SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. ___)
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Filed
by
the Registrant ý
Check
the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
For use of the Commission only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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GENEREX
BIOTECHNOLOGY CORPORATION
(Name
of
Registrant as Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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| 1) |
Title
of each class of securities to which transaction
applies:
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| 2) |
Aggregate
number of securities to which transaction
applies:
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| 3) |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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| 4) |
Proposed
maximum aggregate value of
transaction:
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5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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| 1) |
Amount
Previously Paid:
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| 2) |
Form,
Schedule or Registration Statement No.:
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| 3) |
Filing
Party:
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Date
Filed:
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GENEREX
BIOTECHNOLOGY CORPORATION
33
Harbour Square
Suite
202
Toronto,
Ontario, Canada M5J 2G2
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD TUESDAY, MAY 29, 2007
Dear
Stockholder:
You
are
cordially invited to attend the annual meeting of stockholders of Generex
Biotechnology Corporation ("Generex") that will be held on Tuesday, May 29,
2007, at 10:00 a.m. (local time), at the Terrence Donnelly Centre for Cellular
and Biomolecular Research, University of Toronto, 160 College Street, Toronto,
Ontario, Canada M5S 3E1, for the following purposes, as set forth in the
accompanying proxy statement:
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1.
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To
elect seven directors;
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2.
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To
ratify the appointment of Danziger & Hochman, Chartered Accountants as
independent public accountants for the fiscal year ending July 31,
2007;
and
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3.
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To
transact such other business as may properly come before the annual
meeting and any adjournment or postponement of the
meeting.
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The
Board
of Directors has established the close of business on April 20, 2007, as the
record date for the determination of stockholders entitled to receive notice
of,
and to vote at, the annual meeting and any adjournment or postponement thereof.
This Notice and the Proxy Statement are first being mailed to stockholders
on or
about May 5, 2007.
YOU
ARE
URGED TO REVIEW CAREFULLY THE ACCOMPANYING PROXY STATEMENT AND TO COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE WHETHER
OR
NOT YOU PLAN TO ATTEND THE MEETING.
You
may
revoke your proxy at any time before it has been voted. You are cordially
invited to attend the annual meeting in person if it is convenient for you
to do
so.
By
order
of the Board of Directors,
/s/
Rose
C. Perri
Rose
C.
Perri
Secretary
May
4,
2007
GENEREX
BIOTECHNOLOGY CORPORATION
33
Harbour Square
Suite
202
Toronto,
Ontario, Canada M5J 2G2
PROXY
STATEMENT
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Why
am I being furnished this Proxy Statement?
This
Proxy Statement is provided to the stockholders of Generex in connection with
the solicitation by our Board of Directors of proxies for use at our annual
meeting of stockholders to be held on Tuesday May 29, 2007 at 10:00 a.m. (local
time), at the Terrence Donnelly Centre for Cellular and Biomolecular Research,
University of Toronto, 160 College Street, Toronto, Ontario, Canada M5S 3E1,
and
any adjournments or postponements thereof. Generex’s Annual Report to
Stockholders in respect of the fiscal year of Generex ended July 31, 2006,
including financial statements, accompanies this Notice and Proxy Statement,
but
is not incorporated as part of the Proxy Statement and is not to be regarded
as
part of the proxy solicitation material.
What
are the items of business for the meeting?
The
items
of business for the meeting are as follows:
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·
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To
elect seven directors;
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·
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To
ratify the appointment of Danziger & Hochman, Chartered Accountants as
our independent public accountants for the fiscal year ending July
31,
2007; and
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To
transact such other business as may properly come before the annual
meeting and any adjournment or postponement of the
meeting.
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Who
is soliciting my proxy?
The
Board
of Directors is soliciting your proxy in order to provide you with an
opportunity to vote on all matters scheduled to come before the meeting whether
or not you attend the meeting in person.
Who
is entitled to vote?
You
may
vote if you owned shares of Generex’s common stock as of the close of business
on April 20, 2007, which is the record date. You are entitled to one vote for
each share of common stock that you own. As of April 20, 2007, we had
108,247,742shares of common stock outstanding.
How
do I vote before the meeting?
If
you
hold your shares in your own name as the stockholder of record, you may vote
by
completing, signing and returning the enclosed proxy card. If you are a
street-name stockholder, you will receive instructions from your bank, broker
or
other nominee describing how to vote your shares. Certain of these institutions
offer telephone and Internet voting. Please refer to the information forwarded
by your bank, broker or other nominee to see which options are available to
you.
What
shares can I vote?
You
may
vote all shares owned by you as of the close of business on April 20, 2007,
the
record date. These shares include:
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Shares
held directly in your name as the stockholder of record;
and
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Shares
of which you are the beneficial owner but not the stockholder of
record
(typically referred to as being held in “street name”). These are shares
that are held for you through a broker, trustee or other nominee
such as a
bank.
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May
I vote at the meeting?
You
may
vote your shares at the meeting if you attend in person. If you hold your shares
through an account with a bank or broker, you must obtain a legal proxy from
the
bank or broker in order to vote at the meeting. Even if you plan to attend
the
meeting, we encourage you to vote your shares by proxy.
How
do I revoke my proxy?
If
you
are the stockholder of record, you may revoke your proxy at any time before
the
polls close at the meeting. You may revoke your proxy by:
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delivering
written notice to our Secretary at our principal executive officers,
the
address of which is set forth below,
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delivering
a proxy bearing a later date, or
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attending
the annual meeting in person and casting a ballot.
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If
you
hold your shares through an account with a bank or broker, your ability to
revoke your proxy depends on the voting procedures of the bank or broker. Please
follow the directions provided to you by your bank or broker.
Our
principal executive officers are located at 33 Harbour Square, Suite 202,
Toronto, Ontario, Canada M5J 2G2, and our telephone number is (416)
364-2551.
What
if I return my proxy card but do not provide voting
instructions?
Proxy
cards that are signed and returned but do not contain instructions will be
voted
as follows:
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FOR
the election of the nominees for director named on page 4 of this
Proxy
Statement.
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FOR
the ratification of the appointment of Danziger & Hochman, Chartered
Accountants as our independent public accountants for the fiscal
year
ending July 31, 2007.
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In
accordance with the best judgment of the individuals named as proxies
on
the proxy card on any other matters properly brought before the
meeting.
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What
does it mean if I receive more than one proxy card or instruction
form?
Your
shares are probably registered in more than one account. You should vote each
proxy card you receive. We encourage you to consolidate all of your accounts
by
registering them in the same name, social security number and
address.
Will
my shares be voted if I do not provide my proxy?
If
you
are a registered stockholder and do not provide a proxy, you must attend the
meeting in order to vote your shares.
If
you
hold shares through an account with a bank or broker, your shares may be voted
even if you do not provide voting instructions on your instruction form. Banks
and brokers have the authority under NASDAQ rules to vote shares for which
their
customers do not provide voting instructions on certain routine matters. The
election of directors and the ratification of the appointment of Generex’s
independent registered public accounting firm are considered routine matters
for
which banks and brokers may vote without specific instructions from their
customers.
May
stockholders ask questions at the meeting?
Yes.
Generex representatives will answer stockholders’ questions of general interest
at the end of the meeting.
How
many votes must be present to hold the meeting?
In
order
for us to conduct our meeting, a majority of our outstanding shares of common
stock as of April 20, 2007 must be present in person or by proxy at the meeting.
This is referred to as a quorum. Your shares are counted as present at the
meeting if you attend the meeting and vote in person or if you properly return
a
proxy by mail. Shares voted by banks or brokers on behalf of beneficial owners
are also counted as present at the meeting. In addition, abstentions and broker
non-votes will be counted for purposes of establishing a quorum with respect
to
any matter properly brought before the meeting.
Broker
non-votes occur on a matter when a bank or broker is not permitted under
applicable rules and regulations to vote on a matter without instruction from
the beneficial owner of the underlying shares and no instruction has been
given.
How
many votes are needed for each proposal and how are the votes
counted?
The
seven
nominees for director receiving the highest number of “FOR” votes will be
elected as directors. This number is called a plurality. Because directors
are
elected by a plurality, abstentions are not taken into account in determining
the outcome of election of directors.
The
affirmative vote of the holders of a majority of the shares of common stock
present in person or by proxy at the meeting will be required for the
ratification of the appointment of Danziger & Hochman, Chartered Accountants
as our independent public accountants for the current fiscal year. On this
proposal, abstentions will be counted as negative votes in the tabulation of
the
votes cast by stockholders. Broker non-votes will not be counted in the
tabulation of the votes cast on the proposal but will be counted for purposes
of
establishing a quorum.
Any
other
proposal that might properly come before the meeting will require the
affirmative vote of the holders of a majority of the shares of commons stock
present in person or by proxy at the meeting in order to be approved. On any
such proposal, abstentions will be counted as negative votes in the tabulation
of the votes cast by stockholders. Broker non-votes will not be counted in
the
tabulation of the votes cast on the proposal but will be counted for purposes
of
establishing a quorum.
How
will proxies be voted on other items or matters that properly come before the
meeting?
If
any
other items or matters properly come before the meeting, the proxies received
will be voted on those items or matters in accordance with the discretion of
the
proxy holders.
Is
Generex aware of any other item of business that will be presented at the
meeting?
The
Board
of Directors does not intend to present, and does not have any reason to believe
that others will present, any item of business at the annual meeting other
than
those specifically set forth in the notice of the meeting. However, if other
matters are properly brought before the meeting, the persons named on the
enclosed proxy will have discretionary authority to vote all proxies in
accordance with their best judgment.
Will
Generex reimburse any expenses of banks, brokers, nominees and
fiduciaries?
All
costs
and expenses of this solicitation, including the cost of preparing and mailing
this proxy statement will be borne by Generex. In addition to the use of the
mails, certain directors, officers and regular employees of Generex may solicit
proxies personally, or by mail, telephone or otherwise, but such persons will
not be compensated for such services. Arrangements will be made with brokerage
firms, banks, fiduciaries, voting trustees or other nominees to forward the
soliciting materials to each beneficial owner of stock held of record by them,
and Generex will reimburse them for their expenses in doing so.
Will
the directors be in attendance at the meeting?
We
currently expect all of our director nominees to be in attendance at the 2007
Annual Meeting of Stockholders. It has been customary for our directors to
attend our annual meetings of stockholders. All of the director nominees
attended the last Annual Meeting of Stockholders.
(Proposal
1)
Seven
directors are to be elected at the annual meeting of stockholders. All directors
will be elected to hold office until the next annual meeting of stockholders
following election and until their successors are duly elected and
qualified.
The
persons named below have been designated by our Board of Directors, including
a
majority of independent directors, as nominees for election as directors. Except
for Ms. Masterson, all nominees currently serve as our directors. The
individuals named in the enclosed proxy intend to vote all proxies received
by
them for the nominees listed below unless otherwise instructed. If you do not
wish your shares to be voted for any of the nominees, you may so indicate on
the
proxy. If, for any reason, any of the nominees shall become unavailable for
election, the individuals named in the enclosed proxy may exercise their
discretion to vote for any substitutes proposed by the Board of Directors,
including a majority of independent directors. At this time, the Board of
Directors knows of no reason why any of the nominees might be unavailable to
serve.
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Name
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Age
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Position
Held with Generex
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Director
Since
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Anna
E. Gluskin
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55
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Chairperson,
President, Chief Executive Officer and Director
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September
1997
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Rose
C. Perri
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39
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Chief
Operating Officer, Chief Financial Officer, Treasurer, Secretary
and
Director
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September
1997
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Gerald
Bernstein, M.D.
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73
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Director,
Vice-President for Medical Affairs
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October
2002
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John
P. Barratt
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62
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Independent
Director
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March
2003
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Brian
T. McGee
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46
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Independent
Director
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March
2004
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Peter
G. Amanatides
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43
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Independent
Director
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April
2005
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Nola
E. Masterson
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60
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Director
Nominee
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—
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Anna
E. Gluskin
has
served as the President and Chief Executive Officer of Generex since October
1997 and the Chairperson since November 2002. She held comparable positions
with
Generex Pharmaceuticals Inc. from its formation in 1995 until its acquisition
by
Generex in October 1997.
Rose
C. Perri
has
served as Treasurer and Secretary of Generex since October 1997, and as Chief
Operating Officer since August 1998. She served as Acting Chief Financial
Officer from November 2002 until April 2005 when she was appointed Chief
Financial Officer. She was an officer of Generex Pharmaceuticals Inc. from
its
formation in 1995 until its acquisition by Generex in October 1997.
Gerald
Bernstein, M.D.
has
served as Vice President of Generex since October 1, 2001. Dr. Bernstein acts
as
a key liaison for Generex on medical and scientific affairs to the medical,
scientific and financial communities and consults with Generex under a
consulting agreement on research and medical affairs and on development
activities. Dr. Bernstein has been an associate clinical professor at the Albert
Einstein College of Medicine in New York and an attending physician at Beth
Israel Medical Center, Lenox Hill Hospital and Montefore Medical Center, all
in
New York, since 1999. He was president of the American Diabetes Association
from
1997 to 1998.
John
P. Barratt
is
currently a member of the Generex Audit Committee. Mr. Barratt currently serves
as the Board Liaison Officer of The Caldwell Partners International, a role
he
commenced in July 2006. From April 2005 to July 2006, Mr. Barratt served as
Chief Operating Officer of The Caldwell Partners International. The Caldwell
Partners International is a Canadian-based human capital professional services
company. Mr. Barratt from January 2002 until February 2007 served as the
court-appointed Responsible Person and Liquidation Manager of Beyond.com
Corporation, Debtor-in-Possession, a U.S. Chapter 11 Bankruptcy case, in which
capacity Mr. Barratt reported to the bankruptcy court and to the U.S. Trustee’s
Office. From September 2000 to January 2002, Mr. Barratt acted in the capacity
of Chief Operating Officer of Beyond.com
Corporation,
an electronic fulfillment provider. Between 1996 and 2000, Mr. Barratt was
partner-in-residence with the Quorum Group of Companies, an international
investment partnership specializing in providing debt and/or equity capital
coupled with strategic direction to emerging technology companies. Between
1988
and 1995, Mr. Barratt held a number of positions with Coscan Development
Corporation, a real estate development company, the last position of which
was
Executive Vice-President and Chief Operating Officer. Mr. Barratt currently
serves on a number of Boards of Directors, including Brascade Corporation and
BAM Split Corporation, and is a member of the Board of Directors and Chairman
of
the Risk Policy Committee of the Bank of China (Canada). Mr. Barratt also serves
on the Advisory Boards of the following Brascan SoundVest funds: Diversified
Income Fund, Total Return Fund, Rising Distribution Split Trust and Focused
Business Trust. In addition, Mr. Barratt is also a member of the Advisory Board
of the Brascan Adjustable Rate Trust I and Crystal Fountains Inc.
Brian
T. McGee
is
currently the Chairman of the Generex Audit Committee. Mr. McGee has been a
partner of Zeifman & Company, LLP ("Zeifman") since 1995. Mr. McGee began
working at Zeifman shortly after receiving a B.A. degree in Commerce from the
University of Toronto in 1985. Zeifman is a Chartered Accounting firm based
in
Toronto, Ontario. A significant element of Zeifman's business is public
corporation accounting and auditing. Mr. McGee is a Chartered Accountant.
Throughout his career, Mr. McGee has focused on, among other areas, public
corporation accounting and auditing. In 1992, Mr. McGee completed courses
focused on International Taxation and Corporation Reorganizations at the
Canadian Institute of Chartered Accountants and in 2003, Mr. McGee completed
corporate governance courses on compensation and audit committees at Harvard
Business School. In April 2004 Mr. McGee received his CPA designation from
The
American Institute of Certified Public Accountants.
Peter
G. Amanatides
is
currently the Chairman of the Generex Regulatory Compliance Committee and a
member of the Generex Compensation Committee. Mr. Amanatides has been working
in
the pharmaceutical and biotechnology industry since 1988. Since November 2004,
Mr. Amanatides has been President and Chief Operating Officer of Pharmalogika,
Inc., a North Carolina-based service provider for the pharmaceutical and
biotechnology industry. Since April 2002, Mr. Amanatides has held the positions
of Director and Vice President within the Quality Organization for DSM
Pharmaceuticals and DSM Biologics, both divisions of DSM Pharmaceutical
Products, Inc. From February 1999 to April 2002, Mr. Amanatides served as
Director of Quality Systems for Celera Genomics, a division of Applied
Biosystems involved in genomics and pharmaceutical discovery. Mr. Amanatides
received a B.S. degree in biology from Regents College, Albany, New York and
a
M.S. degree in Biotechnology and Molecular Biology from Hood College, Frederick,
Maryland. Mr. Amanatides has also held ASQ Certification as a certified Quality
Manager.
Nola
E. Masterson
is a
director nominee and will stand
for
election at the annual meeting. Since 1982, she has been the chief executive
officer of Science Futures Inc., an investment and advisory firm. Ms. Masterson
is currently Managing Member and General Partner of Science Futures LLC, I,
II
and III, which are venture capital funds invested in life science funds and
companies. She also serves as a Senior Advisor to TVM Techno Venture Management,
an international venture capital company, and as a member of the Board of
Directors of Repros Therapeutics Inc., a development stage biopharmaceutical
company formerly known as Zonagen, Inc. (currently trading on The NASDAQ Global
Market under the symbol “RPRX”). Ms. Masterson was the first biotechnology
analyst on Wall Street, working with Drexel Burnham Lambert and Merrill Lynch,
and is a co-founder of Sequenom, Inc., a genetic analysis company located in
San
Diego and Hamburg, Germany. She also started the BioTech Meeting in Laguna
Nigel, CA, the annual Biopharmaceutical Conference in Europe, and was nominated
to the 100 Irish American Business List in 2003. Ms. Masterson began her career
at Ames Company, a division of Bayer, and spent eight years at Millipore
Corporation in sales and sales management. Ms. Masterson has 31 years of
experience in the life science industry. She received her Masters in Biological
Sciences from George Washington University, and continued Ph.D. work at the
University of Florida. .
There
are
no family relationships among our officers and directors.
Two
of
our current directors, Mindy J. Allport-Settle and David E. Wires, have elected
not to stand for re-election to the Board of Directors at the annual
meeting.
NASDAQ
Marketplace Rule 4350(c) requires that a majority of the Board of Directors
be
comprised of independent directors as defined in NASDAQ Marketplace Rule
4200(a)(15). The Board of Directors has determined that certain of our current
directors, Messrs. Barratt, McGee, Amanatides, Wires and Ms. Allport-Settle,
are
independent under NASDAQ Marketplace Rules 4200(a)(15) and 4350(c). Accordingly,
a majority of our current directors meet the definition of independence under
the NASDAQ Capital Market listing requirements. The Board of Directors also
has
determined that Ms. Masterson will be independent under applicable NASDAQ
Marketplace Rules upon her election as a director. Therefore, we expect that
a
majority of the seven directors elected at the annual meeting will be
independent under applicable NASDAQ
standards.
In addition, we continue to evaluate additional candidates for independent
directors. In accordance with our Bylaws, the Board of Directors is permitted
to
increase the number of directors and to fill the vacancies created by the
increase until the next annual meeting of stockholders.
The
Board of Directors unanimously recommends that stockholders
vote
FOR
Proposal 1, approving the election
of the above-named nominees.
DANZIGER
& HOCHMAN, CHARTERED ACCOUNTANTS
AS
GENEREX’S INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal
2)
The
Audit
Committee of the Board of Directors has selected Danziger & Hochman,
Chartered Accountants as the independent public accountants to examine the
financial statements of Generex and its subsidiaries for the year ending July
31, 2007. The Board of Directors has concurred in the Audit Committee’s
selection and is presenting the matter to the stockholders for ratification
at
the annual meeting. Danziger & Hochman have provided such services since
their engagement on February 1, 2006. BDO Dunwoody LLP provided such services
for the fiscal year ended July 31, 2005.
Representatives
of Danziger & Hochman are expected to be present at the meeting, will have
an opportunity to make a statement if they so desire and will be available
to
respond to appropriate questions.
Stockholder
ratification of the selection of Danziger & Hochman as our independent
auditors is not required by our Bylaws or otherwise. However, we are submitting
the selection of Danziger & Hochman to the stockholders for ratification as
a matter of good corporate practice. If the stockholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to retain Danziger
& Hochman. Even if the selection is ratified, the Audit Committee in its
discretion may direct the appointment of a different independent audit firm
at
any time during the year if it is determined that such a change would be in
the
best interests of us and our stockholders.
The
Board of Directors unanimously recommends that stockholders
vote
FOR
Proposal 2, ratifying the appointment of Danziger &
Hochman
as
Generex’s independent public accountants for the fiscal year ending July 31,
2007.
On
January 6, 2006, BDO Dunwoody LLP (“BDO”) resigned as our auditor. BDO’s reports
on our financial statements for the fiscal years ended July 31, 2004 and July
31, 2005 did not contain an adverse opinion or a disclaimer of opinion, and
were
not qualified or modified as to uncertainty, audit scope or accounting
principles, except that BDO’s report on our financial statements for the fiscal
year ended July 31, 2005 did contain a going concern note.
During
our fiscal years ended July 31, 2004 and 2005 and the interim period through
January 6, 2006, we had no disagreements with BDO on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to BDO’s satisfaction, would have
caused BDO to make reference to the subject matter of the disagreement in
connection with its reports for such periods, and there were no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K; however, in connection
with our un-audited interim financial statements for the second quarter ended
January 31, 2004, we drafted a letter dated February 17, 2004 to the Office
of
Chief Accountant of the U.S. Securities and Exchange Commission regarding proper
accounting treatment in respect of certain employee stock options. BDO made
our
Audit Committee aware of the matter. We, with the agreement of BDO, subsequently
recorded the options in accordance with the interpretation supplied by the
Office of Chief Accountant.
A
copy of
a letter addressed to the Securities and Exchange Commission, or SEC, from
BDO
regarding its agreement to the above statements relating to its resignation
was
included as Exhibit 16.1 to our Form 8-K filed with the SEC on
January 12, 2006.
On
February 1, 2006, we engaged Danziger & Hochman as our independent auditors
for the fiscal year ending July 31, 2006. During our fiscal years ended July 31,
2004 and July 31, 2005, and the interim period through February 1, 2006, we
had
no consultations with Danziger & Hochman concerning: (a) the application of
accounting principles to a specific transaction or the type of opinion that
might be rendered on our financial statements as to which we received a written
report or oral advice that was an important factor in reaching a decision on
any
accounting, auditing or financial reporting issue; or (b) any disagreements,
as
defined in Item 304(a)(1)(iv) of Regulation S-K. The appointment of Danziger
& Hochman as independent public accountants on February 1, 2006 was
unanimously approved by the Audit Committee of our Board of Directors.
Danziger
& Hochman has served as our independent auditors since February 1, 2006. The
appointment of Danziger & Hochman as independent public accountants was
unanimously approved by the Audit Committee of our Board of Directors. BDO
served as our independent auditors from July 1, 2003 until its resignation
on
January 6, 2006.
The
following table sets forth the aggregate fees paid by Generex for the fiscal
years ended July 31, 2005 and July 31, 2006 to our independent
auditors:
|
Fiscal
Year Ended
July
31, 2005
|
Fiscal
Year Ended
July
31, 2006
|
||||||
|
Audit
Fees
|
$
|
291,390(1
|
)
|
$
|
184,082(2
|
)
|
|
|
Audit-Related
Fees
|
$
|
0
|
$
|
145,860(3
|
)
|
||
|
Tax
Fees
|
$
|
0
|
$
|
0
|
|||
|
All
Other Fees
|
$
|
0
|
(4)
|
$
|
0(4
|
)
|
|
| (1) |
Represents
charges of BDO, Generex's auditor for fiscal year ended July 31,
2005.
|
| (2) |
Represents
charges of Danziger & Hochman, Generex's auditor and charges of BDO,
Generex’s prior auditor for fiscal year ended July 31, 2006.
|
| (3) |
Represents
charges of Danziger & Hochman, Generex's auditor in fiscal year ended
July 31, 2006 for internal controls testing relating to Section 404
of the
Sarbanes-Oxley Act of 2002.
|
| (4) |
Neither
BDO nor Danziger & Hochman billed amounts for any other services.
|
The
Audit
Committee’s policy is to pre-approve all audit services and all non-audit
services that Generex’s independent auditor is permitted to perform for Generex
under applicable federal securities regulations. As permitted by the applicable
regulations, the Audit Committee’s policy utilizes a combination of specific
pre-approval on a case-by-case basis of individual engagements of the
independent auditor and general pre-approval of certain categories of
engagements up to predetermined dollar thresholds that are reviewed annually
by
the Audit Committee. Specific pre-approval is mandatory for the annual financial
statement audit engagement, among others.
The
pre-approval policy was implemented effective as of October 30, 2003. All
engagements of the independent auditor to perform any audit services and
non-audit services since that date have been pre-approved by the Audit Committee
in accordance with the pre-approval policy. The policy has not been waived
in
any instance. All engagements of the independent auditor to perform any audit
services and non-audit services prior to the date the pre-approval policy was
implemented were approved by the Audit Committee in accordance with its normal
functions.
The
Audit
Committee reviewed and discussed Generex's audited financial statements for
the
fiscal year ended July 31, 2006 with management. The Audit Committee discussed
with Danziger
& Hochman, Charter Accountants,
Generex's independent public accountants for the fiscal year ended July 31,
2006, the matters required to be discussed by Statement on Auditing Standards
No. 61, as modified. The Audit Committee received the written disclosures and
the letter from Danziger
& Hochman
required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and discussed with Danziger
& Hochman
its
independence. Based on the review and discussions described above, among other
things, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in Generex's Annual Report on Form
10-K
for the fiscal year ended July 31, 2006 for filing with the SEC.
Submitted
by the Audit Committee
Brian
T.
McGee (Chairman)
John
P.
Barratt
Mindy
J.
Allport-Settle
The
foregoing Report of the Audit Committee shall not be deemed to be soliciting
material, to be filed with the SEC or to be incorporated by reference into
any
of Generex's previous or future filings with the SEC, except as otherwise
explicitly specified by Generex in any such filing.
The
business affairs of Generex are managed under the direction of our Board of
Directors. During the fiscal year ended July 31, 2006, our Board of Directors
held four meetings and took action by unanimous consent four times. During
the
fiscal year ended July 31, 2006, all of the directors attended all of the Board
of Directors meetings that were held.
During
fiscal year 2006, the Board of Directors consisted of seven members. In May
2006, the number of directors increased to eight with the election of David
Wires to the Board at the annual stockholders meeting. A majority of the current
directors as of this date meet the definition of independence under the NASDAQ
Capital Market listing requirements. Generex continues to evaluate additional
candidates for independent directors. In accordance with the Bylaws of Generex,
the Board of Directors is permitted to increase the number of directors and
to
fill the vacancies created by the increase until the next annual meeting of
stockholders.
The
Board
of Directors has established a standing Audit Committee and a standing
Compensation Committee. The Board does not currently have a standing Nominating
Committee.
The
Audit
Committee, which was established on March 1, 2000, met four times during the
fiscal year ended July 31, 2006. The Audit Committee reviews and discusses
with Generex's management and its independent auditors the audited
and
unaudited
financial statements contained in Generex's Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, respectively. Although Generex's management
has
the primary responsibility for the financial statements and the reporting
process, including the system of internal controls and disclosure controls
and
procedures, the Audit Committee reviews and discusses the reporting process
with
management on a regular basis. The Audit Committee also discusses with the
independent auditor their judgments as to the quality of Generex's accounting
principles, the reasonableness of significant judgments reflected in the
financial statements and the clarity of disclosures in the financial statements
as well as such other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards. The Audit Committee
has
adopted a written charter, which was amended on October 30, 2003 and, as
amended, is reproduced as Appendix
A
to
Generex's Proxy Statement filed with the SEC on January 23, 2004. The Audit
Committee Charter is also available on Generex's website-www.generex.com.
During
fiscal 2006, the Audit Committee was composed of Brian T. McGee, who serves
as
the chairman, John P. Barratt and Mindy J. Allport-Settle. All members of the
Audit Committee satisfy the independence requirements under NASDAQ rules for
audit committee members. Members of the Audit Committee also satisfy a separate
SEC independence requirement, which provides that they may not accept directly
or indirectly any consulting, advisory or other compensatory fee from Generex
or
any of its subsidiaries other than their directors’ compensation. All of the
members of the Audit Committee attended all of the meetings that they were
eligible to attend.
The
Compensation Committee was formed on July 30, 2001 and met two times during
the
fiscal year ended July 31, 2006. The Compensation Committee was formed to set
policies for compensation of the Chief Executive Officer and the other executive
officers of Generex. The Compensation Committee periodically compares Generex's
executive compensation levels with those of companies with which Generex
believes that it competes for attraction and retention of senior caliber
personnel. Under NASDAQ rules effective as of the date of the annual meeting,
the Compensation Committee will either determine or recommend to the Board
of
Directors the compensation of all executive officers.
The
Compensation Committee currently consists of three non-employee directors:
Ms.
Allport-Settle, Peter G. Amanatides and David Wires. Ms. Allport-Settle is
currently the Chairwoman of the Compensation Committee. All of the members
of
the Compensation Committee attended all of the meetings of the Compensation
Committee.
None
of
the members of the Compensation Committee has previously served at any time
as
an officer or employee of Generex or any of its subsidiaries. Ms. Allport-Settle
has had no relationship with Generex that is required to be disclosed under
Item
404 of Regulation S-K under the Securities Exchange Act of 1934, as amended.
During our last fiscal year and our current fiscal year, we paid consulting
fees
to PharmaLogika, Inc., a private consulting firm in the pharmaceuticals
regulatory field for which Mr. Amanatides serves as the Senior Vice-President
& Chief Operating Officer, and we paid legal fees to Wires Jolley LLP, a law
firm in which Mr. Wires is a partner. See “Compensation Committee Interlocks and
Insider Participation” below for a description of our relationship with, and the
fees paid to, PharmaLogika and Wires Jolley.
No
executive officer of Generex has served on the board of directors or
compensation committee of any other entity that has or has had one or more
executive officers serving as a director of Generex (excluding entities that
are
wholly owned by one or more of the executive officers).
Generex
amended its Audit Committee Charter on October 30, 2003. The Audit Committee
Charter, the Compensation Committee Charter and the Generex Code of Ethics
have
been posted on Generex’s Internet website - www.generex.com.
Generex
currently does not have a nominating committee. Nominations
for the election of directors at annual meetings have generally been handled
by
the full Board of Directors, which to date has never exceeded eight members.
Five of our current eight directors are independent, and four of the seven
director nominees are independent. Currently, future candidates for director
are
either (i) recommended by a majority of the independent directors for selection
by the Board of Directors or (ii) discussed by the full Board of Directors
and
approved for nomination by the affirmative vote of a majority of the Board
of
Directors, including the affirmative vote of a majority of the independent
directors, as required by NASDAQ rules.
As
a
small company, we have has generally used an informal process to identify and
evaluate director candidates. Although we believe that identifying and
nominating highly skilled and experienced director candidates is critical to
the
company’s future, we have not engaged, nor do we believe that it is necessary at
this time to engage, any third party to assist
it
in
identifying director candidates. We have encouraged both independent directors
and employee directors to identify nominees for the Board of Directors. We
believe that as a result, our Board is presented with a more diverse and
experienced group of candidates for discussion and consideration.
During
the evaluation process, the Board seeks to identify director candidates with
the
highest personal and professional ethics, integrity and values. The Board seeks
candidates with diverse experience in business, finance, pharmaceutical and
regulatory matters, and other matters relevant to a company such as Generex.
Additionally, we require that director nominees have sufficient time to devote
to the company’s affairs.
Generex
will consider candidates that are put forward by its stockholders. The name,
together with the business experience and other relevant background information
of a candidate, should be sent to Mark Fletcher, the Executive Vice-President
and General Counsel of Generex, at Generex’s principal executive offices located
at 33 Harbour Square, Suite 202, Toronto, Ontario, Canada M5J 2G2. Mr. Fletcher
will then submit such information to the independent directors for their review
and consideration. The process for determining whether to nominate a director
candidate put forth by a stockholder is the same as that used for reviewing
candidates submitted by directors. Other than candidates submitted by its
directors and executive officers, Generex has never received a proposed
candidate for nomination from any large long-term stockholder.
Any
stockholder entitled to vote for the election of directors may nominate a person
for election to the Board of Directors at the annual meeting. Any stockholder
wishing to do so must submit a notice of such nomination in writing to the
Secretary of Generex at Generex's principal offices located at 33 Harbour
Square, Suite 202, Toronto, Ontario, Canada M5J 2G2 not less than 60 nor more
than 90 days prior to the annual meeting. In the event that less than 70 days
notice or prior disclosure of the date of the meeting is given or made to
stockholders, notice of nomination by a stockholder to be timely must be
received not later than the close of business on the 10th day following the
day
on which such notice of the date of the meeting was mailed or such public
disclosure was made. The stockholder's notice of nomination must provide
information about both the nominee and the nominating stockholder, as required
by Generex's Amended and Restated Bylaws. A copy of these Bylaw requirements
will be provided upon request in writing to Mr. Fletcher, at Generex’s principal
executive offices located at 33 Harbour Square, Suite 202, Toronto, Ontario,
Canada M5J 2G2.
Interested
parties who wish to make any concerns known to non-management directors may
submit communications at any time in writing to: Mark Fletcher, Executive
Vice-President and General Counsel, Generex Biotechnology Corporation, 33
Harbour Square, Suite 202, Toronto, Ontario, Canada M5J 2G2. The General Counsel
will determine, in his good faith judgment, which communications will be relayed
to the non-management directors.
Compensation
Philosophy.
The
goals of Generex's compensation program are to attract and retain talented
executives, to motivate these executives to achieve Generex's business goals,
to
align executive and stockholder interests and to recognize individual
contributions as well as overall business results.
The
key
elements of Generex's executive compensation are base salary, cash bonuses,
stock bonuses and stock options. While the elements of compensation are
considered separately, the Compensation Committee ultimately looks to the value
of the total compensation package provided by Generex to the individual
executive.
Base
Salaries.
Prior
to 2001, Generex historically paid very modest base salaries to its executive
officers, relying on option grants to supplement the low base salaries. The
Compensation Committee implemented increases for fiscal 2002 to bring the base
salaries of Generex's executives in line with base salaries of Generex's
principal competitors.
In
fiscal
2005, the Compensation Committee again reviewed salaries for its executive
officers and recommended increases, which the full Board of Directors adopted,
effective as of August 1, 2004, to bring the base salaries of such executives
in
line with base salaries of our principal competitors. Ms. Gluskin’s annual base
salary was increased from $350,000 to $425,000; Ms. Perri’s annual base salary
was increased from $295,000 to $325,000; and Mr. Fletcher’s annual base salary
was increased from $130,000 to $250,000. These were the first salary adjustments
for Ms. Gluskin and Ms. Perri since August 1, 2002 and for Mr. Fletcher since
April 1, 2003. In each of fiscal 2005 and 2006, the current salaries for each
of
Ms. Gluskin, Ms. Perri and Mr. Fletcher were maintained.
Cash
Bonuses.
In 2002,
the Compensation Committee adopted performance objectives for determining
bonuses of executive officers on a going forward basis. Executive officer
bonuses were, and continue to be, based on the executive's position within
Generex, Generex's attainment of the objectives and individual contributions
to
the attainment of the objectives. In fiscal 2006, the Committee decided to
continue its plan, which was developed in fiscal 2004, to tie potential
executive bonuses to measurable and realistic milestones. The Compensation
Committee meets each year to determine such year's bonuses. Generex achieved
a
number of its objectives during fiscal 2006, including raising significant
additional capital to fund the company’s clinical and regulatory and research
and development programs, completing the transfer of technology to PharmaBRAND,
S.A. in Quito, Ecuador and the consequent commencement of commercial production
of Generex Oral-lyn™, the initiation of a Generex Oral-lyn™ study in juveniles,
completion of a Pre-New Drug Submission meeting with Health Canada in respect
of
Generex Oral-lyn™, completion of a Pre-Investigational New Drug meeting with the
FDA in respect of Antigen Express’s application of its technology in the
development of an avian influenza vaccine, the establishment of a research
and
development collaboration with Fertin Pharma in respect of metformin gum, the
initiation of a metformin gum pilot study, the engagement of Cardinal Health
to
manufacture Generex Oral-lyn™ for the completion of clinical trials, the
achievement of compliance with Section 404 of the Sarbanes-Oxley Act, the grant
of several new patents to augment intellectual property protection of the
company’s proprietary drug delivery technologies, the presentation of the
company’s clinical data at important international scientific symposia, and the
successful resolution of the Sands litigation. In consideration of the
achievement of the foregoing objectives, the Compensation Committee determined
that it was appropriate to award bonuses for fiscal 2006. On September 8, 2006,
our full Board of Directors awarded bonuses to certain of Generex’ executive
officers as follows: Ms. Gluskin - $206,125; Ms. Perri - $157,625; and Mr.
Fletcher - $121,250. Each bonus was payable, at each recipient’s discretion, in
cash, in shares of Generex’s common stock, or a combination thereof, provided
that (i) the number of shares, if any, were determined based on the average
closing price of Generex’s common stock on the NASDAQ Capital Market for the 30
successive trading days ended September 7, 2006 ($1.45), and (ii) to the extent
not paid on or before October 20, 2006, any unpaid portions thereof would be
irrevocably forfeited. The bonuses were paid in cash prior to October 20,
2006.
On
December 9, 2005, our Board of Directors also approved a one-time recompense
payment in the aggregate amount of $1,000,000 for each of Ms. Gluskin and Ms.
Perri in recognition of Generex’s failure to remunerate each of Ms. Gluskin and
Ms. Perri in each of the fiscal years ended July 31, 1998, 1999, 2000 and 2001
in a fair and reasonable manner commensurate with comparable industry standards
and Ms. Gluskin’s and Ms. Perri’s duties, responsibilities and performance
during such years. The payment of such amount to each of Ms. Gluskin and Ms.
Perri will be made (a) in cash at such time or times and in such amounts as
determined solely by Ms. Gluskin or Ms. Perri, as applicable, and/or (b) in
shares of our common stock at such time or times as determined by Ms. Gluskin
or
Ms. Perri, as applicable, provided that the conversion price for any such shares
shall be equal to the average closing price of our common stock on the NASDAQ
Capital Market for the 20 successive trading days immediately preceding, but
not
including, December 9, 2005 ($0.95).
Stock
Options/Long-Term Incentives.
The
purpose of stock option grants is to provide an additional incentive to Generex
employees, including executive officers, to contribute materially to the growth
of Generex. Stock options are granted to align the interests of the recipients
with the interests of stockholders. Pursuant to the terms of Dr. Bernstein’s
employment agreement with Generex in respect of the contract year ending March
31, 2006, Generex issued Dr. Bernstein a warrant to purchase 50,000 shares
of
Generex common stock on April 17, 2006 with an exercise price of $2.66 per
share, which represented the average closing price of the common stock on the
NASDAQ Capital Market for the five trading days ending April 17, 2006. Pursuant
to the terms of Dr. Bernstein’s employment agreement with Generex in respect of
the contract year ending March 31, 2007, Generex issued Dr. Bernstein a warrant
to purchase 50,000 shares of Generex common stock with an exercise price equal
to the closing price of the common stock on the NASDAQ Capital Market on March
5, 2007 ($1.71).
Chief
Executive Officer Compensation for Fiscal 2006.
Ms.
Gluskin's compensation for the fiscal year ended July 31, 2006 was determined
in
accordance with the compensation policies described above. Ms. Gluskin was
paid
an annual base salary of approximately $425,000, which the Committee deemed
appropriate compensation, and received a bonus of $206,125 which was paid in
cash. In determining Ms. Gluskin’s compensation for fiscal 2006, the Committee
considered the base salaries of chief executive officers of our competitors.
In
addition, the Committee determined that Ms. Gluskin was instrumental in our
achievement of numerous objectives during fiscal 2006, including raising
significant additional capital to fund the company’s clinical and regulatory and
research and development programs, completing the transfer of technology to
PharmaBRAND, S.A. in Quito, Ecuador and the consequent commencement of
commercial production of Generex Oral-lyn,™ the initiation of a Generex
Oral-lyn™ study in juveniles, completion of a Pre-New Drug Submission meeting
with Health Canada in respect of Generex Oral-lyn™, completion of a
Pre-Investigational New Drug meeting with the FDA in respect of t Antigen
Express’s application of its technology in the development of an avian influenza
vaccine, the establishment of a research and development collaboration with
Fertin Pharma in respect of metformin gum, the initiation of a metformin gum
pilot study, the engagement of Cardinal Health to manufacture Generex Oral-lyn
for the completion of clinical trials, the achievement of compliance with
Section 404 of the Sarbanes-Oxley Act, the grant of several new patents to
augment intellectual property protection of the company’s proprietary drug
delivery technologies, the presentation of the company’s clinical data at
important international scientific symposia, and the successful resolution
of
the Sands litigation. In light of such determinations, the compensation paid
to
Ms. Gluskin for fiscal 2006 was considered to give appropriate incentive to
Ms.
Gluskin to continue to promote the strategic objectives of Generex and to
enhance stockholder value.
Submitted
by the Compensation Committee
Mindy
J.
Allport-Settle (Chairwoman)
Brian
T.
McGee
Peter
G.
Amanatides
The
foregoing Report of the Compensation Committee on Executive Compensation and
the
Performance Graph on page 19 shall not be deemed to be soliciting material,
to
be filed with the SEC or to be incorporated by reference into any of Generex's
previous or future filings with the SEC, except as otherwise explicitly
specified by Generex in any such filing.
The
Compensation Committee currently consists of three non-employee directors:
Mindy
J. Allport-Settle, Peter G. Amanatides and David Wires. None of the members
of
the Compensation Committee has previously served as an officer or employee
of
Generex or any of its subsidiaries at any time. Ms. Allport-Settle has had
no
relationship with Generex that is required to be disclosed under Item 404 of
Regulation S-K under the Exchange Act. Ms. Allport-Settle will not stand for
re-election at the annual meeting.
Mr.
Wires
is a partner in the firm of Wires Jolley LLP. Wires Jolley represents us in
various matters. During fiscal 2006, we paid approximately $85,000 in fees
to
Wires Jolley. We continue to use Wires Jolley and expect to pay legal fees
in
similar amounts to the firm in fiscal 2007. Mr. Wires will not stand for
re-election at the annual meeting.
Mr.
Amanatides is the Senior Vice-President & Chief Operating Officer of
PharmaLogika, Inc., a private consulting firm in the pharmaceuticals regulatory
field. During fiscal year 2006, we paid $150,000 in fees to PharmaLogika for
services rendered. Subsequently, in the fiscal year 2007, we paid an additional
$100,000 in fees to PharmaLogika for services rendered and owe a balance of
$50,000. We do not expect to pay any further fees to PharmaLogika going forward.
Mr. Amanatides is neither a director nor a shareholder of PharmaLogika.
No
executive officer of Generex has served on the board of directors or
compensation committee of any other entity that has or has had one or more
executive officers serving as a director of Generex (excluding entities that
are
wholly owned by one or more of the executive officers).
The
SEC
adopted amendments to the executive officer and director compensation disclosure
rules in 2006. These rules will require, among other things, new tabular and
narrative disclosure about executive officer and director compensation. These
rules became effective for company filings containing disclosures for fiscal
years ending on or after December 15, 2006. Accordingly, we are not required
to
comply with these new SEC rules in this Proxy Statement and are complying with
the rules in effect prior to these amendments.
The
following table sets forth, for Generex's last three fiscal years, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") and the three most highly compensated executive and non-executive
officers of Generex, other than the CEO, whose salary and bonus payments
exceeded $100,000 for the fiscal year ended July 31, 2006.
|
ANNUAL
COMPENSATION
|
LONG-TERM
COMPENSATION
|
|||||||
|
AWARDS
|
PAYOUTS
|
|||||||
|
Name
and Principal Position
|
Year
Ended July 31
|
Salary
($)
(2)
|
Bonus
($)
|
Other
Annual Com-pensa-tion
|
Restricted
Stock Award(s)
($)
|
Securities
Underlying Options
(#)
|
LTIP
Payouts
|
All
Other
Compensation
($)
|
|
Anna
E. Gluskin (1), President and Chief Executive Officer
|
2006
2005
2004
|
425,000
425,000(5)
350,000
|
206,125(3)
500,000(6)
0
|
*
*
*
|
0
0
0
|
0
250,000(7)
100,000(8)
|
0
0
0
|
1,000,000(4)
0
0
|
|
Rose
C. Perri (1), Chief Operating Officer, Chief Financial Officer, Treasure
and Secretary
|
2006
2005
2004
|
325,000
325,000(9)
295,000
|
157,625(3)
250,000(10)
0
|
*
*
*
|
0
0
0
|
0
250,000(7)
100,000(8)
|
0
0
0
|
1,000,000(4)
0
0
|
|
Mark
Fletcher, Executive Vice President and General Counsel
|
2006
2005
2004
|
250,000
250,000(11)
100,000
|
121,250(3)
200,000(12)
30,000(13)
|
*
*
*
|
0
0
0
|
0
250,000(7)
0
|
0
0
0
|
0
0
0
|
|
Gerald
Bernstein, M.D. Vice President, Medical Affairs
|
2006
2005
2004
|
200,000
200,000(14)
150,000
|
0
0
30,000(15)
|
*
*
*
|
0
0
0
|
50,000(16)
100,000(17)
0
|
0
0
0
|
0
0
0
|
| * |
Perquisites
and other personal benefits, securities or other property received
by each
executive officer did not exceed the lesser of $50,000 or 10% of
such
executive officer's salary and
bonus.
|
| (1) |
Portions
of the cash compensation paid to Ms. Gluskin and Ms. Perri are
attributable to amounts paid indirectly through a management services
agreement with a corporation of which, at July 31, 2006, Ms. Gluskin
and
Ms. Perri were equal owners.
|
| (2) |
Cash
compensation is stated in the table in U.S. dollars. To the extent
any
cash compensation was paid in Canadian dollars, it has been converted
into
U.S. dollars based on the weighted average Canadian/U.S. dollar exchange
rate for the years ended July 31, 2006, 2005 and 2004, respectively.
|
| (3) |
The
bonuses awarded to each of Ms. Gluskin, Ms. Perri and Mr. Fletcher
on
September 8, 2006 were in respect of Generex’s fiscal year ended July 31,
2006. Each bonus was payable, at each recipient’s discretion, in cash, in
shares of Generex’s common stock, or a combination thereof, provided that
(i) the number of shares, if any, were determined based on the average
closing price of Generex’s common stock on the NASDAQ Capital Market for
the 30 successive trading days ended September 7, 2006 ($1.45), and
(ii)
to the extent not paid on or before October 20, 2006, any unpaid
portions
thereof would be irrevocably forfeited. The bonuses were paid in
cash
prior to October 20, 2006.
|
| (4) |
On
December 9, 2005, the Board of Directors approved a one-time recompense
payment in the aggregate amount of $1,000,000 for each of Ms. Gluskin
and
Ms. Perri in recognition of Generex’s failure to remunerate each of Ms.
Gluskin and Ms. Perri in each of the fiscal years ended July 31,
1998,
1999, 2000 and 2001 in a fair and reasonable manner commensurate
with
comparable industry standards and Ms. Gluskin and Ms. Perri’s duties,
responsibilities and performance during such years. Such amounts
were
payable (i) in cash at such time or times and in such amounts as
determined solely by Ms. Gluskin or Ms. Perri, as applicable, and/or
(ii)
in shares of Generex’s common stock at such time or such times as
determined by Ms. Gluskin or Ms. Perri, as applicable, provided that
the
conversion price for any such shares was equal to the average closing
price of Generex’s common stock on the NASDAQ Capital Market for the 20
successive trading days immediately preceding, but not including,
December
9, 2005 ($0.95). The amounts were not paid as of April 20, 2007 with
the
exception of $415,742.30 that was used by Ms. Perri to repay Note
Receivable, Due from Related Party. The amount was due from EBI,
Inc., a
shareholder of the Company that is controlled by the estate of the
Company’s former Chairman of the Board, Mark Perri. The note was not
interest bearing, unsecured and did not have any fixed terms of repayment.
The note was extended to EBI, Inc. in May
1997.
|
| (5) |
On
April 5, 2005, the Board of Directors approved the increase in Ms.
Gluskin’s annual base salary, which was effective as of August 1, 2004.
The retroactive salary adjustment and unpaid salary amounts accrued
through March 31, 2005 ($168,578) were satisfied by the issuance
under the
Generex Biotechnology Corporation 2001 Stock Option Plan, as amended
(the
“2001 Plan”), of stock options to purchase 301,032 shares of common stock
at the exercise price of $0.001 per share. The number of shares was
calculated using the closing price of the common stock on the NASDAQ
Capital Market on April 4, 2005 ($0.56 per share).
|
| (6) |
The
bonus awarded to Ms. Gluskin on April 5, 2005 was in the form of
stock
options to purchase 819,672 shares of common stock at the exercise
price
of $0.001 per share. The options were granted under the 2001 Plan.
The
number of shares awarded was calculated using the closing price of
the
common stock on The NASDAQ Capital Market on December 13, 2004 ($0.61
per
share).
|
| (7) |
These
options were granted under the 2001 Plan on April 5, 2005 with an
effective date as of December 13, 2004 and an exercise price of $0.61
per
share, which represents the closing price of the common stock on
The
NASDAQ Capital Market on December 13,
2004.
|
| (8) |
These
options were granted under the 2001 Plan on November 18, 2003 with
an
effective date as of November 18, 2003.
|
| (9) |
On
April 5, 2005, the Board of Directors approved the increase in Ms.
Perri’s
annual base salary, which was effective as of August 1, 2004. The
retroactive salary adjustment and unpaid salary amounts accrued through
March 31, 2005 ($93,473) were satisfied by the issuance under the
2001
Plan of stock options to purchase 166,916 shares of common stock
at the
exercise price of $0.001 per share. The number of shares was calculated
using the closing price of the common stock on The NASDAQ Capital
Market
on April 4, 2005 ($0.56 per share).
|
| (10) |
The
bonus awarded to Ms. Perri on April 5, 2005 was in the form of stock
options to purchase 409,836 shares of common stock at the exercise
price
of $0.001 per share. The options were granted under the 2001 Plan.
The
number of shares awarded was calculated using the closing price of
the
common stock on The NASDAQ Capital Market on December 13, 2004 ($0.61
per
share).
|
| (11) |
On
April 5, 2005, the Board of Directors approved the increase in Mr.
Fletcher’s annual base salary, which was effective as of August 1, 2004.
The retroactive salary adjustment accrued through March 31, 2005
($80,000)
was satisfied by the issuance under the 2001 Plan of stock options
to
purchase 142,857 shares of common stock at the exercise price of
$0.001
per
|
share.
The number of shares was calculated using the closing price of the common stock
on The NASDAQ Capital Market on April 4, 2005 ($0.56 per share).
| (12) |
The
bonus awarded to Mr. Fletcher on April 5, 2005 was in the form of
stock
options to purchase 327,869 shares of common stock at the exercise
price
of $0.001 per share. The options were granted under the 2001 Plan.
The
number of shares awarded was calculated using the closing price of
the
common stock on The NASDAQ Capital Market on December 13, 2004 ($0.61
per
share). This bonus includes the $30,000 annual guaranteed bonus specified
under Mr. Fletcher’s contract.
|
| (13) |
Mr.
Fletcher's employment agreement guaranteed him a bonus of $30,000
annually, payable in quarterly installments. This bonus was eliminated
effective April 5, 2005.
|
| (14) |
On
April 5, 2005, in connection with the amendment of Dr. Bernstein’s
employment agreement with Generex, the Board of Directors approved
the
increase in Dr. Bernstein’s annual base salary to $200,000 effective as of
April 1, 2005. With the increase in his annual base salary, the annual
bonus of $30,000 under Dr. Bernstein’s employment agreement was
eliminated.
|
| (15) |
Dr.
Bernstein’s employment agreement guaranteed him a bonus of $30,000
annually, payable monthly. This bonus was eliminated effective April
5,
2005 in connection with the amendment of Dr. Bernstein’s employment
agreement.
|
| (16) |
Pursuant
to the terms of his employment agreement with Generex in respect
of
contract year ending March 31, 2006, a warrant to purchase 50,000
shares
of Generex common stock was granted to Dr. Bernstein on April 17,
2006
with an exercise price of $2.66 per share, which represented the
average
of the closing prices of the common stock on the NASDAQ Capital Market
for
the five trading days ending April 17,
2006.
|
| (17) |
Pursuant
to the terms of his employment agreement with Generex in respect
of
contract years ending March 31, 2004 and 2005, these options were
granted
to Dr. Bernstein under the 2001 Plan on April 5, 2005 with an effective
date as of December 13, 2004 and an exercise price of $0.61 per share,
which represents the closing price of the common stock on The NASDAQ
Capital Market on December 13, 2004.
|
No
options were exercised by the CEO or the named executive officers during the
fiscal year ended July 31, 2006. The following table provides information
relating to the number and value of options held by the CEO and the named
executive officers at fiscal year end.
|
Name
|
Shares
Acquired
On
Exercise (#)
|
Value
Realized
($)
|
Number
of securities underlying unexercised options at July 31,
2006
(#)
Exercisable/ Unexercisable
|
Value
of unexercised in-the-money options at July 31,
2006(1)
($)
Exercisable/ Unexercisable
|
|||||||||
|
Anna
E. Gluskin
|
-0-
|
-0-
|
1,820,704
/ 0
|
$
|
1,847,607
/ 0
|
||||||||
|
Rose
C. Perri
|
-0-
|
-0-
|
1,226,752
/ 0
|
$
|
1,053,981
/ 0
|
||||||||
|
Mark
Fletcher
|
-0-
|
-0-
|
971,726
/ 0
|
$
|
1,014,289
/ 0
|
||||||||
|
Gerald
Bernstein, M.D.
|
-0-
|
-0-
|
155,159
/ 0
|
$
|
108,000
/ 0
|
||||||||
| (1) |
The
closing price of Generex’s common stock on The NASDAQ Capital Market on
July 31, 2006 was $1.46 per share.
|
We
have
no long-term incentive plans or defined benefit or actuarial pension plans,
and
have not repriced any options previously granted to the above named
officers.
It
is our
policy to compensate members of our Board of Directors as follows:
|
Ÿ
|
Directors
who are not officers or employees of Generex receive cash compensation
of
$10,000 each fiscal quarter and are reimbursed for expenses incurred
in
connection with attendance at Board and committee
meetings.
|
|
Ÿ
|
At
the discretion of the full Board of Directors, directors who are
not
officers or employees of Generex may receive stock options to purchase
shares of our common stock, par value $0.001 per share, each fiscal
year.
The number and terms of such options is within the discretion of
the full
Board of Directors.
|
|
Ÿ
|
Directors
who are officers or employees of Generex do not receive separate
consideration for their service on the Board of
Directors.
|
On
May
30, 2006, in consideration of their service on committees of the Board of
Directors, each of our non-employee directors, John P. Barratt, Mindy J.
Allport-Settle, Brian T. McGee and Peter G. Amanatides, received 150,000 shares
of restricted common stock under the Generex Biotechnology Corporation 2006
Stock Plan.
In
addition, on May 30, 2006, David E. Wires received 150,000 shares of restricted
common stock under the 2006 Plan following his election as a director of Generex
on the same date. Mr. Wires is a partner of a law firm that represents us in
various matters. The legal fees paid by us to Mr. Wires’ law firm during the
last fiscal year are described below under the heading “Certain Relationships
and Related Transactions.”
Ms.
Gluskin, Ms. Perri and Dr. Bernstein are compensated pursuant to their
employment agreements with us. The terms of their employment agreements with
us
are described below the heading “Agreements with Employees.”
Information
concerning Ms. Gluskin, Generex’s Chairwoman, President and Chief Executive
Officer, Ms. Perri, Generex’s Chief Operating Officer, Chief Financial Officer,
Treasurer and Secretary, and Dr. Bernstein, Generex’s Vice President of Medical
Affairs, is included above in the biographic summaries of the nominees for
director under Proposal 1. Information with regard to the remaining executive
officer of Generex who is not also a director follows:
Mark
Fletcher, Esq.
- Age 41
- Mr. Fletcher has served as our Executive Vice President and General Counsel
since April 2003. From October 2001 to March 2003, Mr. Fletcher was engaged
in
the private practice of law as a partner at Goodman and Carr LLP, a leading
Toronto law firm. From March 1993 to September 2001, Mr. Fletcher was a partner
at Brans, Lehun, Baldwin LLP, a law firm in Toronto. Mr. Fletcher received
his
LL.B. from the University of Western Ontario in 1989 and was admitted to the
Ontario Bar in 1991.
Executive
officers are appointed by the Board of Directors and serve at the discretion
of
the Board of Directors.
Slava
Jarnitskii
is our
Financial Controller. He began his employment with Generex Pharmaceuticals
in
September 1996 and has been in the employment of Generex since its acquisition
of Generex Pharmaceuticals in October 1997. Before his employment with Generex
Pharmaceuticals, Mr. Jarnitskii received a Masters of Business Administration
degree from York University in September 1996.
George
Markus
is our
Manager of Regulatory Affairs. Mr. Markus holds a B.Sc. (Honours) in theoretical
chemistry from Dalhousie University and an M.Sc. in analytical chemistry from
McGill University. He is an instructor at the Academy of Applied Pharmaceutical
Sciences in Toronto, Canada. In his more than twenty years in the industry,
he
has been President & Chief Executive Officer of Consolidated Clinical
Research of Canada Inc., a site management organization (SMO) that manages
the
coordination of clinical research sites, and has worked in Quality Assurance
/
Special Projects / Clinical Operations and as a Director, Regulatory Affairs
for
Dimethaid Research Inc. Mr. Markus has also held regulatory affairs
positions
with Pasteur Merieux Connaught, Biovail Corporation International, Sanofi
Winthrop, Genpharm Inc. Pharmaceuticals, and Sandoz Canada Inc.
Dr.
Jaime Davidson, MD, FACP, FACE
was
appointed a consultant Medical Director for Generex in July, 2006. Dr. Davidson
is the President of Endocrine and Diabetes Associates of Texas, based at the
Medical City Dallas Hospital complex, and a Clinical Associate Professor of
Internal Medicine at University of Texas Southwestern Medical Center in Dallas,
Texas. Dr. Davidson chaired the Diabetes Consensus Guidelines for the American
College of Endocrinology and serves as Director of the Annual Intensive
Diabetes, Endocrinology and Metabolic Diseases Course for the University of
Southern California Keck School of Medicine. He serves as a council member
for
the Texas Department of Health Services, appointed by Texas Governor Rick Perry.
In 2006, Dr. Davidson was distinguished by the American Association of Clinical
Endocrinologists with an award for his contributions to the improvement of
endocrine health for under-served populations, and by the American Diabetes
Association with the Harold Rifkin MD award for his international contributions
in the diabetes field. In the past, he has held positions with the National
Diabetes Advisory Board, the National Institutes of Health, the Centers for
Disease Control, the Institute of Medicine, and the boards of directors of
the
American Diabetes Association, the American Association of Clinical
Endocrinologists, and the American College of Endocrinology. He served in higher
education for a six-year term as a Regent of Midwestern State University in
Texas appointed by then Governor George W. Bush. He has also served in the
President's Council for Fitness and Sports, chaired the Texas Diabetes Council
of the Texas Department of Health for several years where he instituted the
Texas Diabetes Algorithm, and under his guidance the Texas Diabetes Institute
was established with the University of Texas Health Science Center in San
Antonio, Texas. Dr. Davidson's experience in clinical pharmacology began with
a
Clinical Pharmacology Fellowship at Lilly Laboratories for Clinical Research
and
it continued with multiple clinical trials. In addition, he was an advisor
to
the Food and Drug Administration (FDA) on the Endocrinology and Metabolism
Advisory Board. Dr. Davidson's Internal Medicine training was completed at
Scott
and White Hospital (now known as Texas A&M University) and his Endocrinology
training at University Of Indiana.
Dr.
Eric von Hofe, Ph.D.,
has
been President of Antigen Express since April 2005. He joined Antigen in
November 2003 as Vice President of Technology Development of Antigen. He has
extensive experience with technology development projects, including his
previous positions at Millennium Pharmaceuticals first as Program Director
for
Target Validation and later as Director of Programs & Operations, Discovery
Research. Prior to that, Dr. von Hofe was Director, New Targets at Hybridon,
Inc., where he coordinated in-house and collaborative research that critically
validated gene targets for novel antisense medicines. Dr. von Hofe also held
the
position of Assistant Professor of Pharmacology at the University of
Massachusetts Medical School, where he received a National Cancer Institute
Career Development Award for defining mechanisms by which alkylating carcinogens
create cancers. He received his Ph.D. from the University of Southern California
in Experimental Pathology and was a postdoctoral fellow at both the University
of Zurich and Harvard School of Public Health. His work has been published
in
twenty-eight articles in peer-reviewed journals, and he has been an inventor
on
four patents.
Dr.
Minzhen Xu
is Vice
President - Biology of Antigen. Dr. Xu received an M.D. from Shanghai Medical
University in China and a Ph.D. in immunology from University of Massachusetts
Medical School. He has been with Antigen since its inception and is Generex's
chief experimentalist.
On
December 9, 2005, upon the recommendation of a majority of the members of the
Compensation Committee, our Board of Directors approved the terms and conditions
of employment for Anna Gluskin as our President and Chief Executive Officer
and
Rose Perri as our Chief Financial Officer and Chief Operating Officer. Prior
to
such date, Ms. Gluskin and Ms. Perri served in such capacities without formal
employment agreements with Generex. The material terms of Generex’s employment
agreement with each of Ms. Gluskin and Ms. Perri (each of whom is referred
to as
“Executive” below) are identical except as otherwise noted and are as
follows:
|
●
|
Each
agreement became effective as of January 1, 2006. The initial term
of each
agreement is five years, subject to the termination provisions described
below. Generex or Executive may give notice of non-renewal not less
than
six months prior to the expiration of the term. If no such notice
is
given, the term of the agreement will extend indefinitely and will
be
terminable upon not less than six months’ prior written
notice.
|
|
●
|
Each
agreement may be terminated:
|
|
|
(a)
|
by
Generex for cause (without any additional payment to
Executive);
|
|
|
(b)
|
automatically
upon expiration of the term;
|
|
|
(c)
|
automatically
upon Executive’s death or disability;
or
|
|
|
(d)
|
by
Executive upon thirty days’ prior written notice if there is a (i) a
material change in duties (other than removal of the title of Chief
Financial Officer and the duties associated therewith in the case
of Ms.
Perri), (ii) a material reduction in Executive’s remuneration, (iii) a
material breach of the agreement by Generex, (iv) a change of control
of
Generex, or (v) a sale of all or substantially all of the property
and
assets of Generex.
|
In
the
event of termination pursuant to clause (b) above as a result of Generex’s
notice of non-renewal or pursuant to clause (d) above, Generex will pay
Executive an amount equal to the greater of (x) an amount equal to five times
Executive’s base annual salary as of the date of termination, which amount will
be payable in a lump sum on the date of termination, or (y) $5,000,000,
$3,000,000 of which will be payable in a lump sum on the date of termination
and
$2,000,000 of which will be payable in stock issuable within three business
days
of the date of termination and valued at the 20-day VWAP as of the close of
business on the date of termination. In addition, in such a termination event,
Executive will be entitled to participate in and receive benefits for a period
of twelve months following termination and will have no duty to
mitigate.
|
●
|
Executive
will be entitled to an annual bonus as determined by Generex’s
Compensation Committee in respect of each fiscal year of Generex
during
the term of the agreement and reimbursement of all reasonable expenses
incurred by her in connection with Generex’s
business.
|
|
●
|
Executive
will be included on any management slate of nominees submitted to
Generex’s stockholders for election to the Board of
Directors.
|
|
●
|
Each
agreement will include standard employee confidentiality, non-competition
and non-solicitation covenants.
|
|
●
|
Each
of Ms. Gluskin and Ms. Perri will receive her current annual base
salary
under her respective employment agreement with Generex, which salary
may
not be reduced during the term of such agreement. Ms. Gluskin’s current
annual base salary is $425,000, and Ms. Perri’s is $325,000.
|
The
employment agreements with Ms. Gluskin and Ms. Perri have not yet been
memorialized in written agreements.
Mr.
Fletcher is compensated through an employment agreement, dated March 17, 2003,
between Mr. Fletcher and Generex. Pursuant to the terms of the employment
agreement, Mr. Fletcher holds the position of Executive Vice President and
General Counsel. The employment agreement provides for Mr. Fletcher's term
of
service to extend through March 16, 2008, subject to (i) termination without
cause by Generex upon 30 days' prior written notice and (ii) for cause by
Generex immediately upon the giving of notice. The employment agreement provides
that Mr. Fletcher will receive annual base compensation. Under the employment
agreement, Mr. Fletcher may receive additional cash bonuses at the discretion
of
the Board of Directors. Upon entering into the employment agreement Mr. Fletcher
received options to purchase 250,000 shares of common stock. On April 5, 2005,
our Board of Directors increased the annual base salaries of certain executive
officers effective as of August 1, 2004, and Mr. Fletcher’s annual base salary
was increased from $130,000 (including guaranteed bonus of $30,000) to $250,000
(with no guaranteed bonus).
Dr.
Bernstein is compensated pursuant to his employment agreement with Generex.
In
April 2002, Generex entered into an employment agreement with Dr. Bernstein,
which was subsequently amended in April 2005. The term of the employment
agreement commenced April 1, 2002 and, pursuant to the 2005 amendment, extends
until March 31, 2008, subject to (i) termination without cause by Dr. Bernstein
or Generex upon 90 days' prior written notice and (ii) for cause by Generex
immediately upon the giving of notice. Pursuant to the terms of his employment
agreement, Dr. Bernstein holds the position of Vice President of Medical
Affairs. Dr. Bernstein’s current annual base compensation is $200,000. Under the
employment agreement, as amended, Dr. Bernstein is entitled to receive options
to purchase 50,000 shares of common stock for each year of employment, but
he is
no longer entitled to monthly advances against potential cash bonuses in the
amount of $2,500. On April 17, 2006, pursuant to the terms of Dr. Bernstein’s
employment agreement with Generex in respect of contract year ending March
31,
2006, the Board of Directors granted Dr. Bernstein a warrant to purchase 50,000
shares of Generex common stock. The exercise price of the warrant was $2.66
per
share, which represented the average of the closing price of the common stock
on
the NASDAQ Capital Market for the five trading days ending April 17, 2006.
The
shares issued upon exercise of the warrant were registered for resale pursuant
to a registration statement filed June 26, 2006 with the
SEC.
On
March 5, 2007, pursuant to the terms of Dr. Bernstein’s employment agreement
with Generex in respect of contract year ending March 31, 2007, the Board of
Directors granted Dr. Bernstein a warrant to purchase 50,000 shares of Generex
common stock. The exercise price of the warrant is equal to the average of
the
closing price of the common stock on the NASDAQ Capital Market for the five
trading days ending March 31, 2007. The shares issued upon exercise of the
warrant have not been registered for resale.
Set
forth
below is a line graph comparing the cumulative total return on Generex's common
stock with cumulative total returns of the NASDAQ Stock Market (U.S. Companies)
and the NASDAQ Biotechnology Index for the period commencing July 31, 2001
and
ending on July 31, 2006. The graph assumes that $100 was invested on July 31,
2001, in Generex's common stock, the stocks in the NASDAQ Stock Market (U.S.
Companies) and the stocks comprising the NASDAQ Biotechnology Index, and that
all dividends were reinvested. Generex's common stock began trading on the
NASDAQ SmallCap Market (now known as the NASDAQ Capital Market) on June 5,
2003.
We
know
of no arrangements, including any pledge by any person of our securities, the
operation of which may at a subsequent date result in the change in control
of
Generex.
Review
of Related Party Transactions
We
presently have a policy requiring approval by stockholders or by a majority
of
disinterested directors of transactions in which one of our directors has a
material interest apart from such director's interest in Generex. We also have
a
policy requiring the approval by the Audit Committee for any transactions in
which a director or an executive officer has a material interest apart from
such
director's or officer’s interest in Generex.
Related
Transactions
Prior
to
January 1, 1999, a portion of our general and administrative expenses resulted
from transactions with affiliated persons, and a number of capital transactions
also involved affiliated persons. Although these transactions were not the
result of "arms-length" negotiations, we do not believe that this fact had
a
material impact on our results of operations or financial position. Prior to
December 31, 1998, we classified certain payments to executive officers for
compensation and expense reimbursements as "Research and Development - related
party" and "General and Administrative - related party" because the executive
officers received such payments through personal services corporations rather
than directly. After December 31, 1998, these payments have been and will
continue to be accounted for as though the payments were made directly to the
officers, and not as a related party transaction. With the exception of our
arrangement with our management company described below, we do not foresee
a
need for, and therefore do not anticipate, any related party transactions in
the
current fiscal year.
On
May 3,
2001, we advanced $334,300 to each of three senior officers, who are also our
stockholders, in exchange for promissory notes. These notes bore interest at
8.5% per annum and were payable in full on May 1, 2002. These notes were
guaranteed by a related company owned by these officers and secured by a pledge
of 2,500,000 shares of our common stock owned by this related company. On June
3, 2002, our Board of Directors extended the maturity date of the loans to
October 1, 2002. The other terms and conditions of the loans and guaranty
remained unchanged and in full force and effect. As of July 31, 2002, the
balance outstanding on these notes, including accrued interest, was $1,114,084.
Pursuant to a decision made by the Compensation Committee as of August 30,
2002,
these loans were satisfied through the application of 592,716 shares of pledged
stock, at a value of $1.90 per share, which represented the lowest closing
price
during the sixty days prior to August 30, 2002.
On
December 9, 2005, our Board of Directors approved a one-time recompense payment
in the aggregate amount of $1,000,000 for each of Ms. Gluskin, our Chairwoman,
Chief Executive Officer and President, and Ms. Rose Perri, our Chief Operating
Officer, Chief Financial Officer, Treasurer and Secretary, in recognition of
the
company’s failure to remunerate each of Ms. Gluskin and Ms. Perri in each of the
fiscal years ended July 31, 1998, 1999, 2000 and 2001 in a fair and reasonable
manner commensurate with comparable industry standards and Ms. Gluskin’s and Ms.
Perri’s duties, responsibilities and performance during such years. The payment
of such amount to each of Ms. Gluskin and Ms. Perri will be made (a) in cash
at
such time or times and in such amounts as determined solely by Ms. Gluskin
or
Ms. Perri, as applicable, and/or (b) in shares of our common stock at such
time
or times as determined by Ms. Gluskin or Ms. Perri, as applicable, provided
that
the conversion price for any such shares shall be equal to the average closing
price of our common stock on the NASDAQ Capital Market for the 20 successive
trading days immediately preceding, but not including, December 9, 2005. The
amounts were not paid as of April 20, 2007 with the exception of $415,742.30
that was used by Ms. Perri to repay Note Receivable, Due from Related Party.
The
amount was due from EBI, Inc., a shareholder of the Company that is controlled
by the estate of the Company’s former Chairman of the Board, Mark Perri. The
note was not interest bearing, unsecured and did not have any fixed terms of
repayment. The note was extended to EBI, Inc. in May 1997.
Real
Estate Transactions:
On
August 7, 2002, we purchased real estate with an aggregate purchase price of
approximately $1.6 million from an unaffiliated party. In connection with that
transaction, Angara Enterprises, Inc., a licensed real estate broker that is
an
affiliate of Ms. Gluskin received a commission from the proceeds of the sale
to
the seller in the amount of 3% of the purchase price, or $45,714. We believe
that this is less than the aggregate commission which would have been payable
if
a commission had been negotiated with an unaffiliated broker on an arm's length
basis.
On
December 9, 2005, our Board of Directors approved the grant to Ms. Perri of
a
right of first refusal in respect of any sale, transfer, assignment or other
disposition of either or both real properties municipally known as 1740 Sismet
Road, Mississauga, Ontario and 98 Stafford Drive, Brampton, Ontario
(collectively, the “Properties”). We granted Ms. Perri this
right
in
recognition of the fair market value transfer to us during the fiscal year
ended
July 31, 1998 by Ms. Perri (or parties related to her) of the
Properties.
We
utilize a management company to manage all of our real properties. The property
management company is owned by Ms. Perri, Ms. Gluskin and the estate of Mark
Perri, our former Chairman of the Board. In the fiscal years ended July 31,
2006
and 2005, we paid the management company approximately $46,113 and $44,024,
respectively, in management fees.
Legal
Fees.
David
Wires, one of our directors, is a partner of the firm Wires Jolley LLP. Wires
Jolley represents us in various matters. During fiscal 2006, we paid
approximately $85,000 in fees to Wires Jolley. We continue to use Wires Jolley
and expect to pay legal fees in similar amounts to the firm in fiscal 2007.
Consulting
Fees.
Peter
Amanatides, one of our directors, is the Senior Vice-President & Chief
Operating Officer of PharmaLogika, Inc., a private consulting firm in the
pharmaceuticals regulatory field. During fiscal year 2006, Generex paid $150,000
in fees to PharmaLogika for services rendered. Subsequently, in fiscal 2007,
we
paid an additional $100,000 in fees to PharmaLogika for services rendered and
owe a balance of $50,000. We do not expect to pay any further fees to
PharmaLogika going forward. Mr. Amanatides is neither a director nor a
shareholder of PharmaLogika.
The
table
on the following pages sets forth information regarding the beneficial ownership
of the common stock by:
|
•
|
Our
executive officers and directors;
|
|
•
|
All
directors and executive officers as a group;
and
|
|
•
|
Each
person known to us to beneficially own more than 5% of our outstanding
shares of common stock.
|
The
information contained in these tables is as of April 20, 2007. At that date,
we
had 108,247,742 shares of common stock outstanding.
We
have
redeemed our 1,000 shares of Special Voting Rights Preferred Stock as of April
5, 2007 for the aggregate redemption price of $100.
A
person
is deemed to be a beneficial owner of shares if he has the power to vote or
dispose of the shares. This power can be exclusive or shared, direct or
indirect. In addition, a person is considered by SEC rules to beneficially
own
shares underlying options or warrants that are presently exercisable or that
will become exercisable within sixty (60) days.
Except
as
otherwise indicated, the address of each person named in the table below is
c/o
Generex Biotechnology Corporation, 33 Harbour Square, Suite 202, Toronto, Canada
M5J 2G2.
Beneficial
Ownership
|
Name
of Beneficial Owner
|
Number
of Shares
|
Percent
of Class
|
|||||
|
(i)
Directors and Executive Officers
|
|||||||
|
Peter
G. Amanatides (1)
|
251,000
|
*
|
|||||
|
John
P. Barratt (2)
|
495,714
|
*
|
|||||
|
Gerald
Bernstein, M.D. (3)
|
253,419
|
*
|
|||||
|
Mark
Fletcher (4)
|
985,086
|
1.0
|
%
|
||||
|
Anna
E. Gluskin (5)
|
2,790,998
|
2.6
|
%
|
||||
|
Rose
C. Perri (6)
|
5,331,554
|
4.9
|
%
|
||||
|
Mindy
J. Allport-Settle (7)
|
323,100
|
*
|
|||||
|
Brian
T. McGee (8)
|
455,714
|
*
|
|||||
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David
E. Wires (9)
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171,839
|
*
|
|||||
|
Nola
Masterson
|
0
|
*
|
|||||
|
Officers
and Directors as a group (10 persons)
|
11,057,974
|
10.2
|
%
|
||||
|
(ii)
Other Beneficial Owners (and their
addresses)
|
|||||||
|
EBI,
Inc. In Trust(10)
c/o
Miller & Simons
First
Floor, Butterfield Square
P.O.
Box 260
Providencials
Turks
and Caicos Islands
British
West Indies
|
1,441,496
|
1.3
|
%
|
||||
|
GHI,
Inc. In Trust (11)
c/o
Miller & Simons
First
Floor, Butterfield Square
P.O.
Box 260
Providencials
Turks
and Caicos Islands
British
West Indies
|
1,907,334
|
1.8
|
%
|
||||
| * |
Less
than 1%.
|
| (1) |
Includes
100,000 shares issuable upon exercise of stock options granted on
April 5,
2005 under the 2001 Plan, 1,000 shares purchased on August 5, 2005
and
150,000 shares of restricted stock awarded on May 30, 2006 under
the 2006
Plan.
|
| (2) |
Includes
70,000 shares issuable upon exercise of stock options granted on
March 19,
2003, 70,000 shares issuable upon exercise of stock options granted
on
October 30, 2003, 70,000 shares issuable upon stock options granted
on
October 26, 2004, 100,000 shares issuable upon exercise of stock
options
granted on April 5, 2005 under the 2001 Plan, 35,714 shares issuable
upon
exercise of stock options granted on April 5, 2005 under the 2001
Plan
received in lieu of cash compensation and 150,000 shares of restricted
stock awarded on May 30, 2006 under the 2006
Plan.
|
| (3) |
Includes
3,469 shares held by Dr. Bernstein, 50,000 shares issuable upon exercise
of stock options granted in November 2002, and 100,000 shares issuable
upon exercise of stock options granted on April 5, 2005 under the
2001
Plan and pursuant to Dr. Bernstein's employment agreement with Generex.
Also includes 50,000 shares issuable upon exercise of a warrant issued
on
April 17, 2006 pursuant to Dr. Bernstein’s employment agreement with
Generex. Also includes 50,000 shares issuable upon exercise of a
warrant
issued on April 2, 2007 pursuant to Dr. Bernstein’s employment agreement
with Generex.
|
| (4) |
Includes
13,360 shares, 250,000 shares issuable upon the exercise of stock
options
granted on March 19, 2003 with an effective date as of April 21,
2003,
250,000 shares issuable upon the exercise of stock options granted
on
April 5, 2005 with an effective date of December 13, 2004, 470,726
shares
issuable upon exercise of stock options granted on April 5, 2005
under the
2001 Plan, 1,000 shares issuable upon exercise of stock options granted
on
January 21, 2001 under Generex's 2000 Stock Option
Plan.
|
| (5) |
Includes
16,127 shares held by Ms. Gluskin, 953,667 shares owned of record
by GHI,
Inc. that are beneficially owned by Ms. Gluskin, 450,000 shares issuable
upon exercise of stock options granted under the 2001 Plan, 250,000
shares
issuable upon exercise of stock options granted on April 5, 2005
with an
effective date of December 13, 2004 under the 2001 Plan, 1,120,704
shares
issuable upon exercise of stock options granted on April 5, 2005
under the
2001 Plan.
|
| (6) |
Includes
204,726 shares held by Ms. Perri, 953,667 shares owned of record
by GHI,
Inc. that are beneficially owned by Ms. Perri, 400,000 shares issuable
upon exercise of stock options granted under the 2001 Plan, 250,000
shares
issuable upon exercise of stock options granted on April 5, 2005
with an
effective date of December 13, 2004 under 2001 Plan, 576,752 shares
issuable upon exercise of stock options granted on April 5, 2005
under the
2001 Plan. Also includes the shares and options that are owned by
the
estate of Mr. Mark Perri, of which Ms. Perri is executor and beneficiary,
but is not considered to beneficially own for some purposes: 45,914
shares
previously owned of record by Mr. Mark Perri; 1,100,000 shares owned
of
record by EBI, Inc. (of which Mr. Mark Perri was beneficial owner);
305,332 shares held of record by brokerage accounts and options for
200,000 shares which survived Mr. Perri's death. Also includes 341,496
shares owned of record by EBI, Inc., which Ms. Perri may be deemed
to
beneficially own because of the power to vote the shares but which
are
beneficially owned by other stockholders because they are entitled
to the
economic benefits of the shares. Ms. Perri is also deemed to beneficially
own an additional 953,667 shares owned of record by GHI, Inc. by
holding
the right to vote such shares. These shares are also beneficially
owned by
Ms. Gluskin.
|
| (7) |
Includes
70,000 shares issuable upon exercise of stock options granted on
October
26, 2004, 100,000 shares issuable upon exercise of stock options
granted
on April 5, 2005 under the 2001 Plan and 150,000 shares of restricted
stock awarded on May 30, 2006 under the 2006 Plan. Also includes
3,100
shares acquired in March 2006.
|
| (8) |
Includes
70,000 shares issuable upon exercise of stock options granted on
October
26, 2004, 100,000 shares issuable upon exercise of stock options
granted
on April 5, 2005 under the 2001 Plan, 35,714 shares issuable upon
exercise
of stock options granted on April 5, 2005 under the 2001 Plan received
in
lieu of cash compensation, and 150,000 shares of restricted stock
awarded
on May 30, 2006 under the 2006 Plan. Also includes 100,000 shares
acquired
in February and March 2006.
|
| (9) |
Includes
150,000 shares of restricted stock awarded on May 30, 2006 under
the 2006
Plan following Mr. Wires’ election as a director of Generex on the same
date. Also includes 14,300 shares held in a registered retirement
savings
plan beneficially owned by Mr. Wires, as well as 7,539 shares held
by a
limited liability partnership of which Mr. Wires disclaims beneficial
ownership except to the extent of his pecuniary
interest.
|
| (10) |
All
of these shares were previously beneficially owned by Mr. Mark Perri
but
are now deemed to be beneficially owned by Ms. Perri because she
has the
sole power to vote the shares. With respect to 1,100,000 of the shares
owned of record by EBI, Inc., Ms. Perri also has investment power
and
otherwise is entitled to the economic benefits of
ownership.
|
| (11) |
Ms.
Gluskin and Ms. Perri each own beneficially 953,667 of the shares
owned of
record by GHI, Inc. by reason of their ownership of investment power
and
other economic benefits associated with such shares. The shares
beneficially owned by Ms. Gluskin also are deemed to be beneficially
owned
by Ms. Perri because she has the sole power to vote the
shares.
|
Section
16(a) of the Exchange Act requires that Generex's directors and executive
officers, and any persons who own more than ten percent of Generex's common
stock, file with the SEC initial reports of ownership and reports of changes
in
ownership of common stock and other equity securities of Generex. Such persons
are required by SEC regulations to furnish Generex with copies of all such
reports that they file. To the knowledge of Generex, based upon its review
of
these reports, all Section 16 reports required to be filed by its directors
and
executive officers during the fiscal year ended July 31, 2006 were filed on
a
timely basis, with the exception of the following reports. The Statement of
Changes in Beneficial Ownership of Securities on Form 4 filed by Gerald
Bernstein on June 12, 2006 was filed late. This Form 4 disclosed the issuance
to
Mr. Bernstein on April 17, 2006 of warrants to purchase 50,000 shares of
Generex’s common stock pursuant to the terms of his employment agreement with
Generex. The April 17, 2006 warrant issuance to Mr. Bernstein was disclosed
on a
timely basis in Generex’s Quarterly Report on Form 10-Q filed with the SEC on
June 14, 2006.
Generex
has enclosed its Annual Report for the year ended July 31, 2006, with this
proxy
statement, which includes Generex's Annual Report to the SEC on Form 10-K for
the fiscal year ended July 31, 2006, without exhibits. Stockholders are referred
to the report for financial and other information about Generex, but such report
is not incorporated in this proxy statement and is not a part of the proxy
soliciting material.
Any
proposals of stockholders intended to be presented at the 2008 annual meeting
of
stockholders must be received by Generex at 33 Harbour Square, Suite 202,
Toronto, Ontario, Canada M5J 2G2, no later than January
5, 2008 in order to be included in the proxy materials and form of proxy
relating to such meeting. It is suggested that stockholders submit any proposals
by an internationally recognized overnight delivery service to the Secretary
of
Generex at its principal executive offices located at 33 Harbour Square, Suite
202, Toronto, Ontario, Canada M5J 2G2. Such proposal must meet the requirements
set forth in the rules and regulations of the SEC in order to be eligible for
inclusion in the proxy materials for such meeting. The annual meeting for the
fiscal year ended July 31, 2007 is scheduled to take place in May
2008.
For
business to be properly brought before the 2008 annual meeting by a stockholder
in a form other than a stockholder proposal requested to be included in
Generex’s proxy materials, any stockholder who wishes to bring such business
before the annual meeting of stockholders must give notice of such business
in
writing to the Secretary of Generex not less than 60 nor more than 90 days
prior
to the annual meeting. In the event that less than 70 days notice or prior
disclosure of the date of the meeting is given or made to stockholders, notice
of such business to be timely must be received by the Secretary of Generex
not
later than the close of business on the 10th day following the day on which
such
notice of the date of the meeting was mailed or such public disclosure was
made.
The stockholder's notice of such business must provide information about the
stockholder proposing such business and the nature the business, as required
by
Generex's Amended and Restated Bylaws. A copy of these Bylaw requirements will
be provided upon request in writing to the Secretary at the principal offices
of
Generex located at 33 Harbour Square, Suite 202, Toronto, Ontario, Canada M5J
2G2.
If
there
should be any change in the foregoing submission deadlines, Generex intends
to
publicly disseminate information concerning the change.
GENEREX
BIOTECHNOLOGY CORPORATION
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MAY
29, 2007
The
undersigned stockholder of Generex Biotechnology Corporation (“Generex”) hereby
appoints Anna E. Gluskin, Rose C. Perri and Mark A. Fletcher, and each of them
with full power of substitution, the true and lawful attorneys, agents and
proxy
holders of the undersigned, and hereby authorizes them to represent and vote,
as
specified herein, all of the shares of Common Stock of Generex held of record
by
the undersigned on April 20, 2007, at the annual meeting of stockholders of
Generex to be held on May 29, 2007 (the "Annual Meeting") at 10:00 a.m. (local
time) at the Terrence Donnelly Centre for Cellular and Biomolecular Research,
University of Toronto, 160 College Street, Toronto, Ontario, Canada and any
adjournments or postponements thereof.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED.
IN
THE
ABSENCE OF DIRECTION, THE SHARES WILL BE VOTED FOR THE PROPOSALS.
THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
RELATING TO THE ANNUAL MEETING.
Item
1.
To elect as directors, to hold office until the next meeting of stockholders
and
until their successors are elected, the seven (7) nominees listed
below:
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NOMINEES:
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01.
Anna E. Gluskin
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02.
Rose C. Perri
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03.
Gerald Bernstein, M.D.
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|
04.
John P. Barratt
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05.
Brian T. McGee
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06.
Peter G. Amanatides
|
|
|
07.
Nola E. Masterson.
|
|
o
FOR
ALL
NOMINEES
|
o
WITHHOLD
ALL NOMINEES
|
o
_____________________________
|
|
For
all nominees
|
||
|
except
as noted
|
||
|
above
|
Item
2.
To ratify the appointment of Danziger & Hochman, Chartered Accountants as
Generex’s independent public accountants for the fiscal year ending July 31,
2007.
|
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
NOTE:
Please sign exactly as name appears hereon. Joint owners should each sign.
Trustees and others acting in a representative capacity should indicate the
capacity in which they sign and give their full title. If a corporation, please
indicate the full corporate name and have an authorized officer sign, stating
title. If a partnership, please sign in partnership name by an authorized
person.
Signature:
Signature:
Date:
PLEASE
MARK, SIGN AND DATE THIS PROXY
AND
RETURN IT PROMPTLY WHETHER YOU
PLAN
TO
ATTEND THE MEETING OR NOT. IF
YOU
DO
ATTEND, YOU MAY VOTE IN PERSON
IF
YOU
DESIRE.
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