Exhibit Index is on page 12
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
SERAGEN, INC.
_________________________________________________________________
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
_________________________________________________________________
(Title of Class of Securities)
81747410
______________________________
(CUSIP Number)
Henry Brachfeld, 175 Bloor Street East,
South Tower, 6th Floor, Toronto, Ontario M4W 3R8 (416) 929-1626
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 29, 1996
_______________________________
(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(b)(3) or (4), check the following
box .
Check the following box if a fee is being paid with the statement X. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on 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 ("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 the following page(s))
Page 1 of 31 Pages
13D
CUSIP No. 81747410 Page 2 of 31 Pages
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
P.R.I.F., L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00, WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Province of Ontario, Canada
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
921,212 (direct) (assuming conversion of all
Convertible Preferred Shares at $4.125)
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
921,212 (direct) (assuming conversion of all
Convertible Preferred Shares at $4.125)
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
921,212 (direct) (assuming conversion of all Convertible Preferred
Shares at $4.125)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2% (direct) (assuming conversion of all Convertible Preferred
Shares at $4.125)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
13D
CUSIP No. 81747410 Page 3 of 31 Pages
________________________
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lillian Brachfeld
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canadian
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
921,212 (indirect) (assuming conversion of all
Convertible Preferred Shares at $4.125)
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
921,212 (indirect) (assuming conversion of all
Convertible Preferred Shares at $4.125)
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
921,212 (indirect) (assuming conversion of all Convertible
Preferred Shares at $4.125)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2% (indirect) (assuming conversion of all Convertible Preferred
Shares at $4.125)
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
13D
CUSIP No. 81747410 Page 4of 31 Pages
________ _________
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Henry Brachfeld
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
921,212 (indirect) (assuming conversion of all
Convertible Preferred Shares at $4.125)
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
921,212 (indirect) (assuming conversion of all
Convertible Preferred Shares at $4.125)
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
921,212 (indirect) (assuming conversion of all Convertible
Preferred Shares at $4.125)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2% (indirect) (assuming conversion of all Convertible
Preferred Shares at $4.125)
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
13D
CUSIP No. 81747410 Page 5 of 31 Pages
________ ________
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HB and Co., Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Province of Ontario, Canada
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
921,212 (indirect) (assuming conversion of all
Convertible Preferred Shares at $4.125)
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
10 SHARED DISPOSITIVE POWER
PERSON
921,212 (indirect) (assuming conversion of all
Convertible Preferred Shares at $4.125)
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
921,212 (indirect) (assuming conversion of all Convertible
Preferred Shares at $4.125)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2% (indirect) (assuming conversion of all Convertible Preferred
Shares at $4.125)
14
TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Item 1. Security and Issuer
This statement relates to the shares of common stock, $0.01 par
value per share, (the "Shares") of Seragen, Inc. (the "Issuer"), whose
principal executive offices are located at 97 South Street, Hopkinton,
Massachusetts 01748.
Item 2. Identity and Background
This statement is being filed by the following persons
(collectively, the "Reporting Persons"): P.R.I.F., L.P. ("PRIF"), HB
and Co., Inc. ("HB"), Lillian Brachfeld and Henry Brachfeld.
PRIF is a limited partnership formed under the Limited
Partnerships Act (Ontario), with its principal business and
office address at 175 Bloor Street East, South Tower, 6th Floor,
Toronto, Ontario, M4W 3R8. The principal business of PRIF is investing
in securities of publicly-traded corporations and other marketable
securities. The sole general partner of PRIF is HB.
HB is a corporation incorporated under the laws of the
Province of Ontario, Canada, with its principal business and
office address at 175 Bloor Street East, South Tower, 6th Floor,
Toronto, Ontario, M4W 3R8. HB is a private corporation all of the shares
of which are beneficially and directly owned by Lillian Brachfeld.
The principal business of HB is to carry on business as an investor in
publicly-traded corporations and other marketable securities.
Henry Brachfeld is the sole director of HB and is the President and
Secretary of HB. There are no other executive officers of HB.
Lillian Brachfeld, a Canadian citizen and resident, is a
private investor whose business address is 175 Bloor Street
East, South Tower, 6th Floor, Toronto, Ontario M4W 3R8.
Henry Brachfeld, an American citizen and a Canadian
resident, is a private investor whose business address is 175 Bloor
Street East, South Tower, 6th Floor, Toronto, Ontario M4W 3R8.
During the last five years, none of HB, PRIF,
Lillian Brachfeld or Henry Brachfeld have been (i) convicted in
a criminal proceeding (excluding traffic violations or
similar misdemeanours), or (ii) a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was 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 fighting any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration
On May 29, 1996 PRIF subscribed for 3,800 convertible
preferred shares (the "Convertible Preferred Shares") of the Issuer,
at a subscription price of U.S. $1,000 per share, for a total
consideration of U.S. $3,800,000 for the Convertible Preferred Shares.
On June 3, 1996, PRIF borrowed U.S. $2,000,000 from Refco F/X Associates
Ltd. ("REFCO"), a Bermuda corporation. The loan from REFCO was secured by
the deposit of 2,500 of the Convertible Preferred Shares of the Issuer.
The remainder of the U.S. $3,800,000 purchase price for the Convertible
Preferred Share, U.S. $1,800,000, came from funds of PRIF.
Item 4. Purpose of Transaction
PRIF acquired direct beneficial ownership of the Convertible
Preferred Shares of the Issuer for investment purposes. The Reporting
Persons believe that the Convertible Preferred Shares of the Issuer
represents an attractive investment. The Convertible Preferred
Shares are convertible into Shares of the Issuer at the lesser of (a)
73% of the five day average closing bid price for the Shares for the five
business days immediately preceding the conversion date, as reported by
NASDAQ, or (b) the closing bid price on NASDAQ for the Shares for May 28,
1996, being $4.125 per Share. The Convertible Preferred Shares are
subject to mandatory conversion into Shares of the Issuer no later than
18 months from the date of the issuance.
None of the Reporting Persons have any plans or proposals which
relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D; however, each
of the Reporting Persons reserves the right to change its plans
or intentions at any time and to take all actions they may deem
appropriate to maximize the investment. In particular, depending upon
prevailing market conditions, economic conditions and other factors,
the Reporting Persons may acquire Shares or securities convertible into
Shares or sell all or part of the interest in the Issuer.
Item 5. Interest in Securities of the Issuer
PRIF is the direct beneficial owner of, and has shared voting and
dispositive power (directly) over, 3,800 Convertible Preferred Shares of the
Issuer, issued at U.S. $1,000 per share, which Convertible Preferred Shares
are convertible, assuming conversion at $4.125 per Share, into 921,212 Shares
of the Issuer. The Convertible Preferred Shares pay an 8% cumulative
dividend payable in Shares at the time of each conversion. According to the
Issuer's Form 10-Q for the quarter ended March 31, 1996, 16,642,451 Shares
are issued and outstanding as at May 6, 1996. Assuming conversion at a price
of $4.125 per Share, PRIF would be entitled upon conversion of all of its
Convertible Preferred Shares to 921,212 Shares, representing approximately
5.2% of the Issuer's outstanding Shares.
As the general partner of PRIF, HB is the indirect
beneficial owner of, and has shared voting and dispositive power (indirectly)
over, the 3,800 Convertible Preferred Shares of the Issuer. As the holder of
all the issued and outstanding shares of HB, Lillian Brachfeld
has the power to direct the indirect voting and disposition of the Convertible
Preferred Shares owned by HB and accordingly may be deemed the indirect
beneficial owner of, and to have shared voting and dispositive power
indirectly over, the 3,800 Convertible Preferred Shares of the Issuer.
As the sole director and sole executive officer of HB, Henry Brachfeld has
the power to direct the indirect voting and disposition of the Convertible
Preferred Shares owned by HB and accordingly may be deemed to be the indirect
beneficial owner of, and to have shared voting and dispositive power
indirectly over, the 3,800 Convertible Preferred Shares of the Issuer.
To the knowledge of HB, none of the executive officer
or director of HB or the control person of HB is the beneficial owner of
any Shares of the Issuer.
During the 60 days preceding the date hereof, there were no
other transactions in the Shares that were effected by the Reporting
Persons.
There are no other persons known to have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from
the sale of, Shares of the Issuer or the Convertible Preferred Shares of the
Issuer.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer
PRIF is a limited partnership, the sole general partner of
which is HB. HB has the exclusive authority to manage, control and
administer investments and affairs of PRIF. The holder of all the issued
and outstanding shares of HB is Lillian Brachfeld. Henry Brachfeld is
the sole director of HB and, as the sole executive officera) of HB,
President and Secretary of HB.
PRIF is a party to an agreement with REFCO, dated June 3, 1996,
wherein REFCO agreed to loan to PRIF the sum of U.S. $2,000,000. PRIF agreed
to secure the loan from REFCO by way of the deposit of 2,500 Convertible
Preferred Shares of the Issuer with REFCO.
Item 7. Material to be Filed as Exhibits
The following are being filed as Exhibits:
Exhibit A Agreement relating to the filing of a joint acquisition
statement
Exhibit B Loan Agreement dated June 3, 1996 between Refco F/X
Associates Ltd. and P.R.I.F., L.P.
Exhibit C Subscription Agreement for Convertible Preferred Shares
dated May 29, 1996 between Seragen, Inc. and P.R.I.F., L.P.
SIGNATURES
After reasonable inquiry and to the best of the
undersigned's knowledge and belief, the undersigned certify that the
information set forth in this statement is true, complete and correct.
DATED: June 21, 1996.
P.R.I.F., L.P.
Henry Brachfeld
by _______________________________
Henry Brachfeld, President
and Secretary of HB and Co., Inc., General Partner
HB AND CO., INC.
Henry Brachfeld"
by _______________________________
Henry Brachfeld
President and Secretary
Lillian Brachfeld
by _______________________________
Lillian Brachfeld
EXHIBIT INDEX
Page No.
Exhibit A Agreement relating to the filing of a joint
acquisition statement 13
Exhibit B Loan Agreement dated June 3, 1996 between
Refco F/X Associates Ltd. and P.R.I.F., L.P. 14
Exhibit C Subscription Agreement for Convertible Preferred
Shares dated May 29, 1996 between Seragen, Inc.
and P.R.I.F., L.P. 17
EXHIBIT A
The undersigned hereby agree that the Statement on Schedule 13D
relating to the common shares of Seragen, Inc., to which this Agreement shall
be attached as an Exhibit, and all future amendments with respect thereto
are being filed with the Securities and Exchange Commission on behalf of
each of the undersigned.
IN WITNESS WHEREOF the undersigned have each duly executed this
Agreement on June 21, 1996.
P.R.I.F., L.P.
Henry Brachfeld
by ____________________________
Henry Brachfeld, President
and Secretary of HB and Co., Inc., General Partner
HB AND CO., INC.
Henry Brachfeld
by _______________________________
Henry Brachfeld
President and Secretary
Lillian Brachfeld
by _______________________________
Lillian Brachfeld
EXHIBIT B
P.R.I.F., L.P.
175 Bloor Street East
South Tower
6th Floor
Toronto, Canada
M4W 3R8
Refco F/X Associates, Ltd. (REFCO), a Bermudian registered company, is
pleased to offer the following terms and conditions with respect to the
following equity financing transaction:
Lender Refco F/X Associates, Ltd.
Borrower P.R.I.F., L.P., a limited partnership formed under the
laws of Ontario, Canada.
Security Seragen Inc. Convertible Preferred Shares issued under
Regulation S at a price of U.S.$1,000 per share. The
shares are subject to mandatory conversion into Common
Stock of Seragen Inc. no later than 18 moths from the date
of issuance of the Convertible Preferred Shares. The
Convertible Preferred Shares are convertible into Common
Stock of Seragen Inc. at either (a) a discount of 27% to
the average of the closing bid price of Common Stock on
NASDAQ for the five business days immediately preceding
the conversion date, or (b) at $4.12 per share of Common
Stock.
Loan Advance U.S.$2,000,000.
Margin Collateral The Borrower will at all times maintain on deposit with
the Lender collateral equal to 80% of the Loan Advance.
The Lender and the Borrower acknowledge that the Loan
will initially be secured by the deposit of 2,500
Convertible Preferred Shares of Seragen Inc. issued at
a price of U.S.$2,500,000.
Maintenance of Subsequent to the conversion of the Shares, to meet
Account margin requirements, the Borrower may deposit collateral
consisting of cash, U.S. government obligations or other
such marketable securities or other property which may be
acceptable to the Lender.
Interest Rate 60-day LIBOR plus 200 bps (fixed at the date of advance of
the Loan) calculated on the amount of the Loan Advance
and payable on maturity.
Principal Amount The principal amount of the Loan is equal to the Loan
Advance plus the Equity Participation Amount.
Equity
Participation The Equity Participation Amount is equal to 35% of the
Amount sum of the following amounts:
(A) the net proceeds of the sale by the Borrower of that
number of shares of Common Stock of Seragen Inc. acquired
upon conversion of 2,000 Convertible Preferred Shares
(and for this purpose, if the Borrower is the owner of
more than 2,000 Convertible Preferred Shares, the first
Common Shares acquired by the Borrower upon conversion
and sold by the Borrower shall be taken into account for
purposes of this calculation) after deducting brokerage
commissions incurred in connection with the sale
minus
(B) a pro rata portion of the commissions paid by the
Borrower in connection with the purchase of 2,000 of the
Seragen Inc. Convertible Preferred Stock;
(C) interest paid or accrued by the Borrower on the Loan
from the Lender from the date of borrowing to the date of
repayment, and
(D) U.S. $2,000,000.
Maturity Date The Loan will be repayable on the earlier of the date of
closing of the sale by the Borrower of the Shares of
Common Stock of Seragen Inc. acquired by the Borrower
upon conversion of the Convertible Preferred Stock and 18
months from the date of advance of the Loan Advance.
If you are in agreement with the aforementioned terms and conditions, please
sign your acceptance below.
Yours sincerely,
Santo C. Maggio
Director
AGREED AND ACCEPTED
Henry Brachfeld
By:
P.R.I.F., L.P.
Dated: June 3, 1996
EXHIBIT C
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
FOR CONVERTIBLE PREFERRED SHARES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES (AS
DEFINED IN REGULATION S OF THE 1933 ACT) OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
(AS DEFINED IN REGULATION S OF THE 1933 ACT)
EXCEPT PURSUANT TO REGISTRATION UNDER OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE 1933 ACT.
This Offshore Securities Subscription Agreement is executed in
reliance upon the transaction exemption afforded by Regulation S
("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection
with the private placement of the Series A Convertible Preferred Stock
(the "Shares") of
SERAGEN, INC.
97 South Street
Hopkinton, MA 01748
National Association of Securities Dealers Automated Quotation System Symbol
(SRGN), a corporation organized under the laws of Delaware, United States of
America (the "ISSUER").
The Undersigned Purchaser:
NAME: P.R.I.F., L.P. by H.B. and Co., Inc.
ADDRESS: c/o Wood Gundy Inc.
200 King Street West, Box 72, 6th Floor
Toronto, Ontario M5H 3Z8 Canada
, a non "U.S. person" (the "Purchaser") hereby represents and warrants to,
and agrees with, ISSUER as follows:
1. The Offering.
a. The undersigned hereby subscribes for 3,800 Convertible
Preferred Shares (the "Shares"), at the aggregate subscription price of U.S.
$1,000 per share, payable in United States Dollars, for a total consideration
of $3,800,000 Dollars (the "Subscription Proceeds"). The Shares shall pay an
8% cumulative dividend payable in common stock at the time of each
conversion. The Shares are subject to a mandatory, 18 month conversion feature
at the end of which all Shares outstanding will be automatically converted.
The undersigned acknowledges that a portion of such Subscription Proceeds is
payable to Scharff, Witchel & Co., Inc. in connection with facilitation of
the purchase of such Shares by the undersigned.
The Purchaser is entitled, at its option, at any time commencing 45
days after issue hereof to convert any or all of the Shares into shares of
Common Stock, $0.01 par value per share, of the Issuer (the "Common Stock"), at
a conversion price for each share or Common Stock equal to the lesser of (a)
seventy-three percent (73%) of the Market Price (as defined below) of the
Issuer's Common Stock, or (b) the closing bid price on NASDAQ for the Common
Stock for the day immediately preceding the "Closing Date" as defined in
paragraph B. "Market Price" shall mean the five (5) day average closing bid
for the Common Stock for the five (5) business days immediately preceding
the conversion date, as reported by NASDAQ. Investor shall exercise the
conversion option pursuant to the Notice of Conversion attached hereto as
Exhibit "A".
b. Form of Payment. PURCHASER shall pay the total
Subscription Proceeds hereunder by delivering good funds by
wire transfer in United States Dollars on or before May 29,
1996 into the escrow account as follows:
First Union Bank of Connecticut
Stamford Executive Office
300 Main Street, P.O. Box 700
Stamford, CT 06904-0700
ABA # 021101108
Swift # UTCIUS33
Account: 2-072-298
Account Name: Joseph B. LaRocco, Esquire - Trustee
Account
2. Subscriber Representations: Access to Information:
Independent Investigation.
a. Offshore Transaction. PURCHASER represents and
warrants to ISSUER as follows:
i. Neither the PURCHASER nor any person or entity for
whom the PURCHASER is acting as fiduciary is a U.S.
person. A U.S. person means any one of the
following:
(1) any natural person resident in the United
States of America;
(2) any partnership or corporation organized
or incorporated under the laws of the
United States;
(3) any estate of which any executor or
administrator is a U.S. person;
(4) any trust of which any trustee is a U.S.
person;
(5) any agency or branch of a foreign entity
located in the United States;
(6) any non-discretionary account or similar
account (other than an estate or trust)
held by a dealer or other fiduciary for
the benefit or account of a U.S. person;
(7) any discretionary account or similar
account (other than an estate or trust)
held by a dealer or other fiduciary
organized, incorporated, or (if an
individual) resident in the United
States; and
(8) any partnership or corporation if:
(a) organized or incorporated under
the laws of any foreign
jurisdiction; and
(b) formed by a U.S. person,
principally for the purpose of
investing in securities not
registered under the Securities
Act, unless it is organized
or incorporated, and owned, by
accredited Investors (as
defined in Rule 501(a) under
the Securities Act) who are
not natural persons, estates or
trusts.
ii. At the time the buy order was originated, PURCHASER
was outside the United States and is outside the
United States as of the date of the
execution and delivery of this Agreement. No
offer to purchase the Shares was made to a
person in the United States.
iii. PURCHASER is purchasing the Shares for its own
account or for the account of beneficiaries for whom
the PURCHASER has full investment discretion with
respect to the Shares and whom the PURCHASER has
full authority to bind so that each such
beneficiary is bound hereby as if
such beneficiary were a direct purchaser
hereunder and all representations, warranties and
agreements herein were made directly by
such beneficiary. Purchaser is not purchasing
the Shares on behalf of any U.S. person and the
sale has not been prearranged with a purchaser
in the United States.
iv. Each distributor participating in the offering of
the Shares, if any, has agreed in writing, a copy of
which has been delivered to ISSUER with
this Agreement, that all offers and sales of the
Shares prior to the expiration of a period
commencing on the date of the Closing of the last
purchase and sale of the Convertible Preferred
Shares offered by the ISSUER and ending 40 days
thereafter (the "Restricted Period") shall
only be made (A) in compliance with the safe
harbor contained in Regulation S; (B) pursuant to
registration of Shares under the Securities
Act; or (C) pursuant to an exemption from
registration.
v. PURCHASER represents and warrants and hereby agrees
that all offers and sales of the Shares shall only
be made (A) in compliance with the safe harbor
contained in Regulation S; (B) pursuant to
registration of Shares under the Securities Act;
or (C) pursuant to an exemption from
registration.
vi. PURCHASER understands and acknowledges that the
Shares have not been registered under the 1933
Act and may not be offered or sold in
the United States or to U.S. persons or for the
account or benefit of a U.S. person (other than
distributors as defined in Regulation S) unless
the Shares are registered under the Securities Act
or an exemption from the registration requirements
is available.
vii. PURCHASER acknowledges that the purchase of the
Shares involves a high degree of risk and further
acknowledges that it can bear the economic risk
of the purchase of the Shares, including the
total loss of its investment. PURCHASER
acknowledges that it has obtained the advice of
competent legal counsel in its domicile
jurisdiction that Purchaser is qualified under
the laws of its domicile to purchase the
securities offered hereunder and that the offer
and sale of said securities will not violate the
laws of its domicile jurisdiction.
viii. PURCHASER understands that the Shares are being
offered and sold to it in reliance on the rules
promulgated under Regulation S and that the ISSUER
is relying upon the truth and accuracy of the
representations, warranties, agreements,
acknowledgements and understandings of
PURCHASER set forth herein in order to determine
the applicability of such rules and the suitability
of PURCHASER to acquire the Shares.
ix. PURCHASER is sufficiently experienced in financial
and business matters to be capable of evaluating
the merits and risks of itsinvestments, and to make
an informed decision relating thereto.
x. In evaluating its investment, PURCHASER has
consulted with its own investment and/or legal
and/or tax advisors.
xi. PURCHASER understands that in the view of the SEC
the statutory basis for the exemption claimed for
this transaction would not be present if the
offering of Shares, although in technical compliance
with Regulation S, is part of a plan or scheme to
evade the registration provision of the Securities
Act. PURCHASER is acquiring the Shares
for investment purposes and has no present intention
to sell the Shares in the United States, to a U.S.
person or for the account or benefit of a U.S.
person. PURCHASER hereby confirms that the purpose
of including the PURCHASER Representation Letter
(see Exhibit A attached hereto) to facilitate the
transfer of the certificates representing the Shares
into street name, is to enable PURCHASER to comply
with the requirements of certain offshore portfolio
management regulations and the security requirements
of offshore lenders for margin loans. PURCHASER
agrees to provide signature guarantees when any
Purchaser Representation Letter is delivered to
the Company.
xii. PURCHASER is neither an underwriter of, nor a dealer
in, the Shares. PURCHASER is not participating,
pursuant to a contractual agreement, in the
distribution of the Shares.
xiii. PURCHASER represents and warrants that neither it
nor any of its affiliates will directly or
indirectly maintain any short position in Shares,
Common Stock or any other securities of the ISSUER
so long as any of the shares have not been converted
into Common Stock;
If PURCHASER is purchasing the
Shares subscribed for hereby in representative or
fiduciary capacity, the representations and
warranties in this Offshore Securities Subscription
Agreement shall be deemed to have been made on
behalf of the person or persons for whom
PURCHASER is so purchasing.
The foregoing representations and warranties are
true and accurate as of the date hereof, shall be
true and accurate as of the date of the acceptance
by the ISSUER of PURCHASER's subscription, and shall
survive thereafter. If PURCHASER has knowledge,
prior to the acceptance of its Offshore Securities
Subscription Agreement by the ISSUER, that any such
representations and warranties shall not be true
and accurate in any respect, the PURCHASER, prior to
such acceptance, will give written notice of such
fact to the ISSUER specifying which representations
and warranties are not true and accurate and the
reasons therefor.
b. Current Public Information. PURCHASER acknowledges
that PURCHASER has acquired and carefully reviewed the
ISSUER's annual report on Form 10-K for its fiscal year ended
December 31, 1995, and its quarterly report on Form 10-Q
filed for the quarter ended March 31, 1996 (together, the
"SEC Reports"). Except as set forth in this Agreement and
the SEC Reports, no representations or warranties have been
made to PURCHASER by the ISSUER or any agent, employee or
affiliate of the ISSUER, and in entering into this
transaction PURCHASER is not relying upon any information,
other than that provided pursuant to this Agreement and the
SEC Reports and the results of independent investigation
by PURCHASER.
c. Independent Investigation; Access. PURCHASER
acknowledges that PURCHASER, in making the decision to
purchase the Shares subscribed for, has relied upon
independent investigations made by it and its PURCHASER
representative, if any, and PURCHASER and such
representatives, if any, have, prior to any sale to
PURCHASER, had an opportunity to ask questions of, and
to receive answers from ISSUER or any person acting on its
behalf concerning the terms and conditions of this offering.
PURCHASER and its advisors, if any, have been furnished with
access to all publicly available materials relating
to the business, finances and operations of the ISSUER and
materials relating to the offer and sale of the Shares which
have been requested. PURCHASER and its advisors, if any,
have received complete and satisfactory answers to any
such inquiries.
d. No Government Recommendations or Approval.
PURCHASER understands that no federal or state agency has
made or will make any finding or determination relating to
the fairness for public investment in the Shares, or has
passed or made, or will pass on or make, any recommendation
or endorsement of the Shares.
e. Entity Purchases. If PURCHASER is a partnership,
corporation or trust, the person executing this Agreement on
its behalf represents and warrants that:
i. He or she has made due inquiry to determine the
truthfulness of the representations and warranties
made pursuant to this Agreement;
ii. He or she is duly authorized (if the undersigned is
a trust, by the trust agreement) to make this
investment and to enter into and execute this
Agreement on behalf of such entity.
3. Issuer Representations.
ISSUER represents and warrants to the PURCHASER as follows:
a. Reporting Company Status. ISSUER is a reporting
issuer as defined by Rule 902 of Regulation S. ISSUER has
filed the information required by the reporting obligations
under Sections 13 or 15(d) of the Securities Exchange Act
of 1934, as amended.
b. Offshore Transaction. ISSUER has not offered
Convertible Preferred Shares to any person in the United
States or to any U.S. person or for the account or benefit
of any U.S. person. At the time the buy order was
originated, ISSUER and/or its agent reasonably believed that
PURCHASER was outside of the United States and was not a U.S.
Person. ISSUER and/or its agent reasonably believe that the
transaction has not been prearranged with a Purchaser in the
United States.
c. No Directed Selling Efforts. In regard to this
transaction, ISSUER has not conducted any "directed selling
efforts" as that term is defined in Rule 902 of Regulation S
nor has ISSUER conducted any general solicitation relating to
the offer and sale of Convertible Preferred Shares to U.S.
persons residing within the United States or elsewhere.
d. Shares. The Shares and shares of Common Stock
issuable upon conversion of the Shares, when issued and
delivered will be duly and validly authorized and issued,
fully paid and non-assessable and will not subject the
holders thereof to any liability by reason of being such
holders. The stock certificates representing Common Stock
issued upon conversion of the Shares shall be unlegended
and there shall be no stop transfer instructions issued in
relation to such common stock.
e. Subscription Agreement. This Agreement, when
acknowledged by the signature of an officer of the ISSUER,
has been duly authorized, validly executed and delivered on
behalf of the ISSUER and is a valid and binding agreement of
the ISSUER in accordance with its terms.
f. Non-contravention. The execution and delivery of
this Agreement, the consummation of the issuance of the
Shares and the transactions contemplated hereunder do not
and will not conflict with or result in a breach by the
ISSUER of any of the terms or provisions of, or constitute a
default under, the certificate of incorporation or by-laws of
the ISSUER (or any equivalent documents thereto) or any
indenture, mortgage, deed of trust, or other material
agreement or instrument to which the ISSUER is a party or by
which it or any of its properties or assets are bound, or any
existing applicable law, rule or regulation or any applicable
decrees, judgment, or order of any court, federal or
state regulatory body, administrative agency or other
governmental body having jurisdictions over the ISSUER or
any of its properties or assets.
g. Prior Shares Issued Under Regulation S. ISSUER has
not issued any shares of stock under Regulation S subsequent
to its most recent SEC Report.
h. Securities Law Compliance. Based upon the
representations and warranties of the PURCHASER in Section 2
and of all other PURCHASERS executing similar agreements in
connection with this offering, with respect to the Company's
actions, (i) the offer and the sale of Shares has been made
so as to conform in all respects with the requirements of
Regulation S and with the requirements of all other published
rules and regulations of the SEC currently in effect relating
to "private offerings" to non-residents of the United States
of the type contemplated herein; and (ii) Neither the offer,
sale or delivery of the Shares under the terms of this
Agreement will violate Section 5 of the Securities Act,
as presently in effect.
i. Filings. ISSUER undertakes and agrees pursuant to
the sale of its securities under Regulation S to make all
necessary filings in connection with the sale of its
securities as required by the laws and regulations of the
United States.
4. Restricted Period; Conversion.
Rule 903 (c) under Regulations S restricts PURCHASER from offering and
selling the Shares or the shares of Common Stock into which the Shares may be
converted to U.S. persons or for the account or benefit of a U.S. person
during the forty-five (45) day Restricted Period.
5. Reliance on Representations.
PURCHASER understands that the offer and sale of the Shares is not
being registered under the Securities Act. ISSUER is relying on the rules
governing offers and sales made outside the United States pursuant to
Regulation S. Rules 901 through 903 of Regulation S govern this transaction.
6. Transfer Agent Instructions.
a. Legends on Certificate. PURCHASER may transfer the
Shares to persons other than U.S. persons in accordance with
Regulation S prior to the expiration of the 45 day restricted
period. Accordingly, PURCHASER acknowledges that the Company
will instruct its transfer agent to place a stop
transfer order with respect to certificates representing the
Shares and that such certificates will bear the following
legend:
"The shares represented by this certificate have been issued
pursuant to Regulation S promulgated under the Securities
Act of 1933, as amended ("Act"), and have not been registered
under the Act. These shares may not be offered or sold
within the United States or to or for the account of a "U.S.
Person" (as that term is defined in Regulation S) until after
, 1996, [the 45th day following
completion of the offering]. After such date, this legend
shall have no further effect."
b. Purchaser Representation Letter. ISSUER agrees to
accept a PURCHASER's Representation Letter from the PURCHASER
in the form of Exhibit "B" attached, as sole and sufficient
evidence that the PURCHASER has complied with applicable
securities laws and upon receipt of such a letter shall
promptly transfer, or instruct the transfer agent, for the
Convertible Preferred Shares, if any, to transfer the Shares
into "Street Name", if so requested by PURCHASER, as
expeditiously as practical after receipt of the certificates
and the PURCHASER Representation Letter; provided, ISSUER
shall not be required to deliver such instructions if it
knows or reasonably believes, any of the representations
made in the PURCHASER Representation Letter are false.
c. Transfer Agent Instructions. ISSUER shall issue,
or instruct the transfer agent for the Convertible Preferred
Shares, if any, to issue one or more share certificates
representing Shares, in the names of qualified purchasers to
be specified prior to Closing. All of the Shares so issued
will be issued pursuant to Regulation S. ISSUER warrants
further that the Shares shall be freely transferable on
the books and records of ISSUER subject to compliance with
Regulation S and other applicable securities laws and the
terms of this Agreement.
7. Conversion Procedures.
a. The Purchaser is entitled, at its option, at any
time commencing 45 days after issue hereof to convert any
or all of the Shares into shares of Common Stock,
$0.01 par value per share, of the issuer
(the "Common Stock"), at a conversion price for each
share or Common Stock equal to the lesser of (a)
seventy-three percent (73%) of the Market Price (as defined
in Paragraph 1 above) of the Issuer's Common Stock, or
(b) the closing bid price on NASDAQ for the Common Stock
for the day immediately preceding the "Closing Date" as
defined in paragraph 8. Such conversion shall be effectuated
by sending to the Company, or its attorney, a facsimile or
original of the signed Notice of Conversion and a facsimile
or original of the signed Purchaser Representation Letter,
see Exhibits A and B attached hereto, which evidences
Purchaser's intention to convert the Shares or a specified
portion thereof, and accompanied by proper assignment, if
applicable, as long as the original Shares to be converted
are received by the Company within two business days after
receipt of the Notice of Conversion and Purchaser
Representation Letter. No fractional shares or scrip
representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be
rounded down or up, as the case may be, to the nearest
whole share. The date on which notice of conversion is
effective ("Conversion Date") shall be deemed to be the
date on which the Purchaser has delivered to the Company the
original Shares, a facsimile or original of the signed Notice
of Conversion and a facsimile or original of the signed
Purchaser Representation Letter.
b. Within two (2) business days after receipt of the
documentation referred to above in this Section 7(a), the
Company shall deliver a certificate, without stop transfer
instructions, for the number of Common Stock issuable upon
the conversion. It shall be the Company's responsibility
to take 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 earlier of the Conversion Date
or the mandatory conversion date. Upon surrender of any
Shares that are to be converted in part, the Company shall
issue to the Purchaser new Shares equal to the number of
unconverted Shares, if so requested by Purchaser.
8. Closing Date and Escrow Agent.
The date of the issuance of the Shares in the name of the PURCHASER
(the "Closing Date") shall be May 29, 1996. Closing shall be effected through
delivery of funds and certificates to the Escrow Agent. PURCHASER shall
forthwith deliver the necessary funds as indicated in Paragraph 1 to the
Escrow Agent. Share Certificates will be delivered at the instructions of
the ISSUER to the Escrow Agent: Joseph B. La Rococo, Esquire, 1055
Washington Boulevard, Stamford, Connecticut 06901. PURCHASER herein instructs
the Escrow Agent, and gives the Escrow Agent its good and sufficient authority
to release funds to the ISSUER and Scharff, Witchel & Co., Inc. in connection
with the purchase of the Shares, upon receipt by the Escrow Agent of said
Shares subscribed for, subject to the terms and conditions of any Escrow
Agreement in effect between the Issuer and the Escrow Agent. PURCHASER and
ISSUER agree that the Escrow Agent, in his capacity as Escrow Agent, has no
liability as a result of any fraudulent or unlawful conduct of any party
other than the Escrow Agent and agree to hold the Escrow Agent harmless in
such event. In the event the Share Certificates are not received by the
Escrow Agent from the ISSUER within Five (5) Business Days of the date of
receipt of the Escrowed Funds, the Escrow Agent shall return the Escrowed
Funds without interest to the PURCHASER by wire transfer pursuant to written
instructions.
9. Conditions to the Company's Obligation to Sell.
ISSUER reserves the right to reject this Agreement. PURCHASER
understands that ISSUER'S Obligation to sell the Shares subscribed for
hereunder is conditioned upon:
a. The receipt and acceptance by ISSUER of this
Agreement for all the Shares as evidenced by execution of
this subscription agreement by the Chief Executive Officer
or Chief Financial Officer of the ISSUER. The acceptance
of funds by the ISSUER shall be deemed to be constructive
acceptance of this Agreement. PURCHASER understands this
Agreement is irrevocable; and
b. Delivery into the Escrow Agent by PURCHASER of good
U.S. funds as payment in full for the purchase of the Shares
and all fees.
10. Conditions to PURCHASER's Obligation to Purchase
ISSUER understands that PURCHASER's obligation to purchase the
Shares subscribed for hereunder is conditioned upon the following:
a. execution and delivery of this Agreement; and
b. delivery of Shares.
11. Governing Law.
This Agreement shall be governed by and construed under the laws
of the State of Delaware without regard to its choice of law principles.
12. Right of First Refusal.
The Purchaser is hereby given a right of first refusal on any
Regulation S offering involving the Issuer during the next 12 months.
13. Change in Regulation S.
During the eighteen month period following issuance of the Shares,
if there is any change in Regulation S that would restrict the conversion of
the Shares into Common Stock according to the terms and conditions set forth
in this Agreement, then in such event SRGN shall immediately seek
registration by way of a Form S-3 filing. All such action required by
SRGN to complete the registration shall be done as soon as possible at SRGN's
sole cost and expense.
14. Entire Agreement.
This Agreement constitutes the entire agreement among the parties
hereof with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous representations, warranties, agreements and
understandings in connection therewith. This Offshore Securities Subscription
Agreement may be amended only in writing executed by all parties hereto.
15. Independent Counsel. The undersigned acknowledges that it
has been advised to consult with its own attorney regarding legal
matters concerning this Agreement.
16. Full Name and Address of PURCHASER for Registration
Purposes:
NAME: GUNDYCO
ADDRESS: Attn: Jay Smith, Wood Gundy Inc.
200 King Street West, Box 72, 6th Floor
Toronto, Ontario M5H 3Z8 Canada
TELE. NO. 416-594-8930
FAX NO. 416-594-8916
CONTACT NAME: Jay Smith
17. Delivery Instructions (If different from Registration Name):
NAME:
ADDRESS:
TELE. NO.
FAX NO.
CONTACT NAME:
SPECIAL
INSTRUCTIONS: Please ensure registered in street name "GUNDYCO"
18. ISSUER'S Acceptance Based Upon PURCHASER Representations.
ISSUER is accepting this subscription based upon and in reliance
upon the representations and warranties of PURCHASER contained herein,
including without limitation, those contained in section 2 and this Agreement
would not be accepted by ISSUER in the absence of such representations and
warranties.
IN WITNESS WHEREOF, this Offshore Securities Subscription Agreement was duly
executed as of the 29th day of May, 1996.
Company
Name: P.R.I.F., L.P. by H.B. and Co., Inc.
Purchaser
"Henry Brachfeld"
By:
Official Signatory of Purchaser
Name
(Printed): Henry Brachfeld
Title: Officer
Country of
Execution: Canada
Accepted this 29th day of the month of May, 1996.
SERAGEN, INC.
"George W. Masters"
By:
George W. Masters, its Chief
Executive Officer duly authorized
EXHIBIT "A"
NOTICE OF CONVERSION
_________________________, 199__
SERAGEN, INC.
97 South Street
Hopkinton, MA 01748
The undersigned, _______________________________
(the "Holder"), does hereby give notice that it wishes to convert ____________
shares of Series A Convertible Preferred Stock (the "Shares") of SERAGEN, INC.
(the "Issuer") held by it into shares of Common Stock of the Issuer, which have
been reserved for issuance upon such conversion. The Holder represents and
warrants that (i) all of the requirements of Regulation S promulgated under
the Securities Act of 1933, as amended (the "Act") applicable to the Holder
have been complied with by the Holder and (ii) the Holder has not engaged in any
transaction or series of transactions that, although in technical compliance
with all of the requirements of Regulation S, is part of a plan or scheme to
evade the registration requirements of the Act. The number of shares of the
Corporation's common stock, par value $.01 per share ("Common Stock")
issuable upon conversion of the Shares held by an investor under the terms
of this Agreement shall equal the Subscription Proceeds plus the amount of
the accrued dividends through the Conversion Date, divided by the lesser
of (a) seventy-three percent (73%) of the Market Price (as defined below)
of the Issuer's Common Stock, or (b) the closing bid price on NASDAQ for
the Common Stock for the day immediately preceding the "Closing Date" as
defined in paragraph 8 of the Subscription Agreement. "Market Price"
shall mean the five (5) day average closing bid for the Common Stock for
the five (5) business days immediately preceding the conversion date,
as reported by NASDAQ. The undersigned has not taken any short position or
hedge position in the Company's Common Stock to be covered by any of the
Shares or the Underlying Common Stock nor has the undersigned made any
promissory notes and/or pledges to that effect on the Company's
Common Stock.
[Holder]
By:_________________________________
EXHIBIT "B"
PURCHASER REPRESENTATION LETTER
Dear Sirs:
The undersigned ____________, has purchased on
____________, 1996, ____________ Convertible Preferred Shares of SERAGEN, INC.
(the "Company") at a per share subscription price of $_______ per share,
(the Convertible Preferred Shares referred to herein as the "Shares"). In
connection with such purchase, the undersigned, has executed and delivered
a subscription agreement ("Subscription Agreement") of your design. As the
forty-five (45) day transaction restriction period has expired, the undersigned
hereby requests that the Shares be transferred into "Street Name"
of __________________________.
The undersigned represents and warrants as follows:
1. The offer to purchase the Shares was made to it outside of
the United States and the undersigned was, at the time the
Subscription Agreement was executed and delivered, and is now,
outside the United States;
2. It is not a U.S. Person (as such term is defined in
Section 902(a) of Regulation S promulgated under the United States
Securities Act of 1933 (the "Securities Act"); and it has purchased
the Shares for its own account and not for the account or benefit
of any U.S. person;
3. All offers and sales by the undersigned of the Shares shall
be made pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from, or in a
transaction not subject to the registration requirements of,
the Securities Act;
4. It is familiar with and understands the terms, conditions and
requirements contained in Regulation S and definitions of U.S. persons
contained in Regulation S;
5. The undersigned has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to the
Shares; and
6. The undersigned purchased its Shares with investment
intent and presently has no interest to sell, dispose of or otherwise
transfer the Shares. The purpose for this request is to facilitate
the management of the undersigned's investment accounts.
Dated this ______ day of the month of ____________, 1996.
By:
_________________________________ ____________________________________
Official Signature of Purchaser Title
