Item
1.01 Entry into a Material Definitive Agreement.
On
August 4, 2020 (the “Effective Date”), Generex Biotechnology Corporation (the “Company”) and three (two
of whom are affiliates) institutional accredited investors (each a “Buyer” and, collectively, the “Buyers”)
entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to which the Company sold
and issued to the Buyers an aggregate of 5,102,040 shares (the “Common Shares”) of the Company’s common stock,
par value $0.001 per share (the “Common Stock”), at an aggregate price of $2,000,000 (the “Private Placement”).
Pursuant to the Securities Purchase Agreement, the Company
issued to the Buyers (i) Series A Warrants to purchase 5,102,040 shares of Common Stock in the aggregate (the “Series A
Warrants”) with an initial exercise price equal to $0.392 per share (the “Series A/B Exercise Price”), (ii)
Series B Warrants to purchase 15,306,122 shares of Common Stock in the aggregate (the “Series B Warrants”) with an
initial exercise price equal to the Series A/B Exercise Price; (iii) Series C Warrants to purchase the number of shares of Common
Stock equal to Maximum Eligibility Number (as defined therein) (the “Series C Warrants”) at an initial exercise price
equal to $0.539 per share; and (iv) Series D Warrants to purchase the number of shares Common Stock equal to the Maximum Eligibility
Number (as defined therein) (the “Series D Warrants” and together with the Series A Warrants, the Series B Warrants
and the Series C Warrants, the “Warrants” and the Warrants together with the Common Shares and the shares of Common
Stock underlying the Warrants, the “Securities”) at an exercise price equal to $0.001 per share, in each case, subject
to adjustment and beneficial ownership limitations set forth therein. Subject to the satisfaction or waiver of certain conditions
set forth in the Series A Warrants, the Company may force the Buyers to exercise the Series A Warrants in full on the twenty second
(22nd) trading day (the “Forced Exercise Date”) after the effectiveness of the Company’s registration statement
that registers all of the Common Shares and shares underlying the Warrants. The exercise price set forth in each of the Series
A Warrants, the Series B Warrants and Series C Warrants is subject to adjustment on certain trigger dates as provided in each
such Warrant. The holders of the Series A Warrants, Series B Warrants and Series C Warrants shall be allowed a cashless exercise
if a registration statement registering the Securities is not effective within 180 days following the issuance of such Warrants.
On certain trigger dates as set forth in the Series D Warrants, the Series D Warrants will become exercisable into a number of
shares of Common Stock that would have been issued on the issuance date and upon exercise of the Series A Warrants and Series
B Warrants had the purchase price per share and exercise price of the Series A Warrants and Series B Warrants been equal to the
applicable reset price as set forth in the Series D Warrant.
The
Company expects to receive gross proceeds from the Private Placement of $2.0 million initially, before deducting transaction costs,
fees and expenses payable by the Company. The Company intends to use the net proceeds of the Private Placement to first pay certain
accrued expenses and the remaining proceeds for working capital purposes and acquisitions.
As
required by the Securities Purchase Agreement, each director and officer of the Company has previously entered into a lock-up
agreement with the Company whereby each director and officer has agreed that during the period commencing from the date of such
agreement until 90 days after the earliest to occur of (x) such time as all of the Securities may be sold without restriction
or limitation pursuant to Rule 144 (“Rule 144”) under the Securities Act of 1933, as amended (the “1933 Act”)
and without the requirement to be in compliance with Rule 144(c)(1), (y) the one (1) year anniversary of the Issuance of the Warrants,
and (z) the date that the initial registration registering the Securities has been declared effective by the Securities and Exchange
Commission (the “SEC”); provided, that, this clause (z) shall only apply if there are no limitations
as to the number of Securities registrable pursuant to Rule 415 under the 1933 Act, such director or officer will not sell, hypothecate,
pledge, grant any option to purchase, make any short sale or otherwise dispose of or agree to dispose of, directly or indirectly,
any shares of Common Stock or Common Stock Equivalents, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position with respect to any shares of Common Stock or Common Stock equivalents owned by such director or officer.
The
foregoing descriptions of the Securities Purchase Agreement and the Warrants do not purport to be complete and are qualified in
their entirety by reference to the complete text of the Securities Purchase Agreement and the forms of Warrants, which are attached
hereto as Exhibits 10.1 and 4.1, 4.2, 4.3 and 4.4, respectively, to this Current Report on Form 8-K and are hereby incorporated
by reference into this Item 1.01.
Registration
Rights
In
connection with the Private Placement, the Company and the investors entered into a Registration Rights Agreement dated August
4, 2020 (the “Registration Rights Agreement”) providing for the registration for resale of the Securities (the “Registration
Statement”) to be filed with the SEC on or prior to twelve (12) business days after the Effective Date. The Company has
agreed to use its commercially reasonable best efforts to cause the Registration Statement to be declared effective as soon as
possible, but in no event later than the earlier of the (x) seventy fifth (75th) day after the Effective Date and (y) fifth (5th)
business day after the Company is notified by the SEC that the Registration Statement will not be reviewed. The Company shall
also be required to register Securities not covered by the Registration Statement in accordance with the provisions of the Registration
Rights Agreement. If the Company does not meet its filing or effectiveness deadlines or does not maintain its listing on the OTC
QB, then, the Company must pay a cash amount to the Buyers equal to two percent (2.0%) of the aggregate Purchase Price for each
missed deadline or maintenance failure and then again on successive dates until such filing or effectiveness is achieved or such
failure is cured. In the event these payments are not timely made interest at a rate of to 1.5% per month on late payments shall
accrue until such amounts are paid.
The
foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Registration Rights Agreement, which is attached hereto as Exhibit 4.5 to this Current Report
on Form 8-K and is hereby incorporated by reference into this Item 1.01.