EXHIBIT 10.4
GENEREX BIOTECHNOLOGY CORPORATION
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
STOCKHOLDERS' AGREEMENT
AUGUST 6, 2003
This Stockholders' Agreement (the "Agreement") is made as of August 6, 2003,
between Generex Biotechnology Corporation, a Delaware corporation (the
"Company") and the Stockholders listed on Exhibit A (each a "Stockholder" and
collectively the "Stockholders").
SECTION 1
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:
"Closing Date" shall have the meaning set forth in Section 1.14 of the Merger
Agreement.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $0.001 par value per
share.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Holder" shall mean (i) each Stockholder, and (ii) any Person holding
Registrable Securities to whom the rights under this Section 1 have been
transferred, in whole or in part, in accordance with Section 1.14 hereof.
"Merger Agreement" shall mean the Agreement and Plan of Merger dated as of
August 6, 2003 among the Company, AgExp Acquisition, Inc. and Antigen Express,
Inc.
"Person" shall mean a natural person, corporation, partnership, limited
liability company, trust or any other entity, other than a governmental entity,
recognized by statute in its jurisdiction of formation as having legal
existence.
"Registrable Securities" shall mean the shares of Common Stock held by the
Holders; provided, however, that Registrable Securities shall not include such
securities that shall have been (a) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (b)
sold in a single transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all transfer restrictions
and restrictive legends with respect thereto shall have been removed prior to
the consummation of such sale.
The terms "register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement with the Commission in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise stated
below, incurred by the Company in complying with Section 1.5 hereof, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company) and the reasonable
fees and disbursements of one counsel for all Holders up to $5,000 included in
any registration statement hereunder.
"Restricted Securities" shall mean the securities of the Company required to
bear the legend set forth in Section 1.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling commissions
and stock transfer taxes applicable to the securities registered by the Holders
and, except as set forth above, all reasonable fees and disbursements of counsel
for any Holder.
"Shares" shall mean the shares of Common Stock issued to a Stockholder pursuant
to the Merger Agreement and any other securities issued in respect of such
securities upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event.
1.2 RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be sold, assigned,
transferred or pledged prior to the effective date of a registration statement
under the Securities Act covering the sale of such shares except upon the
conditions specified in this Section 1. Each Holder will cause any proposed
purchaser, assignee, transferee, or pledgee of any such shares held by such
Holder to agree to take and hold such securities subject to the provisions and
upon the conditions specified in this Section 1.
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1.3 RESTRICTIVE LEGEND. Each certificate representing the Shares and any other
securities issued in respect thereof upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
Each Holder consents to the Company making a notation on its records and giving
instructions to any transfer agent of the Common Stock in order to implement the
restrictions on transfer established in this Section 1.
1.4 RESTRICTIONS ON TRANSFER; NOTICE OF PROPOSED TRANSFERS. The holder of each
certificate representing Restricted Securities by acceptance thereof agrees to
comply in all respects with the provisions of this Section 1.4. Unless there is
in effect a registration statement under the Securities Act covering the
proposed sale, assignment, transfer or pledge of any Restricted Securities,
prior to any such transfer (other than (i) a transfer not involving a change in
beneficial ownership, (ii) any transfer by any Holder to (A) any individual or
entity controlled by, controlling, or under common control with, such Holder, or
(B) any entity with respect to which such Holder (or any Person controlled by,
controlling, or under common control with, such Holder) has the power to direct
investment decisions, or (iii) in transactions in compliance with Rule 144), the
holder thereof shall give written notice to the Company of such holder's
intention to effect such transfer, sale, assignment or pledge. Each such notice
shall describe the manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be accompanied, at such
holder's expense by either (i) a written opinion of legal counsel who shall be,
and whose legal opinion shall be, reasonably satisfactory to the Company
addressed to the Company, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under the Securities
Act, or (ii) a "no action" letter from the Commission to the effect that the
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to the Company. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 1.3 above, except that such certificate shall not bear such
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restrictive legend if in the opinion of counsel for such holder and the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act. Notwithstanding the foregoing, so long as an executive
officer or director of the holder serves as an executive officer or director of
the Company, such holder agrees to not sell or transfer the Registrable
Securities during periods outside of the trading windows applicable to the
officers of the Company as set forth in the Company's Xxxxxxx Xxxxxxx Program
adopted by the Company's Board of Directors.
1.5 MANDATORY REGISTRATION. (a) The Company shall prepare and file with the
Commission a registration statement (the "Registration Statement") on Form S-1
(or, when eligible, Form S-3) covering the resale of the Registrable Securities
by the Holders on or prior to 30 days after the Closing Date and shall maintain
the effectiveness of such registration statement during the period set forth in
Section 1.7 but subject to suspensions of registration in accordance with
Section 1.8. The Company shall use its commercially reasonable efforts to cause
the Registration Statement to be declared effective within ninety (90) days
after the Closing Date.
(b) The Company shall notify each Holder in writing promptly (and in any event
within three days) after receiving notification from the Commission that the
Registration Statement has been declared effective.
1.6 EXPENSES OF REGISTRATION. All Registration Expenses incurred in connection
with the registration pursuant to Section 1.5 shall be borne by the Company.
Unless otherwise stated, all Selling Expenses relating to securities registered
on behalf of the Holders shall be borne by the Holders of such securities pro
rata on the basis of the number of shares so registered except the legal fees
and disbursements of any counsel for any Holder not required to be paid by the
Company which shall be borne by such Holder.
1.7 REGISTRATION PROCEDURES. At its expense the Company will:
(a) Prepare and file with the Commission the Registration Statement and use its
commercially reasonable efforts to cause such Registration Statement to become
effective as soon as possible after the filing thereof, and keep the
Registration Statement effective pursuant to Rule 415 at all times, subject to
Section 1.8, until the earlier of (i) the date on which all Registrable
Securities have been sold by each Holder, and (ii) the date on which the
Registration Rights terminate as set forth in Section 1.12;
(b) Promptly furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus (and all required
amendments and supplements to any thereof), final prospectus and such other
documents as such Holders or such underwriters may reasonably request in order
to facilitate the public offering of such securities;
(c) Prior to the effectiveness of the Registration Statement, file all documents
required of the Company for normal blue sky clearance in states reasonably
specified in writing by the Holders, provided, however, that the Company shall
not be required to qualify to do business in any jurisdiction in which it is not
now so qualified; and
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(d) Maintain the listing of the Registrable Securities on the NASDAQ SmallCap
Market.
1.8 SUSPENSION OF REGISTRATION. The Company shall promptly notify the Holders of
(i) the issuance by the Commission of a stop order suspending the effectiveness
of the Registration Statement, (ii) the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (iii) the
occurrence or existence of any pending corporate development that, in the
reasonable discretion of the Company, makes it appropriate to suspend the
availability of the Registration Statement to comply with Commission rules. In
each case the Company shall use commercially reasonable efforts to promptly
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to each Holder as such Holder may reasonably request;
provided that, the Company may delay to the extent permitted by law the
disclosure of material non-public information concerning the Company the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an "Allowed Delay"); provided,
further, that an Allowed Delay shall not exceed 6030 consecutive days in any
365-day period, and there shall be no more than two such Allowed Delay periods.
The Company shall promptly notify the Holders in writing of the existence of an
Allowed Delay and shall advise the Holders in writing to cease all sales under
the Registration Statement until the end of the Allowed Delay.
1.9 INDEMNIFICATION.
(a) The Company will indemnify and hold harmless
each Holder and, each of Holder's respective officers and directors, trustees,
members, employees and partners, and each Person controlling such Holder within
the meaning of Section 15 of the Securities Act, with respect to which
registration has been effected pursuant to this Section 1, and each underwriter,
if any, and each Person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against all expenses (including reasonable
attorneys' fees), claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of the Securities Act, the
Exchange Act, state securities law or any rule or regulation promulgated under
such laws applicable to the Company in connection with any the registration, and
within a reasonable period the Company will reimburse each such Holder, each of
Holder's respective officers and directors, trustees, members, employees and
partners, and each Person controlling such Holder within the meaning of Section
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15 of the Securities Act, each such underwriter and each Person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing, defending or paying any such claim,
loss, damage, liability or action; provided that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder, controlling Person or underwriter and stated to be specifically for
use therein.
(b) Each Holder will, if Registrable Securities held by such Holder are included
in the Registration Statement, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by the
Registration Statement, each Person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and each other such
Holder each of their respective officers and directors, trustees, members,
employees and partners, and each Person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses (including
reasonable attorneys' fees), claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in the Registration Statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and within a reasonable
period will reimburse the Company, such Holders, each of their respective
officers and directors, trustees, members, employees and partners, and each
Person controlling such Holder within the meaning of Section 15 of the
Securities Act, for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in the Registration Statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
liability of each Holder under this subsection (b) shall be limited into an
amount equal to the gross proceeds before expenses and commissions to such
Holder received for the shares sold by such Holder, unless such liability arises
out of or is based on willful misconduct by such Holder.
(c) Each party entitled to indemnification under this Section 1.9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld or delayed), and the Indemnified Party may participate in such defense
at such Indemnified Party's expense, and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
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Indemnifying Party of its obligations under this Section 1.9 unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action and provided further, that the Indemnifying Party shall
not assume the defense for matters as to which there is a conflict of interest
or separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation.
1.10 INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities
included in the registration shall furnish to the Company such information
regarding such Holder or Holders, the Registrable Securities held by them and
the distribution proposed by such Holder or Holders as the Company may
reasonably request in writing and as shall be required in connection with the
registration referred to in this Section 1.
1.11 RULE 144 REPORTING. With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
the Restricted Securities to the public without registration, the Company agrees
to use its commercially reasonable efforts to:
(a) Make and keep public information available, as those terms are understood
and defined in Rule 144 under the Securities Act, at all times;
(b) Use its commercially reasonable efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) So long as a Holder owns any Restricted Securities, to furnish to the Holder
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144, and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as the
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing the Holder to sell any such securities without
registration.
1.12 TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Agreement shall terminate as to each Holder on the earlier of
(i) two years after the effective date of the Registration Statement, (ii) the
date on which all Registrable Securities held by such Holder may be resold
without registration or without regard to any volume limitations by reason of
Rule 144(k) under the Securities Act or any other rule of similar effect, or
(iii) all of the Registrable Securities held by such Holder have been sold
pursuant to the Registration Statement or Rule 144(k) under the Securities Act
or any other rule of similar effect.
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SECTION 2
MISCELLANEOUS
2.1 GOVERNING LAW. This Agreement shall be governed in all respects by the
internal laws of the State of Delaware.
2.2 SURVIVAL. The covenants and agreements made herein shall survive the closing
of the transactions contemplated hereby.
2.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
2.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Merger Agreement
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought; provided, however, that Holders of a
majority of the Registrable Securities may, with the Company's prior written
consent, waive, modify or amend on behalf of all Holders, any provisions hereof.
2.5 NOTICES, ETC. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed
(a) if to a Holder, at the address for such Holder set forth on Exhibit A hereto
or at such other address as such Holder shall have furnished the Company in
writing, or (b) if to the Company, one copy should be sent to its address set
forth on the cover page of this Agreement and addressed to the attention of the
President, or at such other address as the Company shall have furnished to the
Holders. Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
2.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party to this
Agreement upon any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-defaulting party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, consent or approval of any kind or character on the part of any party of
any breach or default under this Agreement, or any waiver on the part of any
Holder of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.
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2.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
2.8 SEVERABILITY. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
2.9 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not considered in construing or interpreting
this Agreement.
(Signature Page(s) Follow(s))
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The foregoing Agreement is hereby executed by each party as of the date
indicated below.
"COMPANY"
GENEREX BIOTECHNOLOGY CORPORATION
a Delaware Corporation
By: ________________________________
Xxxx X. Xxxxxxx
President and Chief Executive Officer
Date: August 6, 2003
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(Signature Page to Stockholders' Agreement)
"STOCKHOLDER"
_________________________________
Signature of Individual Stockholder
XXXXXX X. XXXXX
__________________________________
Printed Name of Individual Stockholder
"STOCKHOLDER"
_________________________________
Signature of Individual Stockholder
XXXXXX X. XXXXXXXXX
__________________________________
Printed Name of Individual Stockholder
or
__________________________________
Printed Name of Entity Stockholder
By:_______________________________
Signature
__________________________________
Printed Name of Signatory
___________________________________
Title
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EXHIBIT A
STOCKHOLDERS
Xx. Xxxxxx X. Xxxxx
Xx. Xxxxxx X. Xxxxxxxxx
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