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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
HEARx Ltd
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(Name of Issuer)
Common Stock, $0.10 Par Value
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(Title of Class of Securities)
422360107
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(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, New York 10022
(212) 872-1000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 7, 1996
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(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 / /. (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 disclosure
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 following page(s)
Page 1 of 11 Pages
Exhibit Index: Page 6
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SCHEDULE 13D
CUSIP No. 422360107 Page 2 of 11 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Mr. George Soros (in his personal capacity)
2 Check the Appropriate Box If a Member of a Group*
a. / /
b. / /
3 SEC Use Only
4 Source of Funds*
PF
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
7 Sole Voting Power
Number of 2,841,423
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 2,841,423
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,841,423
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* / /
13 Percent of Class Represented By Amount in Row (11)
4.13%
14 Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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Page 3 of 11 Pages
This statement on Schedule 13D relates to shares of common stock,
$0.10 par value (the "Shares"), of HEARx Ltd. (the "Issuer") and amends the
initial statement on Schedule 13D dated February 5, 1996 (the "Initial
Statement"). This Amendment No. 1 is being filed by the Reporting Person to
report, among other things, the recent redemption of the Senior Preferred Stock
and acquisition of Additional Class A Warrants (as such is defined below).
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Initial Statement. The Initial Statement is
supplementally amended as set forth herein.
Item 3. Source and Amount of Funds or Other Consideration.
On May 6, 1996, the Investors which hold a majority of the Issuer's
Senior Preferred Stock (collectively, the "Majority"), including the Reporting
Person, consented (the "Consent") to the issuance by the Issuer of one or more
newly designated series of convertible preferred stock in offerings (the
"Offerings") made pursuant to Regulation S and Regulation D promulgated under
the Securities Act of 1933, as amended, in an aggregate amount not to exceed
$30,000,000. A copy of the Consent is attached as Exhibit H hereto.
In connection with the Consent, the Issuer delivered to the Investors
an agreement (the "May Agreement"), in the form attached as Attachment A to the
Consent, pursuant to which the Issuer agreed to, among other things, the
following: (i) the application of $6,000,000 from the proceeds of the Offerings
and/or otherwise available funds to redeem all outstanding 1996 Senior Preferred
Stock in accordance with the Senior Preferred Certificate filed with the
Secretary of State of the State of Delaware on January 26, 1996, and (ii) within
10 days of the date of the May Agreement, the issuance and delivery to the
holders of Class A Warrants sold pursuant to the Stock Purchase Agreement
additional warrants (the "Additional Class A Warrants") to purchase a total of
161,390 Shares which shall have terms identical to the Class A Warrants, a copy
of the form of which (the "Class A Form") was attached as Exhibit B to the
Initial Statement (the number of Shares underlying the Additional Class A
Warrants to be issued and delivered to each such holder shall be in the same
proportion as the number of Shares underlying Class A Warrants currently held by
such holder bears to the total number of Shares underlying all Class A Warrants
currently outstanding). Therefore, pursuant to the terms of the Consent and the
May Agreement, the Reporting Person received $1,540,000 for the redemption of
his 1,540 shares of Senior Preferred Stock and 41,423 Additional Class A
Warrants. In addition, pursuant to the terms of the Class B Form, a copy of
which is attached as Exhibit D to the Initial Statement, due to the redemption
of the Senior Preferred Stock prior to the exercise of the Class B Warrants, the
Class B Warrants were automatically redeemed at a price of $0.01 per Share
underlying the Class B Warrants. As such, the Reporting Person received
approximately $10,267 for the redemption of his 1,026,666 Class B Warrants.
Item 4. Purpose of Transaction.
The Reporting Person acquired 41,423 Additional Class A Warrants
(which may be converted into 41,423 Shares) pursuant to the terms of the May
Agreement. Pursuant to the terms of the May Agreement and the Class A Form, the
Additional Class A Warrants may be exercised at a price of $0.55 per Share
(subject to adjustment as provided in the Class A Form) for a period of five
years from the date of issuance.
The Reporting Person has entered into the transaction described
herein with respect to the securities of the Issuer held for his account for
investment purposes and pursuant to the terms of each of the documents discussed
herein.
Except as set forth above and as previously described in the Initial
Statement, the Reporting Person has no present plans or proposals that would
result in any change in the business, policies,
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Page 4 of 11 Pages
management, structure or capitalization of the Issuer. The Reporting Person
reserves the right to acquire additional securities of the Issuer, to dispose of
such securities at any time, or to formulate other purposes, plans or proposals
regarding the Issuer or any of its securities, to the extent deemed advisable in
light of general investment and trading policies, market conditions and other
factors.
Item 5. Interest in Securities of the Issuer.
(a) The aggregate number of Shares of which the Reporting Person may be
deemed a beneficial owner is 2,841,423 (approximately 4.13% of the total number
of Shares which would be outstanding assuming the exercise by the Reporting
Person of all of the presently exercisable derivative securities which he
holds). This number consists of: (i) 2,800,000 Shares issuable upon exercise of
the Class A Warrants issued to the Reporting Person pursuant to the Stock
Purchase Agreement and (ii) 41,423 Shares issuable upon exercise of the
Additional Class A Warrants issued to the Reporting Person pursuant to the May
Agreement.
(c) Except as described in Items 3 and 4 hereof, which is incorporated in
this Item 5(c) by reference, there have been no transactions in the Shares
effected since March 14, 1996 (60 days prior to the date hereof) by the
Reporting Person.
(e) The Reporting Person ceased to be the beneficial owner of five percent
or more of the outstanding Shares on March 15, 1996 (assuming conversion of all
derivative securities held by the Reporting Person which were exercisable on
such date) as a result of the increase in the total number of Shares
outstanding.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Except as described in Items 3 and 4 hereto and the Initial Statement,
which is incorporated in this Item 6 by reference, the Reporting Person does not
have any contracts, arrangements, understandings or relationships with respect
to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
(a) Stock Purchase Agreement, dated January 26, 1996, between HEARx
Ltd., Invemed Associates, Inc. and the Investors (filed as Exhibit A to the
Initial Statement and incorporated herein by reference).
(b) The form of the Class A Warrants issued pursuant to the Agreement
(filed as Exhibit B to the Initial Statement and incorporated herein by
reference).
(h) The Consent, dated May 6, 1996, by the Investors holding a majority of
the shares of the Issuer's Senior Preferred Stock.
(i) Power of Attorney dated April 16, 1996 granted by Mr. George Soros in
favor of Mr. Sean Warren.
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Page 5 of 11 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: May 13, 1996 GEORGE SOROS
By: /s/ Sean C. Warren
----------------------
Sean C. Warren
Attorney-in-Fact
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Page 6 of 11 Pages
INDEX OF EXHIBITS
EXHIBIT PAGE
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H The Consent, dated May 6, 1996, by the Investors holding a
majority of the shares of the Issuer's Senior Preferred Stock 7
I Power of Attorney dated April 16, 1996 granted by Mr. George
Soros in favor of Mr. Sean Warren 11
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Page 7 of 11 Pages
Exhibit H
HEARx Ltd.
471 Spencer Drive
West Palm Beach, FL 33049
Ladies and Gentlemen:
In order to induce those potential investors in the proposed equity financing by
HEARx Ltd. (the "Company") involving the issuance of 1996 Convertible Preferred
Stock, Series B-1 and Series B-2 (the "Financing"), to proceed with their
investment, the undersigned holders of at least 66 2/3% of the "Registrable
Securities," as such term is defined in the Registration Rights Agreement, dated
January 26, 1996, by and among the Company, Invemed Associates, Inc. ("Invemed")
and the Investors (the "Investors") listed therein (the "January Registration
Rights Agreement") hereby agree as follows, provided that (i) all of the
Company's 1996 Preferred Stock, par value $1.00 per share, has been redeemed by
the Company in accordance with the Certificate of Designations, Preferences and
Rights of the 1996 Preferred Stock, par value $1.00 per share, of the Company,
filed with the Secretary of State of the State of Delaware on January 26, 1996
and (ii) the Company shall deliver to Invemed and the Investors its agreement,
in the form attached as Attachment A to the Written Consent of Holders of a
Majority of the Shares of 1996 Senior Preferred Stock, par value $1.00 per
share, of the Company, of even date herewith, that: (x) it shall, within 10 days
of the date hereof, issue and deliver to the holders of the Class A Warrants
(the "Class A Warrants") sold pursuant to the Stock Purchase Agreement, dated
January 26, 1996, among the Company, Invemed and the Investors (the "Stock
Purchase Agreement") additional warrants to purchase a total of 161,390 shares
of Common Stock of the Company, $.10 par value (the "Additional Class A
Warrants"), which shall have terms identical to the Class A Warrants (the number
of shares underlying the Additional Class A Warrants to be issued and delivered
to each such holder shall be in the same proportion as the number of shares
underlying Class A Warrants currently held by such holder bears to the total
number of shares underlying all Class A Warrants currently outstanding); (y) it
shall, within 10 days of the date hereof, issue and deliver to the holders of
the Invemed Warrants (as defined in the Stock Purchase Agreement), additional
warrants to purchase a total of 32,278 shares of Common Stock of the Company,
$.10 par value (the "Additional Invemed Warrants"), which shall have terms
identical
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Page 8 of 11 Pages
to the Invemed Warrants (the number of shares underlying the Additional Invemed
Warrants to be issued and delivered to each such holder shall be in the same
proportion as the number of shares underlying Invemed Warrants currently held by
such holder bears to the total number of shares underlying all Invemed Warrants
currently outstanding); and (z) Invemed has no obligation to return any Invemed
Warrants to the Company pursuant to Section 6.1 of the Stock Purchase Agreement
(with respect to Clauses (x) and (y) above, the number of shares underlying
warrants issued to each holder shall be subject to adjustment by Invemed to
eliminate fractions):
1. The holders of registration rights pursuant to a Registration
Rights Agreement to be executed in connection with the Financing (the "Financing
Holders") may exercise one demand registration right that excludes any
securities that holders of Registrable Securities could otherwise include in
such registration by virtue of "piggyback" registration rights that holders of
Registrable Securities now hold, provided, that the holders of Registrable
Securities may exclude from a demand registration initiated by holders of
Registrable Securities, securities the Financing Holders may otherwise include
by virtue of their "piggyback" registration rights.
2. The holders of the 1996 Convertible Preferred Stock, Series B-1
and Series B-2 shall not be subject to the limitation set forth in paragraph
4(b) of the January Registration Rights Agreement so long as any public sale or
distribution of Common Stock by such holders is (a) pursuant to the Form S-3
registration statement contemplated by paragraph 2(a) of the Registration Rights
Agreement attached hereto as Exhibit A (but the attachment of such agreement
hereto shall not constitute our approval of any of the terms set forth therein);
or (b) pursuant to Rule 144 under the Securities Act of 1933.
This letter may be executed in one or more counterparts, and shall be effective
when at least one counterpart has been executed by holders of 66 2/3% of the
Registrable Securities
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Page 9 of 11 Pages
The undersigned have executed this consent letter as of the 7th day of May,
1996.
Very truly yours,
No. of Registrable
Securities
/s/ George Soros 3,826,666
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George Soros
/s/ Stanley Druckenmiller 2,484,849
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Stanley Druckenmiller
/s/ Gary Gladstein 621,213
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Gary Gladstein
/s/ Elizabeth Larson 745,455
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Elizabeth Larson
/s/ Kenneth G. Langone 3,844,999
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Kenneth G. Langone
- ---------------------------- 248,485
Bruce M. Langone
/s/ Cristina H. Kepner 583,227
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Cristina H. Kepner
/s/ Carlisle Jones 174,242
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Carlisle Jones
/s/ Harris Berenholz 174,242
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Harris Berenholz
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Page 10 of 11 Pages
Attachment A
To the Investors listed on Schedule A (the "Investors") of the Stock Purchase
Agreement by and among HEARx Ltd. (the "Company"), Invemed Associates, Inc.
("Invemed") and the Investors, dated January 26, 1996 (the "Stock Purchase
Agreement"):
We have asked the holders of a majority of the outstanding 1996 Preferred Stock,
par value $1.00 per share, to consent to certain offerings of Preferred Stock of
the Company pursuant to Regulations D and S promulgated under the Securities Act
of 1933, as amended. In consideration of the delivery of such consent, the
receipt of which is hereby acknowledged, we hereby agree as follows:
1. The Company shall, within 10 days of the date hereof, issue and
deliver to the holders of the Class A Warrants sold pursuant to the Stock
Purchase Agreement (the "Class A Warrants") additional warrants to purchase a
total of 161,390 shares of Common Stock of the Company, $.10 par value (the
"Additional Class A Warrants"), which shall have terms identical to the Class A
Warrants (the number of shares underlying the Additional Class A Warrants to be
issued and delivered to each such holder shall be in the same proportion as the
number of shares underlying Class A Warrants currently held by such holder bears
to the total number of shares underlying all Class A Warrants currently
outstanding). The number of shares underlying warrants issued to each holder
shall be subject to adjustment by Invemed Associates, Inc. to eliminate
fractions.
2. The Company shall, within 10 days of the date hereof, issue and
deliver to the holders of the Invemed Warrants (as defined in the Stock Purchase
Agreement), additional warrants to purchase a total of 33,278 shares of Common
Stock of the Company, $.10 par value (the "Additional Invemed Warrants"), which
shall have terms identical to the Invemed Warrants (the number of shares
underlying the Additional Invemed Warrants to be issued and delivered to each
such holder shall be in the same proportion as the number of shares underlying
Invemed Warrants currently held by such holder bears to the total number of
shares underlying all Invemed Warrants currently outstanding). The number of
shares underlying warrants issued to each holder shall be subject to adjustment
by Invemed Associates, Inc. to eliminate fractions.
3. Invemed Associates, Inc. has no obligation to return any Invemed
Warrants to the Company pursuant to Section 6.1 of the Stock Purchase Agreement.
Very truly yours,
HEARx, Ltd.
/s/ Paul A. Brown Dated: May 6, 1996
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By: Paul A. Brown, M.D., President
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Page 11 of 11 Pages
EXHIBIT I
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, GEORGE SOROS, hereby make, constitute and
appoint SEAN C. WARREN as my agent and attorney in fact for the purpose of
executing in my name, in my personal capacity or in my capacity as sole
proprietor of Soros Fund Management all documents, certificates, instruments,
statements, filings and agreements ("documents") to be filed with or delivered
to any foreign or domestic governmental or regulatory body or required or
requested by any other person or entity pursuant to any legal or regulatory
requirement relating to the acquisition, ownership, management or disposition of
securities or other investments, and any other documents relating or ancillary
thereto, including but not limited to, all documents relating to filings with
the United States Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Act") and
the rules and regulations promulgated thereunder, including: (1) all documents
relating to the beneficial ownership of securities required to be filed with the
SEC pursuant to Section 13(d) or Section 16(a) of the Act including, without
limitation: (a) any acquisition statements on Schedule 13D or Schedule 13G and
any amendments thereto, (b) any joint filing agreements pursuant to Rule
13d-1(f) and (c) any initial statements of, or statements of changes in,
beneficial ownership of securities on Form 3, Form 4 or Form 5 and (2) any
information statements on Form 13F required to be filed with the SEC pursuant to
Section 13(f) of the Act.
All past acts of the attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument this 16th day of April,
1996.
/s/ George Soros
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GEORGE SOROS
