SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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SCHEDULE
14A
(Rule
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
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Filed by
the Registrant ý
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
For use of the Commission only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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GENEREX BIOTECHNOLOGY
CORPORATION
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(Name
of Registrant as Specified In Its
Charter)
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Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
fee paid:
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Fee
paid previously with preliminary
materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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3)
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Filing
Party:
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4)
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Date
Filed:
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GENEREX
BIOTECHNOLOGY CORPORATION
33
Harbour Square
Suite
202
Toronto,
Ontario, Canada M5J 2G2
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD FRIDAY, SEPTEMBER 17, 2010
Dear
Stockholder:
You are
cordially invited to attend a special meeting of stockholders of Generex
Biotechnology Corporation ("Generex") that will be held on Friday, September 17,
2010, at 10:00 a.m. (local time), at the Meeting Rooms, Westin Harbour Castle
Hotel, 1 Harbour Square, Toronto, Ontario Canada M5J 1A6, for the following
purposes, as set forth in the accompanying Proxy Statement:
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1.
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To
approve an amendment to our Restated Certificate of Incorporation (i) to
effect a reverse stock split of our common stock, at an exchange ratio of
not less than 1-for-2 and not more than 1-for-10 at any time prior to
September 16, 2011 (the implementation of the reverse stock split,
ratio and timing of which will be subject to the discretion of the Board
of Directors), and (ii) following the reverse stock split, if implemented,
to reduce the number of authorized shares of common stock from 750,000,000
to 500,000,000 unless the Board of Directors utilizes a ratio of not more
than 1-for-2, in which case, the number of authorized shares of common
stock will be maintained at
750,000,000;
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2.
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To
approve the adjournment of the Generex special meeting, if necessary, to
solicit additional proxies for the foregoing proposal;
and
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3.
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To
conduct any other business as may properly come before the Generex special
meeting or any adjournment or postponement
thereof.
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The Board
of Directors has established the close of business on August 17, 2010, as the
record date for the determination of stockholders entitled to receive notice of,
and to vote at, the special meeting and any adjournment or postponement
thereof. This Notice and the Proxy Statement and the attached proxy card
are being mailed to stockholders on or about August [ ],
2010.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE
HELD ON SEPTEMBER 17, 2010: The proxy statement for the special meeting
of stockholders will be made available to stockholders on the Internet at
www.generex.com/proxy.
Your vote
is very important. Whether or not you plan to attend the special meeting of
stockholders, we urge you to vote and to submit your proxy over the Internet, by
telephone or by mail. If you are a registered stockholder and attend the
meeting, you may revoke the proxy and vote your shares in person. If you hold
your shares through a bank or broker and want to vote your shares in person at
the meeting, please contact your bank or broker to obtain a legal
proxy.
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By
order of the Board of Directors,
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/s/ Rose C. Perri
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Rose
C. Perri
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Secretary
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August
[ ], 2010
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GENEREX
BIOTECHNOLOGY CORPORATION
33
Harbour Square
Suite
202
Toronto,
Ontario, Canada M5J 2G2
PROXY
STATEMENT
TABLE
OF CONTENTS
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Page
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About
the Special Meeting and Voting at the Meeting
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1 | ||
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Approval
of an Amendment to Generex’s Restated Certificate of Incorporation,
Subject to the Board’s Discretion, to Effect a Reverse Stock Split and to
Reduce the Number of Authorized Shares of Common Stock from 750,000,000 to
500,000,000 unless the Board of Directors utilizes a ratio of not
more than 1-for-2, in which case, the Number of Authorized Shares will be
Maintained at 750,000,000 (Item 1 on the Proxy
Card)
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Approval
of the Adjournment of the Generex Special Meeting, If Necessary to
Solicit Additional Proxies for the Reverse
Stock Split Proposal (Item 2 on the Proxy
Card)
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Other
Matters
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Security
Ownership of Certain Beneficial Owners and Management
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Other
Information
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Annual
Report
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Appendix
A – Form of Certificate of Amendment to Restated Certificate of
Incorporation
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A-1 | ||
i
ABOUT
THE SPECIAL MEETING AND VOTING AT THE MEETING
Why
am I being furnished this Proxy Statement?
This
Proxy Statement is provided to the stockholders of Generex in connection with
the solicitation by our Board of Directors of proxies for use at a special
meeting of stockholders to be held on Friday, September 17, 2010 at 10:00 a.m.
(local time), at the Meeting Rooms, Westin Harbour Castle Hotel, 1 Harbour
Square, Toronto, Ontario Canada M5J 1A6, and any adjournments or postponements
thereof.
What
are the items of business for the meeting?
The items
of business for the meeting are as follows:
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To
approve an approve an amendment to our Restated Certificate of
Incorporation (i) ) to effect a reverse stock split of our common stock,
at an exchange ratio of not less than 1-for-3 and not more than 1-for-10
at any time prior to September 16, 2011 (the implementation of the
reverse stock split, ratio and timing of which will be subject to the
discretion of the Board of Directors), and (ii) following the reverse
stock split, if implemented, to reduce the number of authorized shares of
common stock from 750,000,000 to 500,000,000 unless the Board of Directors
utilizes a ratio of not more than 1-for-2, in which case, the number of
authorized shares of common stock will be maintained at
750,000,000.
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To
approve the adjournment of the Generex special meeting, if necessary, to
solicit additional proxies for the foregoing proposal;
and
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To
conduct any other business as may properly come before the Generex special
meeting or any adjournment or postponement
thereof.
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Who
is soliciting my proxy?
The Board
of Directors is soliciting your proxy in order to provide you with an
opportunity to vote on all matters scheduled to come before the meeting whether
or not you attend the meeting in person.
Who
is entitled to vote?
You may
vote if you owned shares of Generex’s common stock as of the close of business
on August 17, 2010, which is the record date. You are entitled to one vote
for each share of common stock that you own. As of August 17, 2010, we had
xxx,xxx,xxx shares of common stock outstanding.
How
do I vote before the meeting?
If you
hold your shares in your own name as the stockholder of record, you have three
options for voting and submitting your proxy before the meeting:
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By Internet — We
encourage you to vote and submit your proxy over the Internet at www.proxyvote.com.
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By Telephone — You may
vote and submit your proxy by calling
1-800-690-6903.
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By Mail — You may vote
by completing, signing and returning the enclosed proxy
card.
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If you
are a street-name stockholder, you will receive instructions from your bank,
broker or other nominee describing how to vote your shares. Certain of
these institutions offer telephone and Internet voting. Please refer to
the information forwarded by your bank, broker or other nominee to see which
options are available to you.
What
shares can I vote?
You may
vote all shares owned by you as of the close of business on August 17, 2010, the
record date. These shares include:
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Shares
held directly in your name as the stockholder of record;
and
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Shares
of which you are the beneficial owner but not the stockholder of record
(typically referred to as being held in “street name”). These are
shares that are held for you through a broker, trustee or other nominee
such as a bank.
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1
May
I vote at the meeting?
You may
vote your shares at the meeting if you attend in person. If you hold your
shares through an account with a bank or broker, you must obtain a legal proxy
from the bank or broker in order to vote at the meeting. Even if you plan
to attend the meeting, we encourage you to vote your shares by proxy over the
Internet, by telephone or by mail.
How
do I revoke my proxy?
If you
are the stockholder of record, you may revoke your proxy at any time before the
polls close at the meeting. You may change you vote by:
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Signing
another proxy card with a later date and returning it to us prior to the
meeting.
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Voting
again over the Internet or by telephone prior to 11:59 p.m., Eastern Time,
on September 16, 2010.
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Voting
at the meeting if you are the stockholder of
record.
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Voting
at the meeting if you are the beneficial owner and have obtained a legal
proxy from your bank or broker.
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Our
principal executive offices are located at 33 Harbour Square, Suite 202,
Toronto, Ontario, Canada M5J 2G2, and our telephone number is (416)
364-2551.
Will
my shares be voted if I do not return my proxy?
If your shares are registered
directly in your name, your shares will not be voted if you do not vote
over the Internet, vote by telephone, return your proxy, or vote by ballot at
the special meeting.
If your shares are held in “street
name,” your brokerage firm, under certain circumstances, may vote your
shares for you if you do not return your proxy. Brokerage firms have authority
to vote customers’ unvoted shares on some routine matters. If you do not give a
proxy to your brokerage firm to vote your shares, your brokerage firm may either
vote your shares on routine matters, or leave your shares unvoted. The
proposal to approve the reverse stock split, is considered a non-routine matter;
therefore, your brokerage firm cannot vote your shares with respect to
this proposal unless they receive your voting instructions. We encourage you to
provide voting instructions to your brokerage firm by giving your proxy. This
ensures your shares will be voted at the special meeting according to your
instructions. You should receive directions from your brokerage firm about how
to submit your proxy to them at the time you receive this proxy
statement.
What
if I return my proxy card but do not provide voting instructions?
Proxy
cards that are signed and returned but do not contain instructions will be voted
as follows:
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FOR the approval of an
amendment to our Restated Certificate of Incorporation (i) to effect a
reverse stock split of our common stock, at an exchange ratio of not less
than 1-for-3 and not more than 1-for-10 at any time prior to September
16, 2011 (the implementation of the reverse stock split, ratio and
timing of which will be subject to the discretion of the Board of
Directors), and (ii) following the reverse stock split, if implemented, to
reduce the number of authorized shares of common stock from 750,000,000 to
500,000,000 unless the Board of Directors utilizes a ratio of not more
than 1-for-2, in which case, the number of authorized shares of common
stock will be maintained at
750,000,000.
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FOR the approval of the
Adjournment of the Generex special meeting, if necessary, to solicit
additional proxies for the foregoing
proposal.
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In
accordance with the best judgment of the individuals named as proxies on
the proxy card on any other matters properly brought before the
meeting.
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What
does it mean if I receive more than one proxy card?
Your
shares are probably registered in more than one account. You should vote
all of your shares. We encourage you to consolidate all of your accounts
by registering them in the same name, social security number and address.
For assistance consolidating accounts where you are the stockholder of record,
you may contact our transfer agent, StockTrans, at 1-800-733-1121.
May
stockholders ask questions at the meeting?
Yes.
Generex representatives will answer stockholders’ questions of general interest
at the end of the meeting.
2
How
many votes must be present to hold the meeting?
In order
for us to conduct our meeting, a majority of our outstanding shares of common
stock as of August 17, 2010 must be present in person or by proxy at the
meeting. This is referred to as a quorum. Your shares are counted as
present at the meeting if you attend the meeting and vote in person or if you
properly return a proxy by mail. Shares voted by banks or brokers on
behalf of beneficial owners are also counted as present at the meeting. In
addition, abstentions and broker non-votes will be counted for purposes of
establishing a quorum with respect to any matter properly brought before the
meeting. Broker non-votes occur on a matter when a bank or broker is not
permitted under applicable rules and regulations to vote on a matter without
instruction from the beneficial owner of the underlying shares and no
instruction has been given.
If a
quorum is not present, we expect that the special meeting will be adjourned
until we obtain a quorum.
How
many votes are needed for each proposal and how are the votes
counted?
Approval of an Amendment of the
Restated Certificate of Incorporation, Subject to the Board’s Discretion, to
Effect a Reverse Stock Split and to Reduce the Number of Authorized Shares of
Common Stock from 750,000,000 to 500,000,000 unless the Board of Directors
utilizes a ratio of not more than 1-for-2, in which case, the Number of
Authorized Shares will be Maintained at 750,000,000. (Item 1 on the Proxy
Card). To approve the reverse stock split proposal, stockholders
holding a majority of the outstanding shares of Generex common stock must vote
FOR the proposal. If your shares are held by your broker in “street name” and if
you do not vote your shares, your brokerage firm does not have the authority to
vote your unvoted shares held by the firm on this proposal and will have the
same effect as a vote AGAINST the proposal. If you vote to ABSTAIN on this
proposal, your shares will not be voted in favor of the proposal, will not be
counted as votes cast or shares voting on the proposal, and will have the same
effect as a vote AGAINST the proposal.
Approval of the Adjournment of the
Generex Special Meeting, If Necessary to Solicit Additional Proxies for the
Reverse
Stock Split Proposal (Item 2 on the Proxy Card). To approve the
adjournment of the Generex special meeting, if necessary, to solicit additional
proxies for the proposal set forth as Item 1 on the Proxy Card, a majority of
the votes cast by stockholders present in person or by proxy and voting on the
matter must vote FOR the proposal. For purposes of this vote, an
abstention or a failure to vote will not affect whether the proposal is approved
once a quorum is established.
Any other
proposal that might properly come before the meeting will require the
affirmative vote of the holders of a majority of the shares of commons stock
present in person or by proxy at the meeting in order to be approved. On
any such proposal, abstentions will be counted as negative votes in the
tabulation of the votes cast by stockholders. Broker non-votes will not be
counted in the tabulation of the votes cast on the proposal but will be counted
for purposes of establishing a quorum.
How
will proxies be voted on other items or matters that properly come before the
meeting?
If any
other items or matters properly come before the meeting, the proxies received
will be voted on those items or matters in accordance with the discretion of the
proxy holders.
Is
Generex aware of any other item of business that will be presented at the
meeting?
The Board
of Directors does not intend to present, and does not have any reason to believe
that others will present, any item of business at the special meeting other than
those specifically set forth in the notice of the meeting. However, if other
matters are properly brought before the meeting, the persons named on the
enclosed proxy will have discretionary authority to vote all proxies in
accordance with their best judgment.
Where
do I find the voting results of the special meeting?
We will
report the voting results in a Form 8-K within four business days after the end
of the special meeting.
Who
bears the costs of soliciting these proxies?
We have
hired Morrow & Co., LLC to assist us in soliciting proxies in connection
with the special meeting. We will pay Morrow’s fees, which we expect to be
approximately $____, plus all expenses for such services. In addition, our
directors, officers, and employees may solicit proxies by telephone, e-mail, and
in person, without additional compensation. Upon request, we will also
reimburse brokerage houses and other custodians, nominees, and fiduciaries for
their reasonable out-of-pocket expenses for distributing proxy materials to
stockholders. All costs and expenses of any solicitation, including the
cost of preparing this proxy statement and posting it on the Internet and
mailing the Proxy Materials, will be borne by Generex.
3
APPROVAL
OF AN AMENDMENT TO GENEREX’S RESTATED CERTIFICATE OF INCORPORATION, SUBJECT TO
THE BOARD’S DISCRETION, TO EFFECT A REVERSE STOCK SPLIT AND TO REDUCE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK FROM 750,000,000 TO 500,000,000 UNLESS THE
BOARD OF DIRECTORS UTILIZES A RATIO OF NOT MORE THAN 1-FOR-2, IN WHICH CASE, THE
NUMBER OF AUTHORIZED SHARES WILL BE MAINTAINED AT 750,000,000
(Item
1 on the Proxy Card)
What
am I voting on?
You are
voting on a proposal to approve an amendment to our Restated Certificate of
Incorporation (i) to effect a reverse stock split of our common stock at an
exchange ratio of not less than 1-for-3 and not more than 1-for-10 at any time
prior to September 16, 2011 (the implementation of the reverse stock split,
ratio and timing of which will be subject to the discretion of the Board of
Directors) (the “Reverse Stock Split”), and (ii) following the Reverse Stock
Split, if implemented, to reduce the number of authorized shares of common stock
from 750,000,000 to 500,000,000 unless the Board of Directors utilizes a ratio
of not more than 1-for-2, in which case, the number of authorized shares of
common stock will be maintained at 750,000,000 (collectively, the “Amendment”),
without further approval of the stockholders, upon a determination by the Board
of Directors that such Amendment is in the best interests of Generex and its
stockholders.
The Board
of Directors has unanimously authorized the proposed Amendment to our Restated
Certificate of Incorporation, subject to the Board’s discretion, to effect the
Reverse Stock Split and to reduce the number of the authorized shares of common
stock except where the Reverse Stock Split ratio is not more than
1-for-2.. The form of the proposed Amendment is attached to this proxy
statement as Appendix A
and is incorporated herein by reference.
Why
is the Reverse Stock Split necessary?
The Board
of Director’s primary objective in proposing the Reverse Stock Split is to raise
the per share trading price of our common stock. The Board of Directors believes
that by increasing the market price per share of our common stock, we may regain
and maintain compliance with the NASDAQ listing requirements.
On July
23, 2008, we received notice from The NASDAQ Stock Market that we were not
compliance with Marketplace Rule 4310(c)(4) (now known as Listing Rule
5550(a)(2)), which requires us to have a minimum bid price per share of at least
$1.00 for thirty (30) consecutive business days. In accordance with this
Rule, we had 180 calendar days, or until January 20, 2009, subject to extension,
to regain compliance with this Rule. Our initial compliance period of 180
calendar days ending on January 20, 2009 was subsequently extended until
November 9, 2009 due to NASDAQ’s temporary suspension of the minimum bid price
requirement from October 16, 2008 until August 3, 2009.
On
November 9, 2009, we received a second letter from NASDAQ indicating that we had
not regained compliance with the $1.00 minimum bid price required for continued
listing under Listing Rule 5550(a)(2) within the grace period previously allowed
by NASDAQ following the initial notice of noncompliance on July 23, 2008.
Pursuant to Listing Rule 5810(c)(3)(A), NASDAQ gave us an additional 180
calendar day compliance period because we met all other initial inclusion
criteria (other than the minimum bid price requirement) as of January 6,
2009. We had 180 calendar days, or until May 5, 2010, to regain
compliance with the rule. NASDAQ noted that if we failed to regain
compliance with this rule during the grace period, our common stock would be
subject to immediate delisting. To regain compliance with the minimum bid
price requirement, the closing bid price of our common stock had to close at
$1.00 per share or more for a minimum of ten consecutive business
days.
On May 5,
2010, our stock closed at $0.3999. On May 6, 2010, we received a delisting
determination letter from the staff of The Nasdaq Stock Market due to our
failure to regain compliance with The Nasdaq Capital Market's minimum bid price
requirement for continued listing. We are appealing the Nasdaq Staff's
determination. The hearing occurred on June 10, 2010. The
appeal to the Hearings Panel will stay the suspension of our securities and the
filing of a Form 25-NSE with the SEC. The filing of a Form 25-NSE would
remove our stock from listing and registration on The Nasdaq Stock Market.
On July 9, 2010, the Nasdaq Hearings Panel granted our request to remain listed
on The Nasdaq Stock Market, subject to certain conditions. One of these
conditions included us informing the Panel on or about July 28, 2010 that we had
obtained shareholder approval to implement a reverse stock split in a ratio
sufficient to meet the $1.00 bid price requirement for continued listing set
forth in Nasdaq Listing Rule 5550(a)(2).
4
On July
28, 2010, we held our Annual Meeting in Toronto, Ontario Canada. One of
the proposals that was voted on by our stockholders at the Annual Meeting was
whether or not to approve a proposed Amendment to our Restated Certificate of
Incorporation to, among other things, effect a reverse stock split in a ratio of
not less than 1-for-3 and not more than 1-for-10 at any time prior to July 27,
2011 (the ratio and timing of which will be subject to the discretion of the
Board of Directors) and, following the reverse stock split, to maintain the
authorized shares of common stock at 750,000,000 (collectively the “Proposed
Amendment”). Although 60.62% of the voting stockholders voted in favor of
the Proposed Amendment, it was not approved because a favorable vote from the
holders of at least 50% of the outstanding shares would have been needed to
approve it. We attribute the shortfall in votes cast to a recent change in
the broker voting rules, which prohibits brokers holding shares in street name
to vote those shares on a reverse stock split proposal in the absence of an
instruction from the beneficial owner (such proxy proposals are now for the
first time considered “non-routine” matters).
As a
consequence of Generex’s failure to meet the Nasdaq Hearings Panel’s condition
that we obtain shareholder approval of a reverse stock split, Generex may be
delisted from The Nasdaq Stock Market.
We have
reported the above results to the Nasdaq Hearings Panel, and requested
additional time to hold the special meeting dedicated to approving the Reverse
Stock Split. To date, NASDAQ has taken no further action to delist
Generex, nor has the Hearings Panel formally responded to our request. We
have been informally advised that the Hearings Panel will hold the status quo
and allow Generex to attempt to authorize and then effect the Reverse Stock
Split, subject to all of the other original conditions. Even if the
Reverse Stock Split is effected, we will continue to be required to attain and
maintain the $1.00 minimum price within the original time parameters. This
will be much more difficult than if the Reverse Stock Split had been authorized
at the Annual Meeting.
The Board
of Directors approved the Reverse Stock Split proposal in part as a potential
means of increasing the share price of our common stock in anticipation of our
receipt of a delisting notice from NASDAQ.
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The
Reverse Stock Split is intended to raise the bid price of the common stock to
satisfy the $1.00 minimum bid price requirement. However, there can be no
assurance that the Reverse Stock Split, if implemented, will have the desired
effect of sufficiently raising the common stock price.
What
will happen if Generex’s common stock is delisted from NASDAQ?
If our
common stock is delisted, the stock would then be eligible for quotation on the
Over-The-Counter (OTC) Bulletin Board maintained by NASDAQ, on another
over-the-counter quotation system or on the “pink sheets.”
If our
common stock is delisted from NASDAQ and our public float falls below $75
million, we may become ineligible to use the SEC Form S-3 to register additional
shares of common stock for issuance by us in certain circumstances and to
register additional shares of common stock for resale by others. This will
make it more difficult and more expensive for us to register any additional
securities, which may adversely affect our ability to raise additional
funds.
In
addition, if our common stock is delisted from NASDAQ, the liquidity and
marketability of shares of our common stock would decrease. As a result, an
investor might find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of our common stock. If our common stock were
to be delisted and the trading price of the common stock were to continue to be
less than $1.00 per share, trading in our common stock would also be subject to
certain rules under the 1934 Act which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
“penny stock” involving persons other than established customers and accredited
investors. The additional burdens imposed upon broker-dealers might discourage
broker-dealers from effecting transactions in our common stock, which might
further affect the liquidity of our common stock. For these reasons, we believe
that current and prospective investors will view an investment in our common
stock more favorably if the shares remain listed on The NASDAQ Capital Market
than if our common stock trades on the OTC Bulletin Board or similar trading
systems.
Why
is the Board requesting discretion to determine the reverse split ratio and to
effect the Reverse Stock Split?
The Board
of Directors believes that the availability of a range of reverse split ratios
will provide the Board with the flexibility to implement the Reverse Stock Split
in a manner designed to maximize the anticipated benefits for Generex and its
stockholders. In determining which reverse stock split ratio to implement,
if any, following the receipt of stockholder approval, the Board of Directors
may consider, among other things, factors such as:
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the
historical trading price and trading volume of the common
stock;
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the
then prevailing trading price and trading volume of the common stock and
the anticipated impact of the Reverse Stock Split on the trading market
for the common stock;
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which
reverse split ratio would result in the greatest overall reduction in
Generex’s administrative costs;
and
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prevailing
general market and economic
conditions.
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5
To effect
the Reverse Stock Split, the Board would set the timing for such a split and
select the specific ratio from the range of ratios described in this proxy
statement. No further action on the part of stockholders will be required to
either implement or abandon the Reverse Stock Split. If the proposal is approved
by stockholders, and the Board determines to implement any of the reverse stock
split ratios, we would communicate to the public, prior to the effective date of
the Reverse Stock Split, additional details regarding the Reverse Stock Split,
including the specific ratio the Board selects.
Although
the Board of Directors requests stockholder approval of the proposed amendment
to the Restated Certificate of Incorporation, the Board reserves the authority
to decide, in its discretion, to abandon or delay the Reverse Stock Split after
such vote. For example, the Board may decide in its discretion to abandon
or delay the Reverse Stock Split if Generex were to gain compliance with the
NASDAQ Capital Market continued listing requirements at the time of the special
meeting or soon thereafter. If the Board fails to effect the Reverse Stock
Split within twelve months after the special meeting, stockholder approval again
would be required prior to implementing any subsequent reverse stock
split.
What
are the anticipated effects of the Reverse Stock Split on existing stockholders
of Generex?
The
number of shares of common stock held by each stockholder will be reduced as a
result of the Reverse Stock Split. For example, if the Board of Directors
selects a reverse split ratio of 1-to-5, a stockholder holding 5,000 shares of
common stock before the Reverse Stock Split would hold 1,000 shares of common
stock immediately after the Reverse Stock Split. Any outstanding options
or warrants would also be adjusted by the same reverse split ratio. We
will not issue fractional shares of common stock. Where a stockholder
would have been entitled to a fractional share, we will round up fractional
shares to the nearest whole share. Each stockholder's proportionate ownership of
outstanding shares of common stock would remain the same, except for minor
differences resulting from the rounding up of fractional shares. A reverse
stock split may leave certain stockholders with one or more "odd lots," which
are stock holdings in amounts of fewer than 100 shares of common stock.
These odd lots may be more difficult to sell than shares of common stock
in even multiples of 100. Stockholders selling odd lots created by the
Reverse Stock Split may incur increased brokerage commissions in selling such
shares.
Except
for de minimis adjustments that may result from the treatment of fractional
shares as described above, the Reverse Stock Split will not have any dilutive
effect on our stockholders since each stockholder would hold the same percentage
of our common stock outstanding immediately following the Reverse Stock Split as
such stockholder held immediately prior to the Reverse Stock Split. The relative
voting and other rights that accompany the shares of common stock would not be
affected by the Reverse Stock Split.
Although
the Reverse Stock Split will not have any dilutive effect on our stockholders,
the proportion of shares owned by our stockholders relative to the number of
shares authorized for issuance will decrease because the Amendment will reduce
the number of authorized of shares of common stock only to 500,000,000 unless
the Board of Directors utilizes a ratio of not more than 1-for-2, in which case,
the number of authorized shares of common stock will remain at the current level
of 750,000,000..
The
following table shows the number of shares that would be (a) issued and
outstanding, (b) authorized and reserved for issuance upon the exercise of
outstanding capital stock options and warrants (assuming vesting of all
nonvested shares underlying such options and warrants), and (c) authorized
and unreserved for issuance, and (d) total authorized, in each case upon the
implementation of the Reverse Stock Split at a ratio of 1-for-2, a ratio of
1-for-3 and a ratio of 1-for-10 based on our capitalization as of the record
date of August 17, 2010.
|
As of August 17, 2010
|
Shares
Issued and
Outstanding
|
Shares
Authorized
and
Reserved for
Issuance(1)
|
Shares
Authorized
and
Unreserved
|
Total
Authorized
|
||||||||||||
|
Pre-Split
|
[ | ] | [ | ] | [ | ] | 750,000,000 | |||||||||
|
If
1-for-2 stock split enacted
|
[ | ] | [ | ] | [ | ] | 750,000,000 | |||||||||
|
If
1-for -3 stock split enacted
|
[ | ] | [ | ] | [ | ] | 500,000,000 | |||||||||
|
If
1-for -10 stock split enacted
|
[ | ] | [ | ] | [ | ] | 500,000,000 | |||||||||
|
(1)
|
Shares which are authorized and
reserved for issuance upon the exercise of outstanding options and
warrants, assuming the vesting of all nonvested shares underlying such
options and warrants.
|
6
The
additional authorized but unissued shares of common stock that would become
available if the Reverse Stock Split is effected may be used for various
purposes, including, without limitation, raising capital, providing equity
incentives to employees, officers or directors, effecting stock dividends, and
establishing strategic relationships with other companies and expanding
Generex’s business or product lines through the acquisition of other businesses
or products. In order to support our projected need and timetable for additional
equity capital and to provide flexibility to raise the capital necessary to
finance ongoing operations, the Board of Directors believes the number of shares
of common stock we are authorized to issue should be maintained at a
proportionately higher level than would be available if the number of authorized
shares was reduced by the Reverse Stock Split ratio – either at 500,000,000 or,
in the event the Board of Directors utilizes a ratio of no more than 1-for-2, at
750,000,000.
At the
present time, we do not currently have any plans to issue any of the authorized
but unissued shares of common stock that would become available for issuance if
the Reverse Stock Split proposal is approved by our stockholders and
subsequently effected by the Board of Directors. Even if the Reverse Stock
Split is effected, we will be required to obtain stockholder approval prior to
the issuance of authorized stock, in certain circumstances, including if (1) the
issuance would result in a change of control of Generex, (2) shares are issued
to purchase the stock or assets of another company if a director, officer or
substantial stockholder of Generex had a 5% or greater interest (or such persons
had collectively a 10% or greater interest) in the company or assets to be
acquired, or in consideration to be paid in the transaction, and certain other
conditions applied, (3) greater than 20% of Generex’s common stock or voting
power outstanding prior to the issuance of shares is issued, and (4) if shares
are issued pursuant to a new or amended employee option plan.
What
are the anticipated effects of the Reverse Stock Split on the market for our
common stock?
The Board
of Directors believes that an increased stock price could enhance the appeal of
our common stock to the financial community, including institutional investors,
and the general investing public. Because of the trading volatility often
associated with low-priced stocks, many brokerage firms and institutional
investors have internal policies and practices that either prohibit them from
investing in low-priced stocks or tend to discourage individual brokers from
recommending low-priced stocks to their customers. Some of these policies
and practices pertain to the payment of brokers' commissions and to
time-consuming procedures that make the handling of lower-priced stocks
unattractive to brokers from an economic standpoint. We believe that the
anticipated higher market price resulting from a reverse stock split would
better enable institutional investors and brokerage firms with such policies and
practices to invest in our common stock. There can be no assurance that
this will be the case, however.
What
are the anticipated effects of the Amendment on our authorized and outstanding
shares?
If and
when the Board of Directors elects to effect the Reverse Stock Split, the
authorized number of shares of our common stock will be reduced to 500,000,000
or, in the event the Board of Directors utilizes a ratio of no more than
1-for-2, to 750,000,000. Accordingly, there will be a reduction in the
number of authorized shares of our common stock at a proportionately higher
level than would be available if the number of authorized shares was reduced by
the Reverse Stock Split ratio or, in the event that the Board of Directors
selects a Reverse Stock Split ratio of not more than 1-for-2, no reduction in
the number of authorized shares. As a result, the proportion of shares owned by
our stockholders relative to the number of shares authorized for issuance will
decrease, and the additional authorized shares of common stock will be available
for issuance at such times and for such purposes as the Board of Directors may
deem advisable without further action by our stockholders, except as required by
applicable laws and regulations. Because our common stock is traded on The
NASDAQ Capital Market, stockholder approval must be obtained, under applicable
NASDAQ rules, prior to the issuance of shares for certain purposes, including
the issuance of shares of Generex’s common stock equal to or greater than 20% of
the then outstanding shares of common stock in connection with a private
refinancing or an acquisition or merger, unless an exemption is available from
such approval. Such an exemption would be available if the Board authorized the
filing of an application with NASDAQ to waive the shareholder vote requirement
if it believed the delay associated with securing such vote would seriously
jeopardize our financial viability and NASDAQ granted us such an
exemption.
The
additional shares of our common stock to be authorized will be a part of the
existing class of common stock and, if and when issued, would have the same
rights and privileges as the shares of our common stock presently issued and
outstanding.
What
are the anticipated effects of the Reverse Stock Split on our stock
plans?
The
Reverse Stock Split, when implemented, will affect outstanding stock awards and
options to purchase our common stock. Each of Generex’s 2000 Stock Option
Plan, 2001 Stock Option Plan, as amended, and 2006 Stock Plan, as amended
(collectively, the "Plans"), includes provisions for appropriate adjustments to
the number of shares of common stock covered by each such plan and to stock
options and other grants of stock-based awards under the Plan, as well as the
per share exercise price. If
stockholders approve the Reverse Stock Split and the Board of Directors selects
a reverse split ratio of 1-to-5, an outstanding stock option to purchase five
shares of common stock would thereafter evidence the right to purchase one share
of common stock consistent with the reverse stock split ratio, and the exercise
price per share would be a corresponding multiple of the previous exercise
price. For example, a pre-split option for 500 shares of common stock with
an exercise price of $0.50 per share would be converted post-split into an
option to purchase 100 shares of common stock with an exercise price of $2.50
per share. Further, the number of shares of common stock reserved for
issuance under the plans will be reduced by the same ratio.
7
Will
the Reverse Stock Split have any effect on Generex?
We expect
our business and operations to continue as they are currently being conducted
and the Reverse Stock Split is not anticipated to have any effect upon the
conduct of our business. We expect to incur expenses of approximately
$50,000 to effect the Reverse Stock Split.
What
effect will the Reverse Stock Split on Generex’s registration under the Exchange
Act?
Our
common stock is currently registered under Section 12(b) of the Securities
Exchange Act of 1934 ("Exchange Act"), and we are subject to the periodic
reporting and other requirements of the Exchange Act. As of August 17,
2010, we had xxx holders of record of our common stock (although we have
significantly more beneficial holders). We do not expect the Reverse Stock Split
and the rounding up of fractional shares to result in a significant reduction in
the number of record holders. We do presently does not intend to seek any
change in our status as a reporting company for federal securities law purposes,
either before or after the Reverse Stock Split.
If the
Reverse Stock Split is implemented, we currently expect that the common stock
will continue to be traded on the NASDAQ Capital Market under the symbol "GNBT",
provided that we meet the continued listing requirements (although NASDAQ would
likely add the letter "D" to the end of the trading symbol for a period of 20
trading days to indicate that the Reverse Stock Split has
occurred).
Will
the Reverse Stock Split have any potential anti-takeover or dilutive
effect?
The
purpose of maintaining our authorized common stock at a proportionately higher
level than would be available if the number of authorized shares was reduced by
the Reverse Stock Split ratio – either 500,000,000 or 750,000,000 depending on
the Reverse Stock Split ratio - is to facilitate our ability to raise additional
capital to support our operations, not to establish any barriers to a change of
control or acquisition of the company. The common shares that are authorized but
unissued provide our Board of Directors with flexibility to effect, among other
transactions, public or private refinancings, acquisitions, stock dividends,
stock splits and the granting of equity incentive awards. However, these
authorized but unissued shares may also be used by the Board of Directors,
consistent with and subject to its fiduciary duties, to deter future attempts to
gain control of us or make such actions more expensive and less desirable. The
Amendment would give our Board of Directors authority to issue additional shares
from time to time without delay or further action by the shareholders except as
may be required by applicable law or the NASDAQ rules. The Amendment is not
being recommended in response to any specific effort of which we are aware to
obtain control of Generex, nor does the Board of Directors have any present
intent to use the authorized but unissued common stock to impede a takeover
attempt.
In
addition, the issuance of additional shares of common stock for any of the
corporate purposes listed above could have a dilutive effect on earnings per
share and the book or market value of our outstanding common stock, depending on
the circumstances, and would likely dilute a shareholder’s percentage voting
power in the company. Holders of our common stock are not entitled to preemptive
rights or other protections against dilution. Our Board of Directors intends to
take these factors into account before authorizing any new issuance of
shares.
Are
there risks associated with the Reverse Stock Split?
Yes,
there are certain risks associated with the Reverse Stock Split, including
without limitation those described below.
There
can be no assurance that the total market capitalization of our common stock
(the aggregate value of all Generex common stock at the then market price) after
the implementation of the Reverse Stock Split will be equal to or greater
than the total market capitalization before the Reverse Stock Split or that the
per share market price of our common stock following the Reverse Stock Split
will increase in proportion to the reduction in the number of shares of our
common stock outstanding before the Reverse Stock Split.
There can
be no assurance that the market price per share of our common stock after the
Reverse Stock Split will remain unchanged or increase in proportion to the
reduction in the number of old shares of our common stock outstanding before the
Reverse Stock Split. For example, based on the closing price of our common stock
on August 13, 2010 of $0.XX per share, if the Board were to implement the
Reverse Stock Split and utilize a ratio of 1-for-5, we cannot assure you that
the post-split market price of our common stock would be $X.XX (that is,
$0.XX × 5) per share or greater. In many cases, the market price
of a company’s shares declines after a reverse
stock split.
8
Accordingly,
the total market capitalization of our common stock after the Reverse Stock
Split, when and if implemented, may be lower than the total market
capitalization before the Reverse Stock Split. Moreover, in the future, the
market price of our common stock following the Reverse Stock Split may not
exceed or remain higher than the market price prior to the Reverse Stock
Split.
The
Reverse Stock Split may not increase our stock price over the long-term, which
may prevent us from qualifying for listing with NASDAQ.
While we
expect that the Reverse Stock Split, together with other actions required to
meet applicable listing standards, will enable our shares to qualify for listing
with NASDAQ and that we will be able to continue to meet on-going quantitative
and qualitative listing requirements, we cannot be sure that this will be the
case. Negative financial results, adverse clinical trials developments, or
market conditions could adversely affect the market price of our common stock
and jeopardize our ability to meet or maintain applicable NASDAQ listing
requirements. Furthermore, in addition to its enumerated listing and maintenance
standards, NASDAQ has broad discretionary authority over the initial and
continued listing of securities, which it could exercise with respect to our
shares.
If
the Reverse Stock Split is effected, the resulting per-share stock price may not
attract institutional investors or investment funds and may not satisfy the
investing guidelines of such investors and, consequently, the trading liquidity
of our common stock may not improve.
While the
Board believes that a higher stock price may help generate investor interest,
there can be no assurance that the Reverse Stock Split will result in a
per-share price that will attract institutional investors or investment funds or
that such share price will satisfy the investing guidelines of institutional
investors or investment funds. As a result, the trading liquidity of our common
stock may not necessarily improve.
A
decline in the market price of our common stock after the Reverse Stock Split is
implemented may result in a greater percentage decline than would occur in the
absence of the Reverse Stock Split, and the liquidity of our common stock could
be adversely affected following the Reverse Stock Split.
If the
Reverse Stock Split is effected and the market price of our common stock
declines, the percentage decline may be greater than would occur in the absence
of the Reverse Stock Split. The market price of our common stock will, however,
also be based on our performance and other factors, which are unrelated to the
number of shares of common stock outstanding. Furthermore, the liquidity of our
common stock could be adversely affected by the reduced number of shares that
would be outstanding after the Reverse Stock Split.
How
will the Reverse Stock Split be effected?
If
approved by shareholders at the special meeting and our Board of Directors
concludes that it is in the best interests of Generex and its stockholders to
effect the Reverse Stock Split, the Amendment will be filed with the Delaware
Secretary of State. The actual timing of the filing of the Amendment with the
Delaware Secretary of State to effect the Reverse Split will be determined by
the Board of Directors but will be no later than twelve months following the
approval of this Item
1. Also, if for any reason the Board of Directors deems it advisable to
do so, the Reverse Split may be abandoned at any time prior to the filing of the
Amendment, without further action by our shareholders. The Reverse Split will be
effective as of the date of filing with the Delaware Secretary of State (the
“Effective Time”). We will issue a press release and file a Form 8-K
pre-announcing the filing of the Amendment prior to its effective filing
date.
Upon the
filing of the Amendment, without further action on the part of us or the
stockholders, the outstanding shares of common stock held by stockholders of
record as of the Effective Time would be converted into a lesser number of
shares of common stock based on a Reverse Stock Split ratio of one-for-two to
one-for-ten. For example, if you presently hold 1,000 shares of our common
stock, you would hold between 500 and 100 shares of our common stock
following the Reverse Stock Split.
Will
Generex issue fractional shares in connection with the Reverse Stock
Split?
The Board
of Directors does not currently intend to issue fractional shares in connection
with the Reverse Stock Split. Therefore, we do not expect to issue certificates
representing fractional shares. Stockholders of record who would otherwise hold
a fractional share because the number of shares of common stock they hold before
the Reverse stock Split is not evenly divisible by the split ratio will be
entitled to have their fractional share rounded up to the next whole
number.
9
How
do I exchange my pre-reverse stock split certificates for new post-reverse stock
split certificates?
If we
implement the Reverse Stock Split, our transfer agent will act as our exchange
agent for purposes of implementing the exchange of stock
certificates.
On or
after the Effective Time, the exchange agent will mail a letter of transmittal
to each stockholder. Each stockholder will be able to obtain a certificate
evidencing his, her or its post-Reverse Stock Split shares only by sending the
exchange agent the stockholder’s old stock certificate(s), together with the
properly executed and completed letter of transmittal and such evidence of
ownership of the shares as we may require. Stockholders will not receive
certificates for post-Reverse Stock Split shares unless and until they surrender
their old certificates. You should not forward your certificates to the
exchange agent until you receive the letter of transmittal, and you should only
send in your certificates with the letter of transmittal. If you elect to
receive a new stock certificate in the letter of transmittal, the exchange agent
will send you a new stock certificate after receipt of your properly completed
letter of transmittal and old stock certificate(s). If you surrender your
old stock certificate(s) but do not elect to receive a new stock certificate in
the letter of transmittal, you will hold that your shares electronically in
book-entry form with our transfer agent as described below. You will not have to
pay any service charges in connection with the exchange of your
certificates.
Certain
of our registered holders of common stock hold some or all of their shares
electronically in book-entry form with our transfer agent. These shareholders do
not have stock certificates evidencing their ownership of our common stock. They
are, however, provided with a statement reflecting the number of shares
registered in their accounts. If you hold all of your shares of common
stock electronically in book-entry form with our transfer agent, you do not need
to take any action as your holdings will be electronically adjusted by our
transfer agent to give effect to the Reverse Stock Split.
Upon the
Reverse Stock Split, we intend to treat shares of common stock held by
stockholders in "street name," that is, through a bank, broker or other nominee,
in the same manner as stockholders whose shares of common stock are registered
in their names. Banks, brokers or other nominees will be asked to effect
the Reverse Stock Split for their beneficial holders holding the common stock in
"street name." However, these banks, brokers or other nominees may have
different procedures than registered stockholders for processing the Reverse
Stock Split. If you hold shares of common stock with a bank, broker or
other nominee and have any questions in this regard, you are encouraged to
contact your bank, broker or other nominee directly.
You
should not send your certificates now. You should send them only after you
receive the letter of transmittal from our exchange agent.
The par
value per share of our common stock will remain unchanged at $0.001 per share
after the Reverse Stock Split. As a result, as of the Effective Date, the
stated capital on Generex’s consolidated balance sheet attributable to Generex
common stock will be reduced and the additional paid-in-capital account will be
increased by the amount by which the stated capital is reduced. Per share
net income or loss will be increased because there will be fewer shares of
common stock outstanding. We do not anticipate that any other accounting
consequences, including changes to the amount of stock-based compensation
expense to be recognized in any period, will arise as a result of the Reverse
Stock Split. The number of authorized shares of common stock will be
reduced from 750,000,000 to 500,000,000 unless the Board of Directors utilizes a
ratio of not more than 1-for-2, in which case, the number of authorized shares
of common stock will be maintained at 750,000,000.
What
are the federal income tax consequences of the Reverse Stock Split?
The
following is a summary of certain U.S. federal income tax consequences relating
to the Reverse Stock Split as of the date hereof. This summary addresses only
U.S. holders who hold their shares of Common Stock as a capital asset for U.S.
federal income tax purposes (i.e., generally, property held for
investment).
For
purposes of this summary, a “U.S. holder” means a beneficial owner of common
stock who is any of the following for U.S. federal income tax purposes: (i) an
individual who is a citizen or resident of the United States, (ii) a corporation
created or organized in or under the laws of the United States, any state
thereof, or the District of Columbia, (iii) an estate the income of which is
subject to U.S. federal income taxation regardless of its source, or (iv) a
trust if (1) its administration is subject to the primary supervision of a court
within the United States and one or more U.S. persons have the authority to
control all of its substantial decisions, or (2) it has a valid election in
effect under applicable U.S. Treasury regulations to be treated as a U.S.
person.
This
summary is based on interpretations of the Internal Revenue Code of 1986, as
amended (the “Code”), and regulations, rulings and judicial decisions as of the
date hereof. These authorities may be changed, perhaps retroactively, and may
adversely affect the U.S. federal income tax consequences described herein. This
summary does not discuss all of the tax consequences that may be relevant to
particular stockholders or to stockholders subject to special treatment under
U.S. federal income tax laws (such as banks and other financial institutions,
insurance companies, real estate investment trusts, regulated investment
companies, personal holding companies, foreign entities, nonresident alien
individuals, broker-dealers, tax-exempt entities, partnerships, and stockholders
who hold common stock as part of a position in a straddle or as part of a
hedging, conversion or integrated transaction).
10
Moreover,
this description does not address the U.S. federal estate and gift tax,
alternative minimum tax, state, local, foreign or other tax consequences of the
Reverse Stock Split.
You
should consult your own tax adviser concerning the particular U.S. federal tax
consequences of the Reverse Stock Split, as well as any consequences arising
under the laws of any other taxing authority, such as any state, local or
foreign income tax consequences to which you may be subject.
To ensure
compliance with Treasury Department Circular 230, each holder of common stock is
hereby notified that: (a) any discussion of U.S. federal tax issues in this
proxy statement is not intended or written to be used, and cannot be used, by
such holder for the purpose of avoiding penalties that may be imposed on such
holder under the Code; (b) any such discussion has been included by Generex in
furtherance of the Reverse Stock Split on the terms described herein; and (c)
each such holder should seek advice based on its particular circumstances from
an independent tax advisor.
Generally,
the Reverse Stock Split will not result in the recognition of gain or loss by a
U.S. holder for U.S. federal income tax purposes. The aggregate adjusted basis
of the post-Reverse Stock Split shares will be the same as the aggregate
adjusted basis of the pre-Reverse Stock Split shares. The holding period of the
post-Reverse Stock Split shares will include a U.S. holder’s holding periods for
the pre-Reverse Stock Split shares.
The
Federal income tax consequence of the receipt of an additional share of common
stock in lieu of a fractional interest is not clear. If the receipt of a
portion of an additional share of common stock is taxed as a dividend, however,
any tax liability association with such receipt is not expected to be
material.
Generex
will not recognize any gain or loss as a result of the Reverse Stock
Split.
Am
I entitled to dissenters’ or appraisal rights in connection with the proposed
Amendment?
The
holders of shares of common stock will have no dissenters' rights of appraisal
under Delaware law, our Restated Certificate of Incorporation or our Amended and
Restated Bylaws with respect to the Amendment to accomplish the Reverse Stock
Split.
How
many votes are needed for this proposal and how are the votes
counted?
The
affirmative vote of a majority of the shares of common stock entitled to vote
thereon is required to approve the Amendment to our Restated Certificate of
Incorporation to accomplish the Reverse Stock Split and to reduce the number of
authorized shares of common stock from 750,000,000 to 500,000,000 unless the
Board of Directors utilizes a ratio of not more than 1-for-2, in which case, the
number of authorized shares of common stock will be maintained at 750,000,000..
The effect of an abstention or broker non-vote is the same as that of a
vote against the proposal.
How
does the Board of Directors recommend that I vote?
We
recommend that you vote FOR
the approval of the amendment to our Restated Certificate of
Incorporation, subject to the Board’s discretion, to effect the Reverse Stock
Split of the common stock and, following the Reverse Stock Split, to reduce the
number of authorized shares of common stock from 750,000,000 to 500,000,000
unless the Board of Directors utilizes a ratio of not more than 1-for-2, in
which case, the number of authorized shares of common stock will be maintained
at 750,000,000.
11
APPROVAL
OF THE ADJOURNMENT OF THE GENEREX SPECIAL MEETING, IF
NECESSARY
TO SOLICIT
ADDITIONAL PROXIES FOR THE REVERSE STOCK SPLIT PROPOSAL
(ITEM
2 ON THE PROXY CARD)
What
am I voting on?
Generex
is asking its stockholders to vote on a proposal to approve the adjournment of
the Generex special meeting, if necessary, to solicit additional proxies for the
proposal set forth as Item 1 on the Proxy Card.
How
many votes are needed for this proposal and how are the votes
counted?
Approval
of adjournment of the Generex special meeting, if necessary, to solicit
additional proxies requires the affirmative vote of a majority of the votes cast
by the holders of Generex common stock entitled to vote thereon at the special
meeting, assuming a quorum is present. For purposes of this vote, an
abstention or a failure to vote will not affect whether the proposal is approved
once a quorum is established.
How
does the Board of Directors recommend that I vote?
We
recommend that you vote FOR
the approval to adjourn the Generex special meeting, if necessary,
to solicit additional proxies for the proposal set forth as Item 1 on the Proxy
Card.
OTHER
MATTERS
The
Generex board of directors is not aware of any other business that may be
brought before the special meeting.
12
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table
on the following pages sets forth information regarding the beneficial ownership
of the common stock by:
|
·
|
Our executive officers and
directors;
|
|
·
|
All directors and executive
officers as a group; and
|
|
·
|
Each person known to us to
beneficially own more than five percent (5%) of our outstanding shares of
common stock.
|
The
information contained in these tables is as of August 4, 2010, except as
indicated below. At that date, we had 269,279,225 shares of common stock
outstanding.
A person
is deemed to be a beneficial owner of shares if he has the power to vote or
dispose of the shares. This power can be exclusive or shared, direct or
indirect. In addition, a person is considered by SEC rules to beneficially own
shares underlying options or warrants that are presently exercisable or that
will become exercisable within sixty (60) days.
Except as
otherwise indicated, the address of each person named in the table below is c/o
Generex Biotechnology Corporation, 33 Harbour Square, Suite 202, Toronto, Canada
M5J 2G2.
Beneficial
Ownership
|
Name of Beneficial Owner
|
Number of
Shares
|
Percent of
Class
|
||||||
|
(i)
Directors and Executive Officers
|
||||||||
|
John
P. Barratt (1)
|
459,047 | * | ||||||
|
Mark
Fletcher (2)
|
1,086,803 | * | ||||||
|
Anna
E. Gluskin (3)
|
2,767,164 | 1.0 | % | |||||
|
Rose
C. Perri (4)
|
5,189,887 | 1.9 | % | |||||
|
Brian
T. McGee (5)
|
389,047 | * | ||||||
|
Nola
Masterson (6)
|
83,333 | * | ||||||
|
Officers
and Directors as a group (6 persons)
|
10,177,981 | 3.8 | % | |||||
|
(ii)
Other Beneficial Owners (and their addresses)
|
||||||||
|
EBI,
Inc. In Trust(7)
|
||||||||
|
c/o
Miller & Simons
|
||||||||
|
First
Floor, Butterfield Square
|
||||||||
|
P.O.
Box 260
|
||||||||
|
Providencials
|
||||||||
|
Turks
and Caicos Islands
|
||||||||
|
British
West Indies
|
1,441,496 | * | % | |||||
|
GHI,
Inc. In Trust (8)
|
||||||||
|
c/o
Miller & Simons
|
||||||||
|
First
Floor, Butterfield Square
|
||||||||
|
P.O.
Box 260
|
||||||||
|
Providencials
|
||||||||
|
Turks
and Caicos Islands
|
||||||||
|
British
West Indies
|
1,907,334 | * | % | |||||
|
Cranshire
Capital, L.P. (9)
|
||||||||
|
3100
Dundee Road, Suite 703
|
||||||||
|
Northbrook,
Illinois 60062
|
12,331,859 | 4.6 | % | |||||
* Less than 1%.
13
|
(1)
|
Includes
70,000 shares, 70,000, 100,000 and 35,714 shares issuable upon exercise of
stock options under the 2001 Plan the expiration dates of which were
extended on October 26, 2009, 33,333 shares issuable upon exercise of
stock options granted on March 8, 2010 under the 2006 Plan which are
vested as of date of this proxy statement, and 150,000 shares of
restricted stock awarded on May 30, 2006 under the 2006
Plan.
|
|
(2)
|
Includes
91,077 shares, 470,726 and 250,000 shares issuable upon exercise of stock
options under the 2001 Plan the expiration dates of which were extended on
October 26, 2009, 100,000 shares issuable upon exercise of stock options
granted on March 8, 2010 under the 2006 Plan which are vested as of date
of this proxy statement, and 175,000 shares of restricted stock granted in
August 2007 under 2006 Stock Plan.
|
|
(3)
|
Includes
26,127 shares held by Ms. Gluskin, 953,667 shares owned of record by GHI,
Inc. that are beneficially owned by Ms. Gluskin, 250,000 and 1,120,704
shares issuable upon exercise of stock options under the 2001 Plan the
expiration dates of which were extended on October 26, 2009,,200,000
shares of restricted stock granted in August 2007 under 2006 Stock Plan,
37,500 shares issuable upon the exercise of options granted on May 27,
2008 under the 2006 Stock Plan, and 166,666 shares issuable upon exercise
of stock options granted on March 8, 2010 under the 2006 Plan which are
vested as of date of this proxy
statement..
|
|
(4)
|
Includes
229,726 shares held by Ms. Perri, 953,667 shares owned of record by
GHI, Inc. that are beneficially owned by Ms. Perri, 250,000 and 576,752
shares issuable upon exercise of stock options under the 2001 Plan the
expiration dates of which were extended on October 26, 2009, 175,000
shares of restricted stock granted in August 2007 under 2006 Stock Plan,
93,750 shares issuable upon the exercise of options granted on May 27,
2008 under the 2006 Stock Plan and 133,333 shares issuable upon exercise
of stock options granted on March 8, 2010 under the 2006 Plan which are
vested as of date of this proxy statement.. Also includes the shares that
are owned by the estate of Mr. Mark Perri, of which Ms. Perri is executor
and beneficiary, but is not considered to beneficially own for some
purposes: 45,914 shares previously owned of record by Mr. Mark Perri;
1,100,000 shares owned of record by EBI, Inc. (of which Mr. Mark Perri was
beneficial owner); 305,332 shares held of record by brokerage accounts.
Also includes 341,496 shares owned of record by EBI, Inc., which Ms. Perri
may be deemed to beneficially own because of the power to vote the shares
but which are beneficially owned by other stockholders because they are
entitled to the economic benefits of the shares. Ms. Perri is also deemed
to beneficially own an additional 953,667 shares owned of record by GHI,
Inc. by holding the right to vote such shares. These shares are also
beneficially owned by Ms. Gluskin.
|
|
(5)
|
Includes
100,000 shares, 70,000, 100,000 and 35,714 shares issuable upon exercise
of stock options under the 2001 Plan the expiration dates of which were
extended on October 26, 2009, 33,333 shares issuable upon exercise of
stock options granted on March 8, 2010 under the 2006 Plan which are
vested as of date of this proxy statement and 150,000 shares of restricted
stock awarded on May 30, 2006 under the 2006
Plan.
|
|
(6)
|
Includes
50,000 shares of restricted common stock granted on August 17, 2007 under
the 2006 Plan and 33,333 shares issuable upon exercise of stock options
granted on March 8, 2010 under the 2006 Plan which are vested as of date
of this proxy statement
|
|
(7)
|
All
of these shares were previously beneficially owned by Mr. Mark Perri but
are now deemed to be beneficially owned by Ms. Perri because she has the
sole power to vote the shares. With respect to 1,100,000 of the shares
owned of record by EBI, Inc., Ms. Perri also has investment power and
otherwise is entitled to the economic benefits of
ownership.
|
|
(8)
|
Ms.
Gluskin and Ms. Perri each own beneficially 953,667 of the shares owned of
record by GHI, Inc. by reason of their ownership of investment power and
other economic benefits associated with such shares. The shares
beneficially owned by Ms. Gluskin also are deemed to be beneficially owned
by Ms. Perri because she has the sole power to vote the
shares.
|
|
(9)
|
As
reported in Amendment No. 2 to Schedule 13G filed with the SEC on February
12, 2010, Downsview Capital, Inc. (“Downsview”) is the general partner of
Cranshire Capital, L.P. (“Cranshire”) and consequently has voting
control and investment discretion over securities held by Cranshire.
Mitchell P. Kopin (“Mr. Kopin”), President of Downsview, has voting
control over Downsview. As a result of the foregoing, each of Mr. Kopin
and Downsview may be deemed to have beneficial ownership (as determined
under Section 13(d) of the Securities Exchange Act of 1934, as amended) of
any shares of common stock of Generex deemed to be beneficially owned by
Cranshire. The number of shares assumes that there has been no
change in the number of shares beneficially owned from the number of
shares reported as being beneficially owned in Amendment No. 2 to Schedule
13G.
|
14
OTHER
INFORMATION
Annual
Report
Copies of
our Annual Report on Form 10-K for the fiscal year ended July 31, 2009 (without
exhibits or documents incorporated by reference therein), are available without
charge to stockholders upon written request to the Secretary of Generex at
Generex Biotechnology Corporation, 33 Harbour Square, Suite 202, Toronto,
Ontario, Canada M5J 2G2, by calling 305-918-7000 or via the Internet at www.generex.com.
Stockholders
are referred to the report for financial and other information about Generex,
but such report is not incorporated in this proxy statement and is not a part of
the proxy soliciting material.
15
Appendix
A
FORM OF
CERTIFICATE OF AMENDMENT
TO
RESTATED
CERTIFICATE OF INCORPORATION
OF
GENEREX
BIOTECHNOLOGY CORPORATION
Generex
Biotechnology Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
“DGCL”),
DOES
HEREBY CERTIFY:
FIRST:
That, in accordance with Section 242 of the DGCL, the Board of Directors of
Generex Biotechnology Corporation (the “Corporation”), by unanimous written
consent filed with the minutes of the Board of Directors, duly adopted by
resolution the amendment (the “Amendment”) to the Corporation’s Restated
Certificate of Incorporation (the “Certificate of Incorporation”) and directed
that said Amendment be submitted to the stockholders of the Corporation for
consideration.
SECOND: That
thereafter, the holders of a majority of the outstanding stock of the
Corporation entitled to vote thereon approved the Amendment at a special meeting
of the Corporation’s stockholders in accordance with Section 242 of the
DGCL.
THIRD:
Effective upon the filing of this Certificate of Amendment with the Delaware
Secretary of State, the Certificate of Incorporation is hereby amended by
deleting Article FOURTH in its entirety and replacing it with the
following:
“FOURTH:
The aggregate number of shares of all classes of stock that this Corporation
shall have the authority to issue after giving effect to the Reverse Stock Split
(as defined herein) is [751,000,000 or 551,000,000]1 shares, consisting of (a)
[750,000,000 or 500,000,000] shares of
common stock, par value $.001 per share, and (b) 1,000,000 shares of preferred
stock, par value $.001 per share. The preferred stock may be issued in one
or more series and may have preferences as to dividends and to liquidation of
the Corporation. The Board of Directors of the Corporation shall establish
the specific rights, preferences, voting privileges and restrictions of such
preferred stock or any series thereof..
“Upon the
filing and effectiveness (the “Effective Time”) of this Certificate if Amendment
to the Restated Certificate of Incorporation, each [number]2 shares of the
Corporation’s common stock, issued and outstanding immediately prior to the
Effective Time, shall automatically be combined into one (1) validly issued,
fully paid and non-assessable share of common stock without any further action
by the Corporation or the holder thereof, subject to treatment of fractional
share interests as described below (the “Reverse Stock Split”). No
certificates representing fractional shares shall be issued in connection with
the Reverse Stock Split. Stockholders who otherwise would be entitled to
receive a fractional share of common stock shall be entitled to receive from the
Corporation’s transfer agent, in lieu of any fractional share, the number of
shares rounded up to the next whole number. Each certificate that immediately
prior to the Effective Time represented shares of common stock (“Old
Certificates”) shall thereafter represent that number of shares of common Stock
into which the shares of common stock represented by such Old Certificate shall
have been combined, subject to the elimination of fractional share interests as
set forth above. Shares of common stock that were outstanding prior to the
Effective Time and that are not outstanding after the Effective Time shall
resume the status of authorized but unissued shares of common
stock.”
FOURTH:
This Certificate of Amendment will be effective upon filing.
IN
WITNESS WHEREOF, Generex Biotechnology Corporation has caused this Certificate
of Amendment to the Restated Certificate of Amendment to be signed by Anna E.
Gluskin, its Chief Executive Officer, this day of
,
2010.
|
GENEREX
BIOTECHNOLOGY CORPORATION
|
||
|
By:
|
||
|
Anna
E. Gluskin
Chief
Executive Officer
|
||
