
 
Kenji Taneda, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Izumi Garden Tower, 37th Floor
1-6-1, Roppongi, Minato-ku
Tokyo 106-6037, Japan
+81-3-3568-2626
 
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
 
August 5, 2021
(Date of Event which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ☐
 
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
 
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
 
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).





CUSIP No. 0474L106
13D
 
 
 
 
1.
 
NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

HEALIOS K.K.
2.
 
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a) ☐
(b) ☐
3.
 
SEC USE ONLY
 
4.
 
SOURCE OF FUNDS (see instructions)
 
WC
5.
 
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)     
6.
 
CITIZENSHIP OR PLACE OF ORGANIZATION
 
Japan
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH
 
7.
 
SOLE VOTING POWER
 
0
 
8.
 
SHARED VOTING POWER
 
16,310,526
 
9.
 
SOLE DISPOSITIVE POWER
 
0
 
10.
 
SHARED DISPOSITIVE POWER
 
16,310,526
11.
 
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

16,310,526
12.
 
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions)    ☐
13.
 
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

7.2%(1)
14.
 
TYPE OF REPORTING PERSON (see instructions)

CO

(1)
Based on 226,255,093 shares of Common Stock outstanding as of August 5, 2021, as reported on the Issuer’s most recent filing on Form 10-Q.




 
CUSIP No. 0474L106
13D
 
 
 
 
1.
 
NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

Tadahisa Kagimoto(2)
2.
 
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a) ☐
(b) ☐
3.
 
SEC USE ONLY
 
4.
 
SOURCE OF FUNDS (see instructions)
 
AF
5.
 
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)     
6.
 
CITIZENSHIP OR PLACE OF ORGANIZATION
 
Japan
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
 
7.
 
SOLE VOTING POWER
 
0
 
8.
 
SHARED VOTING POWER
 
16,310,526
 
9.
 
SOLE DISPOSITIVE POWER
 
0
 
10.
 
SHARED DISPOSITIVE POWER
 
16,310,526
11.
 
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

16,310,526
12.
 
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions)    ☐
13.
 
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

7.2%(3)
14.
 
TYPE OF REPORTING PERSON (see instructions)

IN

(2)
The reporting person may be deemed to have beneficial ownership of shares of Common Stock solely through his interest in HEALIOS K.K.
(3)
Based on 226,255,093 shares of Common Stock outstanding as of August 5, 2021, as reported on the Issuer’s most recent filing on Form 10-Q.



Explanatory Note:

This Amendment No. 10 to Schedule 13D (this “Tenth Amendment”) is filed to amend the initial Statement on Schedule 13D (the “Initial Statement”) relating to the common stock, par value $0.001 per share (the “Common Stock”), of Athersys, Inc., a Delaware Corporation (“Athersys” or the “Issuer”), as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 23, 2018 and as amended pursuant to Amendment No. 1 to the Initial Statement, as filed with the SEC on June 11, 2018 (the “First Amendment”), Amendment No. 2 to the Initial Statement, as filed with the SEC on July 2, 2018 (the “Second Amendment”), Amendment No. 3 to the Initial Statement, as filed with the SEC on April 2, 2020 (the “Third Amendment”), Amendment No. 4 to the Initial Statement, as filed with the SEC on May 15, 2020 (the “Fourth Amendment”), Amendment No. 5 to the Initial Statement, as filed with the SEC on November 13, 2020 (the “Fifth Amendment”), Amendment No. 6 to the Initial Statement, as filed with the SEC on November 18, 2020 (the “Sixth Amendment”), Amendment No. 7 to the Initial Statement, as filed with the SEC on November 23, 2020 (the “Seventh Amendment”), Amendment No. 8 to the Initial Statement, as filed with the SEC on November 30, 2020 (the “Eighth Amendment”) and Amendment No. 9 to the Initial Statement, as filed with the SEC on February 16, 2021 (the “Ninth Amendment”). The Initial Statement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth Amendment and this Tenth Amendment, is referred to herein as the “Statement”. Unless set forth below, all previous Items are unchanged, and the Statement remains in full force and effect, except as expressly amended below. Capitalized terms used herein which are not defined herein have the meanings given to them in the Statement.

Item 3.
Source and Amount of Funds or Other Consideration.

The information contained in Item 4 to this Schedule 13D is incorporated herein by reference.

Item 4.
Purpose of Transaction.

Item 4 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
On August 5, 2021, Healios entered into a Comprehensive Framework Agreement for Commercial Manufacturing and Ongoing Support (the “Framework Agreement”) with the Issuer. The Framework Agreement amends the existing collaboration structure between the parties through amendments, waivers, consents or terminations of certain existing agreements or entering into new agreements as outlined in the Framework Agreement.
The agreements provide Healios access to the Issuer’s manufacturing technology to enable Healios to manufacture MultiStem products, using a qualified manufacturer, for a potential commercial launch in Japan. Further, they clarify the Issuer’s role in providing support services necessary for regulatory approvals, manufacturing readiness, and commercial launch in Japan. The parties will share investment in commercial preparation and product supply through investment by Healios in certain manufacturing preparation activities and additional production capacity for Japan and, through deferrals and certain adjustments to financial terms of the existing license agreement, including milestones and royalties, during the early commercial phase. Additionally, Healios’ license in Japan will be expanded to include two new additional indications under certain conditions. The agreements provide for $8.0 million in new milestone payments available to the Issuer tied to certain Japan commercial manufacturing activities and the establishment of large scale manufacturing relevant to Japan, and warrants (the “Warrants”) issued to Healios to purchase up to a total of 10,000,000 shares of the Issuer’s Common Stock (the “Warrant Shares”) at a premium to the then-current market price and exercisable for 60 days following regulatory approval for ARDS and ischemic stroke, respectively.
Under the terms of one of the Warrants (the “ARDS Warrant”), Healios will have the right to exercise such Warrant within 60 days of receipt of either conditional or full marketing approval from the PMDA for the intravenous administration of MultiStem to treat patients who are suffering from ARDS. The ARDS Warrant is also exercisable prior to such approval upon the Issuer’s public announcement of the entry into an agreement that is expected to result in a change of control of the Issuer. Under the terms of the ARDS Warrant, Healios will have the right to purchase up to an aggregate of 3,000,000 Warrant Shares at the following exercise prices during the following periods: (a) $1.80 per Warrant Share during the period from August 5, 2021 up to, but not including, January 1, 2024, (b) $1.98 per Warrant Share during the period from January 1, 2024 up to, but not including, January 1, 2025 and (c) $2.18 per Warrant Share during the period from January 1, 2025 through July 31, 2026.
Under the terms of the other Warrant (the “Stroke Warrant”), Healios will have the right to exercise such Warrant within 60 days of receipt of either conditional or full marketing approval from the PMDA for the intravenous administration of MultiStem to treat patients who are suffering from ischemic stroke. The Stroke Warrant is also exercisable prior to such approval upon the Issuer’s public announcement of the entry into an agreement that is expected to result in a change of control of the Issuer. Under the terms of the Stroke Warrant, Healios will have the right to purchase up to an aggregate of 7,000,000 Warrant Shares at the following exercise prices during the following periods: (a) $2.40 per Warrant Share during the period from August 5, 2021 up to, but not including, January 1, 2024, (b) $2.52 per Warrant Share during the period from January 1, 2024 up to, but not including, January 1, 2025 and (c) $2.65 per Warrant Share during the period from January 1, 2025 through July 31, 2026.



The Issuer may terminate the Warrants under certain conditions, including the termination of any license agreement and/or collaboration agreement, in effect when the Warrants were issued, between the Issuer and Healios as a result of an uncured material breach by Healios that has triggered such termination. The Warrants also provide that the number of Warrant Shares to be issued thereunder will be limited to the extent that Healios and its affiliates would beneficially own more than 19.9% of the Issuer’s Common Stock after giving effect to such exercise and issuance.
The descriptions of the Warrants are qualified in their entirety by the text of the ARDS Warrant and the Stroke Warrant, copies of which are filed as Exhibit 99.4 and Exhibit 99.5, respectively, to this Tenth Amendment and are incorporated by reference herein.
As previously disclosed, on February 16, 2021, Healios and Dr. Tadahisa Kagimoto entered into a cooperation agreement, (the “Cooperation Agreement”) with the Issuer pursuant to which Healios agreed to certain customary standstill provisions, effective as of the date of the Cooperation Agreement and continuing through the conclusion of the Issuer’s 2022 annual meeting of stockholders (the “Standstill Period”). These provisions prohibit Healios from, among other things, acquiring securities that would result in Healios beneficially owning more than 9.9% of the Issuer’s outstanding shares of Common Stock, inclusive of Healios’ current holdings (the “Ownership Limitation”) and engaging in certain other actions with respect to the Issuer’s stockholder meetings or securities. In addition, under the Cooperation Agreement, during the Standstill Period, the Issuer agrees to provide notice to Healios of certain equity issuances and to allow Healios to participate in certain issuances to maintain its proportionate ownership of the Issuer’s Common Stock as of the time of such issuance, subject to a maximum participation of 19.9% of any such issuance, and subject to the Ownership Limitation.
The foregoing description of the Cooperation Agreement is qualified in its entirety by the text of the Cooperation Agreement, a copy of which was filed as Exhibit 99.3 to the Ninth Amendment and is incorporated by reference herein.
In connection with the execution of the Framework Agreement, on August 5, 2021, Healios entered into an amendment to the Cooperation Agreement (the “Cooperation Agreement Amendment”) with the Issuer to extend the Standstill Period for the provisions described above until the conclusion of the Issuer’s 2023 annual meeting of stockholders. The amendment to the Cooperation Agreement also provides that the Warrant Shares will be excluded from the calculation of the Ownership Limitation.
The foregoing description of the Cooperation Agreement Amendment is qualified in its entirety by the text of the Cooperation Agreement Amendment, a copy of which is filed as Exhibit 99.6  to this Tenth Amendment and is incorporated by reference herein.
Additionally, as previously disclosed, Healios is party to an Investor Rights Agreement (the “Investor Rights Agreement”) with the Issuer, which governs certain of Healios’ and the Issuer’s rights relating to Healios’ ownership of the Issuer’s Common Stock and participation on its Board of Directors. In connection with the execution of the Framework Agreement, on August 5, 2021, Healios and the Issuer entered into a certain Amendment to Investor Rights Agreement (the “IRA Amendment”), pursuant to which Healios agreed to terminate its existing right under the Investor Rights Agreement to nominate two nominees for election to the Issuer’s Board of Directors if Healios beneficially owned 15% or more of the Issuer’s outstanding shares of Common Stock. Healios retains the right to appoint one nominee for election to the Issuer’s Board of Directors if Healios beneficially owns 5% or more of the Issuer’s outstanding shares of Common Stock. Dr. Kagimoto, Chairman and Chief Executive Officer of Healios, currently serves on the Issuer’s Board of Directors as the Healios designee.
The foregoing description of the IRA Amendment is qualified in its entirety by the text of the IRA Amendment, a copy of which is filed as Exhibit 99.7 to this Tenth Amendment and is incorporated by reference herein.
Healios may change its intention with respect to any and all matters referred to in Item 4. Healios intends to review its investment in the Issuer on an ongoing basis and may from time to time in the future express its views to and/or meet with management, the Board, other stockholders or third parties, including, potential partners, service providers and financing sources, and/or may formulate plans or proposals regarding the Issuer, its assets or its securities. Such possible plans or proposals may include one or more plans or proposals that relate to or would result in one or more of the changes referred to herein, or any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D.

Item. 5.
Interest in Securities of the Issuer.
(a)-(b) of Item 5 of the Schedule 13D are hereby amended and restated as follows:


Healios may be deemed to have (i) beneficial ownership (within the meaning of Rule 13d-3 under the Act), (ii) shared power to vote or direct the vote of, and shared power to dispose or direct the disposition of, up to 16,310,526 shares of Common Stock, representing approximately 7.2% of such class, and (iii) sole power to vote or direct the vote of, and sole power to dispose or direct the disposition of, no shares of Common Stock. The information contained in Item 4 to this Schedule 13D is herein incorporated by reference.
Mr. Kagimoto may be deemed, solely through his interest in Healios, to have (i) beneficial ownership (within the meaning of Rule 13d-3 under the Act), (ii) shared power to vote or direct the vote of, and shared power to dispose or direct the disposition of, the shares of Common Stock identified in the response pertaining to Healios immediately above, and (iii) sole power to vote or direct the vote of, and sole power to dispose or direct the disposition of, no shares of Common Stock. The information contained in Item 4 to this Schedule 13D is herein incorporated by reference.
Mr. Gregory A. Bonfiglio, a director of Healios, may be deemed to have (i) beneficial ownership (within the meaning of Rule 13d-3 under the Act), (ii) shared power to vote or direct the vote of, and shared power to dispose or direct the disposition of, up to 922,156 shares of Common Stock, representing approximately 0.4% of such class, and (iii) sole power to vote or direct the vote of, and sole power to dispose or direct the disposition of, no shares of Common Stock.

Item. 6.
Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

The information contained in Item 4 to this Schedule 13D is incorporated herein by reference.

Item 7.
Material to be Filed as Exhibits.

Item 7 of the Schedule 13D is hereby amended and supplemented to add the following:
 
Exhibit No.
 
Description
99.4
 
Common Stock Purchase Warrant of Atherys, Inc., issued August 5, 2021.
99.5
 
Common Stock Purchase Warrant of Atherys, Inc., issued August 5, 2021.
99.6
 
Amendment to Cooperation Agreement, dated August 5, 2021, by and among Athersys, Inc., HEALIOS K.K. and Dr. Tadahisa Kagimoto
99.7
 
Amendment to Investor Rights Agreement, dated August 5, 2021, by and between Athersys, Inc. and HEALIOS K.K.




Schedule A
DIRECTORS AND EXECUTIVE OFFICERS OF HEALIOS K.K.
Set forth below is a list of each executive officer and director of HEALIOS K.K., setting forth the business address and present principal occupation or employment (and the name and address of any corporation or organization in which such employment is conducted) of each person. Unless otherwise specified, the principal employer of each such individual is HEALIOS K.K., and the business address of each such individual is Yurakucho Denki Bldg. North Tower 19F, 1-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan. To the knowledge of the undersigned, during the last five years, no person listed below has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has such person been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction that has resulted in such person being or having been subject to judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or that has found violations with respect to such laws.


Name and Business Address
 
Present Principal Occupation,
principal business of employer (if not HEALIOS K.K.)
     
Hardy TS Kagimoto, a citizen of Japan
 
Representative Director, President & CEO of HEALIOS K.K.
     
Yoshinari Matsuda, a citizen of Japan
Marunouchi Building, 26th Floor, Marunouchi 2-4-1,
Chiyoda-ku, Tokyo 100-6326, Japan
 
Founder and Representative Partner of Uruma Law Offices Legal Professional Corporation
     
Michael Alfant, a citizen of the USA(2)
Daiwa Azabudai Building, 8th Floor
2-3-3 Azabudai
Minato-ku, Tokyo 106-0041, Japan
 
Chair of board and CEO of Fusion Systems Group, an IT solutions and business consultancy advisor
     
Jun Narimatsu, a citizen of Japan(2)
4-5-18 Kamiosaki, 2nd Floor,
Shinagawa-ku, Tokyo 141-0021, Japan
 
Representative Director and President of Muuseo, Inc., which operates certain social media platforms for the curation and sharing of images and data
     
Seigo Kashii, a citizen of Japan(2)
 
External director of HEALIOS K.K.
     
Gregory A. Bonfiglio, a citizen of the USA(2)
8 Redberry Ridge
Portola Valley, CA 94028, USA
 
Founder and Managing Partner of Proteus, LLC, an investment advisory firm
     
Richard P. Kincaid, a citizen of the USA
 
Director, Executive Officer Chief Financial Officer of HEALIOS K.K.
     
David W. Smith, a citizen of the USA
6353 W Rogers Circle
Boca Raton, FL 33487, USA
 
President and Chief Commercial Officer of Akron Biotech, a biotechnology company
     
Masanori Sawada, a citizen of Japan
 
Executive Vice President, Chief Medical Officer of HEALIOS K.K.
     
Kouichi Tamura, a citizen of Japan
 
Executive Officer in charge of research and manufacturing at HEALIOS K.K..
     
Michihisa Nishiyama, a citizen of Japan
 
Executive Officer in charge of development at HEALIOS K.K.
     
Koji Abe, a citizen of Japan
 
Executive Officer in charge of HR and GA at HEALIOS K.K.

(2) External Director





SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: September 21, 2021

 
HEALIOS K.K.
 
 
 
 
 
By:  
/s/ Hardy TS Kagimoto
 
 
Name:  
Hardy TS Kagimoto
 
 
Title:
Chairman & CEO
 
 
 
 
 
HARDY TS KAGIMOTO
 
 
 
 
 
By:
/s/ Hardy TS Kagimoto

Exhibit 99.4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
ATHERSYS, INC.
Issue Date: August 5, 2021 (the “Issue Date”)
THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, HEALIOS K.K. (“Healios”), or its permitted assigns (in either case, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date and on or prior to the close of business on July 31, 2026 (the “Termination Date”), but not thereafter, to purchase from Athersys, Inc., a Delaware corporation (the “Company”), up to 3,000,000 shares (subject to the limitations contained herein, including Section 3(d) below, and subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The purchase price of one Warrant Share shall be equal to the exercise price set forth in Section 1(c) below (the “Exercise Price”).
As used in this Warrant, (a) an “Affiliate” means, with respect to any Person (as defined below), any other Person who, directly or indirectly, controls, is controlled by or under common control with such Person; for purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities or by contract or otherwise, (b) a “Business Day” means any day excluding Saturday, Sunday or any day which is a legal holiday under the laws of the State of New York or of Tokyo, Japan, or a day on which banking institutions are authorized or required by law or other governmental action to close, (c) “Capital Stock” means, with respect to any Person, (i) any capital stock of such Person, (ii) any security convertible, with or without consideration, into any capital stock of such Person, (iii) any other shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) the capital stock of such Person and (iv) any other equity interest in, or right to vote generally in elections of directors or the comparable governing body of, such Person, (d) “Change of Control” means any of the following events: (i) any Person or group of Persons is or becomes the beneficial owner, directly or indirectly, of a majority of the total voting power represented by all then-outstanding Common Stock, (ii) the Company consolidates with or merges into another Person, or any Person consolidates or merges into the Company, other than (A) a merger or consolidation which would


result in the Securities (as defined below) outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) a majority of the combined voting power of the Securities or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person becomes the beneficial owner, directly or indirectly, of a majority of the total voting power of all then-outstanding Securities or (iii) the Company conveys, transfers or leases all or substantially all of its assets to any Person other than a wholly owned Affiliate of the Company; provided, however, that no event shall constitute a Change of Control if Healios, any of its Affiliates or any other Person acting on behalf of Healios or any of its Affiliates, directly or indirectly (1) is or becomes the beneficial owner, directly or indirectly, of a majority of the total voting power represented by all then-outstanding Common Stock, (2) consolidates with or merges with or into the Company or (3) acquires or leases all or substantially all of the Company’s assets, but only in the event that any such Change of Control was not approved by the board of directors of the Company, (e) a “Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity (or any department, agency or political subdivision thereof), (f) “Securities” means Common Stock or other securities entitled to be voted generally in the election of the Company’s board of directors or any direct or indirect options or other rights to acquire, or securities or other instruments that are convertible into, any such securities and (g) a “Trading Day” means any day on which The Nasdaq Stock Market, LLC is open for trading.
Section 1.          Vesting; Exercisability; Exercise Price. The Holder’s right to exercise this Warrant with respect to the Warrant Shares is subject to vesting and limitations on exercisability as follows:
(a)          Subject to Section 1(b) below and the following sentence, this Warrant will become exercisable only upon Healios’ receipt of either conditional or full marketing approval from the Pharmaceuticals and Medical Devices Agency in Japan for the intravenous administration of MultiStem cell therapy to treat patients who are suffering from acute respiratory distress syndrome (the “Approval”). Additionally, if the Approval has not yet occurred, this Warrant will become exercisable upon the public announcement by the Company of the entry into an agreement that is expected to result in a Change of Control (the “Change of Control Announcement”). The Company shall provide written notice to the Holder concurrently with the Change of Control Announcement, along with a summary as to how the proposed transaction constitutes a Change of Control.
(b)          In the event this Warrant becomes exercisable as a result of the Approval, this Warrant shall be exercisable, and the Holder may deliver a Notice of Exercise (as defined below), for the 60 days immediately following the date of the Approval, but no later than the Termination Date. In the event this Warrant becomes exercisable as a result of the Change of Control Announcement, this Warrant shall be exercisable for the period beginning on the day immediately following the Change of Control Announcement and ending on the earlier of (i) the Termination Date and (ii) the Trading Day immediately prior to the consummation of the Change of Control on the condition that the Company has provided the Holder with at least 20 business days’ prior written notice of the anticipated date of the consummation of the Change of Control.
2


(c)          Subject to any adjustments required by Section 3 below, this Warrant may be exercised with respect to 3,000,000 Warrant Shares in the aggregate at the price of (i) $1.80 per Warrant Share during the period from the Issue Date up to, but not including, January 1, 2024, (ii) $1.98 per Warrant Share during the period from January 1, 2024 up to, but not including, January 1, 2025 and (iii) $2.18 per Warrant Share during the period from January 1, 2025 through the Termination Date.
(d)          Subject to any adjustments required by Section 3 below, notwithstanding anything to the contrary in this Warrant, in no event shall this Warrant be exercisable for more than 3,000,000 Warrant Shares.
Section 2.          Exercise.
(a)          Subject to the conditions in Section 1 above, exercise of the purchase rights represented by this Warrant with respect to Warrant Shares may be made, in whole or in part, at any time or times on or after the Issue Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly completed and executed copy of a notice of exercise substantially in the form attached hereto as Exhibit A (each, a “Notice of Exercise”). The date on which such delivery shall have taken place (or be deemed to have taken place) shall be referred to herein as the “Exercise  Date.” Within seven Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank; provided, however, in the event that the Holder has not delivered such aggregate Exercise Price within seven Trading Days following the date of such exercise as aforesaid, the Company shall not be obligated to deliver such Warrant Shares hereunder until such payment is made. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, subject to Section 5(k) below, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three Business Days after the relevant event shall have occurred. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares so purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the dates of such purchases. The Company shall deliver any objection to any Notice of Exercise within two Business Days of receipt of such notice. The Holder, by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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(b)          Mechanics of Exercise.
(i)          Delivery of Warrant Shares Upon Exercise. Upon each exercise of this Warrant, the Company shall promptly, but in no event later than seven Trading Days after delivery of the applicable Notice of Exercise (subject to delivery by the Holder to the Company of the aggregate Exercise Price payable pursuant to Section 1(c) above), instruct the transfer agent for the Common Stock (the “Transfer Agent”) to record the issuance of the Warrant Shares purchased hereunder to the Holder in book-entry form pursuant to the Transfer Agent’s regular procedures. The Warrant Shares shall be deemed to have been issued, and the Holder shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date with payment to the Company of the Exercise Price having been paid.
(ii)          Rescission Rights. If the Company fails to issue or cause to have issued the Warrant Shares pursuant to Section 2(b)(i) above within seven Trading Days after delivery of the applicable Notice of Exercise, then the Holder will have the right to rescind such exercise. The right of rescission of the Holder under this Section 2(b)(ii) is subject to delivery by the Holder of the aggregate Exercise Price payable pursuant to Section 1(c) above.
(iii)          No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
(iv)          Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue, transfer, stamp or other tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder. Without limiting the generality of the foregoing, the Company shall pay all fees required for same-day processing of any Notice of Exercise.
(v)          Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant pursuant to the terms hereof.
(c)          Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to this Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the
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unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise that results in such securities or the Common Stock underlying such securities not being beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. For purposes of this Section 2(c), 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 (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing 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 or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. As used in this Warrant, “Beneficial Ownership Limitation” means 19.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The provisions of this Section 2(c) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.
Section 3.          Certain Adjustments.
(a)          Stock Dividends, Subdivision, Combinations and Consolidations. If the Company, at any time while this Warrant is outstanding (in whole or in part): (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) or any
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other equity or equity equivalent securities payable in shares of Common Stock (or such other class of Capital Stock) (which, for avoidance of doubt, shall not include any shares of Common Stock (or such other class of Capital Stock) issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) into a larger number of shares or (iii) combines or consolidates (including, without limitation, by reverse stock split) outstanding shares of Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) into a smaller number of shares, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event; with respect to Section 1(c) above, the number of Warrant Shares issuable at the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately after such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately before such event; and the total number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or consolidation. If the Company, at any time while this Warrant is outstanding (in whole or in part), distributes rights on shares of its Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) in connection with a shareholder rights plan, no adjustment shall be made pursuant to this Section 3 and any such rights shall accompany the Warrant Shares issued pursuant to this Warrant if such shareholder rights plan remains in effect.
(b)          Reclassifications, Reorganizations, Consolidations and Mergers. In the event of (i) any capital reorganization of the Company, (ii) any reclassification or recapitalization of the stock of the Company (other than (x) a change in par value or from par value to no par value or from no par value to par value or (y) as a result of a stock dividend, subdivision, combination or consolidation of shares as to which Section 3(a) above shall apply) or (iii) any consolidation or merger of the Company with or into another Person (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock or any other class of Capital Stock then issuable upon exercise of this Warrant), this Warrant shall, after such reorganization, reclassification, recapitalization, consolidation or merger, be exercisable for the kind and number of shares of stock or other securities or property (“Alternate Consideration”) of the Company or of the successor corporation resulting from such consolidation or surviving such merger, if any, to which the holder of the number of Warrant Shares underlying this Warrant (at the time of such reorganization, reclassification, recapitalization, consolidation or merger, and subject to the limitations set forth in Section 1 and Section 2 above) would have been entitled upon such reorganization, reclassification, recapitalization, consolidation or merger. In such event, the aggregate Exercise Price otherwise payable for the shares of Common Stock (or such other class of Capital Stock) issuable upon exercise of this Warrant shall be allocated among the Alternative Consideration receivable as a result of such reorganization, reclassification, recapitalization, consolidation or merger in proportion to the respective fair market values of such Alternate Consideration. If and to the extent that the holders of Common Stock (or such other class of Capital Stock) have the right to elect the kind or amount of consideration receivable upon consummation
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of such reorganization, reclassification, recapitalization, consolidation or merger, then the consideration that the Holder shall be entitled to receive upon exercise shall be specified by the Holder, which specification shall be made by the Holder by the later of (A) ten Business Days after the Holder is provided with a final version of all material information concerning such choice as is provided to the holders of Common Stock (or such other class of Capital Stock) and (B) the last time at which the holders of Common Stock (or such other class of Capital Stock) are permitted to make their specifications known to the Company; provided, however, that if the Holder fails to make any specification within such time period, the Holder’s choice shall be deemed to be whatever choice is made by a plurality of all holders of Common Stock (or such other class of Capital Stock) that are not affiliated with the Company (or, in the case of a consolidation or merger, any other party thereto) and that affirmatively make an election (or of all such holders if none of them makes an election). From and after any such reorganization, reclassification, recapitalization, consolidation or merger, all references to “Warrant Shares” herein shall be deemed to refer to the Alternate Consideration to which the Holder is entitled pursuant to this Section 3(b). The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, recapitalizations, consolidations or mergers.
(c)          Other Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) other than any dividend or distribution referred to in Sections 3(a) or (b) above (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including, without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution; provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation. To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant in full.
(d)          Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock (or such other Company security as is then issuable upon exercise of this Warrant) deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (or such other Company security) (excluding treasury shares, if any) issued and outstanding on such date.
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(e)          Notice to Holder.
(i)          Adjustment to Terms of Warrant. Whenever any of the terms of this Warrant are adjusted pursuant to any provision of this Section 3 or any other applicable provision hereof, the Company shall promptly send to the Holder a notice signed by a duly authorized officer of the Company and setting forth (x) the Exercise Price, number of Warrant Shares and, if applicable, the kind and amount of Alternate Consideration purchasable hereunder after such adjustment and (y) the facts requiring such adjustment in reasonable detail.
(ii)          Notice to Allow Exercise by the Holder. If, during the period in which this Warrant is outstanding, (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register (as defined below) of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Securities and Exchange Commission (the “SEC”) pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4.          Transfer of Warrant and Warrant Shares.
(a)          Restrictive Legend. The Warrant Shares (unless and until registered under the Securities Act of 1933, as amended (the “Securities Act”), or transferred pursuant to Rule 144 promulgated under the Securities Act, or any successor rule or regulation hereafter adopted by the SEC, as such rule may be amended from time to time (“Rule 144”)) will be stamped or imprinted with a legend in substantially the following form:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS.
(b)          Transferability. Healios and any subsequent Holder shall not sell, assign, transfer, pledge or dispose of any portion of this Warrant, by operation of law or otherwise, without the prior written consent of the Company, other than the transfer of this Warrant in its entirety to any Affiliate of Healios, which may be conducted without consent provided that an assignment form substantially in the form attached hereto as Exhibit B is duly completed and executed by any such subsequent Holder. Upon any permitted transfer of this Warrant in full, the Holder shall be required to physically surrender this Warrant to the Company within three Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a subsequent Holder for the purchase of Warrant Shares without having a new Warrant issued. The Company shall not assign or transfer any part of its obligations under this Warrant without the prior written consent of Healios, except in a consolidation or merger described in Section 3(b) above.
(c)          Warrant Register. The Company shall register this Warrant upon records to be maintained by the Company (the “Warrant Register”) in the name of the record Holder hereof from time to time. Absent manifest error or actual notice to the contrary, the Company may deem and treat the Holder of this Warrant so registered as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes.
Section 5.          Miscellaneous.
(a)          No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(b) above.
(b)          Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon delivery by the Holder to the Company of (a) a notice of the loss, theft, destruction or mutilation of this Warrant and (b) in the case of loss, theft or destruction, an indemnity agreement in a form and amount reasonably satisfactory to the Company or, in the case of mutilation, surrender of the mutilated Warrant, the Company will make and deliver a new Warrant of like tenor dated as of the Issue Date.
(c)          Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
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(d)          Authorized Shares. The Company covenants that, during the period this Warrant is exercisable (in whole or in part), it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any national securities exchange upon which the Common Stock is listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and full payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable, not subject to any preemptive rights and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than pursuant to taxes in respect of any transfer occurring contemporaneously with such issue).
(e)          Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflict of laws thereof. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(f)          Non-waiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.
(g)          Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in writing either (i) in person or by courier or overnight service or (ii) by e-mail with a copy delivered as provided in clause (i).
(h)          Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(i)          Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
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(j)          Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
(k)          Termination. This Warrant, and all rights, obligations and liabilities hereunder, shall be automatically terminated upon the earliest of (i) the termination of any license agreement and/or collaboration agreement between the Company (or any of its subsidiaries) and Healios in effect as of the Issue Date, in each case in accordance with the terms of such agreement and as a result of an uncured material breach by Healios that has triggered such termination; provided, however, that this Warrant shall not terminate pursuant to this Section 5(k)(i) unless the Company provides Healios with written notice of the applicable breach, and Healios does not either cure such breach within the cure period provided for in the applicable agreement or reach an agreement with the Company (both parties negotiating in good faith), within 60 days of receipt of such notice, to adequately compensate the Company for such breach and (ii) the date immediately following the Termination Date (subject to any Notice of Exercise pending at the Termination Date, in which case such date shall be the date immediately after the date that the Company delivers the Warrant Shares that were subject to such pending Notice of Exercise). Upon termination of this Warrant, the Holder shall surrender this Warrant to the Company for cancellation within three Business Days after the relevant termination event shall have occurred.
(l)          Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(m)          Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signatures Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Issue Date.
 
ATHERSYS, INC.
 
     
     
 
By:  
/s/ William O. Lehmann, Jr.
 
   
Name:  
William O. Lehmann, Jr.
 
   
Title:
Interim Chief Executive Officer, President and Chief Operating Officer
 






[Signature Page to Warrant]



EXHIBIT A
NOTICE OF EXERCISE
TO:          ATHERSYS, INC.
Reference is made to that certain Common Stock Purchase Warrant (the “Warrant”) issued by Athersys, Inc. (the “Company”) on August 5, 2021. Capitalized terms used but not otherwise defined herein shall have the respective meanings give thereto in the Warrant.
(1)          The undersigned Holder of the Warrant hereby elects to exercise the Warrant for ________ Warrant Shares pursuant to Section 1 of the Warrant, subject to delivery of the aggregate Exercise Price for the Warrant Shares as to which the Warrant is so exercised, and the undersigned Holder hereby instructs the Company to issue the applicable number of Warrant Shares in the name of the undersigned Holder.
(2)          The undersigned Holder of the Warrant hereby represents and warrants to the Company that, as of the date hereof:
(a)          Experience; Accredited Investor Status. The undersigned Holder (i) is an accredited investor as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act, (ii) is capable of evaluating the merits and risks of its investment in the Company, (iii) has the capacity to protect its own interests and (iv) has the financial ability to bear the economic risk of its investment in the Company.
(b)          Company Information. The undersigned Holder has been provided access to all information regarding the business and financial condition of the Company, its expected plans for future business activities, material contracts, intellectual property and the merits and risks of its purchase of the Warrants Shares, which it has requested or otherwise needs to evaluate an investment in the Warrant Shares. It has had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. It has also had the opportunity to ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of this investment and all such questions have been answered to its satisfaction.
(c)          Investment. The undersigned Holder has not been formed solely for the purpose of making this investment and is acquiring the Warrant Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution of any part thereof. It understands that the Warrant Shares have not been registered under the Securities Act or applicable state and other securities laws and are being issued by reason of a specific exemption from the registration provisions of the Securities Act and applicable state and other securities laws, the availability of which depends upon, among other things, the bona fide nature of its investment intent and the accuracy of its representations, each as expressed herein.
(d)          Transfer Restrictions. The undersigned Holder acknowledges and understands that (i) transfers of the Warrant Shares are subject to transfer restrictions under the federal securities laws and (ii) it may have to bear the economic risk of this investment for an indefinite period of time unless the Warrant Shares are subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available.
A-1


Name of Registered Owner:
 

Signature of Authorized Signatory of Registered Owner:
 

Name of Authorized Signatory:
 

Title of Authorized Signatory:
 

Date:
 




[Signature Page to Notice of Exercise]

A-2


EXHIBIT B
ASSIGNMENT FORM
1.          (To assign the foregoing Warrant, execute this form and supply the required information. Do not use this form to purchase shares.)
2.          FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to the undersigned assignee. Such assignee hereby acknowledges, agrees and confirms by its signature below that, from and after the date hereof, it will be bound by the terms and conditions of the foregoing Warrant.
3.          Any notices required or permitted to be delivered to such assignee pursuant to the foregoing Warrant shall be delivered to the address set forth below.
Assignee Name:
   
 
(Please Print)
 
     
Assignee Address:
   
 
(Please Print)
 

Dated: _____________ __, ____

Holder’s Signature: __________________________

Holder’s Address: ___________________________

B-1
Exhibit 99.5

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
ATHERSYS, INC.
Issue Date: August 5, 2021 (the “Issue Date”)
THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, HEALIOS K.K. (“Healios”), or its permitted assigns (in either case, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date and on or prior to the close of business on July 31, 2026 (the “Termination Date”), but not thereafter, to purchase from Athersys, Inc., a Delaware corporation (the “Company”), up to 7,000,000 shares (subject to the limitations contained herein, including Section 3(d) below, and subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The purchase price of one Warrant Share shall be equal to the exercise price set forth in Section 1(c) below (the “Exercise Price”).
As used in this Warrant, (a) an “Affiliate” means, with respect to any Person (as defined below), any other Person who, directly or indirectly, controls, is controlled by or under common control with such Person; for purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities or by contract or otherwise, (b) a “Business Day” means any day excluding Saturday, Sunday or any day which is a legal holiday under the laws of the State of New York or of Tokyo, Japan, or a day on which banking institutions are authorized or required by law or other governmental action to close, (c) “Capital Stock” means, with respect to any Person, (i) any capital stock of such Person, (ii) any security convertible, with or without consideration, into any capital stock of such Person, (iii) any other shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) the capital stock of such Person and (iv) any other equity interest in, or right to vote generally in elections of directors or the comparable governing body of, such Person, (d) “Change of Control” means any of the following events: (i) any Person or group of Persons is or becomes the beneficial owner, directly or indirectly, of a majority of the total voting power represented by all then-outstanding Common Stock, (ii) the Company consolidates with or merges into another Person, or any Person consolidates or merges into the Company, other than (A) a merger or consolidation which would


result in the Securities (as defined below) outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) a majority of the combined voting power of the Securities or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person becomes the beneficial owner, directly or indirectly, of a majority of the total voting power of all then-outstanding Securities or (iii) the Company conveys, transfers or leases all or substantially all of its assets to any Person other than a wholly owned Affiliate of the Company; provided, however, that no event shall constitute a Change of Control if Healios, any of its Affiliates or any other Person acting on behalf of Healios or any of its Affiliates, directly or indirectly (1) is or becomes the beneficial owner, directly or indirectly, of a majority of the total voting power represented by all then-outstanding Common Stock, (2) consolidates with or merges with or into the Company or (3) acquires or leases all or substantially all of the Company’s assets, but only in the event that any such Change of Control was not approved by the board of directors of the Company, (e) a “Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity (or any department, agency or political subdivision thereof), (f) “Securities” means Common Stock or other securities entitled to be voted generally in the election of the Company’s board of directors or any direct or indirect options or other rights to acquire, or securities or other instruments that are convertible into, any such securities and (g) a “Trading Day” means any day on which The Nasdaq Stock Market, LLC is open for trading.
Section 1.          Vesting; Exercisability; Exercise Price. The Holder’s right to exercise this Warrant with respect to the Warrant Shares is subject to vesting and limitations on exercisability as follows:
(a)          Subject to Section 1(b) below and the following sentence, this Warrant will become exercisable only upon Healios’ receipt of either conditional or full marketing approval from the Pharmaceuticals and Medical Devices Agency in Japan for the intravenous administration of MultiStem cell therapy to treat patients who are suffering from ischemic stroke (the “Approval”). Additionally, if the Approval has not yet occurred, this Warrant will become exercisable upon the public announcement by the Company of the entry into an agreement that is expected to result in a Change of Control (the “Change of Control Announcement”). The Company shall provide written notice to the Holder concurrently with the Change of Control Announcement, along with a summary as to how the proposed transaction constitutes a Change of Control.
(b)          In the event this Warrant becomes exercisable as a result of the Approval, this Warrant shall be exercisable, and the Holder may deliver a Notice of Exercise (as defined below), for the 60 days immediately following the date of the Approval, but no later than the Termination Date. In the event this Warrant becomes exercisable as a result of the Change of Control Announcement, this Warrant shall be exercisable for the period beginning on the day immediately following the Change of Control Announcement and ending on the earlier of (i) the Termination Date and (ii) the Trading Day immediately prior to the consummation of the Change of Control on the condition that the Company has provided the Holder with at least 20 business days’ prior written notice of the anticipated date of the consummation of the Change of Control.
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(c)          Subject to any adjustments required by Section 3 below, this Warrant may be exercised with respect to 7,000,000 Warrant Shares in the aggregate at the price of (i) $2.40 per Warrant Share during the period from the Issue Date up to, but not including, January 1, 2024, (ii) $2.52 per Warrant Share during the period from January 1, 2024 up to, but not including, January 1, 2025 and (iii) $2.65 per Warrant Share during the period from January 1, 2025 through the Termination Date.
(d)          Subject to any adjustments required by Section 3 below, notwithstanding anything to the contrary in this Warrant, in no event shall this Warrant be exercisable for more than 7,000,000 Warrant Shares.
Section 2.          Exercise.
(a)          Subject to the conditions in Section 1 above, exercise of the purchase rights represented by this Warrant with respect to Warrant Shares may be made, in whole or in part, at any time or times on or after the Issue Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly completed and executed copy of a notice of exercise substantially in the form attached hereto as Exhibit A (each, a “Notice of Exercise”). The date on which such delivery shall have taken place (or be deemed to have taken place) shall be referred to herein as the “Exercise  Date.” Within seven Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank; provided, however, in the event that the Holder has not delivered such aggregate Exercise Price within seven Trading Days following the date of such exercise as aforesaid, the Company shall not be obligated to deliver such Warrant Shares hereunder until such payment is made. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, subject to Section 5(k) below, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three Business Days after the relevant event shall have occurred. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares so purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the dates of such purchases. The Company shall deliver any objection to any Notice of Exercise within two Business Days of receipt of such notice. The Holder, by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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(b)          Mechanics of Exercise.
(i)          Delivery of Warrant Shares Upon Exercise. Upon each exercise of this Warrant, the Company shall promptly, but in no event later than seven Trading Days after delivery of the applicable Notice of Exercise (subject to delivery by the Holder to the Company of the aggregate Exercise Price payable pursuant to Section 1(c) above), instruct the transfer agent for the Common Stock (the “Transfer Agent”) to record the issuance of the Warrant Shares purchased hereunder to the Holder in book-entry form pursuant to the Transfer Agent’s regular procedures. The Warrant Shares shall be deemed to have been issued, and the Holder shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date with payment to the Company of the Exercise Price having been paid.
(ii)          Rescission Rights. If the Company fails to issue or cause to have issued the Warrant Shares pursuant to Section 2(b)(i) above within seven Trading Days after delivery of the applicable Notice of Exercise, then the Holder will have the right to rescind such exercise. The right of rescission of the Holder under this Section 2(b)(ii) is subject to delivery by the Holder of the aggregate Exercise Price payable pursuant to Section 1(c) above.
(iii)          No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
(iv)          Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue, transfer, stamp or other tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder. Without limiting the generality of the foregoing, the Company shall pay all fees required for same-day processing of any Notice of Exercise.
(v)          Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant pursuant to the terms hereof.
(c)          Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to this Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the
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unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise that results in such securities or the Common Stock underlying such securities not being beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. For purposes of this Section 2(c), 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 (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing 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 or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. As used in this Warrant, “Beneficial Ownership Limitation” means 19.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The provisions of this Section 2(c) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.
Section 3.          Certain Adjustments.
(a)          Stock Dividends, Subdivision, Combinations and Consolidations. If the Company, at any time while this Warrant is outstanding (in whole or in part): (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) or any
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other equity or equity equivalent securities payable in shares of Common Stock (or such other class of Capital Stock) (which, for avoidance of doubt, shall not include any shares of Common Stock (or such other class of Capital Stock) issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) into a larger number of shares or (iii) combines or consolidates (including, without limitation, by reverse stock split) outstanding shares of Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) into a smaller number of shares, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event; with respect to Section 1(c) above, the number of Warrant Shares issuable at the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately after such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately before such event; and the total number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or consolidation. If the Company, at any time while this Warrant is outstanding (in whole or in part), distributes rights on shares of its Common Stock (or other class of Capital Stock of the Company then issuable upon exercise of this Warrant) in connection with a shareholder rights plan, no adjustment shall be made pursuant to this Section 3 and any such rights shall accompany the Warrant Shares issued pursuant to this Warrant if such shareholder rights plan remains in effect.
(b)          Reclassifications, Reorganizations, Consolidations and Mergers. In the event of (i) any capital reorganization of the Company, (ii) any reclassification or recapitalization of the stock of the Company (other than (x) a change in par value or from par value to no par value or from no par value to par value or (y) as a result of a stock dividend, subdivision, combination or consolidation of shares as to which Section 3(a) above shall apply) or (iii) any consolidation or merger of the Company with or into another Person (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock or any other class of Capital Stock then issuable upon exercise of this Warrant), this Warrant shall, after such reorganization, reclassification, recapitalization, consolidation or merger, be exercisable for the kind and number of shares of stock or other securities or property (“Alternate Consideration”) of the Company or of the successor corporation resulting from such consolidation or surviving such merger, if any, to which the holder of the number of Warrant Shares underlying this Warrant (at the time of such reorganization, reclassification, recapitalization, consolidation or merger, and subject to the limitations set forth in Section 1 and Section 2 above) would have been entitled upon such reorganization, reclassification, recapitalization, consolidation or merger. In such event, the aggregate Exercise Price otherwise payable for the shares of Common Stock (or such other class of Capital Stock) issuable upon exercise of this Warrant shall be allocated among the Alternative Consideration receivable as a result of such reorganization, reclassification, recapitalization, consolidation or merger in proportion to the respective fair market values of such Alternate Consideration. If and to the extent that the holders of Common Stock (or such other class of Capital Stock) have the right to elect the kind or amount of consideration receivable upon consummation
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of such reorganization, reclassification, recapitalization, consolidation or merger, then the consideration that the Holder shall be entitled to receive upon exercise shall be specified by the Holder, which specification shall be made by the Holder by the later of (A) ten Business Days after the Holder is provided with a final version of all material information concerning such choice as is provided to the holders of Common Stock (or such other class of Capital Stock) and (B) the last time at which the holders of Common Stock (or such other class of Capital Stock) are permitted to make their specifications known to the Company; provided, however, that if the Holder fails to make any specification within such time period, the Holder’s choice shall be deemed to be whatever choice is made by a plurality of all holders of Common Stock (or such other class of Capital Stock) that are not affiliated with the Company (or, in the case of a consolidation or merger, any other party thereto) and that affirmatively make an election (or of all such holders if none of them makes an election). From and after any such reorganization, reclassification, recapitalization, consolidation or merger, all references to “Warrant Shares” herein shall be deemed to refer to the Alternate Consideration to which the Holder is entitled pursuant to this Section 3(b). The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, recapitalizations, consolidations or mergers.
(c)          Other Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) other than any dividend or distribution referred to in Sections 3(a) or (b) above (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including, without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution; provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation. To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant in full.
(d)          Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock (or such other Company security as is then issuable upon exercise of this Warrant) deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (or such other Company security) (excluding treasury shares, if any) issued and outstanding on such date.
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(e)          Notice to Holder.
(i)          Adjustment to Terms of Warrant. Whenever any of the terms of this Warrant are adjusted pursuant to any provision of this Section 3 or any other applicable provision hereof, the Company shall promptly send to the Holder a notice signed by a duly authorized officer of the Company and setting forth (x) the Exercise Price, number of Warrant Shares and, if applicable, the kind and amount of Alternate Consideration purchasable hereunder after such adjustment and (y) the facts requiring such adjustment in reasonable detail.
(ii)          Notice to Allow Exercise by the Holder. If, during the period in which this Warrant is outstanding, (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register (as defined below) of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Securities and Exchange Commission (the “SEC”) pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4.          Transfer of Warrant and Warrant Shares.
(a)          Restrictive Legend. The Warrant Shares (unless and until registered under the Securities Act of 1933, as amended (the “Securities Act”), or transferred pursuant to Rule 144 promulgated under the Securities Act, or any successor rule or regulation hereafter adopted by the SEC, as such rule may be amended from time to time (“Rule 144”)) will be stamped or imprinted with a legend in substantially the following form:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS.
(b)          Transferability. Healios and any subsequent Holder shall not sell, assign, transfer, pledge or dispose of any portion of this Warrant, by operation of law or otherwise, without the prior written consent of the Company, other than the transfer of this Warrant in its entirety to any Affiliate of Healios, which may be conducted without consent provided that an assignment form substantially in the form attached hereto as Exhibit B is duly completed and executed by any such subsequent Holder. Upon any permitted transfer of this Warrant in full, the Holder shall be required to physically surrender this Warrant to the Company within three Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a subsequent Holder for the purchase of Warrant Shares without having a new Warrant issued. The Company shall not assign or transfer any part of its obligations under this Warrant without the prior written consent of Healios, except in a consolidation or merger described in Section 3(b) above.
(c)          Warrant Register. The Company shall register this Warrant upon records to be maintained by the Company (the “Warrant Register”) in the name of the record Holder hereof from time to time. Absent manifest error or actual notice to the contrary, the Company may deem and treat the Holder of this Warrant so registered as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes.
Section 5.          Miscellaneous.
(a)          No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(b) above.
(b)          Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon delivery by the Holder to the Company of (a) a notice of the loss, theft, destruction or mutilation of this Warrant and (b) in the case of loss, theft or destruction, an indemnity agreement in a form and amount reasonably satisfactory to the Company or, in the case of mutilation, surrender of the mutilated Warrant, the Company will make and deliver a new Warrant of like tenor dated as of the Issue Date.
(c)          Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
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(d)          Authorized Shares. The Company covenants that, during the period this Warrant is exercisable (in whole or in part), it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any national securities exchange upon which the Common Stock is listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and full payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable, not subject to any preemptive rights and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than pursuant to taxes in respect of any transfer occurring contemporaneously with such issue).
(e)          Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflict of laws thereof. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(f)          Non-waiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.
(g)          Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in writing either (i) in person or by courier or overnight service or (ii) by e-mail with a copy delivered as provided in clause (i).
(h)          Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(i)          Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
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(j)          Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
(k)          Termination. This Warrant, and all rights, obligations and liabilities hereunder, shall be automatically terminated upon the earliest of (i) the termination of any license agreement and/or collaboration agreement between the Company (or any of its subsidiaries) and Healios in effect as of the Issue Date, in each case in accordance with the terms of such agreement and as a result of an uncured material breach by Healios that has triggered such termination; provided, however, that this Warrant shall not terminate pursuant to this Section 5(k)(i) unless the Company provides Healios with written notice of the applicable breach, and Healios does not either cure such breach within the cure period provided for in the applicable agreement or reach an agreement with the Company (both parties negotiating in good faith), within 60 days of receipt of such notice, to adequately compensate the Company for such breach and (ii) the date immediately following the Termination Date (subject to any Notice of Exercise pending at the Termination Date, in which case such date shall be the date immediately after the date that the Company delivers the Warrant Shares that were subject to such pending Notice of Exercise). Upon termination of this Warrant, the Holder shall surrender this Warrant to the Company for cancellation within three Business Days after the relevant termination event shall have occurred.
(l)          Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(m)          Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signatures Page Follows]

11


IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Issue Date.
 
ATHERSYS, INC.
 
     
     
 
By:  
/s/ William O. Lehmann, Jr.
 
   
Name:  
William O. Lehmann, Jr.
 
   
Title:
Interim Chief Executive Officer, President and Chief Operating Officer
 




[Signature Page to Warrant]




EXHIBIT A
NOTICE OF EXERCISE
TO:
ATHERSYS, INC.
Reference is made to that certain Common Stock Purchase Warrant (the “Warrant”) issued by Athersys, Inc. (the “Company”) on August 5, 2021. Capitalized terms used but not otherwise defined herein shall have the respective meanings give thereto in the Warrant.
(1)          The undersigned Holder of the Warrant hereby elects to exercise the Warrant for ________ Warrant Shares pursuant to Section 1 of the Warrant, subject to delivery of the aggregate Exercise Price for the Warrant Shares as to which the Warrant is so exercised, and the undersigned Holder hereby instructs the Company to issue the applicable number of Warrant Shares in the name of the undersigned Holder.
(2)          The undersigned Holder of the Warrant hereby represents and warrants to the Company that, as of the date hereof:
(a)          Experience; Accredited Investor Status. The undersigned Holder (i) is an accredited investor as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act, (ii) is capable of evaluating the merits and risks of its investment in the Company, (iii) has the capacity to protect its own interests and (iv) has the financial ability to bear the economic risk of its investment in the Company.
(b)          Company Information. The undersigned Holder has been provided access to all information regarding the business and financial condition of the Company, its expected plans for future business activities, material contracts, intellectual property and the merits and risks of its purchase of the Warrants Shares, which it has requested or otherwise needs to evaluate an investment in the Warrant Shares. It has had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. It has also had the opportunity to ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of this investment and all such questions have been answered to its satisfaction.
(c)          Investment. The undersigned Holder has not been formed solely for the purpose of making this investment and is acquiring the Warrant Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution of any part thereof. It understands that the Warrant Shares have not been registered under the Securities Act or applicable state and other securities laws and are being issued by reason of a specific exemption from the registration provisions of the Securities Act and applicable state and other securities laws, the availability of which depends upon, among other things, the bona fide nature of its investment intent and the accuracy of its representations, each as expressed herein.
(d)          Transfer Restrictions. The undersigned Holder acknowledges and understands that (i) transfers of the Warrant Shares are subject to transfer restrictions under the federal securities laws and (ii) it may have to bear the economic risk of this investment for an indefinite period of time unless the Warrant Shares are subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available.
A-1


Name of Registered Owner:
 

Signature of Authorized Signatory of Registered Owner:
 

Name of Authorized Signatory:
 

Title of Authorized Signatory:
 

Date:
 




[Signature Page to Notice of Exercise]

A-2


EXHIBIT B
ASSIGNMENT FORM
1.          (To assign the foregoing Warrant, execute this form and supply the required information. Do not use this form to purchase shares.)
2.          FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to the undersigned assignee. Such assignee hereby acknowledges, agrees and confirms by its signature below that, from and after the date hereof, it will be bound by the terms and conditions of the foregoing Warrant.
3.          Any notices required or permitted to be delivered to such assignee pursuant to the foregoing Warrant shall be delivered to the address set forth below.
Assignee Name:
   
 
(Please Print)
 
     
Assignee Address:
   
 
(Please Print)
 

Dated: _____________ __, ____

Holder’s Signature: __________________________

Holder’s Address: ___________________________

B-1
Exhibit 99.6

Execution Copy
AMENDMENT TO COOPERATION AGREEMENT
This Amendment to Cooperation Agreement (this “Amendment”) is dated as of August 5, 2021 and amends the Cooperation Agreement (the “Agreement”), which was entered into as of February 16, 2021, by and among Athersys, Inc. (the “Company”), on the one hand, and HEALIOS K.K. (“Healios”) and Dr. Tadahisa Kagimoto, on the other hand (each of the Company, Healios and Dr. Kagimoto, a “Party” to this Amendment, and collectively, the “Parties”). All capitalized terms used but not defined herein shall have such meaning ascribed to them in the Agreement.
WHEREAS, the Parties have entered into the Agreement, under the terms and conditions of which the Parties continue to perform;
WHEREAS, pursuant to Section 15 of the Agreement, modifications of the Agreement can be made only in writing signed by an authorized representative of each the Company and Healios;
WHEREAS, on August 5, 2021, the Company issued to Healios two warrants (the “Warrants”) to purchase up to an aggregate of 10,000,000 shares of the Company’s common stock, $0.001 par value per share (the “Warrant Shares”); and
WHEREAS, the Parties desire to amend the Agreement as described below.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein and for other valuable consideration, the Parties, pursuant to Section 15 of the Agreement, agree as follows:
1.          The defined term Standstill Period means the period from the date of the Agreement until the conclusion of the 2022 Annual Meeting.
2.          The defined term Extended Standstill Period means the period from the date of this Amendment until the conclusion of the 2023 annual meeting of stockholders of the Company.
3.          The defined term Annual Meeting means each annual meeting of stockholders of the Company.
4.          In Section 1(a)(iii) of the Agreement, the term “Standstill Period” shall be replaced with “Extended Standstill Period.”
5.          In Section 1(c)(ii) of the Agreement, the term “Standstill Period” shall be replaced with “Extended Standstill Period.”
6.          Section 1(c)(iii) of the Agreement is hereby amended as follows: (a) the phrase “During the Extended Standstill Period” shall be added to the beginning of the section; (b) the term “Standstill Period” shall be replaced with “Extended Standstill Period;” (c) “the 2021 Annual Meeting and the 2022 Annual Meeting” shall be replaced with “each Annual Meeting;”



and (d) “December 31, 2021 and December 31, 2022” shall be replaced with “December 31, 2021, December 31, 2022 and December 31, 2023.”
7.          In Section 2(a) of the Agreement, the term “Standstill Period” shall be replaced with “Extended Standstill Period.”
8.          In Section 2(a)(ii) of the Agreement, the Warrants (and Common Stock issued pursuant to the exercise of the Warrants) shall be excluded from the calculation of the Ownership Limitation.
9.          In Section 2(b) of the Agreement, the term “Standstill Period” shall be replaced with “Extended Standstill Period.”
10.          In Section 5(a) of the Agreement, the term “Standstill Period” shall be replaced with “Extended Standstill Period.”
11.          In Section 15 of the Agreement, the term “Standstill Period” shall be replaced with “Extended Standstill Period.”

[Signature Page to Follow.]



IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by its officer thereunto duly authorized as of the date first above indicated.
 
ATHERSYS, INC.
 
     
     
 
By:
/s/ William O. Lehmann, Jr.
 
   
Name:
William O. Lehmann, Jr.
 
   
Title:
President
 
     
     
 
HEALIOS K.K.
 
     
     
 
By:
/s/ Hardy Kagimoto
 
   
Name:
Hardy Kagimoto
 
   
Title:
CEO
 
     
     
 
/s/ Dr. Tadahisa Kagimoto
 
 
Dr. Tadahisa Kagimoto
 


Exhibit 99.7


Execution Version
AMENDMENT TO INVESTOR RIGHTS AGREEMENT
This Amendment to Investor Rights Agreement (this “Amendment”) is dated as of August 5, 2021 and amends the Investor Rights Agreement (the “Agreement”), which was entered into as of March 14, 2018, by and between Athersys, Inc. (the “Company”) and HEALIOS K.K. (“Healios”) (each of the Company and Healios, a “Party” to this Amendment, and collectively, the “Parties”). All capitalized terms used but not defined herein shall have such meaning ascribed to them in the Agreement.
WHEREAS, the Parties have entered into the Agreement, under the terms and conditions of which the Parties continue to perform;
WHEREAS, pursuant to Section 10(i) of the Agreement, the Agreement may be amended by the written consent of each Party;
WHEREAS, on August 5, 2021, the Parties entered into a Comprehensive Framework Agreement (the “Comprehensive Agreement”) to resolve certain issues under agreements that exist between the Parties as of that date, to create a mutually beneficial business arrangement for the commercialization of the Product (as defined in the Comprehensive Agreement) and to expand the scope of their commercial cooperation through amendment(s), waiver(s), consent(s), or termination(s) of such existing agreements or entering into one or more new agreement(s) as outlined in the Comprehensive Agreement; and
WHEREAS, the Parties desire to amend the Agreement as described below.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein and for other valuable consideration, the Parties, pursuant to Section 10(i) of the Agreement, agree that Section 8.1 of the Agreement is hereby deleted in its entirety, and agree that Section 8.2 of the Agreement shall be amended to delete the words “less than 15.0% of the outstanding Common Stock and”.
[Signature Page to Follow.]



IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by its officer thereunto duly authorized as of the date first above indicated.

 
ATHERSYS, INC.
 
     
     
 
By:
/s/ William O. Lehmann, Jr.
 
   
Name:
William O. Lehmann, Jr.
 
   
Title:
President
 
     
     
 
HEALIOS K.K.
 
     
     
 
By:  
/s/ Hardy Kagimoto
 
   
Name:  
Hardy Kagimoto
 
   
Title:
CEO
 




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