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)
July 14, 2003 (July 10, 2003)
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 July 10, 2003, the Company closed a private placement to two
institutional investors of 6% senior secured convertible debentures due July 31,
2005 in the aggregate principal amount of $5,426,000 (the "Debentures") and
Warrants to purchase an amount of shares of Common Stock equal to 20% of the
shares issuable upon conversion of the Debentures. The terms of the Debentures
are substantially similar to those issued to these two investors in March 2003.
Funding to the Company from the Debentures will be in stages. It is
anticipated that initial funding will occur on July 15,2003.
For a complete description of this transaction, see the Securities
Purchase Agreement, Form of Convertible Debenture, Form of Warrant and
Registration Rights Agreement filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to
this Report and incorporated herein by reference.
To assure that there are adequate shares available to be reserved for issuance
pursuant to conversion of the Debentures, as payment of interest on the
Debentures and upon exercise of the Warrants related thereto, Dr. William A.
Carter, the Company's Chairman, President and Chief Executive Officer, has
agreed to waive his right to exercise an aggregate of 3,006,650 Company options
and warrants (collectively, hereinafter referred to as "Options") held by him
unless and until the Company's authorized shares are increased. One of the
proposals for the Company's Annual Meeting of Stockholders to be held in
September 2003 is an amendment to the Company's certificate of incorporation to
increase the authorized shares of common stock from 50,000,000 to 100,000,000
(the "Proposal").
For this waiver of a right to exercise the Options prior to approval of the
Proposal and for the possible diminution in value of these Options that could
result in the event that the Proposal is not approved, the Company plans to
compensate Dr. Carter. Although the specific amounts have not been determined,
the method of determining such compensation and potential loss is anticipated to
be as follows: The Company's Board of Directors will form a committee (the
"Committee") consisting of the three independent directors. The Committee will
engage an independent valuation firm to value the Options as of July 10, 2003
and again as of the date prior to the vote on the Proposal. The Committee, with
the assistance of the independent valuation firm, will determine the monetary
value of the waiver during this period and that amount will be paid to Dr.
Carter. In the event that the Proposal does not pass, the Committee, with the
assistance of the independent valuation firm, will determine the monetary value
of the Options. The Committee will then give Dr. Carter the choice of turning in
his Options for an amount equal to this determined value (the "Value Payment")
or to continue to hold his Options. If Dr. Carter elects to continue to hold his
Options, the Committee, again with the assistance of the independent valuation
firm, will determine a formula pursuant to which Dr. Carter would receive cash
("Stock Appreciation Payments") rather than shares of common stock should he
exercise any of the Options prior to the time, if ever, adequate authorized but
unissued and unreserved shares become available for issuance upon exercise of
his Options. In addition, if the Proposal does not pass, the Company will agree
to pledge some of its intellectual property as collateral for the Value Payment
or the Stock Appreciation Payments. The specific intellectual property to be
used as collateral, the valuation of such collateral and the method of sale or
license of such intellectual property in the event that sale of the collateral
is required, would be determined by the Committee, with the assistance of the
independent valuation firm.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following exhibits are filed herewith:
10.1 Securities Purchase Agreement, dated July 10, 2003, by and among the
Company and the Buyers named therein.
10.2 Form of 6% Convertible Debenture of the Company.
10.3 Form of Warrant for Common Stock of the Company.
10.4 Registration Rights Agreement, dated July 10, 2003, by and among the
Company and the Buyers named therein.
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.
July 11, 2003 By: /s/ William A. Carter
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William A. Carter, M.D., President