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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), entered into
effective this 29th day of September 2000, by and among Generex Biotechnology
Corporation, a Delaware corporation, with headquarters located at 33 Harbour
Square, Suite 202, Toronto, Ontario M5J 2G2 (the "Company"), and Smallcap
World Fund, Inc. (the "Buyer").
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D ("Regulation D") promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. The Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, units of securities of the Company (the "Units") consisting of
shares of the Company's Common Stock ("Company Common Stock"), par value $.001
per share (the "Shares") and warrants in substantially the same form attached
hereto as Exhibit A to acquire shares of Company Common Stock (the "Warrants"),
each Unit to consist of one Share and a Warrant to purchase 15/100 (0.15) shares
of the Company's Common Stock upon exercise of the Warrant ("Warrant Shares");
and
C. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to register the Shares and
the Warrant Shares under the 1933 Act and SEC rules and regulations promulgated
thereunder.
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.
a. Purchase of Shares and Warrants. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 5 and 6 below, the Company shall issue
and sell to the Buyer and the Buyer agrees to purchase from the Company at the
Closing, as hereinafter defined), 1,079,000 Units (the "Committed Units"), at a
price of $11.00 per Unit (the "Unit Purchase Price").
b. The Buyer understands that, contemporaneously with its offer of Units to
the Buyer, the Company is offering up to 2,000,000 Units to other purchasers
(the "Other Purchasers") in reliance on Regulation D and/or Regulation S
promulgated under the 1933 Act. Buyer consents to such contemporaneous offers
and sale of Units to Other Purchasers provided that (i) offers to Other
Purchasers in the United States shall only be made to one or more qualified
institutional Buyer as that term is defined by Rule 144A promulgated under the
1933 Act or accredited investors as that term is defined by Rule 501(a)
promulgated under the 1933 Act, on substantially similar terms to those set
forth in this Agreement with respect to the Committed
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Units, and (ii) no sale to Other Purchasers shall be consummated more than two
(2) business days after the Closing Date, as defined below. In addition to the
number of Units which Buyer has agreed to purchase pursuant to paragraph (a)
above, Buyer shall have the right to purchase at the Units Purchase Price an
additional number of Units ("Additional Units") equal to 6.5% of the number of
Units purchased by Other Purchasers, provided, however, that no fractional Units
will be issued. Any fractional Unit will be rounded to the next lowest whole
number.
c. Subject to the satisfaction (or waiver) of the conditions contained in
Sections 6 and 7, the Buyer shall pay the Units Purchase Price for the Committed
Units to the Company on the Closing Date by wire transfer of immediately
available funds in accordance with the Company's written wire instructions, and
the Company shall thereupon issue and deliver or cause to be issued and
delivered to such Buyer certificates in such denominations as the Buyer shall
request representing the Shares and Warrants comprising the Committed Units
purchased by the Buyer, duly executed on behalf of the Company and registered in
the name of the Buyer or its designee (the "Units Certificates"). The Closing
Date, shall be such date as the Company and the Buyer shall agree upon, but in
no event later than October 2, 2000 (such date being hereinafter referred
to as "Closing Date"). The term "Closing" as used herein shall mean the delivery
of the Units Certificates, the payment of the Unit Purchase Price for the
Committed Units, and the delivery of such other documents and taking of such
other actions as are required to be delivered or taken at the Closing pursuant
to this Agreement.
d. The Company shall give prompt notice to Buyer of all sales of Units to
the Other Purchasers (an "Additional Units Notice"). If Buyer elects to purchase
Additional Units based on any such sale to Other Purchasers, Buyer shall give
notice to the Company of its intention to purchase such Additional Units within
two (2) business days after the date of the Additional Units Notice, and wire
the purchase price for the Additional Units to the Company within twenty-four
(24) hours thereafter. Certificates for the Additional Units will be delivered
to Buyer in accordance with the procedures set forth in paragraph (c) above.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants that:
a. Investment Purpose. Buyer is acquiring the Shares and Warrants
comprising the Units, purchased hereunder, and any Warrant Shares subsequently
purchased (such Shares, Warrants and Warrant Shares being hereinafter sometimes
referred to as the "Securities") for its own account for investment only and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to an effective registration statement
under the 1933 Act or an exemption from registration the 1933 Act; provided,
however, that by making the representations herein, such Buyer does not agree to
hold any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption from registration under the
1933 Act.
b. Investor Status. Buyer is a "qualified institutional buyer" as defined
in Rule 144A under the 1933 Act and/or an "accredited investor" as that term is
defined in Rule 501 of Regulation D.
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c. Reliance on Exemptions. Buyer understands that the Securities are being
offered and sold to it in reliance on Regulation D and that the Company is
relying upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of Regulation
D and the eligibility of the Buyer to acquire such Securities.
d. Information. Buyer and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have been
requested by the Buyer. Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by the Buyer or its advisors, if
any, or its representatives shall modify, amend or affect the Buyer's right to
rely on the Company's representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Securities involves a
high degree of risk. The Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
e. No Governmental Review. Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
f. Transfer or Resale. Buyer understands that except as provided in the
Registration Rights Agreement, the Securities have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (i) subsequently
registered thereunder, (ii) such Buyer shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to Company counsel, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred without registration under the 1933 Act and in
compliance with an applicable exemption from such registration.
g. Securities. Buyer understands that the certificates or other instruments
representing the Securities, except as set forth below, shall bear a restrictive
legend in substantially the following form (and the Company shall be required to
issue a stop-transfer order against transfer of such stock certificates if the
Securities are not transferred in accordance with the following legend):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR ANY
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE 1933 ACT OR (2) IN A TRANSACTION THAT MAY
BE EFFECTED WITHOUT REGISTRATION UNDER THE 1933 ACT.
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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act and the Buyer has sold the
Securities and has fulfilled the applicable prospectus delivery requirements (a
"prospectus sale"), (ii) in connection with any transaction other than a
prospectus sale, such holder provides the Company with an opinion of counsel, in
a form reasonably acceptable to Company counsel, to the effect that a public
sale, assignment or transfer of the Securities has been or will be made without
registration under the 1933 Act.
h. Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable against such Buyer in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Buyer certifies that it resides or has a bona fide place of
business at its address set forth on Schedule 1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyer that:
a. Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns a controlling position of capital stock or holds a
controlling position of an equity or similar interest) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power and authorization to own their properties and to carry on their business
as now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results or operations, financial condition or prospects of the
Company and its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below).
b. Authorization; Enforcement; Validity. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement, the Warrants and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents"), and
to issue the Securities in accordance with the terms hereof and thereof, (ii)
the execution and delivery of the Transaction Documents by the Company and the
consummation by
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it of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Shares and the Warrants and the reservation for
issuance and the issuance of the Warrant Shares issuable upon exercise thereof,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its stockholders, (iii) the Transaction Documents have been duly executed and
delivered by the Company, and (iv) the Transaction Documents constitute the
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
c. Issuance of Securities. The Shares are duly authorized and, upon
issuance in accordance with the terms hereof, shall be (i) validly issued, fully
paid and non-assessable and (ii) free from all taxes, liens and charges with
respect to the issue thereof. The shares of Common Stock issued pursuant to this
Agreement (subject to adjustment pursuant to the Company's covenant set forth in
Section 4(g) below) have been duly authorized and reserved for issuance upon
exercise of the Warrants. Upon exercise in accordance with the Warrants, the
Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Company Common
Stock.
d. No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the Company's
issuance of the Common Shares and the reservation for issuance and issuance of
the Warrant Shares) will not (i) result in a violation of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation") or the Company's By-laws, as amended and as
in effect on the date hereof (the "By-laws") or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market (as defined below)) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, or By-laws or their organizational charter or
by-laws, respectively. Neither the Company or any of its Subsidiaries is in
violation or any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations, amendments which would not have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory
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agency in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company is not in violation of the
listing requirements of the Principal Market (as defined below).
e. SEC Documents; Financial Statements. As of the Closing, the Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any of their
officers, directors, employees or agents have provided the Buyer with any
material, nonpublic information.
f. Absence of Certain Changes. Since the most recent filing by the Company
with the SEC, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of the Company or its Subsidiaries. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
g. Absence of Litigation. Except as set forth in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the
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Company or any of its Subsidiaries, threatened against or affecting the Company,
the Company's common stock, the Common Shares or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or
directors in their capacities as such that would have a Material Adverse Effect.
h. No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of any of the Securities
under the 1933 Act or cause this offering of the Securities to be integrated
with prior offerings by the Company to third parties other than the Buyer and
Other Purchasers for purposes of the 1933 Act so as to render invalid the
exemption from registration provided under Regulation D or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will the Company or
any of its Subsidiaries take any action or steps that would require registration
of any of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings so as to render invalid the
exemption from registration provided under Regulation D.
i. No Undisclosed Events, Liabilities, Developments or Circumstances. No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement filed with the SEC relating to an
issuance and sale by the Company of the Company Common Stock and which has not
been publicly announced.
j. No General Solicitation. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the 1933 Act) in connection with the offer or sale of the Securities.
k. Employee Relations. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened.
l. Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. None of the Company's trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights have expired or terminated, or are expected
to expire or terminate within two years from the date of this Agreement. The
Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, or of any
such development of similar or identical trade secrets or technical information
by others and the Company and its Subsidiaries are unaware of
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any facts or circumstances which might give rise to any of the foregoing. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties.
m. Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
n. Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the SEC Documents or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries.
Any real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
o. Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged and the Company does not have any reason to believe it will not be able
to renew its existing insurance coverage under substantially similar terms for
the next two (2) years.
p. Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as presently conducted, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
q. Tax Status. The Company and each of its Subsidiaries has made or filed
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
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s. Transactions With Affiliates. Except as set forth in the SEC Documents
filed at least ten days prior to the date hereof, none of the officers, control
parties, control entities, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
t. Eligibility. The Company is currently eligible to register the resale of
the Shares and Warrant Shares on a registration statement on Form S-3 under the
1933 Act.
u. The authorized capital stock of the company consists of 50,000,000
shares of Common Stock, $0.001 par value per share, of which 16,612,945 shares
were issued and outstanding at September 27, 2000. At such date, approximately
5,937,880 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding options and warrants at an average exercise price of
approximately $7.11 per share. In addition, the Company has 1,000,000 shares of
preferred stock, $0.001 par value per share, of which 1,000 shares were issued
and outstanding at September 27, 2000. All of the outstanding shares of the
Company's Common Stock and Preferred Stock have been duly and validly authorized
and are fully-paid and non-assessable. Except as disclosed in this Agreement,
the Registration Rights Agreement and/or the SEC Documents, there are no
options, warrants, contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into
shares of capital stock of the Company.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely to satisfy
each of the conditions to be satisfied by it as provided in Sections 5 and 6 of
this Agreement.
b. Reporting Status. Until the earlier of (i) the date which is one year
after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Shares or Warrant Shares
without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which the Investors shall have sold all
the Shares and Warrant Shares (the "Registration Period"), the Company shall
file all reports required to be filed with the SEC pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
c. Listing. The Company shall promptly secure the listing of all of the
Registrable Securities (as that term is defined in the Registration Rights
Agreement) on Nasdaq and shall use its best efforts to maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. Neither the Company nor any of its Subsidiaries shall take any action
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which would be reasonably expected to result in the delisting or suspension of
Company Common Stock on Nasdaq. The Company shall promptly, and in no event
later than the following business day, provide to the Buyer copies of any
notices it receives from the Nasdaq regarding the continued eligibility of
Company common stock for listing on such automated quotation system or
securities exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 4(f).
d. Reservation of Shares. The Company shall take all action necessary to at
all times have authorized; and reserved for the purpose of issuance, no less
than 100% of the number of shares of common stock needed to provide for the
issuance of the shares of Warrant Shares upon exercise of all outstanding
Warrants.
e. Independent Auditors. The Company shall, until at least three (3) years
after the Closing Date, maintain as its independent auditors an accounting firm
authorized to practice before the SEC.
f. Corporate Existence and Taxes. The Company shall, until at least the
later of (i) the date that is three (3) years after the Closing Date or (ii) the
sale of all of the Common Shares purchased pursuant to this Agreement, maintain
its corporate existence in good standing (provided, however, that the foregoing
covenant shall not prevent the Company from entering into any merger or
corporate reorganization as long as the surviving entity in such transaction, if
not the Company, has common stock listed for trading on Nasdaq, the New York
Stock Exchange or the American Stock Exchange; and (iii) shall pay all its taxes
when due except for taxes which the Company disputes).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common Shares
and Warrants to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing the Buyer with prior
written notice thereof:
a. The Buyer shall have executed each of the Transaction Documents to which
it is a party and delivered the same to Company.
b. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date.
c. The Buyer shall have delivered to the Company such other documents
relating to the transactions as are contemplated by this Agreement.
10
<PAGE>
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or issued by any court
or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by, or materially and
adversely affect the rights and/or obligations of the Company arising under this
Agreement.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Units at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyer's sole
benefit and may be waived by the Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:
a. The Company shall have executed each of the Transaction Documents and
delivered the same to the Buyer.
b. The Company's common stock shall be authorized for quotation on Nasdaq
and trading in Company common stock shall not have been suspended by the SEC or
Nasdaq.
c. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date) and the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.
d. The Company shall have delivered to Buyer the opinion of the Company's
counsel dated as of the Closing Date, in substantially the form of Exhibit C
attached hereto.
e. The Company shall have made all filings, other than those contemplated
by the Registration Rights Agreement, under all applicable federal and state
securities laws necessary to consummate the issuance of the Securities pursuant
to this Agreement in compliance with such laws.
f. The Company shall have delivered to the Buyer such other documents
relating to the transactions as are contemplated by this Agreement.
g. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or issued by any court
or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by, or materially and
adversely affect the rights and/or obligations of the Buyer arising under this
Agreement.
7. INDEMNIFICATION.
In consideration of Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company's other obligations
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<PAGE>
under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless the Buyer and each other holder of the Securities and all of
their stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (d) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities or (e) the status of such Buyer or holder of the
Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
8. LIQUIDATED DAMAGES.
The Company agrees that Buyer will suffer damages if the Company violates
any provision of or fails to fulfill any of its obligations or duties pursuant
to the Transaction Documents (other than the Registration Rights Agreement) and
such violation or failure directly or indirectly restricts Buyer from selling,
transferring or disposing of its Common Shares (a "Company Violation"), and that
it would not be possible to ascertain the extent of such damages. Accordingly,
in the event of such Company Violation, the Company hereby agrees to pay
liquidated damages ("Liquidated Damages") to such Buyer following the occurrence
of such Company Violation in an amount determined by multiplying (i) two percent
(2%) of the Units Purchase Price per Common Share then held by such Buyer by
(ii) the percentage derived by dividing (A) the actual number of days elapsed
from the first day of the date that an uncured Company Violation occurred or the
end of the prior 30-day period, as applicable, to the day all Company Violations
have been completely cured, by (B) 30. Liquidated Damages shall be paid in cash.
The Liquidated Damages payable pursuant hereto shall be payable within five (5)
business days from the end of the 30-day period commencing on the first 30-day
period in which the Company Violation occurs. Notwithstanding anything to the
contrary herein, no Liquidated Damages shall be payable under this paragraph in
respect of any Company Violation which also constitutes a Registration Default
under the Registration Rights Agreement entered into by Buyer and the Company as
of the date of this Agreement.
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<PAGE>
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. This Agreement shall be
governed by and construed in all respects by the internal laws of the State of
Delaware (except for the proper application of the United States federal
securities laws), without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all other prior
oral or written agreements between the Buyer, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Buyer, and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.
f. Notices. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be as set forth below, or at such other address and/or
facsimile number and/or to the attention of such other person as
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<PAGE>
the recipient party has specified by written notice given to each other party
five days prior to the effectiveness of such change:
If to the Company:
Generex Biotechnology Corporation
33 Harbour Square, Suite 202
Toronto, Ontario M5J 2G2
Telephone: (416) 364-2551
Facsimile: (416) 364-9363
Attention: E. Mark Perri
With a copy to:
Eckert Seamans Cherin & Mellott
1515 Market Street, 9th Floor
Philadelphia, Pennsylvania 19102-1909
Telephone: (215) 851-8410
Facsimile: (215) 851-8383
Attention: Joseph Chicco, Esq.
If to a Buyer: to it at the address and facsimile number set forth on Schedule 1
with copies to such Buyer's representatives as set forth on Schedule 1.
g. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns,
including any Assignee of Securities. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer. Buyer may assign some or all of its rights hereunder
without the consent of the Company, provided, however, that any such assignment
shall not release Buyer from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to such assignment
and assumption.
h. No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
i. Survival. Unless this Agreement is terminated under Section 9(k), the
agreements and covenants set forth in Sections 4, 5 and 9, the indemnification
provisions set forth in Section 7, and the liquidated damages provisions set
forth in Section 10 shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Further Assurances. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
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<PAGE>
k. Termination. If Closing does not occur due to the Company's or Buyer's
failure to satisfy the conditions set forth in Sections 5 or 6 above (and the
non-breaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.
l. Placement Agent or Finder. The Company shall be responsible for the
payment of any fees or broker's commissions relating to or arising out of the
transactions contemplated hereby as a result of any engagement or undertaking
made by the Company with the persons claiming such fees or commissions, and
shall pay, and hold the Buyer harmless against, any liability, loss or expense
(including, without limitation, attorneys' fees and out of pocket expenses)
arising in connection with any such engagement or undertaking by the Company.
m. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
n. Remedies. The Buyer and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
o. Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyer hereunder or pursuant to the Transaction Documents or the
Buyer enforces or exercise its rights hereunder or thereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other person under
any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
[signature page follows]
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IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
GENEREX BIOTECHNOLOGY
CORPORATION
By: /s/ E. Mark Perri
------------------------------------
Name: E. Mark Perri
----------------------------------
Title: Chairman
---------------------------------
BUYER: Smallcap World Fund, Inc.
CAPITAL RESEARCH AND MANAGEMENT COMPANY,
its investment adviser
By: /s/ James F. Rothenberg
-----------------------------------------
President
<PAGE>
SCHEDULE 1: SECURITIES PURCHASED/BUYER DATA
<TABLE>
<CAPTION>
Buyer's
Representatives'
Buyer's Address Purchase Number of Number of Address and Facsimile
Buyer's Name and Facsimile Number Price Common Shares Warrant Shares Number (if any)
------------ -------------------- -------- ------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
SMALLCAP World Fund, Inc. c/o Capital Research and $11.00 per share 1,079,000 161,850
Management Company
333 South Hope St.
Los Angeles, CA 90071
Fax: (213) 486-9041
Attn: Michael J. Downer
---------------------- -------------------- -------- ------------- -------------- --------------------
TOTAL
</TABLE>
<PAGE>
EXHIBITS
Exhibit A Form of Warrant
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Company Counsel Opinion
