M0386282v2
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
GENEREX BIOTECHNOLOGY CORPORATION
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(Name of Registrant as Specified in Its Charter)
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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 March 19, 2003
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Generex Biotechnology Corporation ("Generex") that will be held on Wednesday,
March 19, 2003, at 10:00 a.m. (local time), at St. Lawrence Hall, 157 King
Street East, Toronto, Ontario, Canada M5E 1C4, for the following purposes, as
set forth in the accompanying proxy statement:
1. To elect seven directors;
2. To ratify the appointment of Deloitte & Touche LLP as independent
public accountants for Generex for the fiscal year ending July 31,
2003; and
3. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Board of Directors has established the close of business on February 19,
2003 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.
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
February 24, 2003
GENEREX BIOTECHNOLOGY CORPORATION
PROXY STATEMENT
General Information
This proxy statement is provided to the stockholders of Generex
Biotechnology Corporation ("Generex") in connection with the solicitation by
the Board of Directors of Generex of proxies for use at the annual meeting of
stockholders of Generex to be held on Wednesday, March 19, 2003, at 10:00 a.m.
(local time), at St. Lawrence Hall, 157 King Street East, Toronto, Ontario,
Canada M5E 1C4, and any adjournments or postponements thereof. A form of proxy
is enclosed for use at the annual meeting. Proxies properly executed and
returned in a timely manner will be voted at the annual meeting in accordance
with the directions specified therein. If no direction is indicated, they will
be voted for the election of the nominees named herein as directors, for the
appointment of Deloitte & Touche LLP as Generex's independent public
accountants and on other matters presented for a vote, in accordance with the
judgment of the persons acting under the proxies. The persons named as proxies
were selected by the Board of Directors and are present members of the
executive management of Generex.
Any stockholder voting by proxy may revoke that proxy at any time before it
is voted at the annual meeting by delivering written notice to the Secretary
of Generex, by delivering a proxy bearing a later date or by attending the
annual meeting in person and casting a ballot.
Generex's principal executive offices are located at 33 Harbour Square,
Suite 202, Toronto, Ontario, Canada M5J 2G2, and its telephone number is (416)
364-2551. Proxy materials are first being mailed to stockholders beginning on
or about February 24, 2003.
Shares Outstanding, Voting Rights and Vote Required
Only stockholders of record at the close of business on February 19, 2003
are entitled to vote at the annual meeting. The only voting stock of Generex
outstanding and entitled to vote at the annual meeting is its Common Stock,
$.001 par value per share (the "Common Stock"). As of the close of business on
February 6, 2003, 23,855,063 shares of Common Stock were outstanding. Each
share of Common Stock issued and outstanding is entitled to one vote on
matters properly submitted at the annual meeting. Cumulative voting is not
permitted under Generex's Restated Certificate of Incorporation.
The presence, in person or by proxy, of the holders of a majority of the
total issued and outstanding shares of Common Stock entitled to vote at the
annual meeting is necessary to constitute a quorum for the transaction of
business at the annual meeting. Abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum. A
broker non-vote occurs when a nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner. Abstentions will be counted in
tabulating votes cast on the proposals presented to stockholders and will have
the same effect as negative votes. Broker non-votes will not be counted in
tabulating votes cast on the proposals presented to stockholders. Votes cast
in person or by proxy at the annual meeting will be tabulated by the election
inspectors appointed for the meeting.
Directors will be elected by a plurality of the votes of the shares present
or represented by proxy at the annual meeting and entitled to vote on the
election of directors. The proposal to ratify the appointment of Deloitte &
Touche LLP as Generex's independent public accountants requires the
affirmative vote of a majority of the votes of the shares present or
represented by proxy at the annual meeting and cast on such proposals. The
Board of Directors recommends voting (1) FOR the election of the nominees
named herein for directors; and (2) FOR the appointment of Deloitte & Touche
LLP as Generex's independent public accountants for the fiscal year ending
July 31, 2003.
ELECTION OF DIRECTORS
(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 the Board of Directors as
nominees for election as directors. All nominees currently serve as directors
of Generex. 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. At this time, the Board of Directors knows
of no reason why any of the nominees might be unavailable to serve.
Name Age Position Held with Generex
---- --- --------------------------
Gerald Bernstein, M.D. 69 Director, Vice-President, Medical Affairs
Anna E. Gluskin 50 President, Chief Executive Officer and Director
Michael Hawke, M.D. 60 Director
Peter Levitch 70 Director
Pankaj Modi, Ph.D. 47 Vice President, Research and Development and Director
Rose C. Perri 34 Chief Operating Officer, Treasurer, Secretary and Director
J. Michael Rosen 50 Director
Mr. E. Mark Perri, our former Chairman and Chief Financial Officer, passed
away on November 6, 2002. Ms. Rose C. Perri serves as interim Chief Financial
Officer.
Gerald Bernstein, M.D. -- Director since October 2002. Dr. Gerald Bernstein
was elected a Vice President of Generex effective as of 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 Montefiore
Medical Center, all in New York. He is a former president of the American
Diabetes Association.
Anna E. Gluskin -- Director since September 1997. Ms. Gluskin has served as
the President and Chief Executive Officer of Generex since October 1997. She
held comparable positions with Generex Pharmaceuticals, Inc. from its
formation in 1995 until its acquisition by Generex in October 1997.
Michael Hawke, M.D. -- Director since March 2000. Dr. Hawke presently is a
Professor in the Departments of Otolaryngology and Pathology at the University
of Toronto, and is on the staff of the Departments of Otolaryngology at St.
Joseph's Health Center, The Toronto Hospital and Mount Sinai Hospital, all
located in Toronto. He has held these positions for more than the previous
five years. Dr. Hawke has approximately thirty years experience as a medical
researcher, educator and practitioner.
Peter Levitch -- Director since October 2002. Mr. Levitch has been President
of Peter Levitch & Associates, an independent consulting firm to health
professionals since 1981. In this capacity, he advises companies through the
various stages of the development of pharmaceuticals, medical devices,
biologics and diagnostics, including clinical evaluation and the FDA
regulatory approval phases. He has served as an advisor to more than 200
leading biotechnology and biological firms, including Amgen, Genentech,
Immunex, DuPont, Baxter and Johnson and Johnson. Prior to 1981, Mr. Levitch
was Vice President, Clinical and Regulatory Affairs at Oxford Research
International Corp. and held senior positions managing the regulatory and
clinical programs at Ortho Diagnostic Systems (a subsidiary of Johnson &
Johnson).
Pankaj Modi, Ph.D. -- Director since September 1997. Dr. Modi has served as
Vice President, Research and Development of Generex since October 1997. Prior
to that time, Dr. Modi was Director of Insulin Research for Generex
Pharmaceuticals, Inc., a position he assumed in October 1996. Prior to joining
Generex Pharmaceuticals,
2
Dr. Modi was engaged in independent research and was employed as a senior
researcher at McMaster University in Hamilton, Ontario from February 1994
through October 1996.
Rose C. Perri -- Director since September 1997. Ms. Perri has served as
Treasurer and Secretary of Generex since October 1997, and as Chief Operating
Officer since August 1998. She was an officer of Generex Pharmaceuticals, Inc.
from its formation in 1995 until its acquisition by Generex in October 1997.
J. Michael Rosen -- Director since August 2000. Mr. Rosen has been a
principal in a number of related travel management and hotel marketing
businesses since 1978. The principal companies in this group, all of which are
headquartered in Ontario, are Uniworld Travel & Tours, Inc., Nevada Vacations,
Inc., Casino Vacations, Inc. and Casino Tours, Inc. Mr. Rosen presently serves
as the President or a Vice President, and the Chief Financial Officer, of each
of these companies. Mr. Rosen is an accountant by training, and was engaged in
the private practice of accounting prior to 1978.
Generex entered into a joint venture with Elan Corporation, plc ("Elan") and
certain affiliates of Elan in January 2001. Pursuant to a Securities Purchase
Agreement dated January 16, 2001 between Generex, Elan and Elan International
Services, Ltd. ("EIS"), a subsidiary of Elan, EIS has the right to nominate
one director to Generex's Board of Directors for so long as EIS or its
affiliates own at least 1.0% of the issued and outstanding shares of Common
Stock. Dr. Ivan Lieberburg, previously a Generex board member, was the nominee
of EIS thereunder. Dr. Lieberburg resigned effective August 1, 2002. EIS has
not informed Generex of its nominee to replace Dr. Lieberburg or whether it
intends to replace Dr. Lieberburg. Under the terms of the Securities Purchase
Agreement, the EIS-nominated director may not in any event have more than 15%
of the aggregate voting power of the Board of Directors as a whole.
Dr. Modi holds the position of Vice President, Research and Development
pursuant to a consulting agreement that was originally entered into as of
October 1, 1996, that was amended and supplemented as of January 7, 1998 and
that was further amended and supplemented as of December 31, 2000. An
amendment to Dr. Modi's consulting agreement was approved by the Board of
Directors in January 2002. Under the consulting agreement, Generex must use
its best efforts to cause Dr. Modi to be nominated for election and elected a
director of Generex for as long as the consulting agreement is in force. An
amendment to Dr. Modi's consulting agreement was approved by the Board of
Directors in January 2002 granting Dr. Modi cash bonuses upon the occurrence
of certain events in connection with the extension of the joint venture to
include Morphine. See "Director Compensation; Other Compensation" for
information relating to Dr. Modi's consulting agreement.
There are no family relationships among our officers and directors.
Other Key Employees and Consultants
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.
Steven Peltzman is our Vice President, Business Development and Licensing.
He was elected to this position in April of 2002. Mr. Peltzman has over thirty
years of experience in finance and corporate and business development. Before
his employment with Generex, Mr. Peltzman had been an officer in a number of
companies, both publicly traded and privately owned, involved in a range of
healthcare technologies, from biopharmaceutical companies to medical devices
and diagnostics. Mr. Peltzman provides his services under a consulting
agreement and is not a full-time employee of Generex.
The Board of Directors Recommends a Vote FOR
the Election of the Above-Named Nominees
3
PROPOSAL TO RATIFY THE APPOINTMENT OF
DELOITTE & TOUCHE LLP
AS GENEREX'S INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal 2)
The Board of Directors of Generex has selected Deloitte & Touche LLP
("Deloitte & Touche") to serve as the independent public accountants to audit
the financial statements of Generex and its subsidiaries for the fiscal year
ending July 31, 2003. Deloitte & Touche served as Generex's independent public
accountants for the audit of Generex's financial statements for the fiscal
year ended July 31, 2001 and 2002. Representatives of Deloitte & Touche will
attend the annual meeting and will be available to answer appropriate
questions. They will have the opportunity to make a statement at the annual
meeting if they desire.
If the stockholders do not ratify the appointment of Deloitte & Touche as
independent public accountants, the Audit Committee of the Board of Directors
will investigate the reasons for the rejection by the stockholders and the
Board of Directors will reconsider the appointment.
The Board of Directors Recommends a Vote FOR
the Appointment of Deloitte & Touche As Generex's
Independent Public Accountants for the Fiscal Year Ending July 31, 2003.
Fees Paid to Generex's Independent Public Accountants
The following table sets forth the aggregate fees paid by Generex for the
fiscal year ended July 31, 2002 to Deloitte & Touche:
Audit Fees (1) ...................................................... $102,929
Financial Information Systems Design
and Implementation Fees (2) ...................................... $ 0
All Other Fees (3) .................................................. $ 0
---------------
(1) Includes the aggregate fees billed for professional services rendered by
Deloitte & Touche for the audit of Generex's annual financial statements
for the fiscal year ended July 31, 2002 and the reviews of financial
statements included in Generex's Quarterly Reports on Form 10-Q for the
2002 fiscal year. This amount is shown in U.S. Dollars and was converted
from Canadian dollars to U.S. dollars based on the exchange rate of
$1.5290.
(2) No amounts were billed by Deloitte & Touche in fiscal 2002 for financial
information systems design and implementation services.
(3) No amounts were billed by Deloitte & Touche in fiscal 2002 for any other
services.
The Audit Committee has determined that the fact that Generex was not billed
by Deloitte & Touche for non-audit services in fiscal year 2002 is compatible
with the independence of Deloitte & Touche as Generex's independent public
accountants.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business affairs of Generex are managed under the direction of the Board
of Directors. During the fiscal year ended July 31, 2002, Generex's Board of
Directors held four meetings and took action by unanimous consent five times.
During the fiscal year ended July 31, 2002, all of the directors attended all
of the Board of Directors meetings that were held.
The Board of Directors has established two committees, the Audit Committee
and the Compensation Committee.
The Audit Committee was established on March 1, 2000, and met four times
during the fiscal year ended July 31, 2002. During fiscal 2001, the Audit
Committee was composed of Mr. Rosen, who was the Chairman of the Audit
Committee, Dr. Hawke and Dr. Lieberburg. Dr. Lieberburg resigned effective
August 1, 2002. All of
4
the members of the Audit Committee attended all of the meetings that they were
eligible to attend. The Audit Committee is currently composed of Mr. Rosen,
who is the Chairman of the Committee, Dr. Hawke and Mr. Levitch. The Board of
Directors has adopted an Audit Committee charter that specifies the duties of
the Audit Committee. The Audit Committee Charter is attached as Exhibit A to
this proxy statement.
Generex's Common Stock is listed on the Nasdaq National Market and,
therefore, Generex is governed by the applicable rules of the Nasdaq National
Market. The listing requirements for Nasdaq National Market issuers require
that each issuer's audit committee be comprised of three independent
directors. Mr. Rosen, Dr. Hawke and Mr. Levitch meet the definition of
independence under Rule 4200(a)(15) of the listing requirements.
The Board of Directors intends to continue a search for at least one or more
additional director who meets the definition of independence under the Nasdaq
National Market listing requirements and intends to add at least one such
additional director to the Board of Directors by the end of the current fiscal
year.
The Compensation Committee was formed on July 30, 2001 and met four times
during the fiscal year ended July 31, 2002. During fiscal 2002, the
Compensation Committee was composed of Dr. Hawke, who was the Chairman of the
Compensation Committee, Mr. Rosen and Dr. Lieberburg. Dr. Lieberburg resigned
effective August 1, 2002. All of the members of the Compensation Committee
attended all of the meetings of the Compensation Committee. The Compensation
Committee is currently composed of Dr. Hawke, who is the Chairman of the
Committee, Mr. Rosen and Mr. Levitch.
Report of the Audit Committee
The Audit Committee reviewed and discussed Generex's audited financial
statements for the fiscal year ended July 31, 2002 with management. The Audit
Committee discussed with Deloitte & Touche LLP, Generex's independent public
accountants for the fiscal year ended July 31, 2002, the matters required to
be discussed by Statement on Auditing Standards No. 61. The Audit Committee
received the written disclosures and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and discussed with Deloitte & Touche LLP
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, 2002.
Submitted by the Audit Committee
J. Michael Rosen (Chairman)
Michael Hawke, M.D.
Peter Levitch
The foregoing Report of the Audit Committee shall not be deemed to be
soliciting material, to be filed with the Securities and Exchange Commission
(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.
Report of the Compensation Committee on Executive Compensation
Dr. Hawke is the Chairman of the Compensation Committee and Mr. Levitch and
Mr. Rosen are the other members of the Compensation Committee. Mr. Levitch
became a member of the Compensation Committee in October 2002.
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 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. At
the end of the fiscal year ended July 31, 2001, the Compensation Committee
conducted a review of Generex's executive compensation program. This review
included a comprehensive report from an independent executive compensation
consultant and compared Generex's total executive compensation, including base
salaries, cash
5
bonuses and stock options, to a peer group of publicly traded biotechnology
companies. The Compensation Committee continued to use this comprehensive
information as a basis for 2002 compensation. For the fiscal year ended July
31, 2001, the Compensation Committee targeted total cash compensation for
Generex executives to the median of the peer group. For the fiscal year ended
July 31, 2002, the Compensation Committee targeted total cash compensation for
executives at the higher end of the peer group. In setting this policy, the
Compensation Committee took into account Generex's relatively lean management
structure and the number of roles filled by each officer. Dr. Modi's
compensation, however, was based on his contract that provides achievement
based bonuses.
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.
Cash Bonuses. Cash bonuses were granted for fiscal 2002 in order to
recognize and reward the executives of Generex for their performance and for
the accomplishments achieved by Generex during fiscal 2002. The Compensation
Committee adopted performance objectives for executive officers in fiscal
2002. Executive officer bonuses were based on the executive's position within
Generex, Generex's attainment of the objectives and individual contributions
to the attainment of the objectives. The Compensation Committee met to
determine 2002 bonuses after Mr. Mark Perri's death. In determining bonuses
for Ms. Gluskin and Ms. Rose Perri, the Compensation Committee also took into
account the need to provide appropriate incentives to maintain a stable
management team following Mr. Mark Perri's death. The Compensation Committee
judged that the executive officer bonus awards for fiscal 2002 were consistent
with each executive's level of accomplishment and appropriately reflected
Generex's achievement of the objectives and the Compensation Committee's other
goals.
Stock Options. 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.
During 2002, the Committee did not use option grants to compensate the current
group of executives other than the grants required to be made to Dr. Modi
under the terms of his consulting agreement.
Chief Executive Officer Compensation. Ms. Gluskin's compensation for the
fiscal year ended July 31, 2002, was determined in accordance with the
compensation policies described above. Ms. Gluskin was paid a cash salary of
approximately $350,000 and was granted a bonus of $125,000. This compensation
package was considered fair and reasonable in view of Generex's attainment of
the performance objectives, and Ms. Gluskin's substantial contributions to
those accomplishments. The compensation paid to Ms. Gluskin for fiscal 2002
was considered to give appropriate incentives to Ms. Gluskin to continue to
promote the strategic objectives of Generex and to enhance stockholder value.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
does not allow public companies to take a Federal income tax deduction for
compensation paid to certain executive officers, to the extent that
compensation exceeds $1 million for any such officer in any fiscal year. This
limitation does not apply to compensation that qualifies as "performance-based
compensation" under the Code. The Board of Directors believes that at the
present time it is quite unlikely that the compensation paid to any executive
officer will exceed $1 million in any fiscal year. Therefore, the Board of
Directors has not taken any measures to date specifically to qualify any of
the compensation paid to its executive officers as "performance-based
compensation" under the Code.
Submitted by the Compensation Committee
Michael Hawke, M.D.(Chairman)
Peter Levitch
J. Michael Rosen
The foregoing Report of the Compensation Committee on Executive Compensation
and the following Performance Graph 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.
6
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
Generex's Common Stock with cumulative total returns of the Nasdaq National
Market (U.S. Companies) and the Nasdaq Biotechnology Index for the period
commencing February 5, 1998 (the date Generex's Common Stock was first listed
for trading on the Nasdaq over-the-counter market) and ending on July 31,
2002. The graph assumes that $100 was invested on February 5, 1998, in
Generex's Common Stock, the stocks in the Nasdaq National Market (U.S.
Companies) and the stocks comprising the Nasdaq Biotechnology Index, and that
all dividends were reinvested. Generex's Common Stock has been trading on the
Nasdaq National Market since May 5, 2000.
[graphic]
February July July July July July
1998 1998 1999 2000 2001 2002
-------- ----- ----- ----- ----- -----
Generex Biotechnology Corporation ........................................... 100.0 130.2 106.3 126.0 141.7 37.3
Nasdaq Stock Market ......................................................... 100.0 111.3 158.8 226.2 121.4 80.2
Nasdaq Biotechnology Index .................................................. 100.0 111.3 219.0 426.7 367.8 230.4
7
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires that Generex's directors and executive officers, and
any persons who own more than ten percent of the Common Stock, file with the
SEC initial reports of ownership and reports of changes in ownership of the
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 our directors and
executive officers during the fiscal year ended July 31, 2002 were filed on a
timely basis.
Item 11. Compensation Of Executive Officers And Directors
Compensation of Executive Officers
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 officers of Generex
other than the CEO whose salary and bonus payments exceeded $100,000 for the
fiscal year ended July 31, 2002.
Summary Compensation Table
Long-Term Compensation
----------------------------------
Annual Compensation Awards Payouts
--------------------------------- ----------------------- -------
Name and Other Restricted Securities All
Principal Year Annual Stock Underlying Other
Position Ended Salary ($) Bonus Compensa- Award(s) Options LTIP Compensa-
--------- July 31 (3) ($) tion ($) ($) (#) Payouts tion ($)
------- ---------- ------- --------- ---------- ---------- ------- ---------
Anna E. Gluskin (1), 2002 350,000 125,000 * 0 0 0 0
President and Chief 2001 127,240 250,000 * 0 0 0 0
Executive Officer 2000 105,385 0 * 0 300,000 0 0
E. Mark Perri (1), 2002 270,000 100,000 * 0 0 0 0
Chief Financial Officer 2001 95,081 180,000 * 0 0 0 0
2000 103,249 0 * 0 250,000 0 0
Rose C. Perri (1), 2002 250,000 100,000 * 0 0 0 0
Chief Operating Officer, 2001 81,068 100,000 * 0 0 0 0
Treasurer and Secretary 2000 97,147 0 * 0 250,000 0 0
Pankaj Modi, Ph.D.(2), 2002 262,500 0 * 0 150,000(4) 0 0
Vice President, 2001 250,000 300,000 * 0 150,000 0 0
Research and 2000 89,723 5,302 * 0 300,000 0 0
Development
Cash bonuses listed as paid with respect to services in any year are actually
paid in the succeeding year.
---------------
* Perquisites and other personal benefits, securities or other property
received by each executive officer did not exceed the lesser of $50,000
or 10% of such executive officer's salary and bonus.
(1) Portions of the cash compensation paid to Ms. Gluskin, Mr. Mark Perri and
Ms. Rose Perri are attributable to amounts paid indirectly through a
management services agreement with a corporation of which, at July 31,
2002, Ms. Gluskin, Mr. Mark Perri and Ms. Rose Perri were equal owners.
(2) All of the cash compensation paid to Dr. Modi is paid indirectly to him
through a corporation owned 100% by him.
(3) Cash compensation is stated in the table in U.S. dollars. To the extent
any cash compensation was paid in Canadian dollars, it has been converted
into U.S. dollars based on the weighted average Canadian/U.S. dollar
exchange rate for the years ended July 31, 2002, 2001 and 2000,
respectively.
(4) Granted on July 31, 2002 with effect as of July 31, 2002 pursuant to the
terms of Dr. Modi's consulting agreement. These options were granted
under the Generex Biotechnology Corporation 2001 Stock Option Plan.
8
Option Grants during the 2002 Fiscal Year
The following tables set forth information related to options to purchase
Common Stock granted to the chief executive officer (CEO) and the named
executive officers during the fiscal year ended July 31, 2002.
Potential realizable value at
assumed annual rates of stock
Individual grants price appreciation for option term
--------------------------- -----------------------------------------
Percent of
Number of total options
Securities granted
Underlying to employees Exercise
Name options in fiscal price Expiration
---- granted (#) year (%) ($/Sh) date 5% ($) 10% ($)
----------- ------------- -------- ---------- ------ -------
Anna E. Gluskin ....................................... 0 -- -- -- -- --
E. Mark Perri ......................................... 0 -- -- -- -- --
Rose C. Perri ......................................... 0 -- -- -- -- --
Pankaj Modi ........................................... 150,000(1) 31.5% $2.19 7/31/07 90,758 200,533
---------------
(1) Granted on July 31, 2002 with effect as of July 31, 2002 pursuant to the
terms of Dr. Modi's consulting agreement. These options were granted
under the Generex Biotechnology Corporation 2001 Stock Option Plan.
Fiscal Year End Option Values
No options were exercised by the CEO or the named executive officers during
the fiscal year ended July 31, 2002. The following table provides information
relating to the number and value of options held by the CEO and the named
executive officers at fiscal year end.
Number of securities
underlying exercised Value of unexercised
options at options at
July 31, 2001 July 31, 2002
Shares acquired Value (#) ($)
Name on exercise (#) realized ($) Exerciseable/Unexercisable Exerciseable/Unexercisable
---- --------------- ------------ -------------------------- --------------------------
Anna E. Gluskin .................. -0- -0- 300,000/0 0/0
E. Mark Perri .................... -0- -0- 250,000/0 0/0
Rose C. Perri .................... -0- -0- 250,000/0 0/0
Pankaj Modi ...................... -0- -0- 600,000/0 15,000/0
---------------
(1) Based on the closing price of Common Stock ($2.29) at November 11, 2002.
Other Benefit Plans
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.
Directors' Compensation; Other Compensation
Dr. Hawke and Mr. Rosen, each outside directors, received $10,000 in the
fiscal year ended July 31, 2002 for their services as a director to Generex.
In addition, both Dr. Hawke and Mr. Rosen received $10,000 for their services
as Compensation Committee Chairman and Audit Committee Chairman, respectively.
Dr. Hawke was granted options on October 23, 2001 to purchase 30,000 shares of
Common Stock and was granted options on May 18, 2001 to purchase 20,000 shares
of Common Stock, all under the Generex Biotechnology Corporation 2001 Stock
Option Plan (the "2001 Plan"), in recognition of his service as a director.
Mr. Rosen was granted options on October 23, 2001, to purchase 30,000 shares
of Common Stock and was granted options on May 18, 2001 to purchase 20,000
shares of Common Stock, all under the 2001 Plan, in recognition of his service
as a director.
9
Pursuant to an agreement between Mr. Levitch and Generex, Mr. Levitch
received $10,000 upon joining the Board of Directors and will receive $10,000
at the end of each fiscal quarter, beginning with the quarter ending January
31, 2003, as partial consideration for his services as a member of the Audit
Committee and Compensation Committee and his services as a director of
Generex. In addition, under the agreement, Mr. Levitch was granted options
exercisable for 20,000 shares of Common Stock in partial consideration for his
service as a director of Generex. Mr. Levitch is also eligible to be
considered for additional option grants to the same extent as the other
outside directors of Generex.
Dr. Modi is compensated through a consulting agreement that was originally
entered into as of October 1, 1996, that was amended and supplemented as of
January 7, 1998, and that was further amended and supplemented as of December
31, 2000. The parties to the agreement are Dr. Modi, Generex and Generex
Pharmaceuticals, Inc., a wholly-owned subsidiary of Generex. An amendment to
Dr. Modi's consulting agreement was approved by the Board of Directors in
January 2002 granting Dr. Modi cash bonuses upon the occurrence of certain
events in connection with the extension of the joint venture with Elan to
include morphine. All references to the consulting agreement in the following
discussion relate to the agreement, as amended and supplemented.
Pursuant to the terms of the consulting agreement, Dr. Modi holds the
position of Vice President, Research and Development of Generex and Generex
Pharmaceuticals, and both Generex and Generex Pharmaceuticals are jointly and
severally responsible for the payment to Dr. Modi of all amounts due under the
consulting agreement. The agreement provides for Dr. Modi's term of service to
extend through July 31, 2010, subject to termination without cause by Dr. Modi
or Generex at any time after January 1, 2003 upon 12 months' prior written
notice.
In connection with amending and supplementing the consulting agreement in
January 1998, Generex issued 1,000 shares of Special Voting Rights Preferred
Stock ("Special Preferred Stock") to Dr. Modi, comprising all of the
outstanding shares of Special Preferred Stock. Special Preferred Stock does
not generally carry the right to vote, but does have the following special
voting rights:
o the holders of Special Preferred Stock have the right to elect a
majority of Generex's Board of Directors if a change of control occurs;
and
o the holders of Special Preferred Stock have the right to approve any
transaction that would result in a change of control.
A "change of control" is deemed to occur if Generex's founders (namely, Ms.
Gluskin, Dr. Modi or Ms. Rose Perri), or directors appointed or nominated with
the approval of Generex's founders, should cease to constitute at least 60% of
Generex's directors, or if any person becomes either Chairman of the Board of
Directors or Chief Executive Officer of Generex without the prior approval of
the founders. If a change of control were to occur, Dr. Modi would thereafter
be able to elect a majority of the directors. No change of control has
occurred to date.
The consulting agreement provides for an annual base compensation of
$250,000 a year, effective as of August 1, 2000, subject to certain cost-of-
living increases. In addition, Dr. Modi is entitled to receive certain bonus
compensation during the term of the consulting agreement. During the first
calendar quarter of 2001, a $300,000 bonus was paid to Dr. Modi in respect of
Dr Modi's services in securing the development and license agreement between
Generex and Eli Lilly and Company ("Lilly"). Dr. Modi will also receive
certain additional bonus payments based upon the Lilly agreement or any
similar agreements entered into by Generex for rights granted to third parties
to develop, manufacture and/or market products based upon ideas, improvements,
designs or discoveries made or conceived by Dr. Modi.
The consulting agreement provides for Dr. Modi to be granted options to
purchase 150,000 shares of Common Stock in each of the next ten fiscal years,
starting with the fiscal year ended July 31, 2001. The options may be granted
only under option plans of Generex that have been approved by the
stockholders.
Compensation Committee Interlocks and Insider Participation
Effective July 30, 2001, all decisions regarding executive compensation were
made by the Compensation Committee of the Board of Directors. Dr. Hawke is
Chairman of the Compensation Committee and Mr. Levitch and Mr. Rosen are the
other members of the Compensation Committee.
10
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).
Existing Stock Compensation Plans
The following table sets forth information, as of July 31, 2002, regarding
our existing compensation plans and individual compensation arrangements
pursuant to which our equity securities are authorized for issuance to
employees or non-employees (such as directors, consultants and advisors) in
exchange for consideration in the form of services:
Number of securities
remaining available
Number of securities for future issuance
to be issued Weighted-average under equity
upon exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a))
Plan Category -------------------- -------------------- ------------------------
------------- (a) (b) (c)
-------------------- -------------------- ------------------------
Equity compensation
plans approved by
security holders
1998 Stock Option Plan 1,292,500 $5.12 0
2000 Stock Option Plan 1,924,500 $7.70 75,500
2001 Stock Option Plan 1,665,159 $8.73 2,334,841
--------- ----- ---------
Total 4,882,159* $8.68 2,410,341
Equity compensation
plans not approved by
security holders 0 0 0
Total 4,882,159 $8.68 2,410,341
---------------
* Does not include 125,000 options granted to consultants in 2001 that were
not granted pursuant to a stock option plan.
Security Ownership Of Certain Beneficial Owners And Management
The tables on the following pages set forth information regarding the
beneficial ownership of the Common Stock by:
o Our executive officers and directors;
o All directors and executive officers as a group; and
o Each person known to us to beneficially own more than five percent (5%)
of our outstanding shares of Common Stock.
The information contained in these tables is as of February 6, 2003. At that
date, Generex had 23,855,063 shares of Common Stock outstanding. In addition
to Common Stock, Generex has outstanding 1,000 shares of Special Voting Rights
Preferred Stock. All of the shares of Special Voting Rights Preferred Stock
are owned by Dr. Pankaj Modi. In connection with Generex's joint venture with
Elan, Generex issued 1,000 shares of Series A Preferred Stock to an affiliate
of Elan. Including dividends issued on Series A Preferred Stock through
January of 2003, there are 1,123 shares of Series A Preferred Stock
outstanding. All of the Series A Preferred Stock is presently held of record
by an affiliate of Elan.
A person is deemed to be a beneficial owner of shares if he or she 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.
11
BENEFICIAL OWNERSHIP
Name of
Beneficial Owner Number of Percent of
----------------- Shares Class
--------- ----------
(i) Directors and Executive Officers
Gerald Bernstein, M.D. .............................. 10,159(1) *
Anna E. Gluskin ..................................... 1,603,794(2) 3.9%
Michael Hawke, M.D. ................................. 135,000(3) *
Peter Levitch ....................................... 69,483(4) *
Pankaj Modi, Ph.D. .................................. 1,700,200(5) 4.6%
Rose C. Perri ....................................... 4,700,202(6) 15.5%
J. Michael Rosen .................................... 148,730(7) *
Officers and directors as a group ................... 8,367,568(8) 24.7%
(ii) Other Beneficial Owners (and their addresses)
Protius Overseas Limited ............................ 1,139,588(9) 4.7%
P.O. Box 17512-14
Finch Road Douglas
Isle of Man, IM99
Cranshire Capital, L.P. ............................. (9) (9)
666 Dundee Road, Suite 1901
Northbrook, IL 60062
Downsview Capital, Inc. ............................. (9) (9)
666 Dundee Road, Suite 1901
Northbrook, IL 60062
JMJ Capital, Inc. ................................... (9) (9)
666 Dundee Road, Suite 1901
Northbrook, IL 60062
EURAM Cap Strat. "A" Fund Limited ................... (9) (9)
666 Dundee Road, Suite 1901
Northbrook, IL 60062
Mitchell P. Kopin ................................... (9) (9)
666 Dundee Road, Suite 1901
Northbrook, IL 60062
EBI, Inc. In Trust .................................. 1,441,496(10) 6.0%
c/o Miller & Simons
First Floor, Butterfield Square
P.O. Box 260
Providencials
Turks and Caicos Islands
British West Indies
GHI, Inc. In Trust .................................. 1,907,334(11) 8.0%
c/o Miller & Simons
First Floor, Butterfield Square
P.O. Box 260
Providencials
Turks and Caicos Islands
British West Indies
Smallcap World Fund, Inc. ........................... 1,243,467(12) 5.2%
c/o Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071
12
---------------
* Less than one percent.
(1) Includes 5,159 options granted on December 31, 2001 and 5,000 options
granted on January 3, 2000, all under Generex's 2001 Stock Option Plan
(the "2001 Plan") and pursuant to a consulting agreement between Dr.
Bernstein and Generex.
(2) Includes 953,667 shares owned of record by GHI, Inc. that are
beneficially owned by Ms. Gluskin, 100,000 shares issuable upon the
exercise of an option granted under Generex's 1998 Stock Option Plan
(the "1998 Plan"), 200,000 shares issuable upon the exercise of an
option granted under Generex's 2000 Stock Option Plan (the "2000 Plan")
and 350,000 options issuable upon the exercise of an option granted
under Generex's 2001 Plan.
(3) Includes 50,000 shares issuable upon the exercise of an option granted
under the 1998 Plan and 20,000 shares issuable upon the exercise of an
option granted under the 2000 Plan. Also includes 50,000 shares issuable
upon the exercise of options granted under the 2001 Plan (20,000 of
which were granted during fiscal 2001 and 30,000 of which were granted
after fiscal 2001).
(4) Includes 20,000 shares issuable upon the exercise of an option granted
under the 2001 Plan.
(5) Includes 150,000 shares issuable upon the exercise of an option granted
under the 1998 Plan and 150,000 shares issuable upon the exercise of an
option granted under the 2000 Plan. Also includes 300,000 shares
issuable upon the exercise of options granted under the 2001 Plan. Dr.
Modi also owns all the outstanding shares of Generex's Special Voting
Rights Preferred Stock. This stock is not convertible into Common Stock.
(6) Includes 953,667 shares owned of record by GHI, Inc. that are
beneficially owned by Ms. Rose Perri, 100,000 shares issuable upon the
exercise of an option granted under the 1998 Plan, 150,000 shares
issuable upon the exercise of an option granted under the 2000 Plan and
300,000 shares issuable upon the exercise of an option granted under the
2001 Plan. Also includes the shares and options that are owned by the
estate of Mr. Mark Perri, of which Ms. Rose Perri is executor and
beneficiary: 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 an aggregate of 450,000 shares. The options are
exercisable for 90 days after Mr. Mark Perri's death on November 6,
2002. Also includes 341,496 shares owned of record by EBI, Inc., which
Ms. Rose 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.
Rose 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 20,000 shares issuable upon the exercise of an option granted
under the 2000 Plan, and 50,000 shares issuable upon exercise of options
granted under the 2001 Plan. Also includes 7,943 shares owned by a
company of which Mr. Rosen is an officer and indirect 25% owner; Mr.
Rosen may be deemed to beneficially own these shares because he shares
voting power and investment power with respect to such shares.
(8) Includes 500,000 shares issuable upon the exercise of options granted
under the 1998 Plan, 690,000 shares issuable upon the exercise of
options granted under the 2000 Plan and 1,280,159 shares issuable under
the 2001 Plan. Includes 1,441,496 shares owned of record by EBI, Inc.
but beneficially owned or deemed to be beneficially owned by Ms. Rose
Perri. Includes 1,907,334 shares owned of record by GHI, Inc. but
beneficially owned by Ms. Gluskin or Ms. Rose Perri.
(9) Based solely on Schedule 13G filed with the SEC under the Exchange Act
on February 6, 2003. The Schedule 13G was filed for Protius Overseas
Limited; Cranshire Capital, L.P.; Downsview Capital, Inc.; JMJ Capital,
Inc.; EURAM Cap Strat. "A" Fund Limited; and Mitchell P. Kopin as a
group. The members of the group hold shared voting power and shared
dispositive power with respect to these shares. Does not include any
warrants exercisable for Common Stock that are held by any of the
members of the group.
13
(10) All these shares were previously beneficially owned by Mr. Mark Perri
but are now deemed to be beneficially owned by Ms. Rose 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. Rose Perri also has
investment power and otherwise is entitled to the economic benefits of
ownership.
(11) Ms. Gluskin and Ms. Rose 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. Rose Perri because she has the sole power
to vote the shares.
(12) Includes warrants to purchase a total of 164,467 shares of Common Stock.
Certain Relationships and Related Transactions
Generex acquired Generex Pharmaceuticals, Inc. in October 1997. Prior to
Generex's acquisition of Generex Pharmaceuticals, it was a private Canadian
corporation majority-owned and controlled by Mr. Mark Perri, Ms. Rose Perri
and Ms. Gluskin. Unless otherwise indicated, the transactions described below
occurred prior to the acquisition of Generex Pharmaceuticals or pursuant to
contractual arrangements entered into prior to that time. Generex presently
has 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.
Real Estate Financing Transactions: In May 1997, EBI, Inc., a company
controlled by Mr. Mark Perri, acquired shares of Common Stock of Generex
Pharmaceuticals for $3 million (CAD) which, based on the exchange rate then in
effect, represented approximately $2.1 million (US). Generex Pharmaceutical's
use of those funds was restricted to acquiring an insulin research facility.
Subsequently this restriction was eased to permit use of the funds to acquire
properties used for manufacturing Generex's oral insulin product and other
proprietary drug delivery products, and related testing, laboratory and
administrative services. Under the terms of the investment, Generex
Pharmaceuticals was required to lend these funds back to EBI until they were
needed for the purposes specified. The entire amount was loaned back to EBI
and was outstanding at July 31, 1997. During the period ended July 31, 1998, a
total of $2,491,835 (CAD) was repaid by EBI. There were no repayments made in
the years ended July 31, 2002, 2001 and 2000. The balance due from EBI at July
31, 2002, was $508,165 (CAD) (approximately $322,685 (US) based on the
exchange rate then in effect). These funds are due on demand by Generex
Pharmaceuticals, provided they are used for the purchase and/or construction
or equipping of oral insulin manufacturing and testing facilities. The amounts
repaid by EBI were used primarily to purchase and improve certain of the real
estate and buildings owned by Generex Pharmaceuticals.
Loans to Executive Officers: On May 3, 2001, Generex's three senior
officers, who were also shareholders of Generex, were advanced $334,300 each,
in exchange for promissory notes. These notes bore interest at 8.5 percent 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 Generex's Common Stock owned by this related company. On June 3,
2002, Generex's 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. Subsequent to July 31, 2002, pursuant to a decision made as of
August 30, 2002, these loans were satisfied by application 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.
Brokerage Payment: On August 7, 2002, Generex Pharmaceuticals purchased
real estate with an aggregate purchase price of approximately $1,525,000, 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. Management believes that
this is less than the aggregate commission which would have been payable if an
unaffiliated broker had been used.
Joint Venture with Elan: In January 2001, Generex established a joint
venture with Elan International Services, Ltd. ("EIS") and Elan Corporation,
plc ("Elan"). Pursuant to the Securities Purchase Agreement dated January 16,
2001, between Generex, Elan and EIS, EIS has the right to nominate one
director to Generex's Board
14
of Directors for so long as EIS or its affiliates own at least 1.0% of the
issued and outstanding shares of Common Stock. Dr. Ivan Lieberburg, previously
a board member of Generex, was the nominee of EIS thereunder. Dr. Lieberburg
resigned effective August 1, 2002. EIS has not informed Generex of its nominee
to replace Dr. Lieberburg or whether it intends to replace Dr. Lieberburg.
In connection with the transaction, EIS purchased 344,116 shares of Common
Stock for $5,000,000 and was issued a warrant to acquire 75,000 shares of
Common Stock at $25.15 per share. If the joint venture achieves certain
milestones, Generex may require EIS to purchase an additional $1,000,000 of
Common Stock at a 30% premium to the then prevailing fair market value of
shares of Common Stock. EIS also purchased 1,000 shares of a new series of
Generex preferred stock, designated as Series A Preferred Stock, for
$12,015,000. The proceeds from the sale of the Series A Preferred Stock were
applied by Generex to subscribe for an 80.1% equity ownership interest in
Generex (Bermuda) Ltd. EIS paid in capital of $2,985,000 to subscribe for a
19.9% equity interest in Generex (Bermuda) Ltd. While Generex initially owns
80.1% of the joint venture entity, EIS has the right, subject to certain
conditions, to increase its ownership up to 50% by exchanging the Series A
Preferred Stock for 30.1% of Generex's interest in the joint venture entity.
Alternatively, the Series A Preferred Stock may be converted, under certain
conditions, into shares of Generex's Common Stock. Including dividends on the
Series A Preferred Stock, there are 1,123 shares of Series A Preferred Stock
outstanding. The shares of Common Stock and shares of Series A Preferred Stock
presently are held of record by an affiliate of EIS.
OTHER INFORMATION
Annual Report
Generex has enclosed its Annual Report for the year ended July 31, 2002,
with this proxy statement, which includes Generex's Annual Report to the
Securities and Exchange Commission on Form 10-K for the fiscal year ended July
31, 2002, 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.
Stockholder Proposals for the Next Annual Meeting
Any proposals of stockholders intended to be presented at the annual meeting
of stockholders for the fiscal year ending July 31, 2003, must be received by
Generex at 33 Harbour Square, Suite 202, Toronto, Ontario, Canada M5J 2G2, no
later than September 1, 2003 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. Such proposal must meet the requirements
set forth in the rules and regulations of the Securities and Exchange
Commission in order to be eligible for inclusion in the proxy materials for
such meeting. The annual meeting for the fiscal year ending July 31, 2003 is
scheduled to take place in March 2003.
For business to be properly brought before the annual meeting by a
stockholder in a form other than a stockholder proposal, 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 of 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.
If there should be any change in the foregoing submission deadlines, Generex
intends to publicly disseminate information concerning the change.
15
Director Nominees
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 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 the
Secretary at the principal offices of Generex.
Other Matters
The Board 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.
Solicitation of Proxies
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.
By order of the Board of Directors,
/s/ Rose C. Perri
-----------------
Rose C. Perri
Secretary
February 24, 2003
16
EXHIBIT A
GENEREX BIOTECHNOLOGY CORPORATION
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") is appointed by the Board of Directors
(the "Board") of Generex Biotechnology Corporation (the "Company") to assist
the Board in monitoring (1) the integrity of Generex's financial statements
and reports and (2) the independence and performance of Generex's auditors.
The Committee shall be responsible for the appointment, compensation and
oversight of the work of any independent auditors employed by Generex for the
purpose of preparing or issuing an audit report or related work. The
independent auditor so employed shall report directly to the Committee.
The Committee shall have the authority to retain special legal, accounting
or other consultants or advisors to advise it. The Committee shall have the
authority to request any officer or employee of the Company or the Company's
outside counsel, auditor or other consultant or advisor to attend a meeting of
the Committee or to meet with any members of, or consultants or advisors to,
the Committee. The Company shall provide sufficient funds to the Committee for
the retention, use or employment of any legal, accounting or other consultant
or advisor by the Committee that is necessary for the Committee to carry out
its duties under this Charter.
The Committee shall:
1. Review and reassess the adequacy of this Charter from time to time
and recommend any proposed changes to the Board for approval.
2. Review the Company's annual audited financial statements with
management, including major issues regarding accounting and auditing
principles and practices and the adequacy of internal controls.
3. Review with management and the Company's independent auditor any
significant financial reporting issues and judgments observed by or
brought to the attention of the Committee relative to the
preparation of the Company's financial statements.
4. Review the Company's quarterly financial statements prior to the
filing of its Form 10-Q.
5. Review any proposed major changes to the Company's auditing and
accounting principles prior to their adoption.
6. Receive periodic reports from the Company's independent auditor
regarding the auditor's independence, discuss such reports with the
auditor, and recommend any board action deemed necessary and
appropriate by the Committee to assure the independence of the
auditor.
7. Discuss with the independent auditor the matters required to be
discussed with the Committee by the independent auditor under
Statement on Auditing Standards No. 61 relating to the conduct of
the audit of the Company's financial statements.
8. Review with the Company's independent auditor any problems or
difficulties the auditor may have encountered, as well as any
management letter provided by the auditor and the Company's response
to that letter.
9. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy
statement.
10. Review with the Company's attorneys such legal matters as the
Committee determines may have a material impact on the Company's
financial statements.
11. Evaluate together with the Board the performance of the Company's
independent auditor.
12. Review the appointment and any replacements of the Company's
principal accounting officer.
13. Establish procedures for the receipt, retention and treatment of
complaints received regarding accounting, internal accounting
controls or auditing matters and the confidential, anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters.
A-1
Each member of the Committee shall be independent and shall have the ability
to read and understand financial statements, including the Company's balance
sheet, income statement and cash flow statement, or become able to do so
within a reasonable period of time after appointment to the Committee. For
purposes of this Charter, to be considered "independent" a Committee member:
(1) must meet the definition of "independent" as defined in the Nasdaq
National Market listing standards and any U.S. Securities and
Exchange Commission regulation applicable to the Company; and
(2) may not, other than in his or her capacity as a member of the
Committee: (i) accept any consulting, advisory or other compensatory
fee from the issuer, or (ii) be an affiliated person of the issuer
or any subsidiary thereof.
Committee members shall be members of the Board of the Company and shall be
nominated and elected by the full Board annually. The full Board shall
promptly fill vacancies that may occur on the Committee. At least one member
of the Committee shall have past employment experience in finance or
accounting, or comparable experience or background (including, for example,
being or having been a chief executive officer, chief financial officer or
other senior corporate officer with financial oversight responsibilities)
which results in such member having financial sophistication. The
qualifications of Committee members shall be determined by the full Board.
Meetings of the Committee may be called from time to time by the Chairman or
any two members of the Committee upon not less than seventy-two (72) hours
prior notice (which may but need not state the business intended to be
conducted at the meeting), provided that a meeting may be held without such
notice if all members are present or, if absent, waive notice of the meeting.
A majority of the members of the Committee shall constitute a quorum for the
purpose of taking any action upon any matter that may come before it, and the
Committee may take any action which it is authorized to take as a committee
without the necessity of a meeting if all members of the Committee consent in
writing in accordance with Section 141(f) of the Delaware General Corporation
Law. The Chair of the Committee shall promulgate such other rules or
procedures as he or she deems necessary or appropriate for the proper and
efficient conduct of the business of the Committee.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statement are complete and accurate and
in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty
of the Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure the Company's
compliance with laws and regulations relating to financial disclosure or any
other area.
A-2
GENEREX BIOTECHNOLOGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
March 19, 2003
The undersigned stockholder of Generex Biotechnology Corporation (the
"Company") hereby appoints Anna E. Gluskin and Rose C. Perri, 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 February 19, 2003, at the annual meeting of stockholders of
Generex to be held on Wednesday, March 19, 2003 (the "Annual Meeting") at 10:00
a.m. at St. Lawrence Hall, 157 King Street East, Toronto, Ontario, 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:
NOMINEES: Gerald Bernstein, M.D. Anna E. Gluskin
Michael Hawke, M.D. Peter Levitch
Pankaj Modi, Ph.D. J. Michael Rosen
Rose C. Perri
/ / FOR ALL NOMINEES / / WITHHOLD ALL NOMINEES / / ___________________
For all nominees
except as noted
above
Item 2. To ratify the appointment of Deloitte & Touche LLP as Generex's
independent public accountants for the fiscal year ending July 31, 2003.
/ / FOR / / AGAINST / / 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.
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Signature:
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Signature:
------------------------------------
Date:
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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.