UNITED STATES
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): February 9, 2017
GENEREX BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 000-29169 | 98-0178636 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S Employer Identification No.) |
10102 USA Today Way Miramar, Florida |
33025 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (416) 364-2551
4145 North Service Rd, Suite 200, Burlington, Ontario Canada L7L 6A3
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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| Item 1.01. | Entry into a Material Definitive Agreement. |
| Item 3.02 | Unregistered Sales of Equity Securities. |
| Item 3.03 | Material Modification to Rights of Security Holders. |
Generex has entered into agreements eliminating, through exercise and conversion, all of its outstanding common stock purchase warrants (the “Warrants”) and the outstanding shares of its Series G 9% Convertible Preferred Stock (the “Preferred Stock”), as described below..
As at February 9, 2017, there were 350 Series G 9% Convertible Preferred Shares outstanding and convertible into 33,939,394 shares of Generex common stock (based on the VWAP as at that date). The outstanding Warrants as of February 9, 2017 were exercisable for an aggregate of 314,648,294 shares of Generex common stock.
On February 9, 2017, the Company’s Board of Directors approved an offer to each Warrant holder to reduce the exercise price of the Warrants from $0.015 to $0.0074 in exchange for the immediate exercise of 100% of each individual holder’s Warrants on a cashless basis based on a volume weighted average price (“VWAP”) of $0.011. Each of the Warrants contained provisions for cashless exercise, using a formula employing the effective exercise price, the VWAP and the number of Warrant shares that would be issuable upon exercise of a Warrant in accordance with the terms of the Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
As of the date of this Current Report on Form 8-K, each Warrant holder has accepted the proposal and has exercised their Warrants through cashless exercise for an aggregate of 103,809,026 shares of Generex common stock.
In addition, on February 9, 2017, Generex entered into a Right to Shares Agreement with the holder of the Preferred Shares pursuant to which that holder agreed convert 100% of those preferred shares into an aggregate of 33,939,394 shares of Generex common stock based on the February 6, 2017 VWAP. The Company initially will deliver 1,000,000 shares pursuant to The Right to Shares Agreement Those remaining shares 32,939,394 shares of the Company’s common stock, together with the Warrant shares issuable to that holder, will be delivered to that holder from time to time based on draw down notices submitted to the Company by that holder.
Under the Right to Shares Agreement, the may not request issuance of shares holder, to the extent that after giving effect to such issuance after exercise, the holder (together with the holder’s Affiliates, and any other Persons acting as a group together with the holder or any of the holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation. The Beneficial Ownership Limitation is initially 4.99%. From and after sixty-one (61) days after the date of the Right to Shares Agreement, the Beneficial Ownership Limitation shall be increased from 4.99% to 9.99%.
The foregoing will result in the elimination of a significant derivative liability on Generex’s balance sheet for periods after February 9, 2107, In addition, the number of shares of Generex common stock issuable in respect of the Convertible Preferred Stock and Warrants has been reduced by more than 210 million shares, a reduction in excess of 60% and the Company no longer has any securities outstanding to which have attached price protection provisions.
THE ABOVE DESCRIPTION OF, AMONG OTHER THINGS, THE TERMS OF THE RIGHT TO SHARES AGREEMENT IS QUALIFIED IN ITS ENTIRETY BY THE FORMS OF NOTICE TO WARRANT HOLDERS AND THE FORMS OF ACCEPTANCE AND EXERCISE, FILED AS EXHIBIT 4.1 TO THIS REPORT, AND THE FORM OF RIGHT TO SHARES AGREEMENT, FILED AS EXHIBIT 4.2 TO THIS REPORT.
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| Item 8.01. | Other Events. |
DTC Action
The Company intends to implement a 1 for 1000 reverse split of its common stock as soon as possible. As the Company’s common stock is not listed on a national securities exchange, the Company has applied to FINRA for approval of the reverse split, and notified DTC of its intention. Due to these actions, DTC has imposed a “chill” which prohibits the registration of Company shares with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system until the reverse split is consummated or the request for approval is withdrawn. The Company continue to be able to register transfers and newly issued shares by book entry with its transfer agent. In the event the reverse split is not approved by FINRA in a reasonable time, the Company will consider temporarily withdrawing its request for approval of the reverse split to allow the DWAC system to operate for its shares.
Company Offices
As reported in our Current report on Form 8-K dated January 17, 2107 and filed on January, 20, 2017, Generex has acquired a controlling interest in Hema Diagnostic Systems, LLC, a Florida Limited Liability Company with headquarters at 10102 USA Today Way Miramar, Florida 33025. As the Company’s new Chief Executive Officer, Joseph Moscato, and certain other officers of the Company are working from that location, the Company now considers that location to be the principal office of the Company. This location includes Hema Diagnostic’s office for product development and regulatory affairs, and is an FDA Registered Facility with a fully staffed laboratory and assembly facility.
This Current Report on Form 8-K and the documents attached hereto contain forward-looking information related to the Company that involves substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “plans,” “anticipates,” “expects,” “intends,” “future,” “may,” “will,” “could” or similar expressions.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
Exhibit Number |
Description | |
| 4.1 | Notice to Warrant Holders and Form of Acceptance and Exercise | |
| 4.2 | Right to Shares Agreement between Generex and Alpha Capital Anstalt. | |
| 99.1 | Generex Biotechnology Corporation Press Release dated February 15, 2017 |
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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.
| GENEREX BIOTECHNOLOGY CORPORATION. | ||||||
| Date: February 15, 2017 | /s/ Joseph Moscato | |||||
| President and Chief Executive Officer | ||||||
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EXHIBIT INDEX
Exhibit Number |
Description | |
| 4.1 | Notice to Warrant Holders and Form of Acceptance and Exercise | |
| 4.2 | Right to Shares Agreement between Generex and Alpha Capital Anstalt. | |
| 99.1 | Generex Biotechnology Corporation Press Release dated February 15, 2017 |
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GENEREX BIOTECHNOLOGY CORPORATION
NOTICE TO WARRANT HOLDERS
February __, 2017
This notice is being sent to all holders (the “Warrant Holders”) of record of outstanding warrants (“Warrants”) of Generex Biotechnology Corporation.
Capitalized terms not defined in this Notice have the meanings given in the Warrants.
Generex is offering all Warrant Holders the opportunity to exercise their Warrants at the reduced exercise price per shares of $.0074 (“Reduced Exercise Price”) during the period and on the conditions stated below. $.0074 is 67% of the closing price for Generex Common Stock on February 6, 2017.
Reduction in Number of Warrant Shares: The Warrant Holder will agree to a reduction in the number of shares of common stock for which the Warrant is exercisable. The number of shares for which the Warrant is originally exercisable and the number of shares for which the Warrant now will be exercisable are set forth on the attached Form of Acceptance and Exercise.
Period: To accept this offer, the attached Form of Acceptance and Exercise must be completed, executed and returned to Generex on or before February __, 2017. After February __, 2017, the exercise price on all of the Warrants will be the exercise price effective for such Warrant prior to February 7, 2017. However, in the event Generex does not deliver a certificate for the Common Stock or a credit via DWAC within seven Trading Days after receipt of the form of Acceptance and Exercise, the Warrant Holder may withdraw its acceptance by email notice to Generex and retain the benefit of the reduced exercise price for the original stated term of the Warrant
Format of Exercise: Warrants must be exercised through the cashless exercise feature contained in each Warrant, employing $.011 per share as the relevant VWAP.
100% Exercise: Each Warrant Holder must exercise all of the warrants owned by such Warrant Holder.
No increase in Number of Warrant Shares: Each Warrant will be exercisable, at the reduced exercise price for the number of shares set forth on the attached Form of Acceptance and Exercise. No effect will be given to provisions which may be contained in any Warrant increasing the number of shares for which it may be exercised, whether such provision would have been activated by the Reduced Exercise Price, any past Dilutive Issuance or any other cause.
No other Changes. Except explicitly stated in this Notice or the attached Form of Acceptance and Exercise, all rights and obligations of Generex and the Warrant Holders set forth in the Warrants and the documents referenced in the Warrants remain in full force and effect.
To exercise your Warrants at the Reduced Exercise Price, please complete and sign the form of Acceptance and Exercise attached to this Notice, and return it to Mark A, Fletcher, Executive Vice President and General Counsel of Generex, by email to Mfletcher@Generex.com. Generex will promptly issue instructions to its transfer agent, Broadridge Corporate Issuer Solutions, Inc., to issue your shares of common stock. If we receive the appropriate information from you, your shares can be issued via DTC’s DWAC. Common Stock issued upon cashless exercise of the warrants will not bear any restrictive legend and will be issued without restriction on resale. Generex will supply, at Generex’s cost all opinions of counsel required by the Transfer Agent to issue the common stock without restrictive legend and without restriction on resale.
The rights to exercise the Warrants at the reduced Exercise Price are not transferable. The rights may only be exercised by Warrant Holders of record on the date of this notice.
Thank you for your attention and support.
Joseph Moscato
President and CEO
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FORM OF ACCEPTANCE AND EXERCISE
nAME OF wARRANT HOLDER: __________________________________________________________________
To: generex biotechnology corporation
(1) The undersigned Warrant Holder hereby accepts the offer contained in Generex Biotechnology Corporation’s (the “Company”) Notice to Warrant Holders dated February__, 2017 (the “Notice”) to purchase a reduced number of Warrant Shares at the reduced Exercise Price of $ .0074 per share for each Company Warrant held by the undersigned. The exercise of this Warrant will be effected pursuant to the cashless exercise procedure set forth in subsection 2(c) of each Warrant.
(2) The undersigned acknowledges that the number of Warrant shares to be issued for each warrant held by the undersigned is set forth below. The undersigned hereby waives and relinquishes any right to, and any right to claim, additional Warrant Shares pursuant to the Warrants listed below. The undersigned agrees that the issuance of the number of shares under the column “Warrant Shares to be Issued” will satisfy in full and extinguish each Warrant. The undersigned herby specifically waives provisions which may be contained in any Warrant increasing the number of shares for which it may be exercised, whether such provision would have been activated by the Reduced Exercise Price, any past Dilutive Issuance or any other cause.
(3) The undersigned Warrant Holder hereby represents and warrants to the Company, as to each of the Warrants specified below, that the undersigned Warrant Holder is the sole owner of the Warrant, and has not assigned, transferred, sold, pledged, hypothecated, granted a security interest in or encumbered the Warrant or the Warrant Shares, and has not agreed to do any of the foregoing. The Warrant Holder represents and warrants to the Company that the Warrant Holder has the sole right to execute this instrument with respect to the Warrants.
APPLICABLE WARRANTS
| Initial Exercise Date | Original Number Warrant Shares | Warrant Shares to be Issued |
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
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SIGNATURE OF HOLDER TO FORM OF ACCEPTANCE AND EXERCISE:
Name of Entity: ____________________________________________________________
Signature of Authorized Signatory of Investing Entity:
Name of Authorized Signatory: ______________________________________________
Title of Authorized Signatory: _______________________________________________
Date: __________________________________
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RIGHT TO SHARES AGREEMENT
This Right to Shares Agreement, dated and effective as of February 9. 2017 (this “Agreement”) constitutes an agreement between Generex Biotechnology Corporation, a Delaware corporation (the “Company”) and Alpha Capital Anstalt (the “Holder”).
WHEREAS, on the dates set forth on Schedule A hereto, the Company entered into securities purchase agreements (collectively, “Purchase Agreements”) with the Holder for the sale of the Company’s Series G Preferred Stock (the “Preferred Stock”) and common stock purchase warrants (the “Warrants”) as further described on Schedule A, convertible and exercisable, respectively, for $0.001 par value common stock of the Company (the “Common Stock”); and
WHEREAS, the Holder is converting all the Preferred Stock pursuant to the conversion notice annexed hereto as Schedule B, and exercising all of the Warrants pursuant to the terms of the Company’s offer letter dated February __, 2017, pursuant to the exercise notice annexed hereto as Schedule C, and is thereby entitled to receive 33,939,394 shares of Common Stock upon conversion of the Preferred Stock and 67,628,324 shares of Common Stock upon exercise of the Warrants, in the aggregate being 101,567,718 (the “Shares”); and
WHEREAS, the application of certain beneficial ownership limitations with regard to the Preferred Stock and Warrants restricts the receipt by Holder of more than 4.99% of the Company’s outstanding Common Stock as described in the Certificate of Designation with respect to the Preferred Stock and in the warrant certificates with regard to the Warrants; and
WHEREAS, in lieu of presently issuing all of the Shares, the Company and the Holder have agreed to enter into this Agreement whereby the Company will presently issue to Holder 1,000,.000 Shares and subject to the terms and conditions set forth herein, from time to time, the Company shall be obligated to issue and the Holder shall have the right to the issuance of up to 100,567,718 Shares, subject to adjustment hereunder (the “Reserved Shares” and such right of the Holder, the “Right”).
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and intending to be legally bound, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Purchase Agreements and other instruments governing the Preferred Stock and Warrants.
Section 2. Issuance, Delivery and Limitations.
Section 2.1 Issuance of Right in Lieu of Share Issuance. In lieu of issuing the Reserved Shares to the Holder on the Closing Date pursuant to the Purchase Agreement, the Company hereby grants the Right to the Holder. The Company and the Holder hereby agree that no additional consideration is payable in connection with the issuance of the Reserved Shares.
Section 2.2 Right of Issuance of Shares. Subject to the terms hereof, the exercise of the Right may be made, in whole or in part, at any time or times on or after the date hereof by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Issuance Form annexed hereto as Schedule D. Partial exercises of the Right resulting in issuances of a portion of the total number of Reserved Shares available hereunder shall have the effect of lowering the outstanding number of Reserved Shares purchasable hereunder in an amount equal to the applicable number of Reserved Shares issued. The Holder and the Company shall maintain records showing the number of Reserved Shares issued and the date of such issuances. The Company shall deliver any objection to any Notice of Issuance Form within one (1) Business Day of receipt of such notice. The Holder acknowledges and agrees that, by reason of the provisions of this paragraph, following the issuance of a portion of the Reserved Shares hereunder, the number of Reserved Shares available for issuance hereunder at any given time may be less than the amount stated in Section 2.1 hereof.
Section 2.3 Delivery of Certificates. Certificates for the Reserved Shares issued hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Issuance (such date, the “Share Delivery Date”). The Reserved Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such Reserved Shares for all purposes, as of the date the Right has been exercised. The Reserved Shares upon issuance will be unlegended free-trading and not subject to transfer restrictions. The Company will provide to the Transfer Agent (and any successor to the Transfer Agent) at its own expense any legal opinion requested or required by Transfer Agent to effectuate the issuance of the Reserved Shares without any legend as above described.
Section 2.4 Charges, Taxes and Expenses. Issuance of certificates for Reserved Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Issuance.
Section 2.5 Authorized Shares. The Company covenants that, during the period the Right is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Reserved Shares upon the exercise of the Right. The Company further covenants that its entry into this Agreement shall constitute full authority to its officers who are charged with the duty of authorizing the issuance of the stock certificates to execute and issue the necessary certificates for the Reserved Shares upon the due exercise of the Right. The Company will take all such reasonable action as may be necessary to assure that such Reserved Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Reserved Shares which may be issued upon the exercise of the Right represented by this Agreement will, upon exercise of the Right, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Section 2.6 Impairment. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder as set forth in this Agreement against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Reserved Shares above the par value in effect on the date of this Agreement, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Reserved Shares upon the exercise of the Right and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Agreement.
Section 2.7 Authorizations. Before taking any action which would result in an adjustment in the number of Reserved Shares for which the Right provides, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
Section 2.8 Holder’s Limitations. The Holder shall not have the right to exercise any portion of the Right, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Issuance, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation. From and after sixty-one (61) days after the effectuation of this Agreement, the Beneficial Ownership Limitation shall be increased from 4.99% to 9.99%.
Section 2.9 Legal Opinion. The Company will provide an opinion of its counsel if required by the Company’s transfer agent confirming the commencement date of the holding period of the Reserved Shares as determined pursuant to Rule 144 as having commenced on the initial issue dates of the Preferred Stock and Warrants, respectively, and will provide at its own cost and expense such other opinions of its counsel and representations as may be required or necessary in the future in connection with the issuance and resales of the Reserved Shares.
Section 2.10 Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of the Right, pursuant to the terms hereof.
Section 2.11 Benefit of Contractual Rights. Subject to Section 2.12 of this Agreement, all contractual rights and benefits granted to the investors under the Purchase Agreement and Warrant are hereby granted to the Holder with respect to the Reserved Shares as if the Holder actually held the Reserved Shares.
Section 2.12 No Rights as Stockholder Until Exercise. With respect to the Reserved Shares, this Agreement does not entitle the Holder to any voting rights, or other rights as a holder of Common Stock of the Company prior to the exercise of the right to the extent possessing such rights would cause the Holder to exceed the Beneficial Ownership Limitation. It is the purpose of this Agreement that Holder not be deemed the beneficial owner of Common Stock in excess of the Beneficial Ownership Limitation. To the extent not available prior to the exercise of the Right, the Holder shall have all of the rights of a Purchaser of Shares under the Purchase Agreement and the Reserved Shares will be deemed Shares with respect to the amount of Reserved Shares demanded in a Notice of Issuance.
Section 3. Dilution Protection and Liquidated Damages.
Section 3.1 Stock Dividends and Splits. If the Company, at any time while the Right exists: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the number of Reserved Shares issuable upon exercise of the Right shall be proportionately adjusted. Any adjustment made pursuant to this Section 3.1 shall become effective immediately upon the record date for the determination of stockholders entitled to receive such dividend or distribution (provided that if the declaration of such dividend or distribution is rescinded or otherwise cancelled, then such adjustment shall be reversed upon notice to the Holder of the termination of such proposed declaration or distribution as to any unexercised portion of the Right at the time of such rescission or cancellation) and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
Section 3.2 Compensation for Buy-In on Failure to Timely Deliver Certificates. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates (or credit via DWAC) representing the Reserved Shares pursuant to an exercise on or before the Share Delivery Date, and if after such date and prior to the delivery of such certificate or certificates the Holder is required to purchase (in an open market transaction or otherwise) or the Holder’s broker otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Reserved Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Reserved Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Right and equivalent number of Reserved Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded, and the Holder shall promptly return to the Company the certificates issued to such Holder pursuant to the rescinded Notice of Issuance) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Right as required pursuant to the terms hereof.
Section 3.3 Subsequent Rights Offerings. If Section 3.1 above does not apply, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of the Right (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
Section 3.4 Fundamental Transaction. If, at any time while the Right remains outstanding, (i) the Company, directly or indirectly, in one or more related transactions engages in a Fundamental Transaction as defined in the Warrants, then, with respect to such Fundamental Transaction, the Holder will be deemed to be the record owner of the Reserved Shares entitled to all the benefits and rights of a holder of Preferred Stock and Warrants and the Common Stock issuable upon conversion of Preferred Stock and exercise of Warrants to the same extent as a holder of Preferred Stock and Warrants had such rights with respect to conversion Shares and Warrant Shares issuable upon conversion of Preferred Stock and exercise of Warrants.
Section 3.5 Notice to Allow Exercise of Right. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of Common Stock, (C) the Company shall authorize the granting to all holders of Common Stock rights, Preferred Stock or Warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise the Right during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Miscellaneous.
Section 4.1 Transferability. Subject to compliance with any applicable securities laws and to the provisions of the Purchase Agreement, the Right and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon written assignment substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer of this Agreement delivered to the principal office of the Company or its designated agent. Upon such assignment and, if required, such payment, the Company shall enter into a new agreement with the assignee or assignees, as applicable, and this Agreement shall promptly be cancelled. The Right, if properly assigned in accordance herewith, may be exercised by a new holder for the issue of Reserved Shares without having a new agreement executed.
Section 4.2 Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.
Section 4.3 Transaction Document. As between the Company and Holder, this Agreement shall be included in the definition of Transaction Document.
Section 4.4 Incorporation. Sections 5.3 through 5.22 of the Purchase Agreement dated June 24, 2015 are incorporated herein by this reference, mutatis mutandem.
[SIGNATURE PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have caused this Right to Shares Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
HOLDER
ALPHA CAPITAL ANSTALT
/s/
___________________________________
By: Konrad Ackermann
Its: Director
COMPANY
GENEREX BIOTECHNOLOGY CORPORATION
/s/
_________________________________
By: Mark A Fletcher
Its: Executive Vice President and General Counsel
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EXHIBIT A
NOTICE OF ISSUANCE
To: GENEREX BIOTECHNOLOGY CORPORATION
(1) The undersigned hereby elects in accordance with the terms and conditions of the Right to Shares Agreement, dated as of February __, 2017 (the “Right to Shares Agreement”), to exercise its Right to the issuance of ________ Reserved Shares of the Common Stock of GENEREX BIOTECHNOLOGY CORPORATION (the “Company”) pursuant to the terms of the Right to Shares Agreement.
(2) Please issue a certificate or certificates representing said Reserved Shares in the name of the undersigned registered holder or in such other name as is specified below:
_______________________________
(3) The Reserved Shares shall be delivered by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(4) The Reserved Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(5) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
__________________________________________________
[SIGNATURE OF HOLDER]
Name of Registered Holder: ______________________________________________________________
Signature of Authorized Signatory of Registered Holder: ________________________________________
Name of Authorized Signatory: __________________________________________________________
Title of Authorized Signatory: ___________________________________________________________
Date: _______________________________________________________________________________
| 3 |
SCHEDULE A
GENEREX BIOTECHNOLOGY CORPORATION
OUTSTANDING SERIES G PREFERRED CONVERTIBLE PREFERRED STOCK
AND COMMON STOCK PURCHASE WARRANTS HELD BY
ALPHA CAPITAL ANSTALT AS OF FEBRUARY ___, 2017
Series G Preferred Stock
[REQUIRES COMPLETION] Shares issued June 24, 2015
Common Stock Purchase Warrants
| Warrants Quantity | Issue Date | Expiration Date |
| 8,314,956 | December 10, 2012 | December 10,2017 |
| 53,333,334 | June 17, 2013 | June 17, 2018 |
| 33,333,334 | January 14, 2014 | January 15, 2019 |
| 80,000,000 | March 27, 2014 | March 27, 2019 |
| 30,000,000 | June 24, 2015 | June 25, 2020 |
| 4 |
Generex Announces Elimination of
Outstanding Derivative Securities
Company’s Market Capitalization Simplified & Improved
MIRAMAR, Florida & TORONTO, Canada, February 15, 2017 (BUSINESS WIRE) – Generex Biotechnology Corporation (OTCPink:GNBT) today announced that it has achieved the elimination of its outstanding derivative securities.
This is an important milestone for the Company. The consequent reduction in the number of shares coming into the market and the termination of the attendant price protection provisions will unburden the Company. In addition, the elimination of the derivative liability will greatly improve the Company’s balance sheet. Thus unencumbered, and with a reinvigorated management team and Board of Directors, the Company will proceed to execute its business plans and to attract value investors.
As at February 9, 2017, there were 350 Series G 9% Convertible Preferred Shares outstanding and convertible into 33,939,394 shares of Generex common stock (based on the VWAP as at that date). There were also Warrants outstanding and exercisable for an aggregate of 314,648,294 shares of Generex common stock.
On February 9, 2017, the Company’s Board of Directors approved a proposal whereby the Company offered to reduce the exercise price of the Warrants from $0.015 to $0.0074 in exchange for the immediate exercise of 100% of the Warrants on a cashless basis based on a VWAP of $0.011. Generex is pleased to announce that the 11 holders of the Warrants each accepted the proposal and have exercised their Warrants in exchange for an aggregate of 103,809,026 shares of Generex common stock.
In addition, on February 9, 2017, the Company entered into a Right to Shares Agreement with the holder of the Company’s Series G 9% Convertible Preferred Shares pursuant to which that holder agreed convert 100% of those preferred shares into an aggregate of 33,939,394 shares of Generex common stock based on the February 6, 2017 VWAP. Those shares of the Company’s common stock, together with the Warrant shares issuable to that holder, will be delivered to that holder from time to time based on draw down notices submitted to the Company by that holder.
As a result of the foregoing transactions, (a) the number of shares of Generex common stock issuable in respect of the Convertible Preferred Stock and Warrants has been reduced by more than 210 million shares, a reduction in excess of 60% (and a 15.6% reduction in the public float), and (b) as of the date hereof the Company no longer has any securities outstanding to which are attached price protection provisions.
Joseph Moscato, Generex President & Chief Executive Officer, stated: “It is with great satisfaction that I report this important achievement to my fellow Generex stockholders. The implementation of these arrangements has resulted in a very substantial reduction of the size of the Company’s stock “overhang”, greatly reduced dilution, and improved our balance sheet. And, the elimination of the price protection provisions removes a significant impediment to future capital raising initiatives. Our market capitalization has been simplified and greatly improved.”
Cautionary Note Regarding Forward-Looking Statements
This release and oral statements made from time to time by Generex representatives in respect of the same subject matter may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by introductory words such as "expects," "plan," "believes," "will," "achieve," "anticipate," "would," "should," "subject to" or words of similar meaning, and by the fact that they do not relate strictly to historical or current facts. Forward-looking statements frequently are used in discussing potential product applications, potential collaborations, product development activities, clinical studies, regulatory submissions and approvals, and similar operating matters. Many factors may cause actual results to differ from forward-looking statements, including inaccurate assumptions and a broad variety of risks and uncertainties, some of which are known and others of which are not. Known risks and uncertainties include those identified from time to time in the reports filed by Generex with the Securities and Exchange Commission, which should be considered together with any forward-looking statement. No forward-looking statement is a guarantee of future results or events, and one should avoid placing undue reliance on such statements. Generex undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Generex claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act.
SOURCE Generex Biotechnology Corporation
Generex Contact:
Joseph Moscato
646-599-6222
Generex Biotechnology Corporation
Todd Falls
800-391-6755
Extension 222
investor@generex.com