UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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): June 16, 2005
GENEREX
BIOTECHNOLOGY CORPORATION
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
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000-25169
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98-0178636
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(State
or Other
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(Commission
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(IRS
Employer
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Jurisdiction
of
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File
Number)
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Identification
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Incorporation)
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Number)
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33
Harbour
Square, Suite 202, Toronto, Ontario Canada |
M5J
2G2 |
(Address
of
Principal Executive Offices) |
(Zip
Code) |
Registrant’s
telephone number, including area code: (416)
364-2551
(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 (see
General
Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. |
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Entry into a Material Definitive
Agreement. |
Item 2.03. |
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Creation of a Direct Financial Obligation
or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant. |
Item 3.02 |
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Unregistered Sales of Equity
Securities. |
As
previously reported on the Current Report on Form 8-K of Generex Biotechnology
Corporation (the “Company”) filed with the Securities and Exchange Commission
(the “SEC”) on November 12, 2004 (the “November Current Report”), the Company
closed a private placement with four accredited investors, Cranshire Capital,
L.P., Omicron Master Trust, Iroquois Capital, L.P. and Smithfield Fiduciary,
LLC
(the “Investors”) on November 12, 2004, pursuant to which the Company issued 6%
Secured Convertible Debentures (the “Debentures”) and Warrants to the Investors
for an aggregate purchase price of $4,000,000. In connection with the issuance
of the Debentures and Warrants, the Company granted an Additional Investment
Right to each Investor. A brief description of the terms of the Debentures,
Warrants and Additional Investment Rights is set forth under the caption
“Financial Condition, Liquidity and Resources” in the Company’s Quarterly Report
on Form 10-Q filed with the SEC on June 14, 2005. In connection with the
foregoing private placement, the Company and the Investors entered into a
Securities Purchase Agreement and a Registration Rights Agreement, both of
which
are discussed in and filed as exhibits to the November Current Report.
On
June
16, 2005, the Company and each of the Investors entered into Amendment No.
1 to
Securities Purchase Agreement and Registration Rights Agreement (the
“Amendment”), pursuant to which the Investors agreed to exercise of 50% of their
Additional Investment Rights in the aggregate amount of $2,000,000 (the “AIR
Exercise”). In consideration for the AIR Exercise, the Company agreed:
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Ÿ
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to
issue the Investors Debentures in the aggregate amount of $2,000,000
(the
“AIR Debentures”) and to reduce the conversion of the AIR Debentures from
$0.82 as originally agreed to $0.60; but such reduction in the
conversion
price of the AIR Debentures will not trigger any anti-dilution
adjustments
to the existing Debentures and Warrants;
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to
issue the Investors Warrants to purchase an aggregate of 2,439,024
shares
of the Company’s common stock at the exercise price of $0.82 per share
(the “AIR Warrants”);
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Ÿ
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to
grant each Investor a further Additional Investment Right (each
an
“Additional AIR” and collectively, the “Additional AIRs”), pursuant to
which each Investor will have the right to purchase detachable
units
consisting of (a) additional AIR Debentures in principal amount
equal to
the principal amount of AIR Debentures issuable to each Investor
upon the
AIR Exercise with a conversion price of $0.82 (the “Additional AIR
Debentures”) and (b) additional AIR Warrants entitling the holder thereof
to purchase a number of shares of the Company’s common stock equal to 100%
of the shares of common stock issuable upon the conversion in full
at a
$0.82 conversion price (subject to adjustment as set forth therein)
(without regard to any restrictions on conversion therein contained)
of
the AIR Debentures contemplated in clause (a) above, at an exercise
price
equal to the “AIR Warrant Exercise Price” (as such term is defined in the
Additional Investment Rights) (the “Additional AIR
Warrants”).
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Under
the
terms of the Amendment, the Company also agreed to provide registration rights
with respect to the securities issuable upon conversion/exercise of the AIR
Debentures, the Additional AIR Debentures and the Additional AIR Warrants
consistent with the Investors’ existing registration rights under the
Registration Rights Agreement.
The
AIR
Debentures will have a term of fifteen months and amortize over thirteen
months
in thirteen equal monthly installments beginning on the first day of the
third
month following their issuance. Interest on the principal amount outstanding
will accrue at a rate of 6% per annum. The Company may pay principal and
accrued
interest in cash or, at its option, in shares of common stock. If the Company
elects to pay principal and interest in shares of its common stock, the value
of
each share of common stock will be equal to the lesser of (i) $0.60 and (ii)
ninety percent (90%) of the average of the twenty trading day volume weighted
average price for the common stock for the twenty trading day period immediately
preceding the date of payment. At the option of the holder of each AIR
Debenture, the principal amount outstanding under each AIR Debenture will
be initially convertible at any time after the closing of the Amendment
into shares of the Company’s common stock at a conversion price of
$0.60.
Upon
the
occurrence of an “Event of Default,” including a default in payment of principal
or interest (including late fees) which is not cured within three trading
days,
the full principal amount of each AIR Debenture, together with interest and
other amounts owing in respect thereof, to the date of acceleration will
become,
at the holder’s election, due and payable in cash. The aggregate amount payable
upon an Event of Default shall be equal to the “Mandatory Prepayment Amount.”
The Mandatory Prepayment Amount for any AIR Debentures shall equal the sum
of
(i) the greater of: (A) 130% of the principal amount of AIR Debentures to
be
prepaid, plus all accrued and unpaid interest thereon, or (B) the principal
amount of AIR Debentures to be prepaid, plus all other accrued and unpaid
interest thereof, divided by the conversion price on (x) the date the Mandatory
Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory
Prepayment Amount is paid in full, whichever is less, multiplied by the daily
volume weighted average price of the common stock on (x) the date the Mandatory
Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory
Prepayment Amount is paid in full, whichever is greater, and (ii) all other
amounts, costs, expenses and liquidated damages due in respect of such AIR
Debentures. The interest rate on the AIR Debentures will accrue at the rate
of
18% per annum, or such lower maximum amount of interest permitted to be charged
under applicable law, beginning five days after the occurrence of any Event
of
Default that results in the acceleration of the AIR Debentures. A late fee
of
18% per annum, or such lower maximum amount of interest permitted to be charged
under applicable law, will accrue on a daily basis on all overdue accrued
and
unpaid interest under the AIR Debentures from the due date to the date of
payment.
The
AIR
Warrants will be initially exercisable into an aggregate of 2,439,024 shares
of
the Company’s common stock, and the initial exercise price of each AIR Warrant
will be equal to $0.82. The conversion price of the AIR Debentures and the
exercise price of the AIR Warrants will be subject to an anti-dilution
adjustment upon the issuance by the Company of securities at a price per
share
less than the then conversion price or exercise price, as applicable.
Each
Investor may exercise its Additional AIR at any time after the 181st
day
after closing and on or prior to the earlier of (i) the close of business
on the
one-year anniversary after the registration statement for the shares of common
stock underlying the AIR Debentures and AIR Warrants has gone effective and
(ii)
the two year anniversary of the closing of this transaction.
In
addition, in connection with the transactions contemplated by the Amendment,
the
Company will issue to a placement agent (i) 170,732 shares of common stock
in
lieu of a cash fee equal to 7% of the gross proceeds received by the Company
and
(ii) warrants exercisable into approximately 60,000 shares of common stock
at
the same exercise price as the AIR Warrants.
As
the
Company obtained shareholder approval at its April 5, 2005 annual meeting
for
the issuance of up to an aggregate of 10,000,000 shares of common stock or
securities convertible into common stock for a price of not less than 70%
of the
market price at the time of issuance and for aggregate consideration not
to
exceed $50,000,000, in excess of the number of shares that NASDAQ’s Rules
4350(i)(1)(c) and (D) permit the Company to issue without prior stockholder
approval, no further stockholder approval is necessary in connection with
the
transactions contemplated by the Amendment.
The
Company undertook the offer and sale of the AIR Debentures, AIR Warrants
and
Additional AIRs in reliance upon Rule 506 of Regulation D and Section
18(b)(4)(D) of the Securities Act of 1933, as amended.
A
copy of
the press release issued by the Company announcing the signing of the Amendment
is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
THE
ABOVE
DESCRIPTION OF, AMONG OTHER THINGS, THE TERMS OF THE AMENDMENT, THE AIR
DEBENTURES, THE AIR WARRANTS AND THE ADDITIONAL AIRS IS QUALIFIED IN ITS
ENTIRETY BY THE AMENDMENT, WHICH IS INCORPORATED BY REFERENCE HEREIN. THE
COMPANY IS FILING THE AMENDMENT AS EXHIBIT 4.1 TO THIS CURRENT REPORT ON
FORM
8-K.
Item
9.01. Financial
Statements and Exhibits.
(c) Exhibits.
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4.1
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Amendment
No. 1 to Securities Purchase Agreement and Registration Rights
Agreement
entered into by and between Generex Biotechnology Corporation and
the
Purchasers listed on the signature pages thereto
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99.1
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Press
Release issued by Generex Biotechnology Corporation on June 16,
2005
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SIGNATURE
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.
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GENEREX
BIOTECHNOLOGY CORPORATION |
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Dated:
June 16, 2005 |
By: |
/s/ Rose
C. Perri |
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Chief
Operating Officer and |
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Chief
Financial Officer (principal financial officer)
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EXHIBIT
INDEX
Exhibit
Number
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Description
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4.1
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Amendment
No. 1 to Securities Purchase Agreement and Registration Rights
Agreement
entered into by and between Generex Biotechnology Corporation and
the
Purchasers listed on the signature pages thereto
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99.1
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Press
Release issued by Generex Biotechnology Corporation on June 16,
2005
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