<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ADVANCED TISSUE SCIENCES
(Name of Issuer)
Common Shares, $.01 Par Value
(Title of Class of Securities)
00755F 10
(CUSIP Number)
James A. Ralston
Smith & Nephew SNATS, Inc.
1450 Brooks Road
Memphis, TN 38116
(901) 396-2121
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 18, 1999
(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 which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box: [_]
The information required in 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 (the "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).
(Continued on following pages)
(Page 1 of 17 Pages)
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 00755F 10 PAGE 2 OF 17 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Smith & Nephew SNATS, Inc. 62-159-8647
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
4,333,710
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY -0-
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
4,333,710
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,333,710
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
8.30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 00755F 10 PAGE 3 OF 17 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Smith & Nephew Holdings, Inc. 51-037-7156
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
4,333,710
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY -0-
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
4,333,710
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,333,710
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
8.30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 00755F10 PAGE 4 OF 17 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Smith & Nephew plc
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
England and Wales
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
4,333,710
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY -0-
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
4,333,710
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,333,710
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
8.30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP NO. 00755F 10
Page 5 of 17 Pages
This Schedule 13D, filed jointly by Smith & Nephew plc ("Parent"), Smith &
Nephew Holdings, Inc. ("Holdings") and Smith & Nephew SNATS, Inc. ("S&N"),
relates to the common stock, par value $.01 per share ("ATS Common Stock") of
Advanced Tissue Sciences, Inc., a Delaware corporation ("ATS"), and is being
filed pursuant to Rule 13D-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Item 1. Security and Issuer.
--------------------
This statement relates to the ATS Common Stock. ATS is a Delaware
corporation, the principal executive offices of which are located at 10933 North
Torrey Pines Road, La Jolla, California 92037.
Item 2. Identity and Background.
------------------------
This Statement is being filed by the Parent, Holdings and S&N.
The Parent is a corporation incorporated under the laws of England and
Wales. Its principal executive offices are located at 2 Temple Place, London,
England WC2R 3BP. It is engaged in the medical and healthcare business.
Holdings, an indirect, wholly-owned subsidiary of Parent, is a corporation
incorporated under the laws of Delaware. Its principal executive offices are
located at 1201 N. Orange Street, Suite 788, Wilmington, Delaware 19801-1119.
It is a holding company.
S&N, an indirect wholly owned subsidiary of Parent, and a direct, wholly
owned subsidiary of Holdings, is a corporation incorporated under the laws of
Delaware. Its principal executive offices are located at 1201 N. Orange Street,
Suite 788, Wilmington, Delaware 19801-1119. It is a holding company.
Annex A, attached hereto and incorporated by reference, sets forth the
name, residence or business address, present principal occupation or employment
and citizenship of each executive officer and of each director of Parent.
Neither Parent nor any of the persons listed in Annex A has, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
Neither Parent nor any of the persons listed on Annex A has, during the
last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
been or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to such laws.
<PAGE>
CUSIP NO. 00755F 10
Page 6 of 17 Pages
Annex B attached hereto and incorporated by reference, sets forth the name,
residence or business address, present principal occupation or employment and
citizenship of each executive officer and of each director of Holdings.
Neither Holdings nor any of the persons listed in Annex B has, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
Neither Holdings nor any of the persons listed on Annex B has, during the
last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
been or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to such laws.
Annex C, attached hereto and incorporated by reference, sets forth the
name, residence or business address, present principal occupation or employment
and citizenship of each executive officer and of each director of S&N.
Neither S&N nor any of the persons listed in Annex C has, during the last
five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
Neither S&N nor any of the persons listed on Annex C has, during the last
five years, been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding been or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to Federal or State securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Pursuant to a Stock Purchase Agreement dated January 14, 1998, (the
"Purchase Agreement") between S&N and ATS, S&N acquired 1,533,115 shares of the
ATS Common Stock for $13.0453333333 per share or a total of $19,999,996.21.
The funds for such acquisition were obtained from working capital.
Pursuant to a Promissory Note dated March 31, 1997 as amended June 18, 1999
(the "Note"), S&N loaned ATS $10,000,000. This loan was repayable by ATS in
either cash or, under certain circumstances, ATS Common Stock. The funds for
such loan were obtained from working capital. On June 18, 1999 ATS notified S&N
of its election, pursuant to Section 2.3 of the Note, to repay the outstanding
amounts under the Note in shares of ATS Common Stock. On June 30, 1999 ATS
issued S&N 2,800,595 additional shares of ATS Common Stock.
<PAGE>
CUSIP NO. 00755F 10
Page 7 of 17 Pages
Item 4. Purpose of Transaction.
----------------------
The purpose of acquiring the shares is for investment. Depending upon its
evaluation of ATS' business prospects and financial condition, the market for
ATS Common Stock and other factors that it may deem material to its investment
decision, S&N may acquire additional shares of ATS Common Stock in the open
market, in private transactions or by any other permissible means or may dispose
of all or a portion of the shares of ATS Common Stock which are currently owned
or which are hereafter acquired.
Item 5. Interest in Securities of the Issuer.
------------------------------------
S&N holds 4,333,710 shares of ATS Common Stock representing approximately
8.30% of the 52,196,257 issued and outstanding shares.
The number of shares of ATS Common Stock as to which S&N has:
(i) sole power to vote or direct the vote is 4,333,710 shares;
(ii) shared power to vote or to direct the vote is 0 shares;
(iii) sole power to dispose or to direct the disposition is 4,333,710; and
(iv) shared power to dispose or direct the disposition is 0.
No other transactions in ATS Common Stock were effected by Parent, Holdings
or S&N within the past sixty days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
S&N and ATS are involved in a variety of ongoing arrangements and
understandings. In April 1996, S&N and ATS entered into an agreement to form a
fifty-fifty joint venture for the worldwide commercialization of Dermagraft,
ATS' tissue-engineered replacement for the treatment of diabetic foot ulcers
(the "Dermagraft Joint Venture"). In January 1998, S&N and ATS expanded the
Dermagraft Joint Venture to include, with certain exceptions, any products using
ATS' technology for medical care and treatment of skin tissue wounds, such as
pressure and venous ulcers, burns and skin tissue defects. The Dermagraft Joint
Venture was further expanded in August, 1998 by giving S&N the exclusive right
to market TransCyte as a temporary covering for full and partial thickness burns
in the United States, beginning in October 1998. Under the terms of the
Dermagraft Joint Venture agreements, ATS is responsible for supervising the
manufacturing of Dermagraft and TransCyte. S&N's existing wound care sales
force and distribution network is used to market the products.
<PAGE>
CUSIP NO. 00755F 10
Page of 8 of 17 Pages
As consideration for entering into the Dermagraft Joint Venture, S&N paid
ATS $10 million in 1996. In connection with the 1998 expansion of the joint
venture, S&N and ATS entered into the Purchase Agreement pursuant to which S&N
purchased 1,533,115 shares of ATS Common Stock. The Dermagraft Joint Venture
agreements also provide for certain payments by S&N to ATS upon the achievement
of certain milestones. The first of these payments, $15 million, was made in
January, 1999 and up to an additional $136 million may be payable in the future.
ATS and S&N will share equally in the expenses and revenues of the Dermagraft
Joint venture except, as provided in the expansion agreements, ATS will fund the
first $6 million of expenses for conducting clinical trials and for regulatory
support of Dermagraft and TransCyte in the treatment of venous and pressure
ulcers as well as certain manufacturing and distribution costs and certain costs
related to post-market studies of TransCyte through December 1999. Pursuant to
the Dermagraft Joint Venture agreements, each of S&N and ATS have certain rights
or obligations to purchase the other's interest under certain circumstances.
In connection with the Dermagraft Joint Venture, Parent and ATS each own
50% of DermEquip, L.L.C. ("DermEquip"). In August 1997, DermEquip entered into
a term loan agreement with The Chase Manhattan Bank to borrow up to $16 million
(the "Chase Loan") through June 1998. During the first half of 1998, DermEquip
completed drawdowns under the loan agreement to a total of $16 million.
Principal is payable in equal quarterly installments from June 1998 through June
2004. The Chase Loan bears interest payable quarterly at the 90-day London
Interbank Offered Rate ("LIBOR") plus 1/4 percent (5.56% at December 31, 998).
DermEquip's obligations with respect to the Chase Loan are jointly and severally
guaranteed by Parent and ATS. The guarantees are secured by DermEquip's assets,
having a carrying value of $14,485,000 as of December 31, 1998, and by each of
Parent's and ATS' interest in DermEquip.
In 1994, S&N and ATS entered into a separate fifty-fifty joint venture for
the worldwide development, manufacture and marketing of human-based, tissue-
engineered cartilage for orthopedic applications (the "Cartilage Joint
Venture"). Under the agreement, S&N contributed the first $10 million in the
Cartilage Joint Venture funding and ATS contributed certain technology licenses.
Revenues and expenditures of the Cartilage Joint Venture after the first $10
million are being shared equally by the partners. In addition, S&N provided ATS
with a $10 million loan commitment to fund ATS' share of the expenditures of the
Cartilage Joint Venture. The Cartilage Joint Venture also has the right of
first negotiation to develop tissue-engineered bone, tendon and ligament for
orthopedic applications.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit I Agreement of Joint Filing*
Exhibit II Common Stock Purchase Agreement, dated January 14, 1998 between
Advanced Tissue Sciences, Inc. and Smith and Nephew SNATS, Inc.,
<PAGE>
CUSIP NO. 00755F 10
Page of 9 of 17 Pages
incorporated by reference to Exhibit 10.2 to Current Report on
Form 8-K filed with the Securities and Exchange Commission on
January 14, 1998 by Advanced Tissue Sciences, Inc.
Exhibit III Promissory Note between Advanced Tissue Sciences, Inc. and Smith
& Nephew SNATS, Inc., dated March 31, 1997, incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the Quarter Ended
March 31, 1997 filed with the Securities and Exchange Commission
by Advanced Tissue Sciences, Inc.
Exhibit IV Amendment to the Promissory Note between Advanced Tissue
Sciences, Inc. and Smith & Nephew SNATS, Inc., dated June 18,
1999.*
Exhibit V Agreement between Advanced Tissue Sciences, Inc. and Smith &
Nephew plc dated May 6, 1994, incorporated by reference to
Exhibit 10.1 to the Form 10-Q for the Quarter Ended March 31,
1994 filed with the Securities and Exchange Commission by
Advanced Tissue Sciences, Inc.
Exhibit VI Heads of Agreement between Advanced Tissue Sciences, Inc. and
Smith & Nephew plc dated April 29, 1996, incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the Quarter Ended
March 31, 1996 filed with the Securities and Exchange Commission
by Advanced Tissue Sciences, Inc.
Exhibit VII Promissory Note between Advanced Tissue Sciences, Inc. and Smith
& Nephew SNATS, Inc. dated June 11, 1997, incorporated by
reference to Exhibit 10.2 to the Form 10-Q for the Quarter Ended
June 30, 1997 filed with the Securities and Exchange Commission
by Advanced Tissue Sciences, Inc.
Exhibit VIII Heads of Agreement dated January 14, 1998 between Advanced Tissue
Sciences Inc. and Smith & Nephew plc, incorporated by reference
to Exhibit 10.1 to Current Report on Form 8-K dated January 14,
1998 filed with the Securities and Exchange Commission by
Advanced Tissue Sciences, Inc.
Exhibit IX Heads of Agreement between Advanced Tissue Sciences, Inc. and
Smith & Nephew plc dated August 6, 1998, incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the Quarter Ended
June 30, 1998 filed with the Securities and Exchange Commission
by Advanced Tissue Sciences, Inc.
Exhibit X U.S. $16,000,000 Loan Facility to DermEquip, L.L.C. provided by
the Chase Manhattan Bank dated August 12, 1997, incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the Quarter Ended
September 30, 1997 filed with the Securities and Exchange
Commission by Advanced Tissue Sciences, Inc.
________________
* Filed herewith.
<PAGE>
CUSIP NO. 00755F 10
Page 10 of 17 Pages
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, correct and
complete.
/s/ Clifford K. Lomax
---------------------------------------
Title: Vice President and Treasurer
-------------------------------
Dated: July 9, 1999
-------------------------------
<PAGE>
CUSIP NO.00755F 10 Page 11 of 17 Pages
ANNEX A
-------
EXECUTIVE OFFICERS AND DIRECTORS
OF
SMITH & NEPHEW PLC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Name Position Address Citizenship
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John H. Robinson Chairman Smith & Nephew plc British
2 Temple Place
Victoria Embankment
London
WC2R 3BP
- -----------------------------------------------------------------------------------------------------------------
Christopher J. O'Donnell Chief Executive Smith & Nephew plc British
2 Temple Place
Victoria Embankment
London
WC2R 3BP
- -----------------------------------------------------------------------------------------------------------------
Alan R. Fryer Executive Director Smith & Nephew Europe British
(responsible for Consumer, Alum Rock Road
ENT, Casting & Bandaging Birmingham
and Rehabilitation B8 3DZ
Businesses)
- -----------------------------------------------------------------------------------------------------------------
Peter Hooley Finance Director Smith & Nephew plc British
2 Temple Place
Victoria Embankment
London
WC2R 3BP
- -----------------------------------------------------------------------------------------------------------------
Sir Anthony Cleaver Non-Executive Director AEA Technology plc British
15 Lower Regent Street
London
SW2Y 4 LR
- -----------------------------------------------------------------------------------------------------------------
Sir Timothy Lankester Non-Executive Director School of Oriental and British
African Studies
Thornbough Street
Russell Square
London
WC1H 0XG
- -----------------------------------------------------------------------------------------------------------------
Dr. Nancy Lane Non-Executive Director Dept. of Zoology, British
University of Cambridge
Downing Street
Cambridge
CB23EJ
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CUSIP NO. 00755F 10 Page 12 of 17 Pages
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sir Brian Pearse Non-Executive Director Smith & Nephew plc British
2 Temple Place
Victoria Embankment
London
WC2R 3BP
- -------------------------------------------------------------------------------------------------
Dr. Rolf Stomberg Non-Executive Director 22 Hill Street German
Mayfair
London
- -------------------------------------------------------------------------------------------------
Michael G. Parson Company Secretary Smith & Nephew plc British
2 Temple Place
Victoria Embankment
London
WC2R 3BP
- -------------------------------------------------------------------------------------------------
Larry W. Papasan (responsible for Smith & Nephew U.S.A.
Orthopaedics Orthopaedics
1450 Brooks Road
Memphis, TN 38116
- -------------------------------------------------------------------------------------------------
Alan Suggett (responsible for Group Smith & Nephew British
Research & Development) Group Research Centre
York Science Park
Heslington
York
YO1 5DF
- -------------------------------------------------------------------------------------------------
Ronald M. Sparks (responsible for Smith & Nephew Endoscopy U.S.A.
Endoscopy) 160 Dascomb Road
Andover, MA 01810
- -------------------------------------------------------------------------------------------------
Graham H. Siddle (responsible for Smith & Nephew Europe British
Indirect Markets) Alum Rock Road
Birmingham
B8 3DZ
- -------------------------------------------------------------------------------------------------
Paul M. Williams (responsible for Human Smith & Nephew plc British
Resources) 2 Temple Place
Victoria Embankment
London
WC2R 3BP
- -------------------------------------------------------------------------------------------------
Peter W. Huntley (responsible for Smith & Nephew plc Australian
Business Development) 2 Temple Place
Victoria Embankment
London
WC2R 3BP
-------------------------------------------------------------------------------------------------
James L. Dick (responsible for Wound Smith & Nephew Wound British
Management) Management
P.O. Box 81
Hessle Road
Hull
HU3 2BN
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CUSIP NO. 00755F 10 Page 13 of 17 Pages
ANNEX B
-------
EXECUTIVE OFFICERS AND DIRECTORS
OF
SMITH & NEPHEW HOLDINGS, INC.
NAME POSITION ADDRESS CITIZENSHIP
- ---- -------- ------- -----------
Cliff Lomax Chairman of the Board, 1450 Brooks Road British
President Memphis, TN 38116
Ron Sparks Vice President, 160 Dascomb Road U.S.A.
Secretary, Treasurer, Andover, MA 01810
Director
Larry Bobiak General Manager 1201 N. Orange Street U.S.A.
Suite 788
Wilmington, DE 19801
Jack Blair Non-Executive Smith & Nephew Inc. U.S.A.
Director 1450 Brooks Road
Memphis, TN 38116
Jim Ralston Assistant Secretary Smith & Nephew Inc. U.S.A.
1450 Brooks Road
Memphis, TN 38116
<PAGE>
CUSIP NO. 00755F 10 Page 14 of 17 Pages
ANNEX C
-------
EXECUTIVE OFFICERS AND DIRECTORS
OF
SMITH & NEPHEW SNATS, INC.
<TABLE>
<CAPTION>
NAME POSITION ADDRESS CITIZENSHIP
- ---- -------- ------- -----------
<S> <C> <C> <C>
Lucy Fuller Director Smith & Nephew plc British
2 Temple Place
Victoria Embankment
London, WC2R 3P
England
James A. Ralston Secretary Smith & Nephew Inc. U.S.A.
1450 Brooks Road
Memphis, TN 38116
Cliff Lomax Director, Vice Smith & Nephew Inc. British
President, Treasurer 1450 Brooks Road
Memphis, TN 38116
Alan Suggett Chairman of the Smith & Nephew British
Board, President Group Research Centre
York Science Park
Heslington
York, Y01 5DF
England
</TABLE>
<PAGE>
CUSIP NO. 00755F 10 Page 15 of 17 Pages
EXHIBIT INDEX
Exhibit I Agreement of Joint Filing*
Exhibit II Common Stock Purchase Agreement, dated January 14, 1998
between Advanced Tissue Sciences, Inc. and Smith and Nephew
SNATS, Inc., incorporated by reference to Exhibit 10.2 to
Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 14, 1998 by Advanced Tissue
Sciences, Inc.
Exhibit III Promissory Note between Advanced Tissue Sciences, Inc. and
Smith & Nephew SNATS, Inc., dated March 31, 1997,
incorporated by reference to Exhibit 10.1 to the Form 10-Q
for the Quarter Ended March 31, 1997 filed with the
Securities and Exchange Commission by Advanced Tissue
Sciences, Inc.
Exhibit IV Amendment to the Promissory Note between Advanced Tissue
Sciences, Inc. and Smith & Nephew SNATS, Inc., dated June
18, 1999.*
Exhibit V Agreement between Advanced Tissue Sciences, Inc. and Smith &
Nephew plc dated May 6, 1994, incorporated by reference to
Exhibit 10.1 to the Form 10-Q for the Quarter Ended March
31, 1994 filed with the Securities and Exchange Commission
by Advanced Tissue Sciences, Inc.
Exhibit VI Heads of Agreement between Advanced Tissue Sciences, Inc.
and Smith & Nephew plc dated April 29, 1996, incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the Quarter
Ended March 31, 1996 filed with the Securities and Exchange
Commission by Advanced Tissue Sciences, Inc.
Exhibit VII Promissory Note between Advanced Tissue Sciences, Inc. and
Smith & Nephew SNATS, Inc. dated June 11, 1997, incorporated
by reference to Exhibit 10.2 to the Form 10-Q for the
Quarter Ended June 30, 1997 filed with the Securities and
Exchange Commission by Advanced Tissue Sciences, Inc.
Exhibit VIII Heads of Agreement dated January 14, 1998 between Advanced
Tissue Sciences Inc. and Smith & Nephew plc, incorporated by
reference to Exhibit 10.1 to Current Report on Form 8-K
dated January 14, 1998 filed with the Securities and
Exchange Commission by Advanced Tissue Sciences, Inc.
<PAGE>
CUSIP NO. 00755F 10 Page 16 of 17 Pages
Exhibit IX Heads of Agreement between Advanced Tissue Sciences, Inc.
and Smith & Nephew plc dated August 6, 1998, incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the Quarter
Ended June 30, 1998 filed with the Securities and Exchange
Commission by Advanced Tissue Sciences, Inc.
Exhibit X U.S. $16,000,000 Loan Facility to DermEquip, L.L.C. provided
by the Chase Manhattan Bank dated August 12, 1997,
incorporated by reference to Exhibit 10.1 to the Form 10-Q
for the Quarter Ended September 30, 1997 filed with the
Securities and Exchange Commission by Advanced Tissue
Sciences, Inc.
________________
* Filed herewith.
<PAGE>
CUSIP NO. 00755F 10 Page 17 of 17 Pages
EXHIBIT I
---------
Agreement of Joint Filing
Pursuant to Rule 13d-1(k)(1)(iii) of Regulation 13D-G of the
General Rules and Regulations of the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended, the undersigned agree that
the statement to which this exhibit is attached is filed on behalf of each of
them in the capacities set forth below.
Date: July 9, 1999 SMITH & NEPHEW PLC
By: /s/ Michael G. Parson
----------------------------------
Name: Michael G. Parson
--------------------------------
Title: Company Secretary
-------------------------------
SMITH & NEPHEW HOLDINGS INC.
By: /s/ Clifford K. Lomax
----------------------------------
Name: Clifford K. Lomax
--------------------------------
Title: Vice President
-------------------------------
SMITH & NEPHEW SNATS, INC.
By: /s/ Clifford K. Lomax
----------------------------------
Name: Clifford K. Lomax
--------------------------------
Title: Treasurer
-------------------------------
<PAGE>
Exhibit IV
- ----------
AMENDMENT TO PROMISSORY NOTE
The undersigned hereby agree to amend that certain Promissory Note (the
"Note") dated March 31, 1997 in the amount of $10,000,000 made by ADVANCED
TISSUE SCIENCES, INC. ("ATS") in favor of SMITH & NEPHEW SNATS, INC. ("S&N") by
deleting Section 2.3 in its entirety and replacing it with the following:
Section 2.3. Payment in ATS Common Stock. (a) In lieu of paying any
principal or interest payment hereunder in U.S. dollars, ATS may pay such
payment in shares of ATS Common Stock; provided that each of the following
conditions is met:
(i) ATS provides S&N with at least thirty (30) days prior written notice
of ATS's election to make such payment in shares of ATS Common Stock (each such
notice being referred to as a "Stock Election Notice");
(ii) each of the shares of ATS Common Stock issued to S&N as payment, when
delivered to S&N, (A) is duly registered under the Securities Act of 1933, as
amended (the "Act"), and under any applicable state securities laws, (B) is
listed and freely tradable on the Nasdaq Stock Market, and (C) is duly
authorized, validly issued, fully paid and nonassessable and free from any lien
(statutory or other), claim, charge, security interest, pledge, right of first
refusal, preemptive right or any other restriction or encumbrance of any kind;
provided, that S&N waives the conditions set forth in clauses (i), (ii)(A) and
(ii)(B), but only with respect to shares of ATS Common Stock delivered under
this Section 2.3 pursuant to a Stock Election Notice received by S&N in respect
to payment in full of the unpaid principal and interest on this Note made prior
to July 1, 1999 (such shares of ATS Common Stock so delivered being referred to
herein as the "Unregistered Shares"); and
(iii) at the time such payment is made, ATS Common Stock is actively traded
on the Nasdaq Stock Market.
(b) In the event that ATS pays any principal or interest payment in
shares of ATS Common Stock in accordance with Section 2.3(a), ATS will deliver
such shares to S&N on the day that the principal or interest is to be paid and
shall only deliver to S&N whole shares of such ATS Common Stock. Such shares
shall be in good and transferable form, shall be registered in the name of S&N
or such other name as S&N shall designate and, at the option of S&N, shall be
delivered by wire transfer or book entry at a depository or clearing house
designated by S&N; provided, that any Unregistered Shares delivered in payment
of this Note (1) shall constitute "restricted securities" under Rule 144 under
the Act, (2) may not be sold by S&N unless the Unregistered Shares are
registered under the Act or unless an exemption from registration is available
and (3) shall be evidenced by one or more certificate that may bear one or more
of the following legends:
<PAGE>
(A) "These securities have not been registered under the Securities
Act of 1933, as amended (the "Act"). They may not be sold, offered for
sale, pledged or hypothecated in the absence of a registration
statement in effect with counsel satisfactory to ATS that such
registration is not required or unless sold pursuant to Rule 144 or
144A of such Act or registration under the Act is unnecessary in order
for such transfer to comply with the Act"; or (B) any legend that may
be required by the Commissioner or corporations of the State of
California or required pursuant to any state, local or foreign laws
governing such securities."
(c) For purposes of determining the number of shares of ATS Common Stock
payable for any principal or interest payment, such shares shall be valued at
the average of the high and low sales prices reported on the Nasdaq Stock Market
for each of the ten (10) trading days immediately preceding the day such payment
is made, except for any Stock Election Notice received by S&N prior to July 1,
1999 in which case such shares shall be valued at the average of the high and
low sales prices reported on the Nasdaq Stock Market for each of the ten (10)
trading days immediately preceding the date of the Stock Election Notice.
(d) With respect to any Unregistered Shares, S&N shall have the rights to
request registration, and ATS shall have the rights and obligations with respect
to such registration, as set forth in Exhibit "A" hereto."
All other terms and condition of the Note shall remain in full force and
effect.
Dated: June 18, 1999
ADVANCED TISSUE SCIENCES, INC. SMITH & NEPHEW SNATS, INC.
By: /s/ Gail K. Naughton By: /s/ Clifford K. Lomax
---------------------------- -----------------------
Name: Dr. Gail K. Naughton Name: Clifford K. Lomax
-------------------------- ---------------------
President and
Title: Chief Operating Officer Title: Vice President & Treasurer
------------------------- ---------------------------
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS
1. Definitions. For purposes of this Exhibit A: (a) The term "register,"
"registered," and "registration" refer to a registration effected by preparing
and filing a registration statement or similar document in compliance with the
Act, and the declaration or ordering of effectiveness of such registration
statement or document; (b) The term "Registrable Securities" means (1) the
Unregistered Shares and (2) any Common Stock of ATS issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such Unregistered Shares, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
such person's rights are not derived by assignment under this Exhibit A; (c) The
term "Holder" means S&N or any assignee thereof in accordance with Section 9
hereof.
2. Demand Rights.
(a) Registration. Upon receipt by ATS of a written request from S&N that
ATS register all of the Registrable Securities, then ATS shall:
(i) within ten (10) days after receipt thereof, give written notice
of such request to all other Holders known to ATS; and
(ii) subject to the limitations of this Section 2, use its diligent
efforts to prepare and file with the Securities and Exchange Commission (the
"SEC") as soon as practicable, and in any event within sixty (60) days after
receipt of such request, a registration statement under the Act which shall
include all Registrable Securities which the participating Holders request ATS
to register pursuant to a written request delivered to the Secretary of ATS and
received by such Secretary within twenty (20) days after ATS mails notice to the
other Holders pursuant to Section 2(a)(i) hereof.
(b) Underwriting. In connection with a registration effected pursuant to
this Section 2, if the participating Holders intend to distribute some or all of
the Registrable Securities covered by their requests through an underwritten
public offering, then the underwriter will be selected by the participating
Holders and shall be reasonably acceptable to ATS. The participating Holders and
ATS shall enter into an underwriting agreement in customary form with the
selected underwriter. If any Holder declines to execute such underwriting
agreement, then such Holder shall not have any right to include any Registrable
Securities in such underwriting. Notwithstanding any other provision of this
Section 2(b), if the underwriter advises the participating Holders and ATS in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the number of shares of Registrable Securities that may be
included in the underwriting shall be allocated among all of the participating
Holders thereof, in proportion to the amount of Registrable Securities of ATS
held by each participating Holder; provided, however, that the number of shares
of Registrable Securities owned by the Holder who initiated the request for the
demand registration shall not be reduced until
<PAGE>
all other Holders have been eliminated entirely. The registration statement
filed pursuant to the request of the participating Holders may include other ATS
securities held by persons with registration rights and may also include
securities of ATS being sold by ATS for its own account, provided that if more
than 50% of the shares sold in such offering are for the account of ATS, then
such registration shall not be counted for the purpose of the limitation set
forth in Section 2(c)(ii).
(c) Limitations. ATS shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 2:
(i) In any jurisdiction in which ATS would be required to
execute a general consent to service of process in effecting such registration,
qualification, or compliance, unless ATS is already subject to service of
process in such jurisdiction and except as may be required by the Act.
(ii) After the Holders have registered Registrable Securities
pursuant to this Section 2 on one occasion; provided, however, that if all of
the participating Holders notify ATS in writing that they withdraw their
request to register their Registrable Securities pursuant to this Section 2
prior to the filing of the registration statement in connection with such
registration, and they pay the Registration Expenses (as defined below) in
connection with such registration, then such registration shall not be counted
for purposes of this limitation.
(iii) At any time during the period beginning when ATS has
commenced registration procedures (whether by means of holding discussions with
an underwriter or commencing preparation of the registration statement) with
respect to the filing of another registration statement (other than on Form S-8
or S-4) of ATS with the SEC which it in good faith expects to file within thirty
(30) days and ending the earliest of (A) the abandonment of such other offering;
or (B) 180 days after the effective date of such other registration statement
relating to the other offering.
(iv) If ATS shall furnish to the Holders a certificate signed
by the President of ATS stating that in the good faith judgment of the Board of
Directors of ATS, it would be detrimental to ATS and its stockholders for a
registration statement to be effected at such time, in which event ATS shall
have the right to defer the filing of the registration statement for a period of
not more than 120 days and for no more than once in any 12-month period.
3. Piggyback Rights.
(a) Notice of Registration. If (but without any obligation to do so)
ATS proposes to register (including for this purpose a registration effected by
ATS for stockholders other than the Holders) any of its stock or other
securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in an ATS stock plan), ATS shall, at such
time, promptly give each Holder written notice of such registration.
<PAGE>
Upon the written request of each Holder given within 20 days after mailing of
such notice by ATS in accordance with Section 4.2 of the Note, shall, subject to
the provisions of Section 3(b) hereof, cause to be registered under the Act all
of the Registrable Securities that each such Holder has requested to be
registered.
(b) Underwriting. If the registration of which ATS gives notice is for a
registered public offering involving an underwriting, ATS shall so advise the
Holders as a part of the written notice given pursuant to Section 3(a) hereof.
In such event, the right of any Holder to registration pursuant to this Section
3 shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with ATS and the other Holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by ATS. Notwithstanding any other provision of
this Section 3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter may
exclude some or all Registrable Securities from such registration and
underwriting. ATS shall so advise all Holders (except those Holders who have
indicated to ATS the decision not to distribute any of their Registrable
Securities through such underwriting) ("Non-participating Holders"), and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among such Holders in
proportion, as nearly as practicable, to the respective amounts of ATS
securities owned by such Holders at the time of filing the registration
statement; provided, however, that all Registrable Securities proposed to be
sold for the account of the Non-participating Holders (or their transferees)
shall be excluded from the registration and underwriting prior to any reduction
in the number of Registrable Securities proposed to be sold for the account of
other Holders. No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration. If any Holder disapproves of the terms of any such underwriting,
such person may elect to withdraw therefrom by written notice to ATS and the
underwriter. The Registrable Securities or other securities so withdrawn from
such underwriting shall also be withdrawn from such registration; provided,
however, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then ATS shall offer to all Holders who have included Registrable Securities in
the registration the right to include additional Registrable Securities in the
same proportion used above in determining the underwriter limitation.
4. Obligations of ATS. Whenever required under this Exhibit A to effect the
registration of any Registrable Securities, ATS shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to
<PAGE>
become effective, and, if based upon a demand from a Holder, keep such
registration statement effective until all of the shares of Stock have been
sold.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that ATS
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Exhibit A, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Exhibit A, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing ATS for the purposes of such registration, in form and substance as
is customarily given to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of ATS, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
<PAGE>
5. Furnish Information. It shall be a condition precedent to the obligations
of ATS to a particular selling Holder to take any action pursuant to this
Exhibit A that such selling Holder shall furnish to ATS such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be required to effect the
registration of such selling Holder's Registrable Securities.
6. Expenses of ATS Registration. ATS shall bear and pay all expenses (the
"Registration Expenses") incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Sections 2 and 3 hereof, including (without limitation) all
registration, filing and qualification fees, printers costs, company attorneys'
fees, and accounting fees relating or apportionable thereto, and up to $5,000
for the fees and disbursements of one counsel for the selling Holders selected
by them, but excluding underwriting discounts and commissions relating to
Registrable Securities.
7. Indemnification. In the event any Registrable Securities are included in a
registration statement under this Exhibit A:
(a) To the extent permitted by law, ATS will indemnify and hold harmless
each Holder, the officers and directors of each Holder, any underwriter (as
defined in the Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Act, the Exchange Act or other federal or state securities law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by ATS of the Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Act, the Exchange Act or any state
securities law; and ATS will reimburse each such Holder, officer or director;
underwriter or controlling person for any legal or other expenses as incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 7(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of ATS (which consent shall not be unreasonably withheld),
nor shall ATS be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, officer, director, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless ATS, each of its directors, each of its officers who have signed
the
<PAGE>
registration statement, each person, if any, who controls ATS within the meaning
of the Act, any underwriter and any other Holder selling securities in such
registration statement or any of its directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities (joint
or several) to which ATS or any such director, officer, controlling person, or
underwriter or controlling person, or other such Holder or director, officer or
controlling person, may become subject, under the Act, the Exchange Act, or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses as incurred by
ATS or any such director, officer, controlling person, underwriter or
controlling person, other Holder, officer, director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 7(b) shall not apply to amounts pain in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
7(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 7, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7, but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.
(d) The obligations of ATS and Holders under this Section 7 shall survive
the completion of any offering of Registrable Securities in a registration
statement under this Exhibit A, and otherwise.
8. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities
<PAGE>
of ATS to the public without registration or pursuant to a registration on Form
S-3, ATS agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the date hereof;
(b) file with the SEC in a timely manner all reports and other documents
required of ATS under the Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, on an annual basis or otherwise, upon request (i) a written
statement by ATS that it has complied with the reporting requirements of SEC
Rule 144, the Act and the Exchange Act, or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of ATS and
such other reports and documents so filed by ATS and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to any such SEC rule or regulation.
9. Assignment of Registration Rights. The rights to cause ATS to register
Registrable Securities pursuant to this Exhibit A may be assigned by S&N only to
an Affiliate of S&N and, and only where (i) such transfer is effected in
accordance with applicable federal and state securities laws, (ii) such
Affiliate becomes a party to the agreement reflected in this Exhibit or agrees
in writing to be subject to the terms hereof to the same extent as if it were an
original Holder hereunder and (iii) ATS is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
Affiliate and the securities with respect to which such registration rights are
being assigned; and provided, further, that such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by such Affiliate is restricted under the Act. "Affiliate" for
purposes of this Section 9 shall mean any corporation or other entity
controlling, controlled by, or under common control with S&N.
10. Amendment of Registration Rights. Any provision of this Exhibit A may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of ATS and the Holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon the holder of any Registrable Securities at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and ATS.
11. Termination of Registration Rights. ATS's obligations pursuant to this
Exhibit A shall terminate seven (7) years from the date of the Stock Election
Notice.
