EXHIBIT 4.1
AMENDMENT NO. 1 TO INVESTMENT AGREEMENT
This Amendment No. 1 to Investment Agreement (this "Amendment") is
made as of January 26, 1998 by and between Hatteras Partners, L.P., formerly
known as Ramius Hatteras Partners, L.P. (the "Investor") and Advanced Tissue
Sciences, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Company").
WHEREAS, the Investor and the Company are parties to that certain
Investment Agreement (the "Investment Agreement") dated as of February 9, 1996
pursuant to which the Investor shall, upon the request of the Company, invest
up to $50,000,000 in the Company's Common Stock, par value $.01 per share (the
"Common Stock"); and
WHEREAS, pursuant to Section 1.2(a) of the Investment Agreement, the
Investment Agreement terminates on the earlier of February 9, 1998 or the
occurrence of certain specified events, and the Investor and the Company
desire to extend the term to February 9, 1999; and
WHEREAS, in exchange for extending the term of the Investment
Agreement, the Company has agreed to grant the Investor a warrant to purchase
50,000 shares of Common Stock at an exercise price per share equal to the
average of the high and low sales prices for the Common Stock as reported on
the Nasdaq National Market on the date hereof (the "Warrant"), which Warrant
will contain a "cashless exercise" provision for the benefit of the Investor;
and
WHEREAS, the Investor has agreed that in exchange for providing the
Investor a "cashless exercise" right under the Warrant and the inclusion of
certain "piggyback registration rights" in the Warrant, the Company shall not
otherwise be obligated to register for resale under the Securities Act of
1933, as amended (the "1933 Act"), the shares of Common Stock issuable upon
the exercise of the Warrant.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Investment Agreement.
2. Amendment of Section 1.2(a) to Extend Term to February 9, 1999.
The first sentence of Section 1.2(a) of the Investment Agreement is hereby
restated to read as follows:
"At any time prior to the earlier of (i) February 9, 1999 or
(ii) the termination of this Agreement in accordance with
Article V herein, the Company may deliver written notices
to the Investor (each such notice hereinafter referred to
as a "Put Notice") stating a dollar amount (the "Dollar
Amount") of Common Stock which the Company intends to sell
to the Investor five business days following the date (the
"Put Notice Date") on which the Put Notice is given to the
Investor by the Company in accordance with Section 6.4 herein."
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3. Change in Name of Investor. Any notice or other communication
sent by the Company to the Investor pursuant to the Investment Agreement or
this Amendment shall be addressed to Hatteras Partners, L.P. (rather than to
its former name, Ramius Hatteras Partners, L.P.). All other information
concerning how notices or other communications are to be sent to the Investor
shall remain unchanged as set forth in Section 5.2 of the Investment
Agreement.
4. Issuance of Warrant; No Registration Requirement. Concurrent
with the execution of this Amendment, the Company shall deliver to the
Investor the Warrant in the form attached hereto as Exhibit A executed by the
Company. The Company shall not be required to register under the 1933 Act the
50,000 shares of Common Stock issuable upon the exercise of the Warrant (such
50,000 shares, the "New Warrant Shares"); thus, the provisions of Section 1.5
of the Investment Agreement shall not apply to the Warrant.
5. Remedy for Failure to Purchase from February 9, 1998 to
February 9, 1999. The deliveries to be made by the Investor to the Company
under Section 6.1(b)(i), (ii) or (iii) of the Investment Agreement upon a
Failure to Purchase by the Investor shall apply only to a Failure to Purchase
that occurs through and including February 9, 1998. In particular, none of
the 175,000 Warrant Shares underlying the Warrants issued upon execution of
the Investment Agreement shall be subject to forfeiture for a Failure to
Purchase that occurs from and after February 9, 1998 through and including
February 9, 1999 (the "Extension Period"), nor shall any of the 50,000 New
Warrant Shares underlying the Warrant issued concurrently with the execution
of this Amendment be subject to forfeiture for a Failure to Purchase that
occurs prior to the Extension Period. The remedy for a Failure to Purchase
that occurs during the Extension Period shall be as set forth below in this
paragraph. Upon a Failure to Purchase that occurs during the Extension
Period, the Investor shall promptly deliver to the Company, (i) that
percentage of the total number of New Warrant Shares as is equal to that
percentage of $50,000,000 which the Investor failed to deliver to the Company
at the time of the Failure to Purchase, or (ii) cash equal to 1/2% of the
amount which the Investor failed to deliver to the Company at the time of the
Failure to Purchase or (iii) Common Stock equal in value, based on the market
value of such Common Stock on the date of such Failure to Purchase, to 1/2%
of the amount which the Investor failed to deliver to the Company at the time
of the Failure to Purchase. The determination as to type of consideration to
be delivered to the Company pursuant to the immediately preceding sentence
shall be made by the Investor, in its sole discretion. Nothing in this
Section 5 is intended to limit or in any way be in lieu of any rights or
remedies which the Company may have against Investor for any breach by
Investor of the Investment Agreement, this Amendment or other agreements
entered into pursuant to the Investment Agreement or this Amendment.
6. Balance of Investment Agreement Unaffected. Except as
amended hereby, the Investment Agreement continues in full force and effect as
originally executed.
7. Entire Agreement. This Amendment, together with the Investment
Agreement, constitutes the entire agreement among the parties pertaining to
the subject matter hereof and completely supersedes all prior or
contemporaneous agreements, understandings, arrangements, commitments,
negotiations and discussions of the parties, whether oral or written (all of
which shall have no substantive significance or evidentiary effect). Each
party acknowledges,
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represents and warrants that it has not relied on any representation,
agreement, understanding, arrangement or commitment which has not been
expressly set forth in this Amendment and the Investment Agreement. Each
party acknowledges, represents and warrants that this Amendment, together
with the Investment Agreement, is fully integrated and not in need of parol
evidence in order to reflect the intentions of the parties. The parties
specifically intend that the literal words of this Amendment and the
Investment Agreement shall, alone, conclusively determine all questions
concerning the parties' intent.
8. Counterparts. This Amendment may be executed in one or more
counterparts, which, when taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the date first
above written.
ADVANCED TISSUE SCIENCES, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
HATTERAS PARTNERS, L.P.
By: Xxxxxxx Capital, LLC
By:_______________________________
Name:_____________________________
Title:____________________________
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EXHIBIT A
Form of Warrant
(Attached)
