CONSENT AND WAIVER
Exhibit
10.2
This
Consent and Waiver (this “Agreement”),
dated
as of July 31, 2008, is entered by and between Generex Biotechnology
Corporation, a Delaware corporation (the “Company”),
and
Xxxxxxxx Investment Master Fund Ltd. (the “Holder”).
RECITALS
A. Pursuant
to that certain Securities Purchase Agreement (the “Purchase
Agreement”),
dated
as of March 31, 2008, by and among the Company, the Holder and the other
investors listed on the Schedule of Buyers attached thereto (together with
the
Holder, the “Investors”),
the
Holder purchased the Company’s 8% Senior Secured Convertible Note in the
principal amount of $2,000,000.00 (the “Note”).
Capitalized terms used in this Agreement that are not otherwise defined have
the
meaning set forth in the Note.
B. The
Note
requires the Company to pay the Holder on each applicable Installment Date
the
Installment Amount due on such date by electing (i) a Company Conversion if
various conditions are satisfied and/or (ii) a Company Redemption.
C. In
connection with the Purchase Agreement, the Company and the Investors entered
into that certain Registration Rights Agreement, dated as of March 31, 2008
(the
“Registration
Rights Agreement”),
pursuant to which, among other things, the Company is obligated to have a
registration statement for the resale of the Registrable Securities (as defined
in the Registration Rights Agreement) (the “Registration
Statement”)
declared effective on or before July 29, 2008 which Registration Statement
was
declared effective on July 29, 2008.
D. As
of the
date hereof, certain Equity Conditions have not been satisfied, including (i)
that the Registration Statement was not declared effective for the resale of
all
of the Registrable Securities for a period of thirty (30) days preceding the
August 1, 2008 Company Installment Notice Date (the “Registration
Statement Equity Condition”)
and
(ii) that the Company received notice from The Nasdaq Stock Market of its
failure to comply with the minimum bid price requirement of Marketplace Rule
4310(c)(4) and has 180 calendar days to regain compliance with such rule (the
“Listing
Maintenance Equity Condition”).
AGREEMENTS
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Holder hereby
agree as follows:
1. Waiver.
The
Holder hereby waives satisfaction of only the following: (a) the Registration
Statement Equity Condition solely with respect to the Installment Notice Due
Date applicable to the Installment Date that is September 1, 2008 and (b) the
Listing Maintenance Equity Condition solely with respect to the Installment
Dates that are September 1, 2008 and October 1, 2008 (the “Applicable
Installment Dates”).
2. Consent
to Deferral of 50% of the Installment Amount due on August 1,
2008.
Notwithstanding the Company’s election set forth in any applicable Company
Installment Notice delivered to the Holder prior to the date hereof, the Holder
hereby consents to the Company converting (provided that there is then no Equity
Conditions Failure (other than the Equity Conditions Failures expressly waived
in Section 1 above) and provided that all other conditions necessary for the
Company to effect a Company Conversion are then satisfied) and/or redeeming
fifty percent (50%) of the Installment Amount due on August 1, 2008 as
follows:
(i) 25%
of
the Installment Amount due on August 1, 2008 shall be so converted and/or
redeemed at the time of, and in the same manner as (i.e., through a Company
Conversion and/or a Company Redemption), the Company’s conversion and/or
redemption (in accordance with the terms of the Note) of the Installment Amount
due on September 1, 2008, provided that (1) the Holder may require a Company
Conversion with respect to such portion of the Installment Amount due on August
1, 2008 notwithstanding whether the Company elected, or is required to effect,
a
Company Redemption thereof and (2) the Pre-Installment Conversion Price and
the
Company Conversion Price with respect to such portion of the Installment Amount
due on August 1, 2008 shall be as set forth in Section 3 below to the extent
the
Company is permitted to effect a Company Conversion with respect thereto or
the
Holder requires a Company Conversion with respect thereto in accordance with
clause (1) above; and,
(ii) 25%
of
the Installment Amount due on August 1, 2008 shall be so converted and/or
redeemed at the time of, and in the same manner as (i.e., through a Company
Conversion and/or a Company Redemption), the Company’s conversion and/or
redemption (in accordance with the terms or the Note) of the Installment Amount
due on October 1, 2008, provided that (1) the Holder may require a Company
Conversion with respect to such portion of the Installment Amount due on August
1, 2008 notwithstanding whether the Company elected, or is required to effect,
a
Company Redemption thereof and (2) the Pre-Installment Conversion Price and
the
Company Conversion Price with respect to such portion of the Installment Amount
due on August 1, 2008 shall be as set forth in Section 3 below to the extent
the
Company is permitted to effect a Company Conversion with respect thereto or
the
Holder requires a Company Conversion with respect thereto in accordance with
clause (1) above.
3. Calculation
of Company Conversion Price and Pre-Installment Conversion Price.
To the
extent any portion of the Installment Amount due on August 1, 2008 is converted
as provided above pursuant to a Company Conversion in connection with the
Installment Amounts due on either September 1, 2008 or October 1,
2008:
(i) notwithstanding
the Pre-Installment Conversion Price set forth in the Note, the Pre-Installment
Conversion Price with respect to such portion of the Installment Amount due
on
August 1, 2008 to be so converted shall be equal to the lowest of (i) the then
applicable Conversion Price, (ii) the price which shall be computed as 90%
of
the arithmetic average of the VWAP of the Common Stock on each of the twenty
(20) consecutive Trading Days immediately preceding August 1, 2008 and (iii)
the
price which shall be computed as 90% of the arithmetic average of the VWAP
of
the Common Stock on each of the twenty (20) consecutive Trading Days immediately
preceding the delivery or deemed delivery of the Company Installment Notice
with
respect to the Installment Amount due on September 1, 2008 or October 1, 2008
(as the case may be). All such determinations to be appropriately adjusted
for
any stock split, stock dividend, stock combination or other similar transaction
during such measuring periods.
(ii) notwithstanding
the Company Conversion Price set forth in the Note, the Company Conversion
Price
with respect to such portion of the Installment Amount due on August 1, 2008
to
be so converted shall be equal to the lowest of (i) the then applicable
Conversion Price, (ii) the price which shall be computed as 90% of the
arithmetic average of the VWAP of the Common Stock on each of the twenty (20)
consecutive Trading Days immediately preceding August 1, 2008 and (iii) the
price which shall be computed as 90% of the arithmetic average of the VWAP
of
the Common Stock on each of the twenty (20) consecutive Trading Days immediately
preceding September 1, 2008 or October 1, 2008 (as the case may be). All such
determinations to be appropriately adjusted for any stock split, stock dividend,
stock combination or other similar transaction during such measuring
periods.
Other
than as expressly set forth in this Agreement, the Company shall deliver
Pre-Installment Conversion Shares and Conversion Shares in accordance with
the
terms of the Note.
4. Payment
of Interest and 50% of the Installment Amount due on August 1,
2008.
Notwithstanding anything contained in this Agreement to the contrary, the
Company shall (i) pay to the Holder in cash on August 1, 2008 the portion of
the
Installment Amount due on August 1, 2008 that constitutes accrued and unpaid
Interest through such date, and (ii) pay to the Holder in cash on August 1,
2008
50% of the Installment Amount due on August 1, 2008 (i.e. a partial Company
Redemption).
5. Effect
of this Agreement.
Except
as otherwise expressly provided herein, the Note is, and shall continue to
be,
in full force and effect and is hereby ratified and confirmed in all respects.
[signature
page follows]
IN
WITNESS WHEREOF,
the
Company and the Holder have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.
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COMPANY:
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GENEREX
BIOTECHNOLOGY
CORPORATION
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By:
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Name:
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Xxxx
X. Xxxxxxx
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Title:
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Chief
Executive Officer
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HOLDER:
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XXXXXXXX
INVESTMENT
MASTER
FUND LTD.
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By:
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Name:
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Title:
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