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
Date of Report (Date of earliest event reported): May 20, 1998
AMERICAN BIOGENETIC SCIENCES, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State of jurisdiction of incorporation)
0-19041 11-2655906
(Commission File No.) (IRS Employer Identification No.)
1375 AKRON STREET, COPIAGUE, NEW YORK 11726
(Address of Principal Executive Offices) (Zip Code)
516-789-2600
(Registrant's telephone number, including area code
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS
On May 20, 1998, the Company completed a private placement to three
accredited investors (the "Investors") of an aggregate of $4,000,000 of 5%
Convertible Debentures due May 20, 2001 (the "Debentures") and three series of
Warrants to purchase up to an aggregate of 261,228 shares of the Company's Class
A Common Stock (the "Warrants").
The Debentures will become convertible to the extent of 25% of the
principal amount thereof commencing on September 17, 1998, with an additional
25% of the principal amount of the Debentures becoming first convertible on each
of October 17, 1998, November 16, 1998 and December 16, 1998 (subject to
potential acceleration in certain instances) at a conversion price equal to 87%
(if converted before November 17, 1998), 86% (if converted between November 17,
1998 and February 14, 1999), 85% (if converted between February 15, 1999 and May
20, 1999) or 84% (if converted after May 20, 1999), respectively, of the average
of the closing bid prices of the Company's Class A Common Stock for the five
consecutive trading days immediately preceding the date of conversion of the
Debentures (the "Variable Conversion Price"); provided, however, that in no
event may the conversion price be greater than $1.9375 per share, which was 125%
of such average price over the five consecutive trading days prior to the
consummation of the transaction (the "Fixed Conversion Price"). Interest on the
Debentures is payable only on maturity, conversion, redemption or when other
payment is made on the Debentures in cash or, if registered for resale under the
Securities Act of 1933, as amended (the "Securities Act"), in shares of the
Company's Class A Common Stock valued at the applicable Debenture conversion
price. Any Debenture outstanding on May 20, 2001 will be automatically converted
into Class A Common Stock of the Company as of that date. In addition, the
Company may require conversion of outstanding Debentures after May 20, 2000 if
the closing bid price of its Class A Common Stock on the trading day immediately
preceding its giving of notice of conversion to Debentureholders is at least
$3.0625. In the event the Company would be required to issue more than 4,000,000
shares of its Class A Common Stock upon conversion of all of the Debentures (the
"Conversion Limit"), the Company will have the option of: (i) issuing additional
shares of Common Stock if stockholder approval has been obtained or if
stockholder approval is not required in order to comply with applicable rules of
the market upon which its Class A Common Stock is traded or (ii) paying cash to
the holder in an amount equal to the principal amount of Debentures being
converted plus an amount equal to the number of shares of Class A Common Stock
that would be otherwise issuable upon conversion of the Debentures multiplied by
the difference between the highest sales price of the Company's Common Stock on
the date of conversion and the applicable Debenture conversion price. In the
event of a merger or other business combination or corporate reorganization as a
result of which the stockholders of the Company immediately prior thereto own in
the aggregate less than 50% of the voting power of the ultimate parent resulting
from such transaction or the Company transfers all or substantially all of its
assets to another person, then the Debentureholders may participate in such
transaction as a class on the same basis as if the Debentures had been
converted. In the event a purchase, tender or exchange offer is made and
accepted by the holders of more than 50% of the voting power of all outstanding
shares of Common Stock immediately prior thereto, the holders of the Debentures
are entitled to
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redeem any outstanding Debentures at a redemption price equal to 115% of the
then outstanding principal amount of the Debentures plus accrued interest on the
Debentures.
In connection with the sale and issuance of the Debentures, the
Company also issued to the Investors the Warrants in series entitling the
Investors to purchase, at an exercise price of $1.9141 per share, an aggregate
of 65,307 shares of the Company's Class A Common Stock at any time to and
including May 19, 2002, 65,307 shares of the Company's Common Stock (subject to
pro rata reduction to the extent the original principal amount of the Debentures
issued to the Investors is not outstanding on the day such Warrant is first
exercised) at any time between November 20, 1998 and November 19, 2002, and
130,614 shares of the Company's Class A Common Stock (subject to pro rata
reduction to the extent the original principal amount of the Debentures issued
to the Investors is not outstanding on the day such Warrant is first exercised)
at any time between May 20, 1999 and May 19, 2003.
The Debentures and the Warrants contain various anti-dilution
adjustments, including, among other things, in the event of stock dividends,
splits and combinations, capital reorganizations and, in the case of the
Warrants, certain issuances of Class A Common Stock and various common stock
equivalents at an effective purchase price per share which is less than the
exercise price of the Warrants.
The Company has also entered into a Registration Rights Agreement
with the Investors pursuant to which, among other things, the Company has agreed
to file, on or prior to July 19, 1998, a registration statement under the
Securities Act covering the shares issuable upon conversion of the Debentures
and exercise of the Warrants and to maintain such registration statement
effective for, in general, 54 months or, if earlier, the date when all shares
subject thereto are sold pursuant to the registration statement or Rule 144
promulgated under the Securities Act ("Rule 144"), or are eligible to be sold
under Rule 144 without volume or other limitations. Should such registration
statement not be timely filed or become effective by September 17, 1998, the
Company will be required to pay each Debentureholder an amount equal to 1% of
the principal amount of such holder's Debentures for the first 30 days, 1.5% for
the next 30 days and 2% for each 30 days thereafter that the registration
statement is not effective. If the registration statement is either not filed or
does not become effective by November 16, 1998, holders of Debentures will be
entitled to require the Company to redeem their Debentures at a redemption price
equal to 130% of the outstanding principal amount thereof, plus accrued interest
thereon. All expenses of registration are to be borne by the Company, other than
underwriting discounts and selling commissions, and fees and expenses of counsel
employed by the Investors in excess of $5,000, which are the obligations of the
Investors.
As compensation for the placement of the Debentures and the
Warrants, the Company paid Jesup & Lamont Securities Corporation, the placement
agent, a commission of $200,000.
Each of the three Investors is an "accredited investor" as defined
in Rule 501(a) of Regulation D under the Securities Act and acknowledged in its
Securities Subscription Agreement that it was purchasing the Debentures, the
Warrants and the Class A Common Stock issuable upon conversion of the Debentures
and exercise of the Warrants for investment for its own account and
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not with a view towards distribution. The Company believes the exemption
afforded under Section 4(2) of the Securities Act is applicable to the issuance
of the Debentures and Warrants.
The foregoing is a brief description of the Debentures, the
Warrants, the Registration Rights Agreement and Securities Subscription
Agreements, copies or forms of which appear as exhibits to this Report. The
foregoing descriptions thereof do not purport to be complete and are qualified
in their entirety by reference to such documents.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Exhibits:
Exhibits:
4.1 Form of the Company's 5% Convertible Debentures.
99.1 Form of Securities Subscription Agreement between the
Company and each of the Investors.
99.2 Registration Rights Agreement between the Company and
each of the Accredited Investors.
99.3(a) Form of the Company's Series WA Warrant issued to
each of the Investors
99.3(b) Form of the Company's Series WB Warrant issued to
each of the Investors
99.3(c) Form of the Company's Series WC Warrant issued to
each of the Investors
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 thereunto duly authorized.
AMERICAN BIOGENETIC SCIENCES, INC.
(Registrant)
Dated: June 2, 1998 By: /S/ JOSEF C. SCHOELL
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Josef C. Schoell,
Vice President-Finance
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EXHIBIT INDEX
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Exhibit
Number Document
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4.1 Form of the Company's 5% Convertible Debentures.
99.1 Form of Securities Subscription Agreement between the Company
and each of the Investors.
99.2 Registration Rights Agreement between the Company and each of
the Accredited Investors.
99.3(a) Form of the Company's Series WA Warrant issued to each of the
Investors
99.3(b) Form of the Company's Series WB Warrant issued to each of the
Investors
99.3(c) Form of the Company's Series WC Warrant issued to each of the
Investors