SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
NOVEMBER 6, 1998
Date of Report
(Date of earliest event reported)
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ADVANCED TISSUE SCIENCES, INC.
(Exact name of registrant as specified in its charter)
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Delaware 0-016607 14-1701513
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
10933 North Torrey Pines Road, La Jolla, California 92037
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 450-5730
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Item 5. Other Events
Advanced Tissue Sciences, Inc. (the "Company") entered into a Redemption
Amendment Agreement (the "Redemption Amendment") with the buyers (the "Buyers")
of the Company's Series B Convertible Preferred Stock (the "Series B Preferred
Stock") dated November 6, 1998. The Company and the Buyers are the parties to a
Securities Purchase Agreement pursuant to which the Company sold, and the Buyers
purchased, an aggregate of 500 shares of the Company's Series B Preferred Stock
in a private placement completed on July 10, 1998.
Under its terms and subject to adjustment in certain events, the Series B
Preferred Stock is convertible into Common Stock of the Company at $4.77 per
share (the "Conversion Price"). The Conversion Price will be increased by
one-half the amount by which the market price of the Common Stock on the date of
conversion exceeds $7.96 per share. Conversely, should the Average Daily
Trading Price (as defined in the Certificate of Designations Preferences and
Rights of the Series B Preferred Stock (the "Certificate of Designations"))
prior to a conversion be equal to or below $3.58 per share, the Conversion Price
will be equal to such Average Daily Trading Price.
Only ten percent of the Series B Preferred Stock may be converted monthly at or
below $3.58 per share on a cumulative basis beginning in November 1998. On a
quarterly basis, the Company may also elect to redeem preferred shares presented
for conversion at 105% of the Conversion Amount (as defined in the Certificate
of Designations). After one year from the date of issuance and subject to
meeting certain conditions including an Average Daily Trading Price for fifteen
consecutive days of at least $9.55 per share, the Company shall have the right
to force conversion of a portion or all of the then outstanding Series B
Preferred Stock.
The Series B Preferred Stock accrues dividends at 5% per annum. Dividends are
payable quarterly in Common Stock or cash at the option of the Company. To the
extent not previously converted, the Series B Preferred Stock is, at the
election of the Company, redeemable at par value plus accrued dividends or
convertible into Common Stock three years from the date of issuance subject to
extension in certain circumstances.
The Series B Preferred Stock is redeemable at the option of the holders upon the
occurrence of certain events. The Redemption Amendment modifies the Buyers
rights to require redemption of 400 shares of the Series B Preferred Stock (the
"Effected Preferred Shares") upon the occurrence of certain of these events.
Specifically, the Redemption Amendment provides as to the Effected Preferred
Shares that certain events shall be excluded from the definitions of Major
Transactions (as defined in section 3(c) of the Certificate of Designations) and
Triggering Events (as defined in section 3(d) of the Certificate of
Designations), and from the events described in Section 4(a) of the Certificate
of Designations related to shares of the Company's Common Stock (the "Common
Stock") registered, authorized and available for issuance upon conversion of the
Series B Preferred Stock, each referred to as an "Excluded Event."
Under the Redemption Amendment and upon the occurrence of an Excluded Event, the
Company may elect to pay each holder of the Effected Preferred Shares an amount
equal to one percent (1.00%) per day of the Liquidation Value (as defined in the
Certificate of Designations), restricted to a limited number of days (from ten
up to twenty days per Excluded Event) and only during such period of time as an
Excluded Event shall be continuing. The Company may also elect to limit such
daily payments to no more than twenty percent on the occurrence of one or more
Excluded Events in any consecutive 365 day period. In addition to the daily
payments, upon the occurrence of each Excluded Event and the election to make
such daily payments, the conversion price of Effected Shares shall also be
reduced by ten to fifteen percent from the then existing conversion price. If
the Company elects not to make or fails to make any of the daily payments
discussed above, the holders of the Effected Shares will have the right to
require redemption of the Effected Preferred Shares outstanding as provided in
the Certificate of Designations.
In consideration of and as a part of the Redemption Amendment, the Company has
agreed to hold a meeting of its common stockholders by January 29, 1999 during
which the Company will seek stockholder approval (i) to
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issue shares on conversion of the Series B Preferred Stock equal to or in excess
of twenty percent of the outstanding shares of Common Stock on July 10, 1998
(i.e., approximately 7,864,834 shares) as pursuant to regulations of The
National Association of Securities Dealers, Inc. and (ii) to amend the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock, $.01 par value per share, from 100,000,000 shares to
125,000,000 shares. Additionally, under the Redemption Amendment, the Company
will reserve a minimum of 43,400,000 shares of Common Stock for conversion of
the Series B Preferred Stock unless and until the common stockholders approve
the amendment to increase the Company's authorized Common Stock to 125,000,000
shares.
The foregoing summary is qualified in its entirety by reference to the
Redemption Amendment Agreement attached as an exhibit hereto and the Certificate
of Designations, Preferences and Rights of Series B Convertible Preferred Stock
of Advanced Tissue Sciences, Inc. and the Securities Purchase Agreement by and
among Advanced Tissue Sciences, Inc. and the Investors dated July 10, 1998 filed
as Exhibits 3.1 and 10.1, respectively, to the Company's Current Report on Form
8-K dated July 10, 1998.
Item 7. Exhibits
Exhibit
Number Description
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10.1 Redemption Amendment Agreement by and among Advanced Tissue
Sciences, Inc. and the Buyers of Series B Convertible Preferred
Stock dated November 6, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANCED TISSUE SCIENCES, INC.
Date: November 12, 1998 By: /s/ Arthur J. Benvenuto
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Arthur J. Benvenuto
Chairman and Chief Executive Officer
EXHIBIT 10.1
REDEMPTION AMENDMENT AGREEMENT
REDEMPTION AMENDMENT AGREEMENT (the "AGREEMENT"), dated as of November 6,
1998, by and among Advanced Tissue Sciences, Inc., a Delaware corporation, with
headquarters located at 10933 N. Torrey Pines Rd., La Jolla, California 92037
(the "COMPANY"), and the investors listed on the signature pages to this
Agreement (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers entered into a Securities Purchase
Agreement, dated as of July 10, 1998 (the "PURCHASE AGREEMENT") pursuant to
which the Company sold, and the Buyers purchased, an aggregate of 500 shares of
the Company's Series B Convertible Preferred Stock (the "PREFERRED SHARES"),
which is convertible into shares of the Company's Common Stock, par value $.01
per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Certificate of Designations,
Preferences and Rights of the Preferred Shares, as filed with the Secretary of
State of the State of Delaware on July 9, 1998 (the "CERTIFICATE OF
DESIGNATIONS"); and
B. The Company and the Buyers wish to make certain agreements
concerning the Buyers' right to require the Company to redeem the 400 Preferred
Shares specifically identified on Exhibit A hereto (the "EFFECTED PREFERRED
SHARES"). Notwithstanding anything herein, the 100 Preferred Shares
specifically identified on Exhibit B hereto (the "NON-EFFECTED PREFERRED
SHARES"), and the rights of the holders thereof, shall not in any way whatsoever
be effected by Sections 1 and 2 of this Agreement. Therefore, notwithstanding
anything to the contrary, Sections 1 and 2 of this Agreement shall be effective
only as to the Effected Preferred Shares.
NOW THEREFORE, in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and the Buyers hereby agree as follows:
1. Events Excluded from Redemption Provisions. Notwithstanding
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anything to the contrary set forth in Sections 3 or 4 of the Certificate of
Designations, only as to the Effected Preferred Shares, the following events
shall be excluded from the definitions of Major Transaction (as defined in
Section 3(c) of the Certificate of Designations) and Triggering Event (as
defined in Section 3(d) of the Certificate of Designations) and shall be
excluded from the events described in Section 4(a) of the Certificate of
Designations and no Buyer shall have any of the rights set forth in Sections 3
and 4 of the Certificate of Designations with respect to such events
(individually, an "EXCLUDED REDEMPTION EVENT" and, collectively, the "EXCLUDED
REDEMPTION EVENTS"):
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a. the consolidation, merger or other business combination
of the Company with or into another Person which is not approved or
recommended by the Company's Board of Directors;
b. a purchase, tender or exchange offer made to and
accepted by the holders of more than 50% of the outstanding shares
of Common Stock which is not approved or recommended by the
Company's Board of Directors;
c. the failure of the Registration Statement (as defined
in the Registration Rights Agreement (as defined in the Purchase
Agreement)) to be declared effective by the SEC on or prior to the
date that is 150 days after the Initial Issuance Date, provided that
the Company has used its best efforts to have such Registration
Statement declared effective by the SEC;
d. suspension from listing or delisting of the Common
Stock from The Nasdaq National Market or The New York Stock
Exchange, Inc. for a period of five or more consecutive days,
provided that the Company has used its best efforts to maintain
the listing of the Common Stock on such exchanges and has not
voluntarily delisted the Common Stock or had the Common Stock
suspended from trading; and
e. upon the Company's receipt of a Conversion Notice (as
defined in the Certificate of Designations), or on the Maturity
Date, the Company cannot issue shares of Common Stock registered
for resale under the Registration Statement because the Company
(i) does not have a sufficient number of shares of Common Stock
authorized and available to honor such conversion, provided that
the Company has used its best efforts to obtain the approval of
its shareholders to increase the number of shares of Common Stock
authorized and available for issuance by the Company, (ii) is
otherwise prohibited by applicable law or by the rules and
regulations of any stock exchange, inter-dealer quotation system
or other self-regulatory organization with jurisdiction over the
Company or the Common Stock, or (iii) fails to have a sufficient
number of shares of Common Stock registered for resale under the
Registration Statement, and in each case with respect to clauses
(i), (ii) and (iii), provided that the Company has used its best
efforts all respects to avoid the occurrence of such event.
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Notwithstanding the foregoing, an Excluded Redemption Event shall not include an
event listed above if at any time after the date of this Agreement any of the
parties receives written confirmation from the SEC or the Company's outside
accountants that such event is within the control of the Company as contemplated
by S.E.C. Rule 5-02.28(a) and such event shall be included in the definitions of
Major Transaction (as defined in Section 3(c) of the Certificate of
Designations) and Triggering Event (as defined in Section 3(d) of the
Certificate of Designations) and shall be included in the events described in
Section 4(a) of the Certificate of Designations and each Buyer shall have all of
the rights set forth in Sections 3 and 4 with respect to such events.
2. Consequences of Occurrence of an Excluded Redemption Event. In the
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event that an Excluded Redemption Event occurs, then in addition to any other
remedies the holders of the Effected Preferred Shares may have at law or in
equity, the Company may elect, by delivering written notice on the first date
that such Excluded Redemption Event occurs to each holder of the Preferred
Shares (which notice shall be delivered by facsimile and overnight mail) (an
"ELECTION") to pay to each holder of Effected Preferred Shares an amount in cash
per Effected Preferred Share on each day that such Excluded Redemption Event
continues equal to 1.00% of the Liquidation Value (as defined in Section 11 of
the Certificate of Designations) ("EXCLUDED REDEMPTION EVENTS DAILY PAYMENTS"),
provided that the Company shall not be obligated to make such payments for a
number of consecutive days which exceeds the Excluded Redemption Event Maximum
Period (as defined below). The Company's failure to make an Election in the
manner described above or, except as provided below, the Company's failure to
pay Excluded Redemption Daily Payments on each day they are due shall constitute
a Triggering Event for purposes of Section 3 of the Certificate of Designations.
For purposes of this Agreement, "EXCLUDED REDEMPTION EVENT MAXIMUM PERIOD" means
(a) with respect to the first occurrence of any one of the Excluded Redemption
Events, 20 consecutive days, (b) with respect to the second occurrence of any
one of the Excluded Redemption Events, 15 consecutive days and (c) with respect
to each occurrence of any Excluded Redemption Event following the second
occurrence of any one of the Excluded Redemption Events, 10 consecutive days.
In addition, upon the occurrence of an Excluded Redemption Event and an Election
by the Company, the Initial Market Price, the Floating Conversion Price and the
Profit-Sharing Conversion Price (each as defined in the Certificate of
Designations) with respect to any conversion of Effected Preferred Shares on or
after the date of the occurrence of such Excluded Redemption Event shall be
equal to the product of (i) the Initial Market Price, the Floating Conversion
Price or the Profit-Sharing Conversion Price, as the case may be, then in effect
as calculated pursuant to the Certificate of Designation without giving effect
to any adjustments to the Conversion Price pursuant to this Section 2,
multiplied by (ii) the difference of (I) one, minus (II) the Reduction
Percentage (as defined below). For purposes of this Agreement, "REDUCTION
PERCENTAGE" means (A) with respect to the first occurrence of any one of the
Excluded Redemption Events, 15% and (B) with respect to the occurrence of any
one of the Excluded Redemption Events after the first occurrence of any one of
the Excluded
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Redemption Events, the sum of (x) 15% and (y) 10% times the number of Excluded
Redemption Events which have occurred after the first Excluded Redemption Event
occurs. Notwithstanding the foregoing, the Company, in its sole discretion, may
elect not to make Excluded Redemption Events Daily Payments totaling more than
20% of the Liquidation Value per Effected Preferred Share in any consecutive 365
day period ("EXCLUDED REDEMPTION EVENT ELECTION") by providing written notice
("EXCLUDED REDEMPTION ELECTION NOTICE") of such election to each holder of
Effected Preferred Shares at any time after the Company's payment of Excluded
Redemption Event Daily Payments totaling at least 20% of the Liquidation Value
per Effected Preferred Share in any consecutive 365 day period (collectively,
the "MAXIMUM EXCLUDED REDEMPTION EVENT DAILY PAYMENTS"). If the Company makes
an Excluded Redemption Event Election and does not redeem the Effected Preferred
Shares in accordance with Section 3 or Section 4 of the Certificate of
Designations, then (a) no new Excluded Redemption Events Daily Payments shall
accrue and be due except with respect to an Excluded Redemption Event which
occurs in a subsequent consecutive 365 day period the first day of which begins
at least 365 days after the last Maximum Excluded Redemption Event Daily
Payments was due and payable and (b) the Reduction Percentage automatically
shall be amended on and after the date of such Excluded Redemption Election by
replacing the term "10%" in clause (y) of the definition of Reduction Percentage
above with the term "15%".
3. Shareholder Approval. On or before the date which is 45 days after
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the date of this Agreement, (the "PROXY STATEMENT TRIGGER DATE"), the Company
shall provide each stockholder entitled to vote at the next meeting of
stockholders of the Company, which meeting shall not be later than January 29,
1999 (the "STOCKHOLDER MEETING DEADLINE"), a proxy statement, which has been
previously reviewed by the Buyers and a counsel of their choice, soliciting each
such stockholder's affirmative vote at such stockholder meeting for (a) approval
of the Company's issuance of all of the Securities (as defined in the Purchase
Agreement) as described in the Purchase Agreement and (b) authorization of an
increase in the number of authorized shares of the Common Stock to at least
125,000,000 shares of Common Stock (collectively, the "SHAREHOLDER APPROVALS"),
and the Company shall use its best efforts to solicit its stockholders' approval
of such issuance of the Securities and such increase in authorized shares of
Common Stock and cause the Board of Directors of the Company to recommend to the
stockholders that they approve such proposal. If such stockholder meeting is
not the Company's annual stockholder meeting, such proxy statement shall not
seek approval of any matters other than the approval described in the preceding
sentence and the election of directors. If the Company fails to hold a meeting
of its stockholders by the Stockholder Meeting Deadline, then, as partial relief
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each holder of Preferred Shares an amount
in cash per Preferred Share equal to the product of (i) $50,000; multiplied by
(ii) .02; multiplied by (iii) the quotient of (x) the number of days after the
Stockholder Meeting Deadline that a meeting of the Company's stockholders is not
held, divided by (y) 30. The Company shall make the payments referred to in the
immediately preceding sentence within
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five days of the earlier of (I) the holding of the meeting of the Company's
stockholders, the failure of which resulted in the requirement to make such
payments, and (II) the last day of each 30-day period beginning on the
Stockholder Meeting Deadline. In the event the Company fails to make such
payments in a timely manner, such payments shall bear interest at the rate of
1.5% per month (pro rated for partial months) until paid in full.
4. Reservation of Shares. At all times after the date of this
---------------------
Agreement and prior to the date on which the Company receives each of the
Shareholder Approvals and increases its authorized shares of Common Stock to at
least 125,000,000 shares of Common Stock, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance of Common Stock upon the conversion of Preferred Shares, no less than
43,400,000 shares of Common Stock. At all times on and after the date on which
the Company receives each of the Shareholder Approvals and increases its
authorized shares of Common Stock to at least 125,000,000 shares of Common
Stock, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than 150% of the
number of shares of Common Stock needed to provide for the issuance of the
Conversion Shares (as defined in the Purchase Agreement) (without regard to any
limitations on conversions). This Section 4 amends and supersedes the Company's
obligation in Section 4(f) of the Purchase Agreement.
5. Buyer's Representations and Warranties.
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Each Buyer represents and warrants with respect to only itself that:
a. Authorization; Enforcement. This Agreement has been duly
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and validly authorized, executed and delivered on behalf of such Buyer and
each is a valid and binding agreement of such Buyer enforceable against such
Buyer in accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
b. No Conflicts. The execution, delivery and performance of
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this Agreement by such Buyer and the consummation by such Buyer of the
transactions contemplated hereby will not result in a violation of the
certificate of incorporation, by-laws or other documents of organization of
such Buyer.
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6. Representations and Warranties of the Company.
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The Company represents and warrants to each of the Buyers that:
a. Organization and Qualification. The Company is a corporation
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duly organized and validly existing in good standing under the laws of the
State of Delaware and has the requisite corporate power and authorization to
own its properties and to carry on its business as now being conducted.
b. Authorization; Enforcement; Compliance with Other
-------------------------------------------------
Instruments. (i) The Company has the requisite corporate power and authority
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to enter into and perform this Agreement, (ii) the execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby, including without limitation the reservation for issuance
of the shares of Common Stock issuable upon conversion of the Preferred Shares,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its stockholders, (iii) this Agreement has been duly executed and delivered by
the Company, and (iv) this Agreement constitutes the valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
c. No Conflicts. The execution, delivery and performance of
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this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby (including, without limitation, the reservation
for issuance of the shares of Common Stock issuable upon conversion of the
Preferred Shares) will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of Preferred Stock of the Company or the By-laws; (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company or any of its Subsidiaries (as
defined in the Purchase Agreement) is a party; or (iii) result in a violation
of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
principal market or exchange on which the Common Stock is traded or listed)
applicable to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries is bound or affected.
Except as specifically contemplated by this Agreement, the Company is not
required to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by this
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Agreement in accordance with the terms hereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
d. Acknowledgment Regarding Buyers' Agreeing to Amend. The
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Company acknowledges and agrees that each of the Buyers is acting solely in the
capacity of arm's length holder of Preferred Shares with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any of the Buyers
or any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to
such Buyer's holding Preferred Shares and having purchased the Preferred
Shares. The Company further represents to each Buyer that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
e. No Other Agreements. The Company has not, directly or
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indirectly made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by this Agreement except as set
forth herein and in the Transaction Documents (as defined in the Purchase
Agreement) and the Certificate of Designations.
7. GOVERNING LAW; MISCELLANEOUS.
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a. Governing Law. This Agreement shall be governed by and
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interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.
b. Filing of Form 8-K. On or before November 12, 1998, the
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Company shall file a Form 8-K with the SEC describing the terms of the
transaction contemplated by this Agreement, in each case in the form required
by the 1934 Act.
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c. Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
d. Headings. The headings of this Agreement are for convenience
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of reference and shall not form part of, or affect the interpretation of, this
Agreement.
e. No Severability. If any provision of this Agreement shall
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be invalid or unenforceable in any jurisdiction for any reason whatsoever, then
(a) this entire Agreement shall be null and void and of no legal or other effect
whatsoever and (b) this Agreement and rights and obligations hereunder shall not
be enforceable against any party hereto or against any holder of Preferred
Shares.
f. Entire Agreement; Amendments. Except as specifically amended
----------------------------
and superseded hereby, the Transaction Documents and the Certificate of
Designations shall remain in full force and effect. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it applies to less
than all of the holders of the Effected Preferred Shares then outstanding.
No consideration shall be offered or paid to any person to amend or consent
to a waiver or modification of any provision of any of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.
g. Notices. Any notices, consents, waivers or other
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communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii)
one (1) business day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such communications shall
be:
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If to the Company:
Advanced Tissue Sciences, Inc.
10933 N. Torrey Pines Rd.
La Jolla, California 92037
Telephone: (619) 450-5730
Facsimile: (619) 450-5732
Attention: Vice President, Finance
and Administration
With a copy to:
Brobeck Phleger & Harrison, LLP
38 Technology Drive
Irvine, California 92618
Telephone: (949) 790-6300
Facsimile: (949) 790-6301
Attention: Richard A. Fink
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers to the Purchase Agreement, with copies to such Buyer's representatives as
set forth on the Schedule of Buyers.
Each party shall provide five (5) days' prior written notice to the other
party of any change in address or facsimile number.
h. Successors and Assigns. This Agreement shall be binding
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upon and inure to the benefit of the parties and their respective successors
and assigns, including any purchasers of the Effected Preferred Shares. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the holders of two-thirds (2/3) of the
Preferred Shares then outstanding including by merger or consolidation except
pursuant to a Major Transaction with respect to which the Company is in
compliance with Sections 2(d)(iii) and 3 of the Certificate of Designations.
A Buyer may assign some or all of its rights hereunder without the consent of
the Company only in connection with a transfer of the Preferred Shares in
which the rights and obligations of such Buyer hereunder are expressly assumed
by such assignee. Any such assignment shall release such Buyer from its
obligations hereunder with respect to such Preferred Shares so transferred.
Each Buyer agrees that they shall not transfer any Effected Preferred Shares
unless its transferee expressly agrees to be bound by this Agreement with
respect to such Effected Preferred Shares so transferred.
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i. No Third Party Beneficiaries. This Agreement is intended
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for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
j. Publicity. The Company and each Buyer shall have the right
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to approve before issuance any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of any Buyer, to
make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof).
k. Further Assurances. Each party shall do and perform, or
------------------
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
l. No Strict Construction. The language used in this Agreement
----------------------
will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any
party.
m. Remedies. Each Buyer and each holder of Effected Preferred
--------
Shares or Conversion Shares shall have all rights and remedies set forth in this
Agreement and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
n. Payment Set Aside. To the extent that the Company makes a
-----------------
payment or payments to the Buyers hereunder or the Buyers enforce or exercise
their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
-10-
<PAGE>
o. Indemnification. In consideration of each Buyer's execution
---------------
and delivery of this Agreement and in addition to all of the Company's other
obligations under this Agreement, the Transaction Documents and the Certificate
of Designations, the Company shall defend, protect, indemnify and hold harmless
each Buyer and each other holder of the Securities and all of their
stockholders, officers, directors, employees and direct or indirect investors
and any of the forgoing person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as
a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in this Agreement
or any other certificate, instrument or document contemplated hereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement or any other certificate, instrument or document contemplated hereby,
or (c) any cause of action, suit or claim brought or made against such
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement. Notwithstanding the foregoing,
Indemnified Liabilities shall not include any liability of an Indemnitee arising
solely out of such Indemnitee's willful misconduct or fraudulent action(s). To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 7(o)
shall be the same as those set forth in Sections 6(a) and (d) of the
Registration Rights Agreement, including, without limitation, those procedures
with respect to the settlement of claims and the Company's rights to assume the
defense of claims.
* * * * * *
-11-
<PAGE>
IN WITNESS WHEREOF, the Buyers and the Company have caused this Redemption
Amendment Agreement to be duly executed as of the date first written above.
COMPANY: BUYERS:
ADVANCED TISSUE
SCIENCES, INC. THEMIS PARTNERS L.P.
By: Promethean Investment Group L.L.C.
Its: General Partner
By: __________________________
Name: Arthur J. Benvenuto
Its: Chairman of the Board and By: ____________________________
Chief Executive Officer Name: James F. O'Brien, Jr.
Its: President
HERACLES FUND
By: Promethean Investment Group L.L.C.
Its: Investment Advisor
By: _____________________________
Name: James F. O'Brien, Jr.
Its: President
HALIFAX FUND, L.P.
By: The Palladin Group, L.P.
Its: Attorney-in-Fact
By: ______________________________
Name: Robert Chender
Title: Managing Director
-12-
<PAGE>
LEONARDO, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: ______________________________
Name: John M. Angelo
Its: Chief Execitive Officer
RAPHAEL, L.P.
By: ______________________________
Name: John M. Angelo
Its: Chief Executive Officer
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By: ______________________________
Name: John M. Angelo
Its: Chief Executive Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: Angelo, Gordon & Co., L.P.
Its: Investment Advisor
By: ______________________________
Name: John M. Angelo
Its: Chief Exeuctive Officer
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: ______________________________
Name: John M. Angelo
Its: Chief Executive Officer
-13-
<PAGE>
WINGATE CAPITAL LTD.
By: ______________________________
Name: Kenneth A. Simpler
Its: Vice President
FISHER CAPITAL LTD.
By: ______________________________
Name: Kenneth A. Simpler
Its: Vice President
CCG INVESTMENT FUND LTD.
By: ______________________________
Name: Kenneth A. Simpler
Its: Vice President
CCG CAPITAL LTD.
By: ______________________________
Name: Kenneth A. Simpler
Its: Vice President
MIDWAY CAPITAL LTD.
By: ______________________________
Name: Kenneth A. Simpler
Its: Vice President
-14-
<PAGE>
EXHIBIT A
---------
EFFECTED PREFERRED SHARES
-------------------------
NUMBER OF SHARES
CERTIFICATE OF SERIES B
INVESTOR NAME NUMBER PREFERRED STOCK
- --------------------------------- ----------- -----------------
Themis Partners L.P. B-14 32
Heracles Fund B-16 80
Halifax Fund, L.P. B-18 64
Leonardo, L.P. B-20 78.4
Raphael, L.P. B-22 8
Ramius Fund, Ltd. B-24 19.2
GAM Arbitrage Investments, Inc. B-26 4
AG Super Fund International, L.P. B-28 2.4
Wingate Capital Ltd. B-30 32.8
Fisher Capital Ltd. B-32 61.6
CCG Investment Fund Ltd. B-34 7.2
CCG Capital Ltd. B-36 7.2
Midway Capital Ltd. B-38 3.2
<PAGE>
EXHIBIT B
---------
NON-EFFECTED PREFERRED SHARES
-----------------------------
NUMBER OF SHARES
CERTIFICATE OF SERIES B
INVESTOR NAME NUMBER PREFERRED STOCK
- --------------------------------- ------------ -----------------
Themis Partners L.P. B-15 8
Heracles Fund B-17 20
Halifax Fund, L.P. B-19 16
Leonardo, L.P. B-21 19.6
Raphael, L.P. B-23 2
Ramius Fund, Ltd. B-25 4.8
GAM Arbitrage Investments, Inc. B-27 1
AG Super Fund International, L.P. B-29 0.6
Wingate Capital Ltd. B-31 8.2
Fisher Capital Ltd. B-33 15.4
CCG Investment Fund Ltd. B-35 1.8
CCG Capital Ltd. B-37 1.8
Midway Capital Ltd. B-39 0.8
