Exhibit 1
FIRST AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT (the "Amendment") is entered into as of November 8, 1999, by
and between ADVANCED TISSUE SCIENCES, INC., a Delaware corporation (the
"Company"), and CHASEMELLON SHAREHOLDERS SERVICES, L.L.C., a New Jersey Limited
Liability Company (formerly CHEMICAL TRUST COMPANY OF CALIFORNIA, as Rights
Agent (the "Rights Agent").
Recitals
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A. The Company and the Rights Agent are parties to a Rights Agreement dated
as of January 6, 1995 (the "Rights Agreement").
B. The State of Wisconsin Investment Board ("SWIB"), and the Company have
entered into, among other agreements, a Securities Purchase Agreement dated as
of November 5, 1999 (the "SWIB Purchase Agreement"), pursuant to which SWIB is
to purchase 3,750,000 Units (as defined in the SWIB Purchase Agreement). Each
Unit will separate on issuance into one share of common stock of the Company,
par value $.01 per share, and a warrant to purchase 0.46666666 of a share of
common stock.
C. Pursuant to Section 5.2 of the SWIB Purchase Agreement, the Company's
Board of Directors has determined that an amendment to the Rights Agreement as
set forth herein is necessary and desirable to reflect the foregoing and certain
other matters, and the Company and the Rights Agent desire to evidence such
amendment in writing.
Accordingly, the parties agree that:
1. Certain Definitions. Section 1 of the Rights Agreement shall be
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amended as follows:
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(a) The definition of "Acquiring Person" in subsection (a) shall be
deleted and replaced as follows:
"Acquiring Person" shall mean any Person (as defined below) who
or which,together with all Affiliates and Associates (as such terms are
defined below) of such Person, shall be the Beneficial Owner (as defined
below) of 15% or more of the Company's Common Shares (as defined below)
then outstanding, but shall not include (1) the Company, any Subsidiary
(as defined below) of the Company, any employee benefit plan of the
Company or of a Subsidiary of the Company, or any entity holding the
Company's Common Shares for or pursuant to the terms of any such plan or
(2) the State of Wisconsin Investment Board (the "Permitted Investor" or
"SWIB"), but only to the extent that (1) the Permitted Investor first
becomes the Beneficial Owner of in excess of 15% of the Company's Common
Shares solely as a result of the Permitted Investor entering into the SWIB
Purchase Agreement (as defined below) in the ordinary course of
its business and not with the purpose or effect of changing or influencing
the control of the Company (or in connection with or as a participant in
any transaction having such purpose or effect) and (2) at any time
subsequent thereto the Permitted Investor does not "beneficially own" (as
defined below) any more than 19.99% of the Company's Common Shares (the
"Beneficial Ownership Limitation").
In addition, no current holder of the Company's Common Shares
shall be deemed an "Acquiring Person" by reason of such holder's holdings
at the date of the Rights Agreement, prior to any amendments thereto,
unless such holder (other than the Permitted Investor) shall increase its
holdings by more than 2% of the Company's outstanding Common Shares, or,
in the case of the Permitted Investor, unless the Permitted Investor
shall increase its holdings above the Beneficial Ownership Limitation,
but any new Person that becomes the Beneficial Owner of the holdings of
such current holder shall be deemed an Acquiring Person.
Notwithstanding the foregoing, no Person shall become an Acquiring
Person as the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, (a) increases the
proportionate number of shares beneficially owned by such Person to 15%
or more of the Company's Common Shares then outstanding or, (b) in the
case of the Permitted Investor, increases the proportionate number of the
Company's Common Shares owned by the Permitted Investor to more than the
Beneficial Ownership Limitation; provided, however, that if, by reason
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of share purchases by the Company, (1) a Person (other than the Permitted
Investor) shall become the Beneficial Owner of 15% or more of the Company's
Common Shares then outstanding or, (2) in the case of the Permitted
Investor, the amount of the Company's Common Shares the Permitted Investor
beneficially owns increases to exceed the Beneficial Ownership Limitation,
and, in the case of (1) or (2) shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person, including without limitation the Permitted
Investor, shall be deemed to be an Acquiring Person.
Notwithstanding the foregoing, if the Company's Board of Directors
determines in good faith that a Person who would otherwise be an Acquiring
Person, as defined pursuant to the foregoing provisions of this paragraph
(a), is eligible to file and did file a Schedule 13G and such Person
divests as promptly as practicable a sufficient number of the Company's
Common Shares so that such Person would no longer be an Acquiring Person,
as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an Acquiring Person for any
purpose of this Agreement.
(b) The definition of "Trading Day" shall be moved to subsection (ii)
and the following definition shall replace such definition as subsection
(hh): "SWIB Purchase Agreement" shall mean that certain Securities
Purchase Agreement dated as of November 5, 1999, by and between the
Company and SWIB.
2. Amendment of Section 3(a).
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The first sentence of Section 3(a) of the Rights Agreement is amended to
read in its entirety as follows:
(a) Until the earlier of (i) the tenth Business Day after the Shares
Acquisition Date or (ii) the tenth Business Day (or such later, date as
may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any entity holding the Company's Common Shares for or
pursuant to the terms of any such plan) of, or of the first public
announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any entity holding the Company's
Common Shares for or pursuant to the terms of any such plan) to commence,
a tender or exchange offer the consummation of which would result in any
Person becoming the Beneficial Owner of the Company's Common Shares
aggregating 15% or more of the Company's then outstanding Common Shares
or, in the case of the Permitted Investor, which would cause the Permitted
Investor to beneficially own Company Common Shares in excess of the
Beneficial Ownership Limitation (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for the Company's Common
Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the Company's Common
Shares. As soon as practicable after the Distribution Date, the Company
will notify the Rights Agent thereof and the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested and provided
with or given access to the necessary information, send) by first-class,
insured, postage-prepaid mail, to each record holder of the Company's
Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As
of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3. Miscellaneous.
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This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made
and performed entirely within such State. This Amendment may be executed in
any number of counterparts, each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument. If any term,
provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Amendment shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the day and year first above written.
ATTEST: ADVANCED TISSUE SCIENCES, INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxxxx
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Name: /s/ Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxxx
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Title: Senior Vice President Title: Chairman of the Board and
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and Chief Financial Officer Chief Executive Officer
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ATTEST: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
/s/ Xxxxxx Xxxxxxx
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Name: /s/ Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
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Title: Vice President Title: Assistant Vice President
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