SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 27, 2004 (January 26, 2004)
HEMISPHERX BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27072 52-0845822
(state or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) (Identification No.)
1617 JFK Boulevard, Philadelphia, Pennsylvania 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 988-0080
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
On January 26, 2004, the Company closed a private placement to two
institutional investors of 6% senior secured convertible debentures due January
31, 2006 in the aggregate principal amount of $4,000,000 (the "Debentures"),
warrants to purchase an aggregate of up to 790,514 shares of Common Stock,
158,103 shares of Common Stock (the "Shares") and Additional Investment Rights
(to purchase up to an additional $2,000,000 principal amount of Debentures
commencing in six months). Funding to the Company from the Debentures will occur
following delivery by the Company of certain closing documents anticipated to
take place later today.
The Debentures mature on January 31, 2006 and bear interest at 6% per
annum, payable quarterly in cash or, subject to satisfaction of certain
conditions, common stock. Any shares of common stock issued to the Investors as
payment of interest shall be valued at 95% of the average closing sales price of
the common stock during the five consecutive business days ending on the third
business day immediately preceding the applicable interest payment date.
Commencing six months after issuance, the Company is required to start repaying
the then outstanding principal amount under the Debentures in monthly
installments amortized over 18 months in cash or, at the Company's option, in
shares of common stock. Any shares of common stock issued to the Investors as
installment payments shall be valued at 95% of the arithmetic average Weighted
Average Price (as defined in the Debentures) of the common stock during the
10-day trading period commencing on and including the eleventh trading day
immediately preceding the date that the installment is due.
The Debentures are convertible at the option of the Investors at any time
through January 31, 2006 into shares of our common stock. The conversion price
under the Debentures is fixed at $2.53 per share, subject to adjustment for
anti-dilution protection for issuance of common stock or securities convertible
or exchangeable into common stock at a price less than the conversion price then
in effect.
There are two classes of warrants received by the Investors; class A and
class B. The class A warrants are to acquire at any time from July 26, 2004
through July 26, 2009 an aggregate of up to 395,257 shares of common stock at a
price of $3.29 per share. The class B warrants are to acquire at any time from
July 26, 2004 through July 26, 2009 an aggregate of up to 395,257 shares of
common stock at a price of $5.06 per share. On January 27, 2005, the exercise
price of the class A and B warrants will reset to the lesser of the respective
exercise price then in effect or a price equal to the average of the daily price
of the common stock between January 27, 2004 and January 26, 2005 (but in no
event less than $2.58 per share with regard to the class A warrants and $3.54
per share with regard to the class B warrants). The exercise price (and the
reset price) under the warrants also is subject to similar adjustments for
anti-dilution protection.
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The Company also issued to the Investors Additional Investment Rights
pursuant to which the Investors have the right to acquire up to an additional
$2,000,000 principal amount of Debentures from the Company. The Additional
Investment Rights are exercisable commencing on July 26, 2004 (the "Trigger
Date") for a period of 90 days from the Trigger Date or 90 days from the date
upon which the registration statement registering the shares issuable upon
conversion of the Debentures to be issued pursuant to the Additional Investment
Rights is declared effective, which ever is longer.
The Company entered into a Registration Rights Agreement with the
Investors in connection with the issuance of the Debentures (including any
Debentures issued pursuant to the Additional Investment Rights), the Shares and
the warrants. The Registration Rights Agreement requires that the Company
register on behalf of the Investors the Shares issued to the Investors and 135%
of the shares issuable upon conversion of the Debentures (including payment of
interest thereon) and exercise of the warrants.
By agreement between the Company and the Investors, the dates upon which
all warrants previously issued to the investors may become exercisable is now
July 26, 2004 and the exercise periods of these warrants have been extended
accordingly.
For a complete description of this transaction, see the Securities
Purchase Agreement, form of Convertible Debenture, forms of A and B Warrant,
Registration Rights Agreement and form of Additional Investment Rights filed as
Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 to this Report and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following exhibits are filed herewith:
10.1 Securities Purchase Agreement, dated January 26, 2004, by and among
the Company and the Buyers named therein.
10.2 Form of 6% Convertible Debenture of the Company.
10.3 Form of A Warrant for Common Stock of the Company.
10.4 Form of B Warrant for Common Stock of the Company.
10.5 Registration Rights Agreement, dated January 26, 2004, by and among
the Company and the Buyers named therein.
10.6 Form of Additional Investment Rights.
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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.
HEMISPHERX BIOPHARMA, INC.
January 26, 2004 By: s/William A. Carter
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William A. Carter, M.D., President
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