EXHIBIT 4.4 GENEREX BIOTECHNOLOGY CORPORATION ADDITIONAL INVESTMENT RIGHT

 

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                                                                     EXHIBIT 4.4

 

 

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE

SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR

THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM

REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES

ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN

EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN

AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION

REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE

SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO

SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE

COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE

SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED

BY SUCH SECURITIES.

 

                        GENEREX BIOTECHNOLOGY CORPORATION

 

 

                           ADDITIONAL INVESTMENT RIGHT

 

 

                                        Date of Original Issuance: July 12, 2004

 

         Generex Biotechnology Corporation, a Delaware corporation (the

"COMPANY"), hereby certifies that, for value received, [ ] or its registered

assigns (the "HOLDER"), is entitled to purchase from the Company up to a total

number Units (as defined in Section 1) as equals the quotient obtained by

dividing (a) $[ ] by (b) the Exercise Price (as defined in Section 1). This

Additional Investment Right ("ADDITIONAL INVESTMENT RIGHT") may be exercised

from time to time and at any time in whole or in part prior to the Expiration

Date and is subject to the terms and conditions set forth below.

 

         1. Definitions. As used in this Additional Investment Right, the

following terms shall have the respective definitions set forth in this Section.

Capitalized terms that are used and not defined in this Additional Investment

Right that are defined in the Purchase Agreement (as defined below) shall have

the respective definitions set forth in the Purchase Agreement.

 

                  (a) "BUSINESS DAY" means any day except Saturday, Sunday and

any day which is a federal legal holiday in the United States or a day on which

banking institutions in the State of New York are authorized or required by law

or other government action to close.

 

                  (b) "CLOSING PRICE" means on any particular date: (a) the

closing sales price per share of Common Stock on such date on any of the New

York Stock Exchange, American Stock Exchange, NASDAQ National Market or NASDAQ

SmallCap Market on which the Common Stock is then listed or quoted (as reported

by Bloomberg L.P. for regular session trading on such day), or if there is no

 

 

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such price on such date, then the closing sales price on such trading markets on

the date nearest preceding such date (as reported by Bloomberg L.P. for the

closing sales price for regular session trading on such day), or (b) if the

shares of Common Stock are not then listed or quoted on any of the New York

Stock Exchange, American Stock Exchange, NASDAQ National Market or NASDAQ

SmallCap Market, the closing sales price for a share of Common Stock on the OTC

Bulletin Board (as reported by Bloomberg L.P. for 5:00 P.M. (New York time), or

(c) if the shares of Common Stock are not then reported by the OTC Bulletin

Board or the National Quotation Bureau Incorporated (or similar organization or

agency succeeding to its functions of reporting prices), then the average of the

"Pink Sheet" quotes for the relevant conversion period, as determined in good

faith by the Holder, or (d) if the shares of Common Stock are not then publicly

traded the fair market value of a share of Common Stock as determined by an

appraiser selected in good faith by the Holders of this Additional Investment

Right.

 

                  (c) "COMMON STOCK" means the common stock of the Company,

$.001 par value per share, and any securities into which such common stock may

be hereafter reclassified.

 

                  (d) "EXPIRATION DATE" means the 120th Trading Day after the

Effective Date for the initial Registration Statement.

 

                  (e) "EXERCISE PRICE" means $1.22; provided, that if the

Company's auditors issue a report containing a "going concern qualification"

within the Company's Annual Report on Form 10-K for the Company's fiscal year

ended July 31, 2004, then the Exercise Price shall equal the lesser of (i) $1.22

and (ii) the greater of (x) the average Closing Price for the five Trading Days

immediately after public announcement of such report and (y) 70% of the Per Unit

Purchase Price (as defined under the Purchase Agreement).

 

                  (f) "EXERCISE SHARES" means the shares of Common Stock

issuable upon exercise of this Additional Investment Right.

 

                  (g) "EXERCISE WARRANT" means the Common Stock Purchase

Warrant, in the form of Exhibit A, pursuant to which, upon each delivery of an

Exercise Notice hereunder, the Holder will have the right to acquire Warrant

Shares in such number as described in Section 5(a).

 

                  (h) "PURCHASE AGREEMENT" means the Securities Purchase

Agreement, dated June 23, 2004, to which the Company and the original Holder are

parties.

 

                  (i) "TRADING DAY" means (i) a day on which the Common Stock is

traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the

Common Stock is not listed on a Trading Market, a day on which the Common Stock

is traded in the over-the-counter market, as reported by the OTC Bulletin Board,

or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on

which the Common Stock is quoted in the over-the-counter market as reported by

the National Quotation Bureau Incorporated (or any similar organization or

agency succeeding to its functions of reporting prices); provided, that in the

event that the Common Stock is not listed or quoted as set forth in (i), (ii)

and (iii) hereof, then Trading Day shall mean a Business Day.

 

 

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                  (j) "UNIT" means (i) one Exercise Share; and (ii) the right to

purchase Warrant Shares under the Exercise Warrant equal to eighty (80) percent

of an Exercise Share.

 

                  (k) "WARRANT SHARES" means the shares of Common Stock issuable

upon exercise of the Exercise Warrants.

 

         2. Registration of Additional Investment Right. The Company shall

register this Additional Investment Right, upon records to be maintained by the

Company for that purpose (the "ADDITIONAL INVESTMENT RIGHT REGISTER"), in the

name of the record Holder hereof from time to time. The Company may deem and

treat the registered Holder of this Additional Investment Right as the absolute

owner hereof for the purpose of any exercise hereof or any distribution to the

Holder, and for all other purposes, absent actual notice to the contrary.

 

         3. Registration of Transfers. The Company shall register the transfer

of any portion of this Additional Investment Right in the Additional Investment

Right Register, upon surrender of this Additional Investment Right, with the

Form of Assignment attached hereto duly completed and signed, to the Company at

its address specified herein. Upon any such registration or transfer, a new

Additional Investment Right to purchase Common Stock, in substantially the form

of this Additional Investment Right (any such new Additional Investment Right, a

"NEW ADDITIONAL INVESTMENT RIGHT"), evidencing the portion of this Additional

Investment Right so transferred shall be issued to the transferee and a New

Additional Investment Right evidencing the remaining portion of this Additional

Investment Right not so transferred, if any, shall be issued to the transferring

Holder. The acceptance of the New Additional Investment Right by the transferee

thereof shall be deemed the acceptance by such transferee of all of the rights

and obligations of a holder of an Additional Investment Right.

 

         4. Exercise and Duration of Additional Investment Rights. Subject to

the terms and conditions hereof, this Additional Investment Right shall be

exercisable by the registered Holder at any time and from time to time on or

after the date hereof to and including 6:30 p.m. New York City time, on the

Expiration Date. At 6:30 p.m., New York City time on the Expiration Date, the

portion of this Additional Investment Right not exercised prior thereto shall be

and become void and of no value. The Company may not call or redeem any portion

of this Additional Investment Right without the consent of the Holder.

 

         5. Delivery of Units.

 

                  (a) To acquire Units under this Additional Investment Right,

the Holder shall not be required to physically surrender this Additional

Investment Right unless the aggregate Units then represented by this Additional

Investment Right is being exercised. Upon delivery of a written notice, in the

form of the Exercise Notice attached hereto (the "EXERCISE NOTICE") to the

Company (together with the Additional Investment Right Exercise Log attached

thereto (the "ADDITIONAL INVESTMENT RIGHT EXERCISE LOG")) at its address for

notice set forth herein and upon payment of an amount equal to the Exercise

Price multiplied by the number of Units that the Holder intends to purchase

hereunder, the Company shall promptly (but in no event later than three Trading

Days after the Date of Exercise) issue and deliver to the Holder, (1) a

certificate representing the number of Exercise Shares to which such exercise

pertains (the dollar amount of the exercise at issue divided by the Exercise

Price), which, unless otherwise required by the Purchase Agreement, shall be

 

 

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free of restrictive legends, and (2) Exercise Warrants in such number as would

give the Holder the right to acquire a number of Warrant Shares equal to eighty

(80) percent of the number of Exercise Shares issuable in respect of such

Exercise Notice in accordance with clause (1) of this sentence. The Company

shall, upon request of the Holder and subsequent to the date on which a

registration statement covering the resale of the Exercise Shares has been

declared effective by the Securities and Exchange Commission, use commercially

reasonable efforts to deliver the Exercise Shares hereunder electronically

through the Depository Trust Corporation or another established clearing

corporation performing similar functions, if available, provided, that, the

Company may, but will not be required to change its transfer agent if its

current transfer agent cannot deliver Exercise Shares electronically through the

Depository Trust Corporation. A "DATE OF EXERCISE" means the date on which the

Holder shall have delivered to Company: (i) the Exercise Notice (with the

Additional Investment Right Exercise Log attached to it), appropriately

completed and duly signed and (ii) the Exercise Price for the number of Units so

indicated by the Holder to be purchased.

 

                  (b) If by the third Trading Day after a Date of Exercise the

Company fails to deliver the required number of Units in the manner required

pursuant to Section 5(a), then the Holder will have the right to rescind such

exercise.

 

                  (c) If by the third Trading Day after a Date of Exercise the

Company fails to deliver the required number of Units in the manner required

pursuant to Section 5(a), and if after such third Trading Day and prior to the

receipt of such Units, the Holder purchases (in an open market transaction or

otherwise) shares of Common Stock to deliver in satisfaction of a sale by the

Holder of the Exercise Shares which the Holder anticipated receiving upon such

exercise (a "BUY-IN"), then the Company shall (1) pay in cash to the Holder the

amount by which (x) the Holder's total purchase price (including brokerage

commissions, if any) for the shares of Common Stock so purchased exceeds (y) the

amount obtained by multiplying (A) the number of Exercise Shares that the

Company was required to deliver to the Holder in connection with the exercise at

issue by (B) the closing bid price of the Common Stock at the time of the

obligation giving rise to such purchase obligation and (2) at the option of the

Holder, either reinstate the portion of the Additional Investment Right and

equivalent number of Units for which such exercise was not honored or deliver to

the Holder the number of Exercise Warrants that would have been issued had the

Company timely complied with its exercise and delivery obligations hereunder.

The Holder shall provide the Company written notice indicating the amounts

payable to the Holder in respect of the Buy-In.

 

                  (d) Provided that the Holder has satisfied its obligations

hereunder, the Company's obligations to issue and deliver Units in accordance

with the terms hereof are absolute and unconditional, irrespective of any action

or inaction by the Holder to enforce the same, any waiver or consent with

respect to any provision hereof, the recovery of any judgment against any Person

or any action to enforce the same, or any setoff, counterclaim, recoupment,

limitation or termination, or any violation or alleged violation of law by the

Holder or any other Person, and irrespective of any other circumstance which

might otherwise limit such obligation of the Company to the Holder in connection

with the issuance of Units. Nothing herein shall limit a Holder's right to

pursue any other remedies available to it hereunder, at law or in equity

including, without limitation, a decree of specific performance and/or

injunctive relief with respect to the Company's failure to timely deliver

certificates representing Exercise Shares upon exercise of the Additional

Investment Right as required pursuant to the terms hereof.

 

 

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         6. Charges, Taxes and Expenses. Issuance and delivery of Units

(including Exercise Shares) upon exercise of this Additional Investment Right

shall be made without charge to the Holder for any issue or transfer tax,

withholding tax, transfer agent fee or other incidental tax or expense in

respect of the issuance of such certificates, all of which taxes and expenses

shall be paid by the Company; provided, however, that the Company shall not be

required to pay any tax which may be payable in respect of any transfer involved

in the registration of any certificates for Exercise Shares or Exercise Warrants

in a name other than that of the Holder. The Holder shall be responsible for all

other tax liability that may arise as a result of holding or transferring this

Additional Investment Right or receiving Units upon exercise hereof.

 

         7. Replacement of Additional Investment Right. If this Additional

Investment Right is mutilated, lost, stolen or destroyed, the Company shall

issue or cause to be issued in exchange and substitution for and upon

cancellation hereof, or in lieu of and substitution for this Additional

Investment Right, a New Additional Investment Right, but only upon receipt of

evidence reasonably satisfactory to the Company of such loss, theft or

destruction and customary and reasonable indemnity (which shall not include a

surety bond), if requested. Applicants for a New Additional Investment Right

under such circumstances shall also comply with such other reasonable

regulations and procedures and pay such