UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2018
GENEREX BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 000-29169 | 98-0178636 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S Employer Identification No.) |
| 10102 USA Today Way, Miramar, Florida | 33025 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (416) 364-2551
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 1.01 Entry into a Material Definitive Agreement.
Item 2.01 Completion of Acquisition or Disposition of Assets.
A subsidiary of Generex Biotechnology Corporation (“ Generex ”) has completed the acquisition of certain operating assets of Veneto Holdings, L.L.C. and its affiliates (“ Veneto ”) contemplated by the Asset Purchase Agreement described in our Current Reports on Form 8-K dated October 3, 2018 and October 9, 2018.
As previously reported, on October 3, 2018, NuGenerex Distribution Solutions, LLC, a wholly-owned subsidiary of Generex entered into an Asset Purchase Agreement (the “ Agreement ”) with Veneto. The Agreement was subsequently assigned to another wholly owned subsidiary, NuGenerex Distribution Solutions 2, LLC (“NuGenerex”). The Agreement provided for NuGenerex to purchase certain assets of Veneto and its subsidiaries (the “ Assets ”) at two separate closings. The first closing took place on October 3, 2018 (the “ First Closing Date ”). ON the First Closing Date, NuGenerex purchased the operating assets of (a) seven dispensing pharmacies, (b) a wholesale pharmacy purchasing company, and (c) an in-network laboratory (the “ First Closing Assets ”). In consideration of the sale, transfer, and assignment of the First Closing Assets on the First Closing Date, NuGenerex executed and delivered to Veneto a secured promissory note in the principal amount of $15,000,000 (the “ First Closing Note ”) guaranteed by Generex and Generex’s Chief Executive Officer, Joseph Moscato.
On November 1, 2018 (the “ Second Closing Date ”), NuGenerex consummated the acquisition of the balance of the Assets contemplated by the Agreement, consisting primarily of Veneto’s management services organization (MSO) business and two additional ancillary service companies (the “ Second Closing Assets ”) (the “ Second Closing ”). The aggregate price for the First Closing Assets and the Second Closing Assets was $30,000,000. ,NuGenerex issued its promissory note in the principal amount of $35,000,000 (the “ New Note ”) consisting of the $30,000,000 purchase price and a $5,000,000 original issue discount, as the sole consideration payable on the Second Closing Date. In addition, NuGenerex has assumed approximately $3.8 million in outstanding institutional debt of Veneto subsidiaries; NuGenerex will have use of the Veneto cash which would otherwise have been applied to paying down the debt. The parties entered into an amendment to Asset Purchase Agreement (the “ Amendment ”) reflecting these changes and the application of the New Note proceeds described below. The New Note retires and replaces the First Closing Note.
Generex expects to raise funds through a combination of debt and equity to fund the required payment of the New Note. As of the date of this report, Generex is in discussions with several potential funding sources, but has no definitive arrangements for such funding.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On November 1, 2108, in connection with the consummation of the Second Closing, NuGenerex issued to Veneto the New Note in the principal amount of $35,000,000. The New Note calls for payment in full on or before January 15, 2019 with interest at an annual rate of 12% on the $30,000,000 portion of the New Note representing the purchase price of the Assets. The New Note is guaranteed by Generex and Joseph Moscato, and secured by a first priority security interest in all of Generex’s assets. Mr. Moscato’s guaranty is limited to the principal amount of $15,000,000.
Upon payment, the proceeds will be distributed as follows (i) $9,000,000 will be paid by NuGenerex into a trust or other fiduciary account acceptable to Veneto to be used exclusively for satisfaction of certain contingent liabilities of Veneto and subsidiaries not being assumed by NuGenerex (for a period of time to be agreed upon), (ii) $3,000,000 will be paid by NuGenerex into an escrow account to secure potential obligations of Veneto in respect of the Second Closing Date working capital and under the indemnification provisions of the Agreement, and (iii) the balance will be payable directly to Veneto in cash.
The New Note has standard events of default for non-payment of principal or interest, certain events of insolvency and bankruptcy of the maker and other uncured, non-monetary defaults.
In addition, pursuant to the Amendment, NuGenerex has assumed approximately $3.8 million in outstanding institutional debt of Veneto subsidiaries. This debt includes $1,560,000 under a term loan and $1,852,000 under a revolving line of credit.
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This Current Report contains summaries of the material terms of the Amendment and the New Note. The summaries of these documents are subject to, and are qualified in their entirety by, reference to these agreements, which are filed as exhibits hereto and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On November 2, 2018 the Company issued a press release regarding the acquisition. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.
The foregoing information in Item 7.01 of this Current Report on Form 8-K is being furnished pursuant to this Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to Item 7.01 of this Current Report on Form 8-K.
By filing this Current Report on Form 8-K and furnishing this information, Generex makes no admission as to the materiality of Item 7.01 in this report. Generex undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is appropriate. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
Forward-Looking Statements
Statements in this report may contain certain forward-looking statements. All statements included concerning activities, events or developments that the Generex expects, believes or anticipates will or may occur in the future are forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and involve known and unknown risks, uncertainties and other factors that may cause actual results and performance to be materially different from any future results or performance expressed or implied by forward-looking statements. Known risks and uncertainties also include those identified from time to time in the reports filed by Generex with the Securities and Exchange Commission, which should be considered together with any forward-looking statement. No forward-looking statement is a guarantee of future results or events, and one should avoid placing undue reliance on such statements. Generex undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Generex cannot be sure when or if it will be permitted by regulatory agencies to undertake additional clinical trials or to commence any particular phase of clinical trials. Because of this, statements regarding the expected timing of clinical trials or ultimate regulatory approval cannot be regarded as actual predictions of when Generex will obtain regulatory approval for any “phase” of clinical trials or when it will obtain ultimate regulatory approval by a particular regulatory agency. Generex claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act. Additional information on these and other risks, uncertainties and factors is included in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed with the SEC.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of a Business Acquired.
In accordance with Item 9.01(a), the Consolidated Financial Statements of Veneto Holdings, L.L.C. as of and for the years ended December 31, 2016 and 2017, and as of and for the nine months ended June 30, 2018 and 2017, will be filed by amendment to this Current Report within 71 days after the date of this Current Report.
(c) Pro forma financial information.
Pro Forma financial information required by Item 9.01(c) will be filed by amendment to this Current Report within 71 days after the date of Generex’s initial Current Report with respect to the Agreement.
(d) Exhibits.
The list of exhibits called included in this Current Report is incorporated by reference to the Exhibit Index filed with this report.
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SIGNATURES
Pursuant to the requirements 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.
| GENEREX BIOTECHNOLOGY CORPORATION. | ||
| Date: November 5, 2018 | /s/ Mark A. Fletcher | |
| Mark A. Fletcher | ||
| Executive Vice President and General Counsel | ||
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Exhibit Index
| Exhibit No. | Description | |
| 10.1 |
Amendment to Asset Purchase Agreement by and between Veneto Holdings, L.L.C. and NuGenerex Distribution Solutions 2, LLC effective November 1, 2018 . |
|
| 10.2 | Promissory Note in the amount of $35,000,000 from NuGenerex Distribution Solutions 2, LLC to Veneto Holdings, L.L.C. | |
| 99.3 |
Press Release dated November 2, 2018
|
| 5 |
AMENDMENT
to
ASSET PURCHASE AGREEMENT
THIS AMENDMENT to ASSET PURCHASE AGREEMENT (this “ Amendment ”) is made and entered into as of the 1 ST day of November, 2018, by and between Veneto Holdings, L.L.C. , a Texas limited liability company (the “ Seller ”), and NuGenerex Distribution Solutions 2, LLC, a Delaware limited liability company (the “ Buyer ”). The Seller and the Buyer are referred to collectively herein as the “ Parties ” and each as a “ Party .”
RECITALS:
WHEREAS, Seller and NuGenerex Distribution Solutions, LLC (“ Original Buyer ”) entered into that certain Asset Purchase Agreement dated effective October 3, 2018 (the “ APA ”), which agreement NuGenerex Distribution Solutions, LLC, assigned, and Buyer assumed, pursuant to that certain Assignment Agreement between them dated effective October 4, 2018; and
WHEREAS, Seller and Buyer desire to make certain amendments to the APA regarding the Second Closing Date, and the terms and conditions of payment of the Purchase Price.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree that the APA is amended as follows:
1. Second Closing Date . The Second Closing Date shall be November 1, 2018.
2. Purchase Price .
(a) Cancellation of the First Closing Note . That certain Purchase Price Note in the amount of Fifteen Million Dollars ($15,000,000) issued by the Original Buyer to Seller on October 3, 2018, together with all rights and obligations thereunder, is rescinded as of the Second Closing. Thereafter, all references to the “Purchase Price Note” in the APA and in this Amendment shall be construed to refer to the Purchase Price Note defined in revised Section 3.1(b) of the APA, as set forth in Section 2(b) of this Amendment.
(b) Final Funding . Section 3.1(b) of the APA is deleted in its entirety and replaced with the following provisions:
(b) Purchase Price Note and Final Funding . At the Second Closing, Buyer shall issue to Seller a secured note (the “Purchase Price Note,” in form and substance satisfactory to Seller, in the original principal amount of Thirty Five Million Dollars ($35,000,000), representing Thirty Million Dollars ($30,000,000) of Purchase Price and Five Million Dollars ($5,000,000) of original issue discount, bearing simple interest at a rate of Twelve Percent Interest (12%) annually on the amount representing the Purchase Price until paid in full, and due and payable in full on or before January 15, 2019 (the “ Final Funding Date ”). On or before the Final Funding Date, Buyer shall repay to Seller the Thirty Five Million Dollar ($35,000,000) Purchase Price Note plus interest thereon (whereupon Seller will return the Purchase Price Note to Buyer marked as paid in full), together with any other Purchase Price adjustments or other sums due from Buyer to Seller under the APA, in the following manner:
(i) Nine Million Dollars ($9,000,000) shall be paid into a trust or other fiduciary account acceptable to the Seller at Closing; such trust or fiduciary account shall be used solely for the purpose of investigating, satisfying, defending, maintaining insurance coverage with respect to and otherwise protecting the Seller, the Subsidiaries (including the Excluded Subsidiaries) and their managers, members, officers, employees and other personnel with respect to certain potential contingent liabilities of Seller and its past and present Affiliates during a period of time to be specified in the trust or fiduciary account and thereafter to be paid to Seller according to the terms and conditions directed by Seller. The funds in such account shall not be distributed to the members of the Company, or used for any purposes other than as stated in this paragraph (ii) until the earlier of the following (x) settlement with the Government Agencies with respect to all Members, Managers, and Affiliates, or (y) receipt of written notification or other indication from Government Agencies known to be conducting investigations or inquiries to the effect that such Government Agencies are terminating their investigation or inquiry without the requirement of any penalty or imposition of any liability, or (z) five (5) years from the Second Closing Date.
(ii) Three Million Dollars ($3,000,000) (the “ Escrowed Purchase Price ”) to be paid into an escrow account with a third party escrow agent mutually acceptable to the Buyer and the Seller (the “ Escrow Agent ”) at Closing, which shall be released from escrow as set forth in Section 3.2(a)(i) , Section 3.3 and Section 10.5 , and more specifically set forth in the escrow agreement agreed upon among the Escrow Agent, the Buyer and the Seller, in substantially the form of Exhibit B hereto (the “ Escrow Agreement ”); and
(iii) The balance, to be paid to the Seller in cash by wire transfer of immediately available funds on the Final Funding Date.
(iv) Veneto shall have access to one-half of the excess Working Capital to be used between the date hereof and the Final Funding Date to pay the debts and obligations of Veneto. Final reconciliation and payment/reimbursement pursuant to the working capital adjustment under the APA shall take place on the Final Funding Date.
3. Termination of Vendor Services Agreements and Net Profits Agreement . The Vendor Services Agreements and Net Profits Agreement by and between Buyer and Seller are terminated effective at the Second Closing.
4. Assignment and Assumption of the BBVA Compass Loans . Effective at the Second Closing, Seller hereby assigns, and Buyer hereby assumes, all of Seller’s and Seller’s Excluded Subsidiaries’ rights and obligations under the Term Loan and Revolving Line of Credit with BBVA Compass (the “ Loans ”) as set forth in this Section 4.
(a) BBVA Compass Loan Agreement:
That certain April 21, 2017 Loan Agreement among Messorio HealthCare Services, LLC and Molise Health Sciences, LLC, as Borrowers, and Compass Bank, as Lender
(b) Balances: Seller represents and warrants to Buyer that:
(i) At close of business on October 31, 2018, the Loan balances were as follows:
Term Loan: $1,560,000
Revolving Line of Credit: $1,852,000
and
(ii) No further funds were drawn on the Revolving Line of Credit after October 31, 2018.
Seller makes no representations or warranties related to the balances of the Loans except as set forth in this Section 4(b) and disclaims all other representations and warranties.
(c) Assignment . Seller, on behalf of Seller and its Affiliates and Subsidiaries, hereby TRANSFERS, ASSIGNS, GRANTS AND CONVEYS to Buyer, all of Seller's right, title and interest, in, to and under the Loans. As between Seller, its Affiliates and Subsidiaries on the one hand, and Compass Bank on the other hand, this assignment shall not affect any obligation of Seller, its Affiliates or Subsidiaries as borrowers and/or Guarantors under the Loans.
(d) Assumption . Buyer hereby accepts the Assignment granted herein and assumes and agrees to make all payments and to perform all other obligations of Seller and Seller’s Affiliates and Subsidiaries as the Borrowers under the Loans, including, but not limited to, full payment of the prior accrued balances set forth in Section 4.(b), above. Buyer may make no further assignment of the Loans, or any part thereof, and any such purported Assignment shall be null and void.
(e) Seller shall obtain a final payment letter from BBVA Compass upon request from Buyer.
(f) Buyer warrants to Seller and BBVA Compass that it will perform the obligations set forth in this Section 4. Buyer and Seller agree that BBVA Compass is an intended third party beneficiary of this Section 4.
5. Debt Repayment . Section 7.6 of the APA is deleted and replaced in its entirety with the following provision:
To the extent Seller or any of the Subsidiaries (other than the Excluded Subsidiaries) have any obligations for borrowed money outstanding on or after the Final Funding Date (excluding obligations related to the BBVA Compass Loans and any Assumed Liability), Seller shall use Proceeds of the Purchase Price to satisfy such debts.
6. APA Error Correction. The Parties acknowledge that Schedule 2.1(a) to the APA incorrectly identified the Rapport Class B Units as a First Closing Asset. The Parties agree that the Rapport Class B Unites are a Second Closing Asset.
7. Capitalized Terms. All capitalized terms not otherwise defined in this Amendment shall have the same meaning assigned in the APA.
8. Entire Agreement . This Amendment is the parties’ entire understanding and agreement regarding the subject matter hereof.
9. Precedence and Conformity of APA . To the extent any provision of this Amendment conflicts with any provision of the APA (including any schedules or exhibits thereto), the terms of this Amendment shall supersede and control. The Parties agree that all of the terms and conditions of the APA shall be deemed to be amended as necessary to effectuate the purposes and intent of this Amendment, regardless of whether such terms and conditions are specifically addressed in this Amendment.
10. Counterparts . This Amendment may be executed in counterparts, which, when taken together shall constitute one and the same document. Electronic and facsimile copies of original signatures shall be deemed originals for all purposes.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
Veneto Holdings, L.L.C.
By: _________________________
Name: Kevin Kuykendall
Title: Chief Executive Officer
NuGenerex Distribution Solutions 2, LLC
By: _________________________
Name: Joseph Moscato
Title: Chief Executive Officer
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Original Issue Date : November 1, 2018
Principal Amount: $35,000,000.00
Purchase Price: $30,000,000.00
PROMISORRY NOTE
DUE JANUARY 15 , 2019
THIS NOTE is a duly authorized and validly issued Note of NuGenerex Distribution Solutions 2, LLC , a Delaware limited liability company (the “ Borrower ”), having its principal place of business at 10102 USA Today Way, Miramar, FL 33025, due January 15, 2019 (this “ Note ”).
FOR VALUE RECEIVED, the Borrower promises to pay to Veneto Holdings, L.L.C. or its registered assigns (the “ Holder ”), with an address at: 3030 LBJ Freeway, Suite 1700, Dallas, TX 75234, or shall have paid pursuant to the terms hereunder, the principal sum of Thirty Five Million Dollars ( $35,000,000.00) on January 15, 2019 (the “ Maturity Date ”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest, if any, to the Holder on the then outstanding principal amount of this Note in accordance with the provisions hereof.
BACKGROUND
A. The Borrower and the Holder are parties to an Asset Purchase Agreement (the “ Agreement ”) pursuant to which the Borrower has purchased and is purchasing certain of the assets of the Holder and the Holder’s subsidiaries (“Assets”).
B. The Borrower is issuing this Note on the date hereof in accordance with the terms of the Agreement, as amended.
C. The Borrower’s parent, Generex Biotechnology Corporation has agreed to grant a first priority security interest to Holder in all of its assets all as more particularly set forth in the Amended and Restated Security Agreement, dated of even date herewith (the “ Security Agreement ”).
D. Joseph Moscato, an individual and Generex Biotechnology Corporation (each a “ Guarantor” and collectively the “Guarantors”) have agreed to guaranty the Borrower’s obligations under this Note, as more particularly set forth in Amended and Restated Guaranty Agreements, dated of even date herewith (the “ Guaranty ”).
TERMS
1. Interest Rate . That portion of the Principal Amount outstanding under this Note representing not more than the Purchase Price shall bear interest from the date first set forth above at an annual rate of twelve percent (12.0%). Simple interest shall accrue daily on the basis of a 365-day year.
2. Payment Terms of Principal and Interest . The outstanding Principal Amount and accrued and unpaid interest under this Note shall be due and payable to Holder on the Maturity Date. This Note may be prepaid in whole or in part at any time by the Borrower. The applicable due date described above is referred to herein as the “ Maturity Date .” There shall be no penalty if the Borrower pre-pays the Principal Amount in whole or in part.
3. Default . Each of the following shall constitute an event of default (each, a “ Default Event ” under this Note):
| (a) | Borrower fails to pay the outstanding Principal Amount and accrued but unpaid interest under this Note on or before the Maturity Date; |
| (b) | Borrower or Guarantors fail to comply with or to perform when due any other term, obligation, covenant or condition contained in this Note, the Security Agreement or the Guaranty; |
| (c) | Borrower becomes insolvent, a receiver is appointed for any of Borrower’s property, Borrower makes an assignment for the benefit of creditors, or any proceeding is commenced either by Borrower or against Borrower under any bankruptcy or insolvency laws; |
| (d) | All or substantially all of Borrower’s assets are sold, assigned or otherwise transferred (including by way of merger or consolidation); |
| (e) | Borrower is terminated or dissolved, or ceases to exist as the result of a merger, restructuring, consolidation any other reason; |
| (f) | The change of control of Borrower, whether by (i) the sale, assignment, transfer or other disposition of more than fifty percent (50%) of the outstanding ownership interests in Borrower, in one or more related transfers, by the Persons who beneficially own such ownership interests; (ii) the issuance by Borrower of any ownership interests, any rights to acquire ownership interests in Borrower or any rights to share in the profits of Borrower; or (iii) by any combination of the foregoing. |
Upon and following an Event of Default, the interest shall accrue at the annual rate of ten percent (10%).
4. Other Provisions Relating to Interest and Charges . Notwithstanding any other provision contained in this Note or in any agreement, document or instrument related to the transaction which this Note is a part: (a) the rates of interest and charges and the payment provided for herein and therein shall in no event exceed the rates and charges and the payment which would result in interest being charged at a rate equaling the maximum allowed by law; and (b) if, for any reason whatsoever, Holder ever receives as interest (or as a charge in the nature of interest) in connection with the transaction of which this Note is a part an amount which would result in interest being charged at a rate exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be excessive interest shall automatically be applied toward reduction of the unpaid principal balance then outstanding hereunder. Any such amount shall not be applied toward payment of interest (or toward payment of a charge in the nature of interest).
5. Limitations . The Borrower’s obligations under this Note are conditioned on compliance with the following until this Note is paid in full:
(i) None of Seller, its subsidiaries or any individual who is a manager or member of Seller on the date of this Agreement, shall interfere with, disparage or compete with Borrower’s and its subsidiaries’ operations of their business involving the Assets, as defined in the Agreement (the “ Relevant Business ”).
6. Costs . In the event that (a) the payment of principal and interest under this Note is not made at the time and in the manner required hereunder, (b) Holder incurs any costs of collection or other costs reasonably necessary for the protection of the interest of Holder with respect to this Note, or (c) Holder, upon the occurrence of an uncured Default Event, exercises its right to accelerate the maturity of the obligations hereunder, Borrower agrees to pay any and all costs and expenses (regardless of the particular nature thereof and whether incurred before or after the initiation of suit or before or after judgment) that may be incurred by Holder in connection with the enforcement of its rights under this Note, including court costs and reasonable attorneys’ fees.
7. Waivers . Borrower, and any sureties, guarantors, and endorsers hereof severally waive presentment for payment, demand, protest, notice of protest, notice of dishonor or nonpayment, notice of intent to accelerate the indebtedness hereof or notice of such acceleration, protest and notice of protest and diligence on collecting or bringing suit against any party hereof and consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by Holder with respect to the payment or partial payments hereon, with or without notice, or other provisions of this Note, before or after the Maturity Date.
8. Remedies . No right or remedy conferred upon or reserved to Holder, or now or hereafter existing at law or in equity or by statute or other legislative enactment, is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and concurrent, and shall be in addition to every other such right or remedy, and may be pursued singly, concurrently, successively or otherwise, at the sole discretion of Holder, and shall not be exhausted by any one exercise thereof but may be exercised as often as occasion thereof shall occur. No act of Holder shall be deemed or construed as an election to proceed under any one such right or remedy to the exclusion of any other such right or remedy.
9. Notices . All notices hereunder shall be made or given to the address of the parties as follows:
If to Holder :
Veneto Holdings, L.L.C.
Attn: Kevin Kuykendall
3030 LBJ Freeway, Suite 1700
Dallas, Texas 75234
If to Borrower :
NuGenerex Distribution Solutions 2, LLC
Attn: Joseph Moscato
c/o Generex Biotechnology Corporation
10102 USA Today Way, Miramar, FL 33025
Any notice or other communications required, contemplated or permitted by this Note by any party shall be in writing and shall be deemed served (a) when personally delivered, with proof of delivery, (b) on the next business day after delivery to a reputable overnight courier for next business day delivery, charges prepaid, providing proof of delivery, or (c) upon delivery by United States mail, registered mail or certified mail, postage prepaid, return receipt requested, with proof of delivery, addressed, in the case of deliveries made pursuant to clause (b) and (c) to the address set forth above. Any party may change the address to which payments, notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth.
10. State Law . Borrower irrevocably consents to the exclusive jurisdiction of the courts of the State of Texas or the United States District Court for the Northern District of Texas in any and all actions and proceedings arising hereunder, and irrevocably agrees to service of process by certified mail, return receipt requested, to the address of Borrower set forth above.
11. Severability . If for any reason one or more of the provisions of this Note or their application to any person or circumstances shall be held to be invalid, illegal or unenforceable in any respect or to any extent, such provisions shall nevertheless remain valid, legal and enforceable in all such other respects and to such extent as may be permissible. In addition, any such invalidity, illegality or unenforceability shall not affect any other provisions of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained therein.
12. Successors and Assigns . This Note inures to the benefit of Holder and binds Borrower, and their respective successors and assigns; provided that Borrower may not assign this Note, by operation of law or otherwise, without the express prior written consent of Holder.
Signature
page follows…
IN WITNESS WHEREOF, the undersigned has executed this Note on or as of the day and year first above written.
Borrower:
NUGENEREX DISTRIBUTION SOLUTIONS 2, LLC
By: ___________________________
Name: Joseph Moscato
Title: Manager
AGREED AND ACCEPTED
Holder:
VENETO HOLDINGS, L.L.C.
By: ___________________________
Name: Kevin Kuykendall
Title: Chief Executive Officer
Generex Biotechnology Finalizes Acquisition of Remaining Veneto Operating Assets
MIRAMAR, FL, November 2, 2018 / (Business Wire) / -- Generex Biotechnology Corporation (www.generex.com) (OTCQB:GNBT) (http://www.otcmarkets.com/stock/GNBT/quote) today announced that it has completed the second and final tranche of the acquisition of operating assets from Veneto Holdings, L.L.C. (“ Veneto ”), a private company, and certain of its affiliated entities (collectively, the “ Veneto Group ”).
The Veneto Group provides specialty pharmacy services and products including surgical products and services, diagnostic testing for screening human blood, urine and/or saliva samples for the presence of narcotics, medications, alcohol and other drugs and substances, durable medical equipment services, and ancillary healthcare services such as management services for its businesses.
On October 3, 2018, Generex affiliate NuGenerex Distribution Solutions 2, LLC (“ NuGenerex ”) agreed to purchase Veneto Group’s eight pharmacies, a wholesale pharmacy purchasing company, and an in-network laboratory. In consideration, NuGenerex executed and delivered to Veneto a promissory note in the principal amount of US $15,000,000 (the “ First Tranche Note ”).
On November 1, 2018, NuGenerex completed the acquisition of the balance of the Veneto Group operating assets, consisting primarily of its management services organization (MSO) business and two additional ancillary service companies. In consideration of the sale, transfer, and assignment of those assets, NuGenerex executed and delivered to Veneto a secured promissory note in the principal amount of US $35,000,000 due January 15, 2019. The note is guaranteed by Generex and retires and replaces the First Tranche Note.
Commenting on this important milestone for Generex, Joseph Moscato, President & Chief Executive Officer, commented, “The completion of this acquisition provides us with revenue generating assets and brings us one step closer to realizing our vision of building a new kind of pharmaceutical company that provides end-to-end solutions for doctors and patients optimizing health outcomes. Generex is now able to provide administration and management services to pharmacies, labs, and other ancillary networks that enable them to deliver better patient care. These services are complemented by a centralized call-center that provides medication therapy and disease management services. So far, this model is implemented in five states (Arizona, Colorado, New Mexico, Oklahoma, and Texas). However, our expansion plan is already underway to implement the model in 22 states where we expect to have operations by the end of 2020.”
Mr. Moscato continued, “We have also identified and are planning further acquisitions in the area of novel therapeutic and diagnostic products that will be integrated into our distribution network bringing our new model of an end-to-end solution to realization.”
Terry Thompson, Generex Chief Operating Officer, said: “We welcome the Veneto team who will join us to create the backbone of our corporate management team. They bring with them a wealth of experience and understanding of the market. Their knowledge and experience will provide support and guidance as we engage in our plan to rapidly grow the Company. The advanced systems at Veneto allow for control of processes including Legal, Regulatory Compliance, Finance, HR, and Sales and Operations and we look forward to incorporating them into the larger organization.”
The combined Company has re-branded as NuGenerex Distribution Solutions and will leverage its relationship with the MSO company Rapport Services, LLC, serving as the Managing Member.
Brooks, Houghton & Company, Inc. acted as the Company’s M&A advisor in respect of the Acquisition, and Eckert Semans Cherin & Mellott, LLC served as legal counsel to the Company.
Further particulars in respect of the Acquisition will available in the Generex Form 8-K Current Report to be filed with the U.S. Securities and Exchange Commission on or before November 5, 2018 and publicly available at www.sec.gov and the disclosures in this press release are subject to those said particulars.
About Generex Biotechnology Corporation
Generex is a strategic, diversified healthcare holdings company with offerings in a variety of services, diagnostics, medical devices, and pharmaceutical development.
The Company’s direct-to-patient services support its strategy of all-inclusive access to doctors, diagnostics, therapeutics, and additional health-related services to greatly improve the patient experience in receiving care.
On the provider side, Generex’s management services remove administrative burdens in multiple provider settings, including private practice and hospital, allowing doctors to devote more time to patient care.
Revenue from the Company’s subsidiaries will support clinical advancement of its wholly owned therapeutic products with a focus in immunotherapeutics based on stimulating critical members of the immune response, known as T helper cells, and its proprietary buccal administration of insulin.
Cautionary Note Regarding Forward-Looking Statements
This release and oral statements made from time to time by Generex representatives in respect of the same subject matter may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by introductory words such as "expects," "plan," "believes," "will," "achieve," "anticipate," "would," "should," "subject to" or words of similar meaning, and by the fact that they do not relate strictly to historical or current facts. Forward-looking statements frequently are used in discussing potential product applications, potential collaborations, product development activities, clinical studies, regulatory submissions and approvals, and similar operating matters. Many factors may cause actual results to differ from forward-looking statements, including inaccurate assumptions and a broad variety of risks and uncertainties, some of which are known and others of which are not. Known risks and uncertainties include those identified from time to time in the reports filed by Generex with the Securities and Exchange Commission, which should be considered together with any forward-looking statement. No forward-looking statement is a guarantee of future results or events, and one should avoid placing undue reliance on such statements. Generex undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Generex claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act.
Generex Contacts:
Generex Biotechnology Corporation
Joseph Moscato
646-599-6222
Todd Falls
800-391-6755 Extension 222
investor@generex.com
Russo Partners
Investor / Media Contacts:
Alex Fudukidis
(646) 942-5632
alex.fudukidis@russopartnersllc.com
Caroline Cunningham
(212) 845-4292
Caroline.Cunningham@russopartnersllc.com