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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): September 30, 1996
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SERAGEN, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-19855 04-2662345
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
97 SOUTH STREET, HOPKINTON, MASSACHUSETTS 01748
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code; (508) 435-2331
Page 1 of 12 pages
Exhibit Index on page 4
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ITEM 5. OTHER EVENTS.
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On September 30, 1996, the Registrant publicly disseminated a press
release announcing that it had raised $5 million through the sale of 5,000
shares of Series C convertible preferred stock in a private placement under
Regulation D of the U.S. Securities Act of 1933. The information contained in
the press release is incorporated herein by reference and filed as Exhibit 99.1
hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(c) Exhibit.
99.1 The Registrant's press release dated September 30, 1996.
99.2 Certificate of Designation of Series C Preferred Stock of the
Registrant, dated September 27, 1996.
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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.
Seragen, Inc.
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(Registrant)
Date: October 1, 1996 /s/ Thomas N. Konatich
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Thomas N. Konatich
Vice President for Finance
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<TABLE>
EXHIBIT INDEX
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<CAPTION>
Exhibit Sequential
Number Description Page Number
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<S> <C> <C>
99.1 The Registrant's press release dated 5
September 30, 1996
99.2 Certificate of Designation of Series C 7
Preferred Stock of the Registrant,
dated September 27, 1996.
</TABLE>
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Exhibit 99.1
[LOGO OF SERAGEN]
SERAGEN, INC., 97 South Street, Hopkinton, Massachusetts 01748
FOR IMMEDIATE RELEASE
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For more information, contact Investor Relations/Corporate Communications
Lora Maurer, Manager
phone: 508-435-2331
fax: 508-435-9805
e-mail: [email protected]
SERAGEN CLOSES $5 MILLION PLACEMENT
OF PREFERRED STOCK
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Hopkinton, MA--September 30, 1996--Seragen, Inc. (NASDAQ:SRGN). Seragen, Inc.
announced today that it has raised $5 million through the sale of 5,000 shares
of Series C convertible preferred stock.
The preferred stock is immediately convertible at the option of the holder,
into shares of Seragen's common stock at a conversion price equal to the lesser
of: the closing bid price on Nasdaq on September 27, 1996; or 73 percent of the
average closing bid prices for five trading days prior to the conversion date.
Terms of the preferred stock also provide for dividends payable in shares of
the company's common stock.
The shares involved are being offered in a private placement under Regulation D
of the U.S. Securities Act of 1933.
Proceeds from the current offering will be used, in conjunction with the option
payment recently received from Sandoz Pharma, Ltd., to finance the company's
continued research and clinical trials through the fourth quarter of 1996.
Seragen is also actively seeking equity and other financing arrangements to
finance the company through 1997.
Seragen is an integrated biopharmaceutical company developing a proprietary
technology portfolio. The company's unique receptor-targeted therapeutic
products, known as fusion proteins, consist of a toxin fragment genetically
linked
-more-
Telephone 508-435-2331--Facsimile 508-435-9805
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Exhibit 99.1
SERAGEN CLOSES $5 MILLION PLACEMENT OF PREFERRED STOCK / PAGE 2 OF 2
to a hormone or growth factor targeting specific receptors on the
surface of disease-causing cells.
Seragen's primary focus is in cancer and dermatology. The company's most
advanced product, IL-2 Fusion Protein, is in Phase III clinical trials for
cutaneous T-cell lymphoma, co-sponsored by Seragen and Eli Lilly and Company.
Seragen has independently conducted a Phase II trial of the same product for
psoriasis and is currently planning further trials for this application.
To the extent that any of the statements contained herein relating to the
Company's products and its operations are forward looking, such statements are
based on current expectations that involve a number of uncertainties and risks.
Such uncertainties and risks include, but are not limited to, the early stage
of the Company's product development and lack of product revenues; the
Company's history of operating losses and accumulated deficit; the Company's
limited financial resources and uncertainty as to the availability of
additional capital to fund its development on acceptable terms, if at all;
Boston University's control of the Company; the Company's reliance on fusion
protein technology; the potential development of competing fusion proteins,
products and technologies; the Company's dependence on its collaborative
partner, Eli Lilly and Company, and the lack of assurance that the Company will
receive further funding under this partnership or develop and maintain other
strategic alliances; the lack of assurance regarding patent and other
protection for the Company's proprietary technology; governmental regulation of
the Company's activities, facilities and products; the Company's limited
manufacturing capabilities; the Company's lack of commercial sales and
marketing capabilities; the dependence on key personnel; the development of
competing technologies; uncertainties as to the extent of reimbursement for the
costs of the Company's potential products and related treatment by government
and private health insurers and other organizations; the potential adverse
impact of government-directed health care reform; the risk of product liability
claims; and general economic conditions. As a result, the Company's future
development efforts involve a high degree of risk. For further information,
refer to the discussion in the Company's 1995 Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission. Actual results may differ
materially from such expectations.
####
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EXHIBIT 99.2
CERTIFICATE OF DESIGNATION, NUMBER,
POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL,
AND OTHER SPECIAL RIGHTS AND THE QUALIFICATIONS,
LIMITATIONS, RESTRICTIONS, AND OTHER DISTINGUISHING
CHARACTERISTICS OF SERIES C PREFERRED STOCK
OF
SERAGEN, INC.
Seragen, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), hereby certifies that:
1. The Corporation is validly existing and incorporated under the
laws of the State of Delaware.
2. The Corporation's Restated Certificate of Incorporation, as
amended, authorizes the issuance of 5,000,000 shares of Preferred Stock, par
value $.01 per share, and expressly vests in the Board of Directors the
authority provided therein to issue any or all of such shares in one or more
series, and by resolution or resolutions the designation, number, full or
limited voting powers, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations, restrictions, and
other distinguishing characteristics of each series to be issued. Currently,
there are no designated shares of Series C Preferred Stock. The rights of the
holder of the Series C Preferred Stock shall rank pari passu with the rights of
the holders of all other series of Preferred Stock, now existing or hereafter
issued by the Corporation, with respect to all preferences upon liquidation.
3. DESIGNATION OF THE SERIES. The Board of Directors of the
Corporation, pursuant to authority expressly vested in it as aforesaid, has
adopted the following, creating a Series C issue of Preferred Stock:
There shall be a series of convertible Preferred Stock designated as
"Series C Preferred Stock." Each share of such series shall be referred to
herein as a "Series C Share." Upon initial issuance by the Corporation, the
price per share of the Series C Shares shall be $1,000 (the "Purchase Price").
The par value per share is $.01. The authorized number of such Series C Shares
is 5,000. The Series C Shares shall be equal in rank to all other series of
Preferred Stock, now existing or hereafter issued by the Corporation.
A. VOTING RIGHTS. Except as otherwise required by law, the
holders of the Series C Shares shall not be entitled to vote separately, as a
series or otherwise, on any matter submitted to a vote of the shareholders of
the Corporation. Notwithstanding the foregoing, without the prior written
consent of the holders of the Series C Shares:
(i) the Corporation shall not amend, alter, or repeal (whether
by amendment, merger, or otherwise) any of the provisions related to the Series
C Shares of its Restated Certificate of Incorporation, as amended, any
resolutions of the Board of Directors or any instrument establishing and
designating the Series C Shares in determining the relative rights and
preferences thereof so as to affect any adverse change in the rights,
privileges, powers, or preferences of the holders of Series C Shares; or
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(ii) the Corporation shall not create or designate any
additional preferred stock senior in right as to dividends, voting rights,
redemptions or liquidation to the Series C Shares.
B. DIVIDENDS. The holders of the Series C Shares shall be
entitled to receive an 8% cumulative dividend payable in Common Stock at the
time of each conversion, but in no event later than eighteen months after the
issuance date of the Series C Shares at which time the Series C Shares shall be
automatically converted into Common Stock. Such dividends shall be payable on
each Conversion Date (as such term is defined in 3.C(iii) below) (the "Dividend
Payment Date"), in preference to dividends on any Common Stock or stock of any
class ranking, as to dividend rights, junior to the Series C Shares. Dividends
shall be fully cumulative and shall accrue (whether or not declared and whether
or not there shall be funds legally available for the payment of dividends),
without interest, and shall be payable on the Dividend Payment Date.
C. Conversion Rights.
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(i) CONVERSION. The holders of the outstanding Series C
Shares shall have the right, at such holders' option, without the payment of any
additional consideration by the holder thereof and at any time from the issuance
date, to convert all or any of such Series C Shares into the number of shares of
Common Stock for which such Series C Shares are then convertible pursuant to
Section 3.C(ii) below (after giving effect to any adjustments provided for under
Section 3.C(iv) hereof).
(ii) CONVERSION PRICE. Upon conversion of the Series C Shares
pursuant to 3.C hereof, each Series C Share shall be converted into the number
of shares of Common Stock equal to $1,000 plus the amount of accrued dividends
payable on the Conversion Date, divided by the lesser of (a) the product of
seventy-three percent (73%) multiplied by the average of the closing bid prices
of the Common Stock as reported by the Nasdaq National Market for the five
trading days immediately preceding the conversion date, or (b) the closing bid
price for the Common Stock as reported by the Nasdaq National Market for the
date preceding the issuance date of the Series C Shares. Nothwithstanding the
foregoing, the maximum number of shares of Common Stock issuable upon exercise
of the Series C Shares shall be that number of shares which results in the
issuance upon conversion of the Series C Shares, in the aggregate, of not more
than 3,360,625 shares of Common Stock. Any Series C Shares which the holder
thereof is unable to convert as a result of the limitation set forth in the
preceding sentence shall be repurchased by the Corporation, at the sole option
of the holder, at a purchase price equal to $1,150 per Series C Share, within
three days after the holder shall have notified the Corporation of its election
to exercise such option.
(iii) MECHANICS OF CONVERSION. The holder of any Series C
Shares is entitled, at its option, at any time from the issuance date, to
convert any or all of the Series C Shares into Common Stock of the Corporation,
at a conversion price set forth in 3.C(ii).
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Such conversion shall be effectuated by surrendering to the Corporation, or its
attorney, the original Series C Shares to be converted together with a written
notice stating that the holder elects to convert all or a portion of the Series
C Shares and stating the name or names (with address) in which the certificate
or certificates for the shares of Common Stock are to be issued and a
representation letter signed by the holder in a form to be agreed upon by the
holder and the Corporation at the time the Series C Shares are purchased. No
fractional shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares of Common Stock issuable shall be rounded
down or up, as the case may be, to the nearest whole number of shares. The date
on which notice of conversion is effective ("Conversion Date") shall be deemed
to be the date on which the holder has delivered to the Corporation the original
Series C Shares, a facsimile or original of the signed notice to convert and a
facsimile or original of the signed representation letter. Within two (2)
business days after receipt of the documentation referred to above, the
Corporation shall deliver a certificate, for the number of shares of Common
Stock issuable upon conversion. The Corporation shall be responsible for taking
all necessary actions and to bear all such costs to issue the Common Stock as
provided herein, including the delivery of an opinion letter to the transfer
agent, if so required. The person in whose name the certificate of Common Stock
is to be registered shall be treated as a shareholder of record on and after the
Conversion Date. No payment or adjustment shall be made for accrued and unpaid
interest until the Conversion Date. Upon surrender of any Series C Shares that
are to be converted in part, the Corporation shall issue to the holder, if so
requested, new Series C Shares equal to the number of unconverted Series C
Shares.
(iv) CERTAIN ADJUSTMENTS. In the event of any change in one or
more classes of capital stock of the Corporation by reason of any stock
dividend, stock split-up, recapitalization, reclassification, or combination,
subdivision or exchange of shares or the like, or in the event of the merger or
consolidation of the Corporation or the sale or transfer by the Corporation of
all or substantially all of its assets, then all liquidation preference,
conversion and other rights and privileges appurtenant to the Series C Shares
shall be promptly and appropriately adjusted by the Board of Directors of the
Corporation so as to fully protect and preserve the same (such preservation and
protection to be the same extent and effect as if the subject event had not
occurred, or the applicable right or privilege had been exercised immediately
prior to the occurrence of the subject event, or otherwise as the case may be),
it being the intention that, following any such adjustment, the holders of the
Series C Shares shall be in the same relative position with respect to their
rights and privileges as they possessed immediately prior to the event that
precipitated the adjustment.
(v) COSTS. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any Series C Shares; provided that
the corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
of such shares in a name other than that of the holder of the Series C Shares in
respect of which such shares are being issued.
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(vi) RESERVATION OF SHARES. The Corporation shall reserve,
free from preemptive rights, out of its authorized but unissued shares of Common
Stock solely for the purpose of effecting the conversion of the Series C Shares,
sufficient shares of Common Stock to provide for the conversion of all
outstanding Series C Shares.
D. Liquidation.
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(i) SERIES C PREFERENCE. Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Series C Shares shall be entitled, before any distribution or payment is made
upon any shares of Common Stock or any Preferred Stock junior in rank to the
Series C Shares, to be paid an amount per share equal to the liquidation value
described in this Section 3.D(i) (the "Liquidation Value"). The per share
Liquidation Value of the Series C Shares on any date is equal to the sum of the
following:
(A) $1,000, plus
(B) an amount equal to any accrued and unpaid dividends
from the date of issuance of the Series C Shares.
Neither the consolidation nor merger of the Corporation with or into any other
corporation or other entities, nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding-up of the Corporation within the meaning
of this Section 3.D. Notice of liquidation, dissolution, or winding-up of the
Corporation shall be mailed, by registered mail, postage prepaid, not less than
20 days prior to the date on which such liquidation, dissolution, or winding-up
is expected to take place or become effective, to the holders or record of the
Series C Shares at their respective addresses as the same appear on the books of
the Corporation or are supplied by them in writing to the Corporation for the
purpose of such notice, but no defect in such notice or in mailing thereof shall
affect the validity of the liquidation, dissolution or winding-up.
(ii) General.
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(A) All of the preferential amounts to be paid to the
holders of the Series C Shares pursuant to Section 3.D(i) shall be paid or set
apart for payment before the payment or setting apart for payment of any amount
for, or the distribution of any assets of the Corporation to, the holders of the
Common Stock or any preferred stock junior in rank to the Series C Shares in
connection with such liquidation, dissolution or winding-up.
(B) After setting apart or paying in full the
preferential amounts aforesaid to the holders of record of the issued and
outstanding Series C Shares as set forth in Section 3.D(i), the holders of
record of Common Stock and any preferred stock junior in rank to the Series C
Shares shall be entitled to participate in any distribution of any
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remaining assets of the Corporation, and the holders of record of the Series C
Shares shall not be entitled to participate in such distribution.
E. REACQUIRED SHARES. Any shares of Series C Shares redeemed,
purchased, converted, or otherwise acquired by the Corporation in any manner
whatsoever shall not be reissued as part of such series and shall be retired
promptly after the acquisition thereof. All such shares upon their retirement
and the filing of any certificate required in connection therewith pursuant to
the Delaware General Corporation Law shall become authorized but unissued shares
of Preferred Stock.
F. COPIES OF AGREEMENTS, INSTRUMENTS, AND DOCUMENTS. Copies of
any of the agreements, instruments or other documents referred to in this
Certificate shall be furnished to any stockholder upon written request to the
Corporation at its principal place of business.
4. The statements contained in the foregoing, creating and
designating the said Series C issue of Preferred Stock and fixing the number,
powers, preferences and relative, optional, participating, and other special
rights and the qualifications, limitations, restrictions, and other
distinguishing characteristics thereof shall, upon the effective date of said
series, be deemed to be included in and be a part of the Restated Certificate of
Incorporation, as amended, of the Corporation pursuant to the provisions of
Sections 104 and 151 of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, this Certificate of Designation has been executed on behalf
of the Corporation by its Chairman of the Board of Directors this 27th day of
September, 1996, and he does hereby affirm, under penalty of perjury, that the
foregoing Certificate of Designation is the act and deed of the Corporation and
that the facts stated therein are true and accurate.
Signed on September 27th, 1996.
SERAGEN, INC.
By /S/ JAMES M. HOWELL
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James M. Howell
Chairman of the Board of Directors
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