UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
¨ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 2010
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 000-25169
GENEREX BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 98-0178636 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| 33 Harbour Square, Suite 202, Toronto, Canada | M5J 2G2 | |
| (Address of principal executive offices) | (Zip Code) |
(416) 364-2551
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| None | Not applicable | |
| (Title of each class) | (Name of each exchange on which registered) |
Securities registered pursuant to Section 12(g) of the Act:
| Common Stock, $.001 par value per share |
| (Title of class) |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). .Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer þ |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
As of January 31, 2010, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $151,387,993 based on the closing sale price as reported on the NASDAQ Capital Market. Generex Biotechnology Corporation has no non-voting common equity.
At November 23, 2010, there were 274,445,713 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 14, 2010.
Generex Biotechnology Corporation
Form 10-K/A
July 31, 2010
| Page | ||
| Part III | ||
| Item 10. | Directors, Executive Officers and Corporate Governance. | 2 |
| Item 11. | Executive Compensation. | 6 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | 19 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence. | 21 |
| Item 14. | Principal Accountant Fees and Services. | 22 |
| Part IV | ||
| Item 15. | Exhibits and Financial Statement Schedules. | 22 |
| Signatures | 23 | |
As used herein, the terms the “Company,” “Generex,” “we,” “us,” or “our” refer to Generex Biotechnology Corporation, a Delaware corporation.
Explanatory Note
This Amendment No. 1 to the Company’s Annual Report on Form 10-K for the year ended July 31, 2010 (“Amendment”) is being filed to furnish the information required by Part III (Items 10, 11, 12, 13 and 14). This Amendment is limited in scope to the items identified above and should be read in conjunction with the original Annual Report on Form 10-K for the year ended July 31, 2010 filed by the Company on October 14, 2010 (the “Form 10-K”). The Amendment does not reflect events occurring after the filing of the Form 10-K on October 14, 2010 and, other than the furnishing of the information identified above, does not modify or update the disclosure in the Form 10-K in any way.
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Executive Officers and Directors
| Name | Age | Position Held with Generex | ||
| Mark Fletcher, Esquire | 45 | Interim President/Chief Executive Officer, General Counsel and Secretary | ||
| Rose C. Perri | 43 | Chief Operating Officer, Chief Financial Officer, Treasurer and Director | ||
| Anna E. Gluskin | 59 | Director | ||
| John P. Barratt | 66 | Chairman of the Board | ||
| Brian T. McGee | 50 | Director | ||
| Nola E. Masterson | 63 | Director |
There are no family relationships among the directors and executive officers. All directors are elected to hold office until the next annual meeting of stockholders following election and until their successors are duly elected and qualified. Executive officers are appointed by the Board of Directors and serve at the discretion of the Board.
Mark Fletcher, Esq. Mr. Fletcher was appointed as Interim President/Chief Executive Officer and Secretary in September 2010. Since April 2003, he has served, and continues to serve as, Executive Vice President and General Counsel. 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. The Board believes that Mr. Fletcher’s wide-ranging legal knowledge and extensive experience as a practicing lawyer, combined with his managerial skills and business acumen and judgment, provide our Board with valuable legal and operational expertise and leadership skills.
Rose C. Perri. Director since September 1997. Ms. Perri has served as Treasurer of Generex since October 1997 and as Chief Operating Officer since August 1998. She served as Secretary from October 1977 to September 2010 and 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. Ms. Perri is one of the founders of Generex. Ms. Perri holds a Bachelor of Arts degree from the University of Toronto as well as a Bachelor of Business Management from York University. The Board believes that Ms. Perri’s business experience, including her experience as founder and an executive officer of Generex, combined with her educational background and her business judgment provide our Board with valuable operational expertise and leadership skills.
John P. Barratt. Independent Director since March 2003 and Chairman of the Board since September 2010. Mr. Barratt is currently the Chairman of the Generex Compensation Committee and a member of the Generex Audit Committee and Corporate Governance and Nominating Committee. Mr. Barratt served as the Board Liaison Officer of The Caldwell Partners International from July 2006 until May 2009. 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 Brookfield Investments 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 as Chairman of the Independent Review Committees of BAM Split Corp. and Brookfield Soundvest Capital Management Ltd. Mr. Barratt is currently the Chief Financial Officer and a member of the Advisory Board of Crystal Fountains Inc. and also served as interim Chief Financial Officer of its subsidiary, Crystal Fountains Inc. from September 2008 to May 2009. The Board believes that Mr. Barratt’s wide-ranging business experience in various industries, his extensive service as an executive officer and director in various companies, and his knowledge of finance, combined with his leadership skills and business judgment, provide our Board with valuable financial and operational expertise and leadership skills.
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Brian T. McGee. Independent Director since March 2004. Mr. McGee is currently the Chairman of the Generex Audit Committee and a member of the Generex Compensation Committee and Corporate Governance and Nominating Committee. Mr. McGee has been a partner of Zeifmans LLP ("Zeifmans") since 1995. Mr. McGee began working at Zeifmans shortly after receiving a B.A. degree in Commerce from the University of Toronto in 1985. Zeifmans is a Chartered Accounting firm based in Toronto, Ontario. A significant element of Zeifmans’ 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. Mr. McGee has received a certificate in International Financial Reporting Standards issued by The Institute of Chartered Accountants in England and Wales in 2010. The Board believes that Mr. McGee’s knowledge and understanding of accounting and finance, his education and training in accounting and corporate governance, and his extensive experience in the accounting industry, combined with his business acumen and judgment, provide our Board with valuable accounting and financial expertise.
Nola E. Masterson. Independent Director since May 2007. Ms. Masterson is currently the Chair of the Generex Corporate Governance and Nominating Committee and a member of the Generex Audit Committee and Compensation Committee. 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 Management Co. LLC, which administers several venture funds invested in life science fund of funds and life science companies. She also serves as Chairwoman of the Board of Directors of Repros Therapeutics Inc. and serves as Chair of the Compensation Committee and Nominating and Corporate Governance Committee and is a member of the Audit Committee. Repros is 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 and first president 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 34 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. The Board believes that Ms. Masterson’s extensive experience in the life science industry and venture capital and investment industry, her business experience, including her experience as an executive officer of an investment advisory company and as a director of a publicly-traded biopharmaceutical company, combined with her business judgment, provide our Board with valuable scientific and operational expertise.
Anna E. Gluskin: Director since September 1997. Ms. Gluskin served as the President and Chief Executive Officer of Generex from October 1997 until September 2010 and served as the Chairperson of the Generex Board of Directors from November 2002 until September 2010. She held comparable positions with Generex Pharmaceuticals Inc. from its formation in 1995 until its acquisition by Generex in October 1997. Along with Ms. Perri, Ms. Gluskin was one of the founders of Generex. Ms. Gluskin holds a Masters degree in Microbiology and Genetics from Moscow State University. Ms. Gluskin has been a member of the Board of Directors of Protect Pharmaceutical Corp. (PRTT:OTC US) since March 2010. The Board believes that Ms. Gluskin’s educational and business experience, including her extensive experience as a founder, board member and executive officer of Generex, combined with her business acumen and judgment provide our Board with valuable scientific and operational expertise.
Other Key Employees and Consultants
Stephen Fellows has served as our Vice President, Finance since June 2009. From August 2005 to December 2008, Mr. Fellows was employed by Sona Mobile Holdings Corporation, a publicly held software company which developed software applications for mobile devices, where he served as Chief Financial Officer. From September 1996 to August 2005, Mr. Fellows worked at 3Com Corporation, where he served in several positions including as the Director of Finance of the corporate accounting group in Marlborough, MA and Director of Finance & Operations of 3Com’s Canadian subsidiary. From January 1992 to August 1996, Mr. Fellows worked at Pennzoil Corporation where he spent time in the international mergers and acquisitions group in Houston, Texas, as well as four years as Controller for Pennzoil Canada. Mr. Fellows received a Bachelor of Business Administration degree from Wilfrid Laurier University in 1988 and earned his Chartered Accountants designation while articling with Arthur Andersen & Company in Toronto in 1990.
Slava Jarnitskii has been our Financial Controller since 1997. 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 International Business Administration degree from Schulich School of Business in September 1996.
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Eric von Hofe, Ph.D., is currently President of Antigen Express, Inc., a wholly-owned subsidiary of Generex. He has extensive experience with technology development projects, including his previous position at Millennium Pharmaceuticals 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 forty-three 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 the company’s chief experimentalist.
Gerald Bernstein, M.D. has served as Vice President Medical Affairs of Generex since October 2001. He served as a Director of Generex from October 2002 to May 2008. 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 is 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. He was president of the American Diabetes Association from 1998 to 1999. Dr. Bernstein has written and lectured extensively on various topics concerning diabetes. Dr. Bernstein holds a Bachelor of Arts degree from Dartmouth College in Biology and a medical degree from Tufts University School of Medicine. Dr. Bernstein has been a member of the Board of Directors of Protect Pharmaceutical Corp. (PRTT:OTC US) since March 2010.
George Markus is Manager of Regulatory Affairs. Mr. Markus holds a B.Sc. (Honours) in theoretical chemistry from Dalhousie University and a 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that Generex's directors and executive officers, and any persons who own more than ten percent (10%) of Generex's common stock, file with the Securities and Exchange Commission (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, 2010 were filed on a timely basis, with the exception of the Statements of Changes in Beneficial Ownership of Securities on Form 4 filed on March 10, 2010 on behalf of each of the persons named below, which reports belatedly disclosed the Board of Directors’ determination on October 20, 2009 to extend the term of certain outstanding options through October 26, 2014 as follows:
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Name of Executive Officer or Director | No. of Shares of Common Stock Underlying Option | Exercise Price per Share | Grant Date | Original Expiration Date | Extended Expiration Date | ||||||||
| Anna Gluskin | 250,000 | $ | 0.61 | 12/13/04 | 12/12/09 | 10/26/14 | |||||||
| 1,120,704 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | ||||||||
| Rose Perri | 250,000 | $ | 0.61 | 12/13/04 | 12/12/09 | 10/26/14 | |||||||
| 576,752 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | ||||||||
| Mark Fletcher | 250,000 | $ | 0.61 | 12/13/04 | 12/12/09 | 10/26/14 | |||||||
| 470,726 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | ||||||||
| John P. Barratt | 70,000 | $ | 0.94 | 10/26/04 | 10/26/09 | 10/26/14 | |||||||
| 35,714 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | ||||||||
| 100,000 | $ | 0.56 | 4/5/05 | 4/4/10 | 10/26/14 | ||||||||
| Brian T. McGee | 70,000 | $ | 0.94 | 10/26/04 | 10/26/09 | 10/26/14 | |||||||
| 35,714 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | ||||||||
| 100,000 | $ | 0.56 | 4/5/05 | 4/4/10 | 10/26/14 | ||||||||
Code of Ethics
Generex has adopted a code of ethics that applies to its directors and the following executive officers: the President, Chief Executive Officer, Chief Financial Officer (principal financial/accounting officer), Chief Operating Officer, any Vice-President, Controller, Secretary, Treasurer and any other personnel performing similar functions. We also expect any consultants or advisors whom we retain to abide by this code of ethics. The Generex Code of Ethics has been posted on Generex's Internet web site - www.generex.com.
Corporate Governance
Procedures for Nomination of Directors by Security Holders
There were no material changes to the procedures for nomination of directors by Generex’s security holders during the year ended July 31, 2010.
Audit Committee
Generex has a separately-designated standing Audit Committee, which was established on March 1, 2000 in accordance with Section 3(a)(58)(a) of the Exchange Act. Since May 29, 2007, the members of the Audit Committee have included Mr. McGee, who serves as chairman, Mr. Barratt and Ms. Masterson.
Audit Committee Financial Expert
Our Board of Directors has determined that at least one person serving on the Audit Committee is an "audit committee financial expert" as defined under Item 407(d)(5)(ii) of Regulation S-K. Mr. McGee, a member of the Audit Committee and its chairman, an “audit committee financial expert” and is “independent,” as these terms are defined under applicable SEC and NASDAQ rules.
Compensation Policies and Practices Related to Risk Management
Management has conducted a risk assessment of Generex's compensation policies and practices relating to executive and non-executive employees. Management has concluded that Generex’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company. The Compensation Committee has reviewed and concurred with management's conclusion. In assessing risk, management reviewed, among other things:
i) all key incentive compensation plans to ensure that they are aligned with our compensation philosophy which aims to:
a) motivate executives and employees to achieve our business objectives,
b) align employee and shareholder interests,
c) recognize individual contributions and overall business success, and
d) ensure that compensation policies include performance metrics that meet and support corporate goals.
ii) the overall compensation mix to ensure an appropriate balance between fixed and variable pay components and between short-term and long-term incentives.
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The objective of the process was to identify any compensation plans and practices that may encourage employees to take unnecessary risk that could threaten the company. Management identified no such plans or practices.
Compensation, Discussion & Analysis
Compensation Philosophy
We are a development stage company focused on research, development, and commercialization of our proprietary drug delivery platform for administration of large molecule drugs to the oral cavity through a hand-held aerosol spray applicator. We are in the process of developing proprietary formulations of drugs that can be delivered through an oral spray thereby eliminating the need for injections and have focused on our Oral-lyn™ insulin formation which is administered as a spray into the oral cavity. We also have a subsidiary, Antigen Express, which focuses on developing proprietary immunomedicines.
As a development stage company, our future depends on the ability of our executives to obtain necessary regulatory approvals to launch Oral-lyn™ in key markets such as the United States, Canada, and Europe, as well as furthering the development of other products in our pipeline through the clinical trial and regulatory process. Attracting, retaining, and motivating key executives that can lead Generex through this process is critical to our success. We have a small executive team that works together closely. Our executives perform multiple roles and need to be able to respond to changing market dynamics quickly.
For these reasons, we seek to ensure that our compensation programs are competitive with similarly-sized companies with which we compete for executive talent. The goals of our executive compensation program are to attract and retain top executives, to motivate executives to achieve our business objectives, to align executive and shareholder interests, and to recognize individual contributions and overall business success.
During the fiscal year ended July 31, 2010, the Compensation Committee of the Board of Directors evaluated the types and amounts of compensation that it believed were appropriate for our President and Chief Executive Officer, our Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary, and our Executive Vice President and General Counsel, who are considered Generex’s policy making executives and who are listed in the Summary Compensation Table on page 11. We refer herein to these executives as the “named executives.”�� Prior to her departure, Ms. Gluskin, who served as our President and Chief Executive Officer, typically presented the Compensation Committee with her recommendations regarding salaries, bonuses and long term incentives for members of the executive management team and support for such recommendations, such as milestones reached, company performance against both operating and financial plans, and comparable compensation data of “peer” industry companies.
In addition to the compensation of our named executives, the Compensation Committee also reviews and approves compensation of members of our senior management, including our Vice President, Medical Affairs, our Vice President, Finance and our Controller.
The Board of Directors appointed the current members of the Compensation Committee on May 28, 2008 following the Annual Meeting of the Stockholders. All three current members served throughout fiscal 2010. During fiscal 2010, the Compensation Committee convened five times to evaluate and discuss compensation for the named executives with respect to the fiscal years ended July 31, 2010 and the calendar year ended December 31, 2010.
Historically, the key components of our executive compensation have been base salary, cash bonuses, and equity incentives, including stock bonuses, restricted stock, and stock options awarded at the discretion of our Compensation Committee and Board of Directors. As a development stage company, we have reviewed compensation of our named executives from time to time and at the discretion of the Compensation Committee when warranted by our financial condition and achievement of our business goals. While the elements of compensation are considered separately, the Compensation Committee ultimately considers the value of the total compensation package provided to the individual named executive.
The Compensation Committee believes the company’s compensation program must take into account the following factors:
• past levels of compensation adjustments;
| • | the expected transition of the company from a development stage company to an operating company; |
| • | the nature of the regulatory approval process for the company’s products; and |
• the potential for growth of the company in the event that regulatory approvals are obtained.
In fiscal 2010, the Compensation Committee reviewed and implemented changes in base salaries for certain of the named executives for the 2010 calendar year, awarded certain of the named executives cash bonuses relating to fiscal 2009 based upon a blend of the company’s and individual executive's performance and the discretion of the Compensation Committee, and awarded equity incentive awards to the named executives primarily for long-term retention purposes. The Compensation Committee has not made any determinations as to bonuses or equity awards for the named executives with respect to performance or contributions in the fiscal year ended July 31, 2010, but the Compensation Committee expects to consider the matter in the future.
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In administering the executive compensation program, our Compensation Committee has relied upon market data provided on a periodic basis by external consultants, as well as its own understanding and assessment of executive compensation trends. In its consideration of compensation for the named executives, the Compensation Committee has reviewed compensation data for pharmaceutical and biotechnology companies, market data provided by external compensation consultants, compensation data compiled by a third-party compensation data firm and publicly available executive compensation data for publicly traded companies.
Use of Compensation Consultant and Benchmarking
In November 2009, the Compensation Committee undertook a comprehensive review of compensation for the named executives. As part of the review the Compensation Committee engaged a compensation consultant, J. Thelander Consulting. A significant portion of the consultant’s review consisted of benchmarking Generex’s named executive compensation against similar positions at public companies in the biotechnology and pharmaceutical industry. The list of companies considered primarily had market capitalizations between $80 and $160 million which was considered comparable to Generex’s market capitalization. In addition, one other company was considered which had a market capitalization in excess of $1 billion, as it had been considered in past compensation studies and as its primary product is somewhat similar to Generex’s Oral-lyn™, in that it is also a drug delivery system for insulin. The companies considered in the consultant’s report included the following:
Market capitalization between $80 and $160 million
| · | ArQule (ARQL) |
| · | Progenix Pharmaceuticals, Inc. (PGNX) |
| · | Idenix Pharmaceuticals, Inc. (IDIX) |
| · | Discovery Laboratories, Inc. (DSCO) |
| · | Ideera Pharmaceuticals, Inc. (IDRA) |
Market capitalization greater than $1 billion
| · | Mannkind (MNKD) |
The consultant’s report concluded that base salaries for the named executives were at or above average compared to the benchmarked companies, while bonus targets, equity incentive compensation and overall total compensation (i.e. base salary, bonuses and equity compensation combined) were below average. While the Compensation Committee reviewed and considered the consultant’s report, the Compensation Committee members exercised discretion and formulated their own conclusions when the Committee determined the compensation components discussed below.
Determination of Compensation
The Compensation Committee typically makes compensation determinations, including any increases in base salary for the next calendar year and any bonuses in respect of the prior fiscal year, before or during the first calendar quarter of each year. The Compensation Committee follows such a schedule in order to eliminate the need to award retroactive salary increases. In addition, the Compensation Committee intends to review compensation arrangements in the first calendar quarter to ensure that compensation levels are appropriate in light of Generex’s financial position and performance at that time.
In considering bonuses in respect of fiscal year 2009 and base compensation for calendar year 2010, in addition to the compensation consultant’s report, the Compensation Committee reviewed publicly available executive compensation information for Generex’s peer companies, executive compensation information as reported in biotechnology and pharmaceutical industry publications, unique aspects of each executive’s roles within Generex, including multiple roles performed by each named executive, as well as contribution and performance of individual named executives towards achievement of overall company performance, and alignment with shareholder expectations.
Components of Compensation
Base Salary
Base salary provides a fixed amount of compensation necessary to attract and retain key executives. It is guaranteed compensation to the named executives for performance of core duties. Base salaries for the named executives may be adjusted upon recommendation by the Compensation Committee and ratification by the Board of Directors. Historically, annual base salaries for the named executives have been reviewed periodically relative to the base pay levels for each executive’s position based on the peer group. The Compensation Committee undertook such a review in November 2009. Levels of base salary are generally targeted at the market’s second quartile (51% – 75%), but also reflect the compensation goals adopted by the Compensation Committee, operational goals determined by management, the named executive’s individual performance, contribution of the named executive to overall corporate performance, and the level of responsibility of the named executive with respect to his or her specific position. The level of base salary also reflects multiple titles and additional responsibilities of the named executives driven by the operational needs of the company.
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In March 2010, the Compensation Committee recommended, and the Board of Directors approved a base salary adjustment of 3.17% for our Executive Vice President and General Counsel from $315,000 to $325,000 to be effective as of January 1, 2010. Based on the comparison to peer companies prepared by the compensation consultant, the Compensation Committee found that Mr. Fletcher’s previous base salary was appropriate, but considered this increase appropriate relative to increases in the cost of living. The Compensation Committee determined that no change in base salary for our President and Chief Executive Officer and our Chief Operating Officer/Chief Financial Officer/Treasurer and Secretary was warranted.
Salary adjustments for all the named executives were last made to base salary compensation in May 2008, which were made effective retroactive to January 1, 2008. No salary adjustments were made in calendar year 2009. In determining the levels of the base salary adjustments for the named executives, if any, the Compensation Committee considered the achievement of certain performance goals by the named executives, including those considered in connection with the award of cash bonuses and enumerated below.
Cash Bonuses
Performance-based compensation is a key component of our compensation philosophy. Historically, cash bonuses have been provided to attract, motivate, and retain highly qualified executives on a competitive basis and provide financial incentives that promote company success. From time to time in the past, the Compensation Committee has granted bonuses to reward achievement relative to specific performance objectives. In awarding bonuses, the Compensation Committee considers various factors, including the named executive’s position within Generex, attainment of specific business objectives and performance milestones, and the named executive’s individual contributions thereto. The Committee exercises discretion with respect to the weight that it gives to these and other factors in determining bonuses. The Compensation Committee also retains discretion with respect to whether any bonuses are paid to the named executives, the amounts of any such bonuses, and the form of any such bonuses.
In March 2010, the Compensation Committee recommended, and the full Board approved, a one-time cash bonus for our Executive Vice President and General Counsel based on his individual performance and contributions during fiscal 2009 in the amount of $225,000, which amount was payable on or before April 30, 2010. In recommending this bonus, the Compensation Committee considered Mr. Fletcher’s pivotal role with respect to negotiations with our convertible debenture holders in restructuring and settling these debentures, as well as his role in our subsequent equity financings following the retirement of the debentures. The Compensation Committee determined that neither the President and Chief Executive Officer nor the Chief Operating Officer/Chief Financial Officer/Treasurer and Secretary were entitled to a bonus for fiscal 2009 in light of our financial condition and failure to achieve our business goals for fiscal 2009.
Long-Term Incentives and Equity Awards
Our compensation program also includes long-term incentive compensation in the form of equity grants subject to a vesting schedule. We believe such incentive compensation further aligns the interests of management with those of stockholders and enhances shareholder value. Currently, we do not have any long-term cash incentive programs in place for the named executives.
Long-term equity incentive grants are discretionary. In determining whether such grants are warranted, the Compensation Committee considers our compensation strategy, market practice concerning long-term incentives provided to executives at peer companies and within the broader market, and the named executive’s specific roles within Generex. At the present, equity incentive awards are subject to vesting over a period of time and are not tied to specific performance measures.
Equity grants have historically been made through stock options under our various plans, including Generex’s 2000 Stock Option Plan, 2001 Stock Option Plan, as amended, and Amended and Restated 2006 Stock Plan, which also allows grants of restricted stock. We consider the costs to the company of granting stock options under Statement of Financial Accounting Standard (SFAS) 123(R) as compared to the costs to named executives of higher income tax liabilities associated with the granting of restricted stock.
In March 2010, the Compensation Committed recommended, and the full Board of Directors approved, the following discretionary awards of options to purchase shares of our common stock:
| Named Executive | No. of Shares Underlying Options | |
| Ms. Gluskin | 500,000 | |
| Ms. Perri | 400,000 | |
| Mr. Fletcher | 300,000 |
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The awards were made pursuant to the 2006 Stock Plan. The stock options have an exercise price equal to the closing trading price of our common stock on the NASDAQ Capital Market on the date of grant ($0.64 per share). The options have a ten-year term, subject to truncation upon cessation of employment as specified in the 2006 Stock Plan. The options becomes exercisable in three installments, with the first installment exercisable as of the date of grant, the second installment exercisable as of August 1, 2010 and the third installment exercisable as of August 1, 2011.
The Compensation Committee recommended these option grants as long-term equity incentives for the purposes of executive retention and motivation to achieve our business objectives and increase shareholder value. In determining the amounts of the stock option awards, the Compensation Committee relied partially on the consultant’s recommendations which indicated that Generex’s equity compensation was below market as compared to the peer companies included in the consultant’s report and partially on the discretion of the Compensation Committee. Stock option awards were made on a roughly proportionate basis to each named executive’s base salary. The value of the options granted to the named executives was approximately 50% to 75% higher than the recommended annual grants in the consultant’s report. The Compensation Committee concluded that larger grants were appropriate because Generex had not granted Mr. Fletcher new stock options since 2005 and had not granted Ms. Gluskin or Ms. Perri new stock options since 2008.
On October 20, 2009, the Compensation Committee recommended and the Board of Directors approved the extension of the term of certain previously granted options to purchase shares of our common stock. The term of such options was extended through October 26, 2014. The terms of options held by the named executive officers were extended as set forth in the table below:
| Named Executive Officer | No. of Shares of Common Stock Underlying Option | Exercise Price per Share | Grant Date | Original Expiration Date | Extended Expiration Date | |||||||||
| Ms. Gluskin | 250,000 | $ | 0.61 | 12/13/04 | 12/12/09 | 10/26/14 | ||||||||
| 1,120,704 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | |||||||||
| Ms. Perri | 250,000 | $ | 0.61 | 12/13/04 | 12/12/09 | 10/26/14 | ||||||||
| 576,752 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | |||||||||
| Mr. Fletcher | 250,000 | $ | 0.61 | 12/13/04 | 12/12/09 | 10/26/14 | ||||||||
| 470,726 | $ | 0.001 | 4/5/05 | 4/5/10 | 10/26/14 | |||||||||
The options set forth in the table above were originally issued pursuant to the Generex Biotechnology Corporation Amended 2001 Stock Option Plan, which permits the amendment of the terms of any previously option issued thereunder. The extension of these options was done in conjunction with an extension of a number of similar employee and director stock options, which were also due to expire shortly after the extension date. As the options had been granted primarily for long term incentive and retention purposes, the Compensation Committee concluded that the extension of these options would continue to provide future benefit to the company in terms of incentive and retention, as well as the achievement of corporate goals. The stock option expense cost to the company was less to extend these options, than to cancel and issue new options. The stock options granted to the named executives on April 5, 2005 with an exercise price of $0.001per share had been granted at that time in lieu of cash payments. The Compensation Committee recommended extension of the options granted on April 5, 2005 at the same time as the extension of the “at market” stock options for the named executives, directors and employees.
Benefits and Perquisites
Named executives may participate in benefit plans that are offered generally to salaried employees such as short and long term disability, health and welfare benefits, and paid time off.
We provide very limited perquisites. During fiscal 2010, we provided our President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer a car allowance with an estimated value of $800 per month to compensate use of their cars for business purposes.
We do not offer: deferred compensation plans, defined benefit plans, supplemental executive retirement plans, supplemental life insurance, benefit restoration plans, or tax gross-ups on change-in-control benefits.
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 the duties, responsibilities and performance of Ms. Gluskin and Ms. Perri’s during those 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 ($0.95) on the NASDAQ Capital Market for the 20 successive trading days immediately preceding, but not including, December 9, 2005. No interest or other earnings were accrued on these amounts. During fiscal 2010, Ms. Gluskin and Ms. Perri elected to receive payment in cash for the outstanding balances payable as of July 31, 2009 in the amounts of $911,433 and $584,172, respectively. These amounts were paid in cash as the Company had sufficient funds to pay out these amounts and the amounts did not meet the criteria above for payment in shares.
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Employment and Severance Agreements
During fiscal 2010, we had terms of employment covering our named executives as described in “Employment Agreements and Potential Payments Upon Termination or Change-In-Control” clarifying terms and conditions of their employment. These terms provide clarity concerning the employment relationship and provide a competitive benefit level to executives, thus promoting stability among the executive team.
We have agreed to provide severance benefits to the named executives as set forth in the terms of their employment. The intent of such severance is to provide the named executives with financial security in the event of a covered termination (including change in control) and to thus support executive retention. To be eligible for certain benefits, including cash payments, under these arrangements, a named executive must experience a covered termination, which may include a change in control, a material reduction in executive compensation, a material change in duties, or a material breach in the agreement by Generex, The benefits payable to our named executives upon a change in control of Generex require two conditions, or “double triggers,” to be satisfied: the change in control must occur, and the named executive’s employment must be terminated, voluntarily or involuntarily, as a result of such event. Under the terms of employment, our President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer would receive cash and stock in the event of a change in control only if each terminated her employment with Generex upon thirty days notice in connection with such event. Under the terms of his employment arrangement, Mr. Fletcher will receive a benefit upon a change in control only if he terminates his employment in connection with such event.
As of the end of fiscal 2010, each of the named executive officers held stock options or restricted stock granted pursuant to the 2001 Stock Option Plan and the 2006 Stock Plan. The 2001 Plan provides that outstanding options will become immediately exercisable and vested upon a change in control, unless the Board of Directors or its designee determines otherwise. In the event that Generex will not be the surviving corporation, the Board or its designee has flexibility under the 2001 Plan to determine how to treat stock options. The 2001 Plan does not condition the acceleration and vesting of stock options in such an event upon an option holder’s termination of employment; however, the terms of the 2001 Plan provide that, unless otherwise provided by the Board or its designee, an option holder can exercise outstanding options after the date of his or her termination of employment only if the option holder voluntarily terminated employment with Generex or was terminated without cause by Generex. Under the terms of the 2006 Plan, unvested stock options and restricted stock will become exercisable or unrestricted, as applicable, thirty days prior to the change-in-control event and such acceleration is not conditioned upon the termination of a participant’s employment with Generex. The 2006 Plan further provides that if Generex is not the surviving corporation as a result of a change in control, all outstanding options that are not exercised will be assumed by, or replaced with comparable options or rights by, the surviving corporation, and outstanding grants of restricted stock will be converted to similar grants of equity in the surviving corporation.
Tax and Accounting Considerations
The Compensation Committee considers implications of tax and accounting requirements impacting compensation programs from the perspective of the company and the individual named executive officers. The Compensation Committee may also consider sections of the tax code which impact Generex or individual taxpayers. For U.S. taxpayers, the Committee structures its programs to comply with Section 409A of the Internal Revenue Code.
The extension of expiry dates of the named executive stock options in October 2009, as described above, resulted in a one-time charge to earnings in the amount of $358,257 in the first quarter of fiscal 2010. There was a total charge to earnings in this quarter of $875,773 relating to stock option expiry date modifications, of which the balance related to employee, director and consultant options. As the Company is currently in a significant tax loss position, there were no material impacts to the Company’s income taxes due to these option modifications.
Given the high individual income tax liabilities which result from the awarding of restricted stock to our executives whom are all tax residents of Canada, the Compensation Committee expects to grant future equity awards in the form of stock options for the foreseeable future.
Compensation Committee Report
The Compensation Committee of Generex Biotechnology Corporation has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Generex’s Annual Report on Form 10-K for the year ended July 31, 2010 and in Generex’s 2011 Proxy Statement.
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THE COMPENSATION COMMITTEE
John P. Barratt, Chairman
Nola E. Masterson
Brian T. McGee
Executive Compensation Tables
The following executive compensation tables pertain to the fiscal year ended July 31, 2010. Therefore, the tables contain information relating to the named executives who served as of the fiscal year end and refer to the positions held by such named executives as of July 31, 2010. On September 29, 2010, the Board of Directors terminated Mrs. Gluskin in her employment as President and Chief Executive and appointed Mark A. Fletcher as interim President and Chief Executive Officer and Secretary. On that date, the Board also appointed John P. Barratt as Chairman of the Board.
Summary Compensation Table
The following table provides information concerning compensation of Generex’s named executives for Generex’s last three completed fiscal years ending July 31, 2008, 2009 and 2010. In respect of fiscal years 2008, 2009 and 2010, the named executives did not receive compensation in the form of non-equity incentive plan compensation or changes in pension value or non-qualified deferred compensation earnings. Therefore, the table below does not include columns for these types of compensation.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
| Anna E. Gluskin | 2010 | $ | 525,000 | 0 | 0 | $ | 324,468 | (4) | $ | 27,846 | (6) | $ | 877,314 | |||||||||||||
| President and | 2009 | $ | 525,000 | 0 | $ | 37,750 | (3) | $ | 9,219 | (4) | $ | 23,991 | (6) | $ | 595,960 | |||||||||||
| Chief Executive Officer | 2008 | $ | 514,583 | (1) | $ | 215,000 | (2) | $ | 113,250 | (3) | $ | 17,516 | (4) | $ | 288,775 | (5),(6) | $ | 1,149,124 | ||||||||
| Rose C. Perri | 2010 | $ | 420,000 | 0 | 0 | $ | 284,739 | (4) | $ | 27,846 | (6) | $ | 732,585 | |||||||||||||
| Chief Operating Officer, | 2009 | $ | 420,000 | 0 | $ | 33,031 | (3) | $ | 24,583 | (4) | $ | 23,991 | (6) | $ | 501,605 | |||||||||||
| Chief Financial Officer, Treasurer and Secretary | 2008 | $ | 411,667 | (7) | $ | 165,000 | (2) | $ | 99,094 | (3) | $ | 41,484 | (4) | $ | 256,083 | (5),(6) | $ | 973,328 | ||||||||
| Mark A. Fletcher | 2010 | $ | 320,833 | (8) | $ | 225,000 | 0 | $ | 233,970 | (4) | 0 | $ | 779,803 | |||||||||||||
| Executive Vice President | 2009 | $ | 315,000 | 0 | $ | 18,875 | (3) | 0 | 0 | $ | 333,875 | |||||||||||||||
| And General Counsel | 2008 | $ | 308,750 | (9) | $ | 125,000 | (2) | $ | 56,625 | (3) | $ | 0 | $ | 228,846 | (5) | $ | 719,221 | |||||||||
*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 average Canadian/U.S. dollar exchange rate for the years ended July 31, 2010, July 31, 2009 and July 31, 2008.
(1) This amount reflects the base salary of $500,000 earned by the named executive up until December 31, 2008 and a salary increase to $525,000 effective retroactively to January 1, 2009, as approved by the Board on May 6, 2008.
(2) On May 6, 2008, the Board awarded this discretionary bonus to Ms. Gluskin, Ms. Perri and Mr. Fletcher in respect of fiscal 2007. Due to the timing of the Board’s decision, this bonus is reported as compensation received in fiscal 2008.
(3) This amount represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with respect to the fiscal years ended July 31, 2010, 2009 and 2008 for restricted stock awards granted in August 2007, a portion of which was in respect of fiscal 2007 and was immediately vested. The fair value is calculated using the closing price of Generex stock on the date of grant. For additional information, refer to Note 15 to our Consolidated Financial Statements included in the Form 10-K for the year ended July 31, 2010 as filed with the SEC. This amount reflects our accounting expense for these awards, and does not correspond to the actual value that will be recognized by the named executives.
(4) This amount reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for option awards granted in May 2008 and March 2010. Such awards were made pursuant to the 2006 Stock Plan. Specifically, amounts reflected in this column relate to options to purchase shares of common stock granted to Ms. Gluskin (50,000 shares) and Ms. Perri (125,000 shares) on May 27, 2008 and options to purchase shares of common stock granted to Ms. Gluskin (500,000 shares), Ms. Perri (400,000 shares) and Mr. Fletcher (300,000 shares) on March 8, 2010. The options vest incrementally over two years. The total fair values of the respective option grants are being expensed over the two-year vesting periods for the options. We utilize a closed-form model (Black-Scholes) to estimate the fair value of stock option grants on the date of grant. Assumptions used in the calculation of these amounts are as follows: risk-free interest rate of 0.12%, expected dividend yield of 0.0%, 10 year expected life of options and expected volatility rate of 105.7%. Also included in this column is the incremental fair value, computed as of October 20, 2009 in accordance with FASB ASC Topic 718, with respect to the modified options. While these amounts reflect the aggregate grant date fair value computed in accordance with ASC Topic 718, they may not correspond to the actual value that will be recognized by the option holders. See Grants of Plan-Based Awards in Fiscal 2010 for a list of the options for which the expiration dates were extended.
(5) This amount includes cash payments to each of the following named executives: Ms. Gluskin - $261,538 (CAD $281,101), Ms. Perri - $228,846 (CAD $245,963) and Mr. Fletcher - $228,846 (CAD $245,963). On May 6, 2008, the Board approved such payments to these named executives to compensate them for income tax liabilities incurred in respect of the restricted stock awards granted in August 2007. These amounts were converted at the exchange rate of US $1.00 to CAD $1.0748, which represented the market exchange rate on the date of the grant.
(6) Represent 50% of the management fee paid to the property management company that manages all of our real estate properties and is owned by Ms. Perri, Ms. Gluskin and the estate of Mark Perri, our former Chairman of the Board. In addition, Ms. Gluskin and Ms. Perri each received a car allowance with an estimated value of $800 per month to compensate use of their cars for business purposes, but such amounts have not been included in this column as the total value of such perquisites is less than $10,000 per named executive for fiscal year 2010, 2009 and 2008..
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(7) This amount reflects the base salary of $400,000 earned by the named executive up until December 31, 2008 and a salary increase to $420,000 effective retroactively to January 1, 2009, as approved by the Board on May 6, 2008.
(8) This amount reflects a base salary of $315,000 earned by the named executive up until December 31, 2010 and a salary increase to $325,000 effective retroactively to January 1, 2010, as approved by the Board on March 8, 2010.
(9) This amount reflects a base salary of $300,000 earned by the named executive up until December 31, 2008 and a salary increase to $315,000 effective retroactively to January 1, 2009, as approved by the Board on May 6, 2008.
Grants of Plan-Based Awards in Fiscal 2010
The following table provides information about equity awards granted to the named executives or modified in the fiscal year ended July 31, 2010, including: (1) the grant date; (2) the number of shares underlying stock options awarded to the named executives, (3) the number of shares underlying existing stock options the terms of which were extended, (4) the exercise price of the stock options awarded or extended, and (5) the grant date fair value of each equity award computed under SFAS 123R.
| Name | Grant Date | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | ||||||||||
| Anna E. Gluskin | 12/13/2004 (1) | 250,000 | $ | 0.61 | (2) | $ | 0.41 | (3) | ||||||
| President and | 4/5/2005 (4) | 819,672 | (5) | $ | 0.001 | $ | 0 | (3) | ||||||
| Chief Executive Officer | 4/5/2005 (4) | 301,032 | (6) | $ | 0.001 | $ | 0 | (3) | ||||||
| 03/08/2010 | 500,000 | (7) | $ | 0.64 | (8) | $ | 0.58 | (9) | ||||||
| Rose C. Perri | 12/13/2004 (1) | 250,000 | $ | 0.61 | (2) | $ | 0.41 | (3) | ||||||
| Chief Operating Officer, Chief | 4/5/2005 (4) | 409,836 | (10) | $ | 0.001 | $ | 0 | (3) | ||||||
| Financial Officer, Treasurer & | 4/5/2005 (4) | 166,916 | (11) | $ | 0.001 | $ | 0 | (3) | ||||||
| Secretary | 03/08/2010 | 400,000 | (7) | $ | 0.64 | (8) | $ | 0.58 | (9) | |||||
| Mark A. Fletcher | 12/13/2004 (1) | 250,000 | $ | 0.61 | (2) | $ | 0.41 | (3) | ||||||
| Executive Vice President | 4/5/2005 (4) | 327,869 | (12) | $ | 0.001 | $ | 0 | (3) | ||||||
| and General Counsel | 4/5/2005 (4) | 142,857 | (13) | $ | 0.001 | $ | 0 | (3) | ||||||
| 03/08/2010 | 300,000 | (7) | $ | 0.64 | (8) | $ | 0.58 | (9) | ||||||
(1) On October 20, 2009, the Board of Directors approved the extension of the exercise periods for such stock options. By their original terms, the options were due to expire on December 12, 2009. The Board of Directors approved the extension of the exercise periods for the options through October 26, 2014.
(2) The options have an exercise price of $0.61 which is equal to the closing trading price of our common stock on December 13, 2004, the date of grant.
(3) This column shows the incremental fair value of the stock options following the extension of the exercise period computed as of the modification date in accordance with SFAS 123R.
(4) On October 20, 2009, the Board of Directors approved the extension of the exercise periods for such stock options. By their original terms, the options were due to expire on April 5, 2010. The Board of Directors approved the extension of the exercise periods for the options through October 26, 2014.
(5) The options to purchase 819,672 shares were granted to Ms. Gluskin representing a bonus of $500,000 awarded on April 5, 2005 with the number of shares calculated using the closing price of the common stock on The NASDAQ Capital Market on December 13, 2004 ($0.61 per share).
(6) The options to purchase 301,032 shares were issued to Ms. Gluskin on April 5, 2005 in satisfaction of retroactive salary adjustment as of August 1, 2004 and unpaid salary amounts accrued through March 31, 2005 ($168,578), with the number of shares calculated using the closing price of the common stock on the NASDAQ Capital Market on April 4, 2005 ($0.56 per share).
(7) The options were granted on March 8, 2010 pursuant to the terms of our 2006 Stock Plan. The options vest as follows: 1/3 of the options are exercisable on the date of grant; 1/3 of the options become exercisable on August 1, 2010, and 1/3 of the options become exercisable on August 1, 2011.
(8) The options have an exercise price equal to the official closing price of our common stock on the NASDAQ Capital Market on the date of grant ($0.64 per share).
(9) This column shows fair value of the options calculated using the Black Scholes value on the grant date of $0.58. See note 4 of the Summary Compensation Table for a discussion of fair value calculation related to the options and the valuation assumptions made with respect to the options.
(10) The options to purchase 409,836 shares were granted to Ms. Perri representing a bonus of $250,000 awarded on April 5, 2005, with the number of shares calculated using the closing price of the common stock on The NASDAQ Capital Market on December 13, 2004 ($0.61 per share).
(11) The options to purchase 166,916 shares were issued to Ms. Perri on April 5, 2005 in satisfaction of retroactive salary adjustment as of August 1, 2004 and unpaid salary amounts accrued through March 31, 2005 ($93,473), with the number of shares calculated using the closing price of the common stock on the NASDAQ Capital Market on April 4, 2005 ($0.56 per share).
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(12) The options to purchase 327,869 shares were granted to Mr. Fletcher representing a bonus of $200,000 awarded on April 5, 2005, with the number of shares awarded calculated using the closing price of the common stock on The NASDAQ Capital Market on December 13, 2004 ($0.61 per share).
(13) The options to purchase 142,857 shares were issued to Mr. Fletcher on April 5, 2005 in satisfaction of retroactive salary adjustment as of August 1, 2004 and unpaid salary amounts accrued through March 31, 2005 ($80,000), with the number of shares calculated using the closing price of the common stock on the NASDAQ Capital Market on April 4, 2005 ($0.56 per share).
Compensation Elements; Employment Agreements and Agreements Providing Payments Upon Retirement, Termination or Change in Control for Named Executives
Historically, the key components of our executive compensation have been base salary, cash bonuses, and equity incentives, including stock bonuses, restricted stock, and stock options awarded at the discretion of our Compensation Committee and Board of Directors. As a development stage company, we have reviewed compensation of our executive management team from time to time and at the discretion of the Compensation Committee when warranted by our financial condition and achievement of our business goals.
Set forth below are the material terms of employment for each of the named executives as of the end of fiscal 2010. The terms of employment provide for certain payments upon retirement, termination or change in control. Such benefits are in addition to benefits available generally to salaried employees who joined the company prior to 2010, such as distributions under the 401(k) savings plan, disability and death benefits and accrued vacation pay.
Terms of Employment for Ms. Gluskin and Ms. Perri
On December 9, 2005, upon the recommendation of a majority of the members of the Compensation Committee, the Board of Directors approved the terms and conditions of employment for Ms. Gluskin as President and Chief Executive Officer and Ms. Perri as Chief Financial Officer and Chief Operating Officer. Prior to such date, Ms. Gluskin and Ms. Perri served in such capacities without formal employment terms. The terms of employment with Ms. Gluskin and Ms. Perri have not been memorialized in separate written agreements. The material terms of Generex’s employment of each of Ms. Gluskin and Ms. Perri are identical except as otherwise noted and are as follows:
| · | Each named executive’s employment is effective as of January 1, 2006. The initial term of employment is five years, subject to the termination provisions described below. Generex or either 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 employment will extend indefinitely and will be terminable upon not less than six months’ prior written notice. |
| · | The named 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 employment and reimbursement of all reasonable expenses incurred by her in connection with Generex’s business. |
| · | The named executive will be included on any management slate of nominees submitted to Generex’s stockholders for election to the Board of Directors. |
| · | Standard employee confidentiality, non-competition and non-solicitation covenants will apply. |
| · | Each named executive is entitled to receive an annual base salary under the terms of her respective employment with Generex, which salary may not be reduced during the term of such employment. |
| · | Each named executive’s employment may be terminated: |
| (a) | by Generex for cause (without any additional payment to the named executive); |
| (b) | automatically upon expiration of the term; |
| (c) | automatically upon the named executive’s death or disability; or |
| (d) | by the named 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 the named executive’s remuneration, |
| (iii) | a material breach of the terms of employment 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 the named executive an amount equal to the greater of:
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| (x) | an amount equal to five times the named 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 volume weighted average price as of the close of business on the date of termination. |
In addition, in such a termination event, the named 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.
Terms of Employment for Mr. Fletcher
On March 17, 2003, our Board of Directors approved the terms and conditions of Mr. Fletcher’s employment, prior to his joining Generex on or about April 21, 2003. Pursuant to the terms of his employment, Mr. Fletcher holds the position of Executive Vice President and General Counsel. Subject to termination in accordance with the terms and conditions of his employment, Mr. Fletcher's term of service extends through March 16, 2008, which term has not been formally extended to date. Mr. Fletcher is entitled to receive annual base compensation and may receive additional cash bonuses at the discretion of the Board of Directors.
On September 29, 2010, Generex and Mr. Fletcher agreed to amend the terms of Mr. Fletcher’s employment to provide that the replacement of Ms. Gluskin as a director or Chief Executive Officer will not constitute a “change of control” and to provide for an increase in Mr. Fletcher’s base salary (to $475,000) upon his appointment as interim Chief Executive Officer. Under the terms of his employment with Generex, Mr. Fletcher is entitled to receive annual base compensation and may receive additional cash bonuses at the discretion of the Board.
The terms of his employment provide that Mr. Fletcher will be bound by standard restrictive covenants prohibiting him from disclosing confidential information about Generex. Either party may give at least 12 months’ notice of non-renewal of the term; if such notice is not given, the term of employment will be indefinite.
Generex may terminate its obligations with respect to Mr. Fletcher’s employment as follows:
| (i) | upon 30 days written notice; |
| (ii) | for “cause”; |
| (iii) | in the event of Mr. Fletcher’s disability; |
| (iv) | in the event of Mr. Fletcher’s death; or |
| (v) | in the event of Mr. Fletcher voluntarily resigning. |
Mr. Fletcher may terminate his obligations upon 30 days written notice upon:
| (a) | a material change in his duties, |
| (b) | a material reduction in compensation, |
| (c) | a material breach or default by Generex, or |
| (d) | a change in control of Generex. |
In the event that Mr. Fletcher terminates his employment voluntarily (and not under the circumstances described in (a), (b), (c) or (d) above) or Generex terminates his employment under the circumstances described in (ii), (iii), (iv) or (v) above, Mr. Fletcher will be entitled only to that portion of his base salary due and owing as of his last day worked, less any amounts owed to Generex. Under these circumstances, he will not be entitled to any bonus or incentive compensation.
If Generex terminates Mr. Fletcher’s employment under the circumstance described in (i) above (and not for cause, disability or death) or Mr. Fletcher gives notice of termination pursuant to (a), (b), (c) or (d) above, Mr. Fletcher will be entitled to receive a lump sum severance payment on the termination date in an amount equal to 18 months of base salary plus the average annual bonus paid to him during each fiscal year of the term of his employment and he will be entitled to participate in and receive benefits for 18 months after the termination date. Mr. Fletcher will have 90 days after the eighteenth month anniversary of the termination date to exercise vested options, and all unvested options that he holds will accelerate and fully vest on the termination date. He has no duty to mitigate his damages based on the termination of employment.
Modification of Existing Options
In October 2009, the Board of Directors approved the extension of the exercise periods for certain stock options held by the named executives. By their original terms, these options were due to expire on either December 12, 2009 or April 5, 2010. The Board of Directors approved the extension of the exercise periods for the options through October 26, 2014. The extension of these options was done in conjunction with an extension of a number of similar employee and director stock options which were also due to expire shortly after the extension date. The modified options are identified in the tables under the headings Grants of Plan-Based Awards in Fiscal 2010 and Outstanding Equity Awards at 2010 Fiscal Year-End in this Part III-Item 11 – Executive Compensation.
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Outstanding Equity Awards at 2010 Fiscal Year-End
The following table provides information on the current holdings of stock option by the named executives. This table includes unexercised and unvested option awards as of July 31, 2010. Each equity grant is shown separately for each named executive. The vesting schedule for each outstanding award is set forth in the footnotes to the table. We do not have any current “stock awards” or “equity incentive plans” as defined in Regulation S-K Item 402(a)(6)(iii); thus, the columns relating to stock awards and equity incentive awards are not included in the table below.
| Option Awards | |||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | ||||||||||||||
| Anna E. Gluskin, | 3-8-2010 | 333,333 | (1) | 166,667 | $ | 0.64 | 3-8-2020 | ||||||||||||
| President and Chief | 12-13-2004 | 250,000 | (2) | 0 | $ | 0.61 | 10-26-2014 | ||||||||||||
| Executive Officer | 4-5-2005 | 819,672 | (3) | 0 | $ | 0.001 | 10-26-2014 | ||||||||||||
| 4-5-2005 | 301,032 | (4) | 0 | $ | 0.001 | 10-26-2014 | |||||||||||||
| 5-27-2008 | 50,000 | (5) | 0 | $ | 0.96 | 5-27-2013 | |||||||||||||
| Rose C. Perri, | 3-8-2010 | 266,666 | (1) | 133,334 | $ | 0.64 | 3-8-2020 | ||||||||||||
| Chief Operating Officer, | 12-13-2004 | 250,000 | (2) | 0 | $ | 0.61 | 10-26-2014 | ||||||||||||
| Chief Financial Officer, | 4-5-2005 | 409,836 | (6) | 0 | $ | 0.001 | 10-26-2014 | ||||||||||||
| Treasurer And Secretary | 4-5-2005 | 166,916 | (7) | 0 | $ | 0.001 | 10-26-2014 | ||||||||||||
| 5-27-2008 | 125,000 | (5) | 0 | $ | 0.96 | 5-27-2013 | |||||||||||||
| Mark E. Fletcher, | 3-8-2010 | 200,000 | (1) | 100,000 | $ | 0.64 | 3-8-2020 | ||||||||||||
| Executive Vice | 12-13-2004 | 250,000 | (2) | 0 | $ | 0.61 | 10-26-2014 | ||||||||||||
| President | 4-5-2005 | 327,869 | (8) | 0 | $ | 0.001 | 10-26-2014 | ||||||||||||
| and General Counsel | 4-5-2005 | 142,857 | (9) | 0 | $ | 0.001 | 10-26-2014 | ||||||||||||
(1)These options were granted on March 8, 2010. The grants were made pursuant to the terms of our 2006 Stock Plan. The exercise price per share is equal to the closing price of Generex common stock on March 8, 2010. The options vest as follows: 33% of the options are exercisable on the date of grant; 33% of the options become exercisable on August 1, 2010, and the remaining 33% of the options become exercisable on August 1, 2011.
(2) These stock options were approved by the Board of Directors on April 5, 2005 with an effective grant date of December 13, 2004. The exercise price per share is equal to the closing price of Generex common stock on December 13, 2004. These options were exercisable immediately upon their grant. The fair value of Generex common stock on April 5, 2005 was $0.56 per share.
(3) These options were granted to Ms. Gluskin representing a bonus of $500,000 awarded to Ms. Gluskin on April 5, 2005. 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). The options were immediately exercisable on the date of grant. They were issued under the 2001 Plan. The fair value of Generex common stock on April 5, 2005 was $0.56 per share.
(4) These options were issued to Ms. Gluskin on April 5, 2005 in satisfaction of retroactive salary adjustment as of August 1, 2004 and unpaid salary amounts accrued through March 31, 2005 ($168,578). 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). The options were immediately exercisable on the date of grant and were issued under the 2001 Plan.
(5) These options were granted on May 27, 2008. The grants were made pursuant to the terms of our 2006 Stock Plan. The options vest as follows: 50% of the options are exercisable on the date of grant; 25% of the options become exercisable on the first anniversary of the date of grant, and the remaining 25% of the options become exercisable on the second anniversary of the date of grant.
(6) These options were granted to Ms. Perri representing a bonus of $250,000 awarded to Ms. Perri on April 5, 2005. 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). The options were immediately exercisable on the date of grant. They were issued under the 2001 Plan.
(7) These options were issued to Ms. Perri on April 5, 2005 in satisfaction of retroactive salary adjustment as of August 1, 2004 and unpaid salary amounts accrued through March 31, 2005 ($93,473). 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). The options were immediately exercisable on the date of grant and were issued under the 2001 Plan.
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(8) These options were granted to Mr. Fletcher representing a bonus of $200,000 awarded to Mr. Fletcher on April 5, 2005. 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). The options were immediately exercisable on the date of grant. They were issued under the 2001 Plan. The fair value of Generex common stock on April 5, 2005 was $0.56 per share.
(9) These options were issued to Mr. Fletcher on April 5, 2005 in satisfaction of retroactive salary adjustment as of August 1, 2004 and unpaid salary amounts accrued through March 31, 2005 ($80,000). The number of shares was calculated using the closing price of the common stock on the NASDAQ Capital Market on April 4, 2005 ($0.56 per share). The options were immediately exercisable on the date of grant and were issued under the 2001 Plan.
Option Exercises and Stock Vested in Fiscal Year 2010
The following table sets forth the number of shares acquired and the value realized upon the vesting of restricted stock awards during fiscal year 2010 for each of the named executive officers. None of the named executive officers exercised any outstanding options in fiscal year 2010.
| Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | ||||||
| Anna E. Gluskin, President and Chief Executive Officer | 50,000 | $ | 29,000 | |||||
| Rose C. Perri, Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary | 43,750 | $ | 25,375 | |||||
| Mark E. Fletcher, Executive Vice President and General Counsel | 25,000 | $ | 14,500 | |||||
| (1) | Value realized on vesting is based on the fair market value of our common stock on the date of vesting and does not necessarily reflect proceeds actually received by the named executive. |
Nonqualified Deferred Compensation
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 ($0.95) on the NASDAQ Capital Market for the 20 successive trading days immediately preceding, but not including, December 9, 2005. No interest or other earnings were accrued on this deferred compensation. In fiscal 2010, the outstanding balances owed to Ms. Gluskin and Ms. Perri, which were $911,433 and $584,172, respectively, as of the previous fiscal year end, July 31, 2009 were fully paid out in cash.
Other Benefit Plans
We have no defined benefit or actuarial pension plans.
Potential Payments Upon Termination or Change-in-Control
The following table shows potential payments to our named executives under existing employment agreements, plans or arrangements, whether written or unwritten, for various scenarios involving termination of employment or a change in control, assuming termination on July 31, 2010 and, if applicable, based upon the closing stock price of Generex common stock on that date. These benefits are in addition to benefits available generally to salaried employees who joined the company prior to 2010, such as distributions under the 401(k) savings plan, disability and death benefits and accrued vacation pay.
The following table provides the intrinsic value (that is, the value based upon Generex’s stock price, and in the case of options minus the exercise price) of equity awards that would become exercisable or vested if the named executive had died or become disabled or been terminated as of July 31, 2010.
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The terms of employment for Ms. Gluskin, Ms. Perri and Mr. Fletcher do not provide specific definitions for the various termination events. For the purposes of the table, below are the standard definitions for certain termination events as defined in the Amended Generex 2001 Stock Option Plan, which we refer to as the “2001 Plan,” and the Amended and Restated 2006 Stock Plan, which refer to as the “2006 Plan.”
"Cause" means that a named executive has:
| (i) | breached his or her employment or service contract with Generex; |
| (ii) | engaged in disloyalty to Generex, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service; |
| (iii) | disclosed trade secrets or confidential information of Generex to persons not entitled to receive such information; |
| (iv) | breached any written confidentiality, non-competition or non-solicitation agreement between the named executive and Generex; or |
| (v) | has engaged in such other behavior detrimental to the interests of Generex as determined by the Compensation Committee. |
“Change in Control” means any of the following:
| (i) | a liquidation or dissolution of Generex, |
| (ii) | a sale of all or substantially all of Generex’s assets, |
| (iii) | a merger in which Generex’s stockholders hold less than a majority of the voting stock in the surviving corporation, or |
| (iv) | when a person or group acquires control of a significant percentage of the voting stock without the approval of the Board of Directors (20% under the 2001 Plan and 50% or more under the 2006 Plan). |
“Disability" means being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
Potential Payments Upon Termination or Change in Control for Named Executives as of July 31, 2010
| Name | Benefit | Cause | Without Cause/Non- Renewal | Voluntary Termination by Executive | Breach by Generex (1) | Change in Control | Disability | Death | |||||||||||||||||||||||
| Anna E. Gluskin | Cash Payment | (2) | $ | 0 | $ | 3,000,000 | $ | 0 | $ | 3,000,000 | $ | 3,000,000 | $ | 0 | (15) | $ | 0 | (12) | |||||||||||||
Stock | (3) | $ | 0 | $ | 2,000,000 | $ | 0 | $ | 2,000,000 | $ | 2,000,000 | $ | 0 | $ | 0 | ||||||||||||||||
| Stock Options | $ | 447,161 | (4) | $ | 447,161 | (5) | $ | 447,161 | (5) | $ | 447,161 | (5) | $ | 447,161 | (9) | $ | 447,161 | (6) | $ | 447,161 | (7) | ||||||||||
Restricted Stock | (13) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Benefits | $ | 0 | $ | 0 | (8) | $ | 0 | (8) | $ | 0 | (8) | $ | 0 | (8) | $ | 0 | $ | 0 | |||||||||||||
| Total | $ | 447,161 | $ | 5,447,161 | $ | 447,161 | $ | 5,447,161 | $ | 5,447,161 | $ | 447,161 | $ | 447,161 | |||||||||||||||||
| Rose C. Perri | Cash Payment | (2) | $ | 0 | $ | 3,000,000 | $ | 0 | $ | 3,000,000 | $ | 3,000,000 | (15) | (12) | |||||||||||||||||
Stock | (3) | $ | 0 | $ | 2,000,000 | $ | 0 | $ | 2,000,000 | $ | 2,000,000 | $ | 0 | $ | 0 | ||||||||||||||||
| Stock Options | $ | 210,174 | (4) | $ | 210,174 | (5) | $ | 210,174 | (5) | $ | 210,174 | (5) | $ | 210,174 | (9) | $ | 210,174 | (6) | $ | 210,174 | (7) | ||||||||||
Restricted Stock | (13) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Benefits | $ | 0 | $ | 0 | (8) | $ | 0 | (8) | $ | 0 | (8) | $ | 0 | (8) | $ | 0 | $ | 0 | |||||||||||||
| Total | $ | 210,174 | $ | 5,210,174 | $ | 210,174 | $ | 5,210,174 | $ | 5,210,174 | $ | 210,174 | $ | 210,174 | |||||||||||||||||
| Mark A. Fletcher | Cash Payment | $ | 0 | $ | 756,767 | (10) | $ | 0 | $ | 756,767 | (10) | $ | 756,767 | (10) | (15) | (1) | |||||||||||||||
| Stock | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||
| Stock Options | $ | 187,820 | (4) | $ | 187,820 | (5),(11) | $ | 187,820 | (5) | $ | 187,820 | (5),(11) | $ | 187,820 | (9) | $ | 187,820 | (6) | $ | 187,820 | (7) | ||||||||||
Restricted Stock | (13) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Benefits | $ | 0 | $ | 0 | (8),(10) | $ | 0 | (8) | $ | 0 | (8),(10) | $ | 0 | (8),(10) | $ | 0 | $ | 0 | |||||||||||||
| Total | $ | 187,820 | $ | 944,587 | $ | 187,820 | $ | 944,587 | $ | 944,587 | $ | 187,820 | $ | 187,820 | |||||||||||||||||
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| (1) | This termination event includes a material change in duties or material reduction in remuneration of such named executive. |
| (2) | This amount would be payable upon the date of termination in a lump sum. |
| (3) | This amount would be payable in shares of Generex common stock based upon the 20-day volume weighted average price ($0.82) as of the close of business on the date of termination. Such shares would be issuable within three business days of the date of termination. |
| (4) | The options granted on April 5, 2005 (including those effective as of December 13, 2004) survive termination of the named executive’s employment. Other options granted to the named executive pursuant to the 2001 Plan and any options granted pursuant to the 2006 Plan would terminate immediately - and shares underlying such options forfeited - upon the named executive’s termination for cause. |
| (5) | The 2001 and 2006 Plans permit a named executive who voluntarily terminates employment with Generex or whose employment is terminated without cause to exercise vested options outstanding at the date of termination for a period of up to 90 days thereafter or the expiration date of the option, whichever is earlier. |
| (6) | The 2001 and 2006 Plans permit a named executive to exercise vested options outstanding at the time of the named executive’s cessation of employment due to disability for a period of up to one year thereafter or the expiration of the option, whichever is earlier. |
| (7) | The 2001 and 2006 Plans permit a named executive’s beneficiary to exercise vested options outstanding at the time of the named executive’s death for a period of up to one year after death or the expiration date of the option, whichever is earlier. |
| (8) | The named executive would be entitled to receive health benefits for a period of 12 months after termination of employment. Since these benefits are widely available to salaried employees of Generex, they are excluded from the table above. The total aggregate value of these benefits in each case is below $5,000. |
| (9) | Upon a change of control, the 2001 and 2006 Plan provide for the acceleration of exercisability and vesting of any outstanding options and removal of all restrictions and conditions on outstanding restricted stock awards, unless otherwise determined by the Board of Directors or its designee. We have assumed for purposes of this column that the named executive will exercise all of his/her fully exercisable and vested options and will receive all shares underlying restricted stock awards in connection with a change of control of Generex, which we have assumed occurred on July 31, 2010. |
| (10) | Pursuant to his employment arrangement, if Generex terminates Mr. Fletcher’s employment upon written notice (and not for cause, disability or death) or Mr. Fletcher gives notice of termination pursuant to a material change in duties, reduction of remuneration, material default or breach by Generex or change in control of Generex, Mr. Fletcher will be entitled to receive a lump sum severance payment on the termination date in an amount equal to 18 months of base salary plus the average annual bonus paid to him during each fiscal year of the term of his employment and he will be entitled to participate in and receive benefits for 18 months after the termination date. |
| (11) | Pursuant to the terms of his employment with Generex, if Generex terminates Mr. Fletcher’s employment upon written notice (and not for cause, disability or death) or Mr. Fletcher gives notice of termination pursuant to a material change in duties, reduction of remuneration, material default or breach by Generex or change in control of Generex, Mr. Fletcher will have 90 days after the eighteenth month anniversary of the termination date to exercise vested options. |
| (12) | Each named executive is entitled to receive monthly disability payments and his/her survivor(s) are entitled to receive a lump sum payment upon such named executive’s death, in either case up to an amount equal to his/her annual base salary or $100,000, whichever is less. Insurance premiums are paid by Generex and such insurance coverage is widely available to all salaried employees at Generex. Thus, the amounts payable upon the disability or death of the named executive (as well as the premiums paid by Generex) are excluded from the table above. |
| (13) | The restricted stock award agreement with the named executive officers provides that in the event the named executive ceases to be employed by, or provide service to, us, any unvested shares of restricted stock will be immediately forfeited. |
Non-Employee Directors' Compensation
In fiscal 2010, our policy for compensation of non-employee directors was as follows.
| · | Nonemployee directors receive an annual cash base retainer. Each nonemployee director serving on the Board of Directors as of May 27, 2008 is entitled to an annual cash retainer of $40,000. Each new nonemployee directors will initially receive a cash retainer of $20,000, increasing to $30,000 for the second year, and $40,000 thereafter. |
| · | At the discretion of the full Board of Directors, nonemployee directors may receive stock options to purchase shares of our common stock or shares of restricted stock each fiscal year. The number and terms of such options or shares is within the discretion of the full Board of Directors. |
| · | Nonemployee directors serving on committees of the Board of Directors receive additional cash compensation as follows: |
| Committee | Chairperson | Member | ||||||
| Audit Committee | $ | 15,000 | $ | 5,000 | ||||
| Compensation Committee | $ | 15,000 | $ | 5,000 | ||||
| Governance & Nominating Committee | $ | 5,000 | $ | 2,000 | ||||
Directors who are officers or employees of Generex do not receive separate consideration for their service on the Board of Directors. The compensation received by Ms. Gluskin and Ms. Perri as employees of Generex is show in the Summary Compensation Table above.
In October 2009, the Board of Directors approved the extension of the exercise periods for certain stock options held by Messrs. Barratt and McGee. By their original terms, these options were due to expire on either October 26, 2009 or April 5, 2010. The Board of Directors approved the extension of the exercise periods for the options through October 26, 2014. The extension of these options was done in conjunction with an extension of a number of similar employee and executive options which were also due to expire shortly after the extension date. As the options had been granted for long-term incentive and retention purposes, the Board of Directors concluded that the extension of these options would continue to provide future benefit to the company in terms of incentive and retention. The modified options are identified in footnote (3) of the Fiscal Year 2010 Director Compensation Table below.
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Fiscal Year 2010 Director Compensation Table
| Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards (3) | All Other Compensation | Total | |||||||||||||||
| John P. Barratt | $ | 65,000 | $ | 0 | $ | 97,995 | $ | 0 | $ | 162,995 | ||||||||||
| Brian T. McGee | $ | 65,000 | $ | 0 | $ | 97,995 | $ | 0 | $ | 162,995 | ||||||||||
| Nola E. Masterson | $ | 55,000 | $ | 0 | $ | 43,850 | $ | 0 | $ | 98,850 | ||||||||||
(1) Includes the annual retainer and additional fees for directors who chair a Board committee or who serve on a Board committee.
(2) There were no restricted stock awards to directors in fiscal year 2010. As of July 31, 2010, the aggregate number of shares underlying stock awards previously granted to each non-employee director was as follows: Mr. Barratt (150,000), Ms. Masterson (100,000) and Mr. McGee (150,000).
(3) Includes the grant date fair value for options to purchase 100,000 shares of common stock granted to each director on March 8, 2010, calculated in accordance with FASB ASC Topic 718. For fiscal 2010, assumptions used to calculate these amounts are set forth in Note 15 of the Notes to Consolidated Financial Statements included in Item 8 – Financial Statements and Supplementary Data of the Form 10-K. The grant date fair value for these options is based on the Black-Scholes model valuation of $0.58 per share. The following assumptions were used in the calculation: expected term of 10 years; a risk-free interest rate of 0.12%; and expected price volatility of 105.7%. The options granted on March 8, 2010 vest as follows: 1/3 of the options are exercisable on the date of grant; 1/3 of the options become exercisable on August 1, 2010, and 1/3 of the options become exercisable on August 1, 2011
Also includes the incremental fair value computed as of the modification date in accordance with FASB ASC Topic 718 for certain outstanding options held by each of Messrs. Barratt and McGee the exercise periods of which were extended through October 26, 2014 by the Board of Directors on October 20, 2009:
No. of Shares of Common Stock Underlying Option | Exercise Price per Share | Grant Date | Original Expiration Date | Incremental Fair Value as of 10/26/09 | |||||||
| 70,000 | $ | 0.94 | 10/26/04 | 10/26/09 | $ | 0.43 | |||||
| 35,714 | $ | 0.001 | 4/5/05 | 4/4/10 | $ | 0 | |||||
| 100,000 | $ | 0.56 | 4/5/05 | 4/4/10 | $ | 0.24 | |||||
At fiscal year end, the total number of stock options held by each non-employee director was as follows: : Mr. Barratt (375,714), Mr. McGee (305,714) and Ms. Masterson (100,000).
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The table on the following pages sets forth information regarding the beneficial ownership of the common stock by: our named executive officers and directors and all the named executives and directors as a group. We are not aware of any person or group that beneficially owns more than five percent of our outstanding shares of common stock.
The information contained in these tables is as of November 23, 2010. At that date, we had 274,445,713 shares of common stock outstanding.
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 | ||||||
| Named Executives and Directors | ||||||||
| John P. Barratt (1) | 492,381 | * | ||||||
| Mark Fletcher (2) | 1,186,803 | * | ||||||
| Anna E. Gluskin (3) | 2,933,831 | 1.0 | % | |||||
| Rose C. Perri (4) | 5,392,221 | 2.0 | % | |||||
| Brian T. McGee (5) | 522,381 | * | ||||||
| Nola Masterson (6) | 116,667 | * | ||||||
| Named Executives and Directors as a group (6 persons) | 10,634,283 | 3.9 | % | |||||
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* Less than 1%.
(1) Includes 70,000 shares, 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, 66,667 vested options of 100,000 options which were granted on March 8, 2010 under 2006 Plan and 150,000 shares of restricted stock awarded on May 30, 2006 under the 2006 Plan.
(2) Includes 266,077 shares, 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 , 470,726 shares issuable upon exercise of stock options granted on April 5, 2005 under the 2001 Plan, 200,000 vested options of 300,000 options which were granted on March 8, 2010 under 2006 Plan and 175,000 shares of restricted stock granted in August 2007 under 2006 Stock Plan, which shares were vested as of August 17, 2009.
(3) Includes 26,127 shares held by Ms. Gluskin, 953,667 shares owned of record by GHI, Inc. that are beneficially owned by Ms. Gluskin, 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, 200,000 shares of restricted stock granted in August 2007 under 2006 Stock Plan, which shares were vested as of August 17, 2009, 333,333 vested options of 500,000 options which were granted on March 8, 2010 under 2006 Plan and 50,000 shares issuable upon the exercise of options granted on May 27, 2008 under the 2006 Stock Plan.
(4) Includes 458,726 shares held by Ms. Perri, 54,000 shares acquired on October 27, 2010, 953,667 shares owned of record by GHI, Inc. that are beneficially owned by Ms. Perri, 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, 175,000 shares of restricted stock granted in August 2007 under 2006 Stock Plan that were vested as of August 17, 2009, 266,666 vested options of 400,000 options which were granted on March 8, 2010 under 2006 Plan and 125,000 shares issuable upon the exercise of options granted on May 27, 2008 under the 2006 Stock Plan. Also includes the shares 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. 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.
(5) 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, 66,667 vested options of 100,000 options which were granted on March 8, 2010 under 2006 Plan 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.
(6) Includes 66,667 vested options of 100,000 options which were granted on March 8, 2010 under 2006 Plan, 50,000 shares of restricted common stock granted to Ms. Masterson on August 17, 2007 under the 2006 Plan.
Changes in Control
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.
Equity Compensation Plan Information
The following table sets forth information as of July 31, 2010 regarding all of our existing compensation plans and individual compensation arrangements pursuant to which equity securities are authorized for issuance to employees, non-employee directors or non-employees (such as directors, consultants and advisors) in exchange for consideration in the form of services:
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | ||||||||||||
| 2000 Stock Option Plan | 0 | $ | 0 | 2,000,000 | ||||||||
| 2001 Stock Option Plan | 4,535,638 | $ | 0.39 | 4,048,490 | ||||||||
| 2006 Stock Plan | 2,930,000 | $ | 0.65 | 18,668,245 | (1) | |||||||
| Total | 7,465,638 | $ | 0.49 | 24,716,735 | ||||||||
| Equity compensation plans not approved by security holders (2) | 4,274,975 | (2) | $ | 0.79 | 0 | |||||||
| Total | 11,740,613 | $ | 0.60 | 24,716,735 | ||||||||
(1) Such shares are available for future issuance under the 2006 Stock Plan as options or restricted stock.
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(2) Includes 1,397,232 warrants issued to various consultants pursuant to the agreements with them, 2,457,743 warrants issued to placement agents as commission, and 420,000 warrants issued to various employees as part of their compensation arrangements. Please see Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities under the heading Sales of Unregistered Securities, Item 7, Management Discussion and Analysis of Financial Condition and Result of Operations under the heading Financial Condition, Liquidity and Resources, and Note 14 of the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data of the Form 10-K for more information on such warrants.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Certain Relationships and Related Transactions
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
One-Time Recompense Payment: 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 former Chairwoman, Chief Executive Officer and President, and Ms. Rose Perri, our Chief Operating Officer, Chief Financial Officer and Treasurer, 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. These amounts were payable (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 outstanding amounts were fully paid as of July 31, 2010
Real Estate Transactions: 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 use 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, 2010 and 2009, we paid the management company approximately $55,691 and $47,981, respectively, in management fees. We believe that the amounts paid to the management company approximate the rates that would be charged by a non-affiliated property management company.
Director Independence
The Board of Directors currently consists of five members, three of whom are “independent” as defined under applicable rules of the SEC and The NASDAQ Stock Market LLC. The three independent members of the Board of Directors are John P. Barratt, Brian T. McGee and Nola E. Masterson.
For a director to be considered independent, the Board must determine that the director has no relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
All members of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee must be independent directors under NASDAQ rules. Members of the Audit Committee also must satisfy a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries other than their directors’ compensation. In addition, under SEC rules, an Audit Committee member who is an affiliate of the issuer (other than through service as a director) cannot be deemed to be independent.
Item 14. Principal Accounting Fees and Services.
MSCM LLP ("MSCM") has served as our independent auditors since September 5, 2008. The appointment of MSCM as our independent public accountants was unanimously approved by the Audit Committee of our Board of Directors. MSCM is the successor to our former independent auditors, Danziger Hochman Partners LLP (“Danziger Hochman”), following MSCM’s merger with Danziger Hochman in September 2008. Danziger Hochman served as our independent auditors from February 1, 2006 until September 5, 2008.
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The following table sets forth the aggregate fees paid by Generex for the fiscal years ended July 31, 2010 and 2009 to our independent auditors:
Fiscal Year Ended July 31, 2010 | Fiscal Year Ended July 31, 2009 | |||||||
| Audit Fees | $ | 220,983 | (1) | $ | 212,756 | (1) | ||
| Audit-Related Fees | $ | 128,867 | (2) | $ | -0- | |||
| Tax Fees | $ | -0- | (3) | $ | -0- | |||
| All Other Fees | $ | 11,923 | (4) | $ | -0- | |||
| TOTAL | $ | 361,773 | $ | 212,756 | ||||
| (1) | Represents charges of MSCM LLP, Generex's auditors for the financial statement audits of the fiscal years ended July 31, 2010 and 2009, including fees associated with quarterly reviews of financial statements included in Generex’s Form 10-Q. |
| (2) | Represents charges of MSCM LLP, Generex's auditor in fiscal year ended July 31, 2010 for Sarbanes-Oxley Section 404 audit of internal controls over financial reporting. |
| (3) | MSCM LLP did not provide and did not bill for any tax services. |
| (4) | Represents fees associated with review of responses to comments of the SEC Staff and review of financial statements included in Form S-8. |
Policy for Pre-Approval of Audit and Non-Audit 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.
PART IV
Item. 15 Exhibits and Financial Statements and Schedules.
Exhibits are incorporated herein by reference or are filed with this Form 10-K/A as set forth in the Exhibit Index beginning on page 24 hereof.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 24th day of November 2010.
| GENEREX BIOTECHNOLOGY CORPORATION | |
| By: | /s/ Mark A. Fletcher |
| Name: Mark A. Fletcher | |
| Title: Interim President and Chief Executive Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Capacity in Which Signed | Date | ||
| /s/ Mark A. Fletcher | Interim President and Chief Executive Officer and General | November 24, 2010 | ||
| Mark A. Fletcher | Counsel and Secretary (Principal Executive Officer) | |||
| /s/ Rose C. Perri | Chief Operating Officer, Chief Financial, Officer, Treasurer, | November 24, 2010 | ||
| Rose C. Perri | Director (Principal Financial and Accounting Officer) | |||
| /s/ Brian T. McGee | Director | November 24, 2010 | ||
| Brian T. McGee | ||||
| /s/ John P. Barratt | Director | November 24, 2010 | ||
| John P. Barratt | ||||
| /s/ Nola E. Masterson | Director | November 24, 2010 | ||
| Nola E. Masterson | ||||
| /s/ Stephen Fellows | VP, Finance | November 24, 2010 | ||
| Stephen Fellows |
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EXHIBIT INDEX
| Exhibit Number | Description of Exhibit | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002† | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002† | |
| 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002† |
† Filed herewith.
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