MEMORANDUM OF AGREEMENT
THIS AGREEMENT made as of the 7th day of January, 1998, between GENEREX
PHARMACEUTICALS INC., an Ontario corporation, GHI, INC. ("GHI"), a Turks and
Cacos corporation, GENEREX BIOTECHNOLOGY CORPORATION, a Delaware corporation,
XX. XXXXXX XXXX ("Xxxx"), an individual, and GALAXY TECHNOLOGY, CANADA
("Galaxy"), a proprietorship of Modi's.
WHEREAS, Modi was engaged by Generex Pharmaceuticals, Inc. ("GPI") to
provide certain services to GPI in connection with its research and development
initiatives pursuant to a Consulting Agreement made as of the 1st day of
October, 1996 (the "Consulting Agreement") between CPI and Modi; and
WHEREAS, pursuant to an Assignment and Assumption Agreement made as of
the 1st day of October, 1997 (the "Assignment and Assumption Agreement"), Modi
assigned to GPI all of his rights, title and interests in and to certain drug
delivery systems and the intellectual property associated therewith
(collectively, the "Technology") and, in that regard, has executed and delivered
to GPI a number of related specific assignments (the "Specific Assignments");
and
WHEREAS, in connection with the execution of the Consulting Agreement
and Assignment of certain technology to GPI, Modi received shares of GPI common
stock, which shares were held of record by GHI for Modi's benefit, and
subsequently exchanged by GHI for shares of Generex Biotechnology corporation
("GBC"); and
WHEREAS, GBC now owns 100% of the outstanding capital stock of GPI; and
WHEREAS, Modi owns and controls Galaxy; and
WHEREAS, Modi has approached management of GPI and GBC, and indicated
that he executed and delivered the Consulting Agreement, Assignment and
Assumption Agreement and the Specific Assignments because he had satisfied
himself that E. Xxxx Xxxxx, the current Chairman of the Board of GPI, Xxxx X.
Xxxxxxx, the current President of GPI, and Xxxx X. Xxxxx (collectively, the
"Management Group"), the founders and directing mind and will of GPI and the
individuals who currently manage or supervise the management of the business and
affairs of GPI, had the requisite skills, motivation and vision to make the
Technology a medical and commercial success on a worldwide basis, and in
reliance upon their representations to him that he would have a central role in
the ongoing research and development of the Technology; and
WHEREAS, Modi considers that his and the Management Group's continued
involvement is crucial to the successful development of the Technology and the
successful commercial marketing and sale of products employing the Technology
("Technology Products"); and
WHEREAS, Modi has advised GPI that he intends to exercise his right to
terminate the Consulting Agreement in the absence of agreements and procedures
that will assure the continued involvement of Modi and the Management Group in
the development of the Technology and, ultimately, the manufacture of Technology
Products; and
WHEREAS, GPI and GBC consider that the continued involvement and
dedication of Modi is crucial to the successful creation and implementation of
the research and development initiatives required to create commercially viable
Technology Products;
NOW, THEREFORE, in consideration of Modi's continued support of GPI and
the Technology pursuant to the Consulting Agreement and for other good and
valuable consideration, the parties agree as follows:
1. Extension of Terms of Consulting Agreement. The Consulting Agreement
is hereby extended to and including December 31, 2004, and paragraph 5 of the
Consulting Agreement is amended accordingly. During the term of the Consulting
Agreement, Modi shall have the title of Vice President, Research and Development
of GPI and of GBC.
2. Compensation. Modi's annual fee for services is increased to
$132,000 (CDN) per year, payable in equal monthly installments of $11,000,
effective as of the earlier of (a) first day of the first month following the
date that GPI and GBC, collectively, receive additional equity capital of
$2,000,000 (US) or more, or (b) April 1, 1998.
3. Revisions of Section 7 of Consulting Agreement. Section 7 of the
Consulting Agreement is amended and restated in its entirety to provide the
following:
"7. Termination
This Agreement shall terminate upon the death of the Consultant or
declaration by a court of competent jurisdiction that the
Consultant is a mentally incompetent person or incapable of
handling his affairs due to mental incompetence, and may be
terminated:
(a) at any time by mutual agreement of the Corporation and the
Consultant in writing;
(b) by Consultant at any time after January 1, 2001, upon twelve
(12) months notice;
(c) by the Corporation for just cause at any time by giving thirty
(30) days written notice thereof to the Consultant. As used herein,
the term "just cause" shall mean and be limited to:
(i) a material breach of trust by the Consultant which causes
or threatens serious injury to the Corporation;
(ii) gross negligence or incompetence on the part of the
Consultant;
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(iii) a material breach of any provision of this Agreement by
the Consultant;
(iv) inability of the Consultant as a result of a bona fide
illness, physical or mental, to attend to his duties hereunder for
a period of twenty-four (24) consecutive weeks, which period shall
be deemed to commence with such inability and shall continue until
the Consultant is once again able to attend to his duties hereunder
on a regular basis;
(v) disobedience or intentional neglect by the Consultant of
any written directive of the Chief Executive Officer of the
Corporation which is neither inconsistent with Consultant's duties,
authority or rights under this or any other agreement between
Consultant and the Corporation, nor outside the scope of his normal
duties as Vice President, Research and Development; or
(vi) any action by the Consultant taken with the intent to
materially and adversely affect a material interest of the
Corporation."
4. Consent Required. During the term of the Consultant Agreement,
neither GPI nor GBC, without first consulting with Modi and obtaining his
express consent or approval, which consent or approval shall not be withheld by
Xx. Xxxx unreasonably, shall do any of the following or suffer or permit any
affiliate of theirs or any other person to do any of the following:
(a) Publish any papers or otherwise make any public disclosure of
previously unpublished research, formulations, test results or other
confidential and/or proprietary data relating to the Technology; or
(b) Enter into a contract for the manufacture of Technology
Products, or components of Technology Products; or
(c) License any other person or entity to use the Technology.
For purposes hereof, in determining whether or not withholding
consent to any of the foregoing actions is unreasonable, among the factors that
shall be considered, in the case of (a), are the possible injury to the
Corporation and/or the Corporation's research and development program and, in
the case of (b) and (c), the commercial and scientific reputation and expertise
and financial strength of a prospective manufacturer or licensee.
5. Election of Modi as a Director. So long as the Consulting Agreement
is in force, GPI and GBC shall use their best efforts to cause Modi to be
nominated for election and elected a director of both GPI and GBC.
6. Issuance of Special Voting Rights Preferred Stock. Simultaneously
with the execution and delivery of this Agreement, and in consideration of his
execution of this Agreement and the sum of $100.00 (US), receipt of which is
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acknowledged, GBC shall issue and deliver to Modi one thousand (1,000) shares of
GBC's Special Voting Rights Preferred Stock (the "SVR Preferred"), the special
voting and other rights of which are set forth in the form of "Designation of
Special Voting Rights Preferred Stock" attached hereto as Exhibit "A". So long
as the SVR Preferred is outstanding, GBC shall not issue any shares of capital
stock or take any other corporate actions which would limit or interfere with
the exercise of the voting rights of holders of SVR Preferred.
7. Reimbursement for Prior Costs Incurred. GPI shall pay $150,000 (CDN)
to Modi to reimburse Modi for costs previously incurred by him in connection
with preparation and filing of patent applications and conducting of tests and
clinical trials relating to the Technology. This amount shall be paid in three
$50,000 installments on March 31, 1998, June 30, 1998 and September 30, 1998.
8. Counsel for the Transaction. (a) each of the parties hereto has
requested Xxxxxx Chicco ("Chicco") of the firm Xxxxxxxx Xxxxxxx Chicco Foxman
Engelmyer & Xxxxx, Philadelphia, PA, to represent him/it in connection with the
preparation and execution of this Memorandum of Agreement. Each of the parties
understands that Chicco represents GPI and GBC in matters wholly unrelated to
this transaction, but that the business of GPI and GPC is materially dependent
on Modi's research and inventions. The parties understand that, with respect to
the transactions contemplated by this Memorandum of Agreement, no communications
to Chicco by a party shall be considered confidential so as to preclude
disclosure to other parties, and the parties acknowledge that Chicco has advised
them that he may communicate information obtained from one party to one or more
other parties, and will communicate all such information received to another
party upon its request. The parties understand that, in this capacity, Chicco
cannot be an advocate for his or its interest against the interest of one or
more of the other parties. Rather, his role shall be to advise each party on
the effect and meaning of various terms that may be proposed by one or more of
the parties, and to attempt to mediate and facilitate a resolution of any
disputed proposals. Chicco's fees and expenses in connection with this
representation shall be paid by GBC.
(b) Each of the parties waives all real and potential conflicts of
interests that arise out of Chicco's multiple representation of the parties in
this transaction.
9. GBC Common Stock. GHI presently owns 8,688,427 shares of GBC Common
Stock. GHI and each of the other parties hereto acknowledge that 3,095,238 of
such shares (the "Modi Shares") are held in trust for Modi. At Modi's request,
record ownership of the Modi Shares shall be transferred to Modi or his nominee
by GHI.
10. Galaxy. All assignments of Technology heretofore made by Modi are
intended to include all rights, title and interest of Galaxy in and to such
Technology.
11. Governing Law. This Memorandum of Agreement shall be governed by
the laws of the Province of Ontario and of Canada applicable therein, and the
parties hereby irrevocably attorn to the jurisdiction of the courts of the
Province of Ontario, except that the parties' rights and obligations with
respect to paragraph 6 above shall be governed by the laws of the State of
Delaware.
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12. Assignment. The benefits of this Memorandum of Agreement may not be
assigned, in whole or in part, by any party without the prior written consent of
the others, but this Agreement nevertheless shall be binding upon the parties,
their respective heirs, legal personal representatives, successors and permitted
assigns.
IN WITNESS WHEREOF, the parties have executive and delivered this
Memorandum of Agreement as of the date first written above.
Witness:
/S/ /S/ Xxxxxx Xxxx
-------------------------- ----------------------------------------
Xxxxxx Xxxx, individually and on behalf Of
Galaxy Technology, Canada
GENEREX PHARMACEUTICALS INC.
Per: /S/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx, President
Per: /S/ E. Xxxx Xxxxx
------------------------------------
E. Xxxx Xxxxx, Chairman
GENEREX BIOTECHNOLOGY CORP.
Per: /S/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx, President
Per: /S/ E. Xxxx Xxxxx
------------------------------------
E. Xxxx Xxxxx, Chairman
GHI, INC.
Per: /S/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx, President
Per: /S/ E. Xxxx Xxxxx
------------------------------------
E. Xxxx Xxxxx, Chairman
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CONSULTING AGREEMENT
THIS AGREEMENT made as of the 1st day of October, 1996.
B E T W E E N:
GENEREX PHARMACEUTICALS INC.,
a corporation incorporated under
the laws of the Province of Ontario
(the "Corporation")
- and -
XX. XXXXXX XXXX,
an individual residing in the
City of Xxxxxxxx in the
Province of Ontario,
carrying on business as
Galaxy Technology Canada
(the "Consultant")
WHEREAS, the Corporation is engaged in the business of the development,
manufacturing, marketing, distribution and sale of generic drug products (the
"Business");
AND WHEREAS, the Corporation wishes to engage the Consultant and obtain
certain services of the Consulting on and subject to the terms of this
Agreement;
THE PARTIES AGREE AS FOLLOWS:
1. Appointment
The Corporation hereby appoints the Consultant to serve as a consultant to
the Corporation to perform such services or such duties as the management of the
Corporation may from time to time request, at a remuneration and upon and
subject to the terms set forth in this Agreement, which the Consultant accepts.
2. Services
Subject to section 1 hereof, the Consultant shall provide the following
services to, for and on behalf of the Corporation:
(a) the provision of management, administration and supervision in respect
of the Corporation's research and development activities in connection
with the Business;
(b) the determination, establishment and implementation of effective
operating procedures for the conduct of the Corporation's research and
development activities in an efficient and effective manner;
(c) the implementation and achievement of the general corporate goals,
plans and objectives of the Corporation in respect of research and
development and, in connection therewith, full cooperation with the
officers and employees of the Corporation;
(d) the preparation and submission to the President of the Corporation of
periodic reports in respect of the Corporation's research and
development activities;
(e) the enhancement of the image and reputation of the Corporation; and
(f) the promotion of the best interests and well-being of the Corporation
generally,
and such other advisory, operational or consultative functions as the
Corporation may reasonably require in connection with the Business. During the
continuance of this Agreement, the Consultant shall well and faithfully serve
the Corporation and shall report to the President of the Corporation.
3. Full Time and Attention
Unless prevented by ill health or other sufficient cause, the Consultant
shall devote, during the term of this Agreement, his full working time,
attention, skill and efforts to the Corporation as required herein, and the
Consultant shall not, without the prior written consent of the Corporation,
engage in any other activities competitive with the Business or other
undertakings from time to time carried on by the Corporation or any affiliate
thereof.
Notwithstanding the foregoing, the Consultant shall be entitled to an
aggregate of three (3) weeks vacation during each of the first three (3) years
of the term of this Agreement and an aggregate of four (4) weeks vacation during
each year of the term of this Agreement thereafter.
4. Independent Contractor
Nothing herein contained shall be construed to be or have effect as a
relationship of employer and employee between the Corporation and the
Consultant. The Consultant acknowledges that any benefits not specifically
listed in this Agreement for his employees providing services under this
Agreement shall be for his sole account.
5. Term
Unless sooner terminated as provided for herein, this Agreement shall
commence on the 1st day of October, 1996, and shall continue until October 31,
2001.
6. Compensation Fee and Benefits
For the services to be rendered by the Consultant to the Corporation
hereunder, subject to the provisions of this Agreement, the Consultant shall be
entitled to receive and the Corporation shall provide during the term of this
Agreement:
(a) a fee of Eighty Four Thousand Dollars ($84,000) for each year during
the term of this Agreement, which shall be paid in equal monthly
installments of Seven Thousand Dollars ($7,000) each payable on the
30th day of each month, not in advance; and
(b) the sum of Five Hundred Dollars ($500) per month payable on the 30th
day of each month, not in advance, to offset the expenses and costs
(including expenses and costs incurred in obtaining and operating an
automobile) incurred in connection with the performance of the
Consultant's services hereunder (for greater certainty, any and all
expenses and costs incurred by the Consultant in excess of such
offsetting payment shall be the sole responsibility of and borne by
the Consultant).
7. Termination
This Agreement shall terminate upon the death of the Consultant or
declaration by a court of competent jurisdiction that the Consultant is a
mentally incompetent person or incapable of handling his affairs due to mental
incompetency and may be terminated:
(a) at any time by mutual agreement of the Corporation and the Consultant
in writing;
(b) by either the Consultant or the Corporation without cause at any time
upon 12 months written notice;
(c) by the Corporation for just cause at any time by giving written notice
thereof to the Consultant. Without limiting the generality of the
foregoing, "just cause" shall include:
(i) any cause which would entitle the Corporation at law to terminate
the service of the Consultant without either notice or pay in
lieu of notice;
(ii) a material breach of trust or duty by the Consultant;
(iii) dishonesty on the part of the Consultant;
(iv) gross negligence or incompetence on the part of the Consultant;
(v) a material breach of any provision of this Agreement;
(vi) inability of the Consultant as a result of bona fide illness,
physical or mental, to attend on a fully time basis, to his
duties hereunder for a period of twenty-four (24) weeks, which
period shall be deemed to commence on the first business day that
the Consultant does not attend to his duties hereunder on a full
time basis, statutory holidays and vacations excepted, and to
continue until the Consultant has resumed attendance to his
duties hereunder on a full time basis for thirty (30) consecutive
business days;
(vii) if the Consultant files an assignment in bankruptcy or is
adjudicated a bankrupt;
(viii) disobedience or neglect by the Consultant of any reasonable
directions of the President of the Corporation; or
(ix) any action done by the Consultant knowingly or intentionally
which is materially detrimental to the welfare or interest of the
Corporation, its reputation or the Business.
In the event of termination, either with or without cause, the Consultant shall
receive:
(a) all fees owing until the date of termination; and
(b) any benefit to which the Consultant is otherwise entitled to under
this Agreement, for services performed to date of termination.
The Consultant acknowledges that the amounts received under this section
constitute settlement in full of any claims against the Corporation in respect
of termination of this Agreement by the Corporation for just cause or otherwise.
8. Confidentiality
The Consultant covenants and agrees with the Corporation that he will not,
either during the continuance of this Agreement or at any time thereafter,
disclose any confidential information or trade secrets or any other information
received by him during the continuance of this Agreement with regard to the
financial, operational or other affairs of the Corporation to any person, nor
shall they use the same for any purpose other than in furtherance of the
Business.
9. Assignment and Disclosure of Inventions
The Consultant hereby assigns and transfer to the Corporation his entire
right, title and interest in and to all Inventions (as used in this Agreement,
"Inventions" shall include but not be limited to, ideas, improvements, designs
and discoveries), whether or not patentable and whether or not reduced to
practice, made or conceived by the Consultant (whether made solely by him or
jointly with others) during the term of this Agreement which relate in any
manner to the Business or the actual or demonstrably anticipated business, work,
undertaking or research and development of the Corporation or its subsidiaries
or results from or are suggested by any task assigned to the Consultant or work
performed by him for or on behalf of the Corporation or its subsidiaries either
alone or jointly with any other employee or agent of the Corporation and
acknowledge that all such Inventions are the sole property of the Corporation
(including, without limitation, Inventions relating to controlled release drugs,
topical insulin, intra-nasal insulin and liposomes creams). The Consultant shall
disclose such Inventions promptly in writing to the President of the Corporation
in order to permit the Corporation to claim rights to which he may be entitled
under this Agreement. The Consultant shall, at the Corporation's request,
promptly execute written assignments of title to the Corporation for any
Invention required to be assigned by this Agreement (an "Assignable Invention")
and will preserve any such Assignable Invention as confidential information of
the Corporation. Upon request, the Consultant shall assist the Corporation or
its nominee at the Corporation's expense during and at any time subsequent to
the termination of this Agreement, in every reasonable way, in obtaining for the
Corporation's benefit patents and copyrights for Assignable Inventions in any
and all jurisdictions, which Inventions shall be and remain the sole and
exclusive property of the Corporation or its nominee whether or not patented or
copyrighted and shall execute such papers and perform such lawful acts as the
Corporation deems to be necessary to allow him to exercise all rights, title and
interest in such patents and copyrights. The request and at its expense all such
documents, including applications for patents and copyrights and assignments of
Inventions, patents and copyrights to be issued therefor, as the Corporation may
determine are necessary or desirable to apply for and obtain patents and
copyrights on Assignable Inventions in any and all countries and/or to protect
the interests of the Corporation or its nominees in such Inventions, patents and
copyrights and to vest title thereto in the Corporation or its nominee.
10. Severability
In the event that any covenant or portion of any covenant contained in this
Agreement shall be unenforceable or be declared invalid for any reason
whatsoever by a court of competent jurisdiction, such unenforceability or
invalidity shall not affect the enforceability or validity of the remaining
covenants or portion of such covenant, and such unenforceable or invalid
covenant or portion shall be severable from the remainder of this Agreement.
11. Non-Transferability
Neither the Consultant, nor any person claiming through the Consultant,
shall have any right to commute, anticipate, encumber or dispose of any payment
hereunder, which payments and rights thereto are expressly declared
non-assignable and non-transferable, except as otherwise specifically provided
herein.
12. Waiver
The failure of either party to insist upon performance of, or the waiver by
any party of a breach of, any terms or conditions of this Agreement shall not be
construed as a waiver of the future performance of such term or condition, and
the rights and obligations of either party with respect thereto shall continue
in full force and effect.
13. Notices
All notices required or permitted to be given by one party to the other
shall be given in writing by personal delivery or by registered mail, postage
prepaid, addresses to such other party or delivered to such other party as
follows:
(a) to the Corporation, addressed to the attention of the President, at:
00 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
(b) to the Consultant at:
0000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx
X00 0X0
Or at such other address as may be given by either of them to the other in
writing from time to time and such notices shall be deemed to have been received
when delivered, or, if mailed, five (5) business days following the date of
mailing thereof; provided that if regular mail service shall be interrupted, any
mailed notice shall be deemed to have been received five (5) business days
following the resumption of normal mail service.
14. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
15. Currency
All dollar amounts referred to in this Agreement are in Canadian funds.
16. Binding Effect
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective legal personal representatives, successors
and assigns, save and except as otherwise specifically provided herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENEREX PHARMACEUTICALS INC.
Per: /S/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: President
/S/ Xxxxxx Xxxx
-------------------------- ---------------------------------
Witness XX. XXXXXX XXXX
CONSULTING AGREEMENT
THIS ADDITION IS MADE TO AGREEMENT made as of the 1st day of October, 1996
BETWEEN:
GENEREX PHARMACEUTICALS INC.
(the "Corporation")
XX. XXXXXX XXXX
(the "Consultant")
Page 4, Clause 9
Further to the clause 9 of this Agreement, in consideration for the assignment
of the intellectual properties specified in schedule A, the consultant will be
receiving further compensation in the form of financial remuneration and shares,
subject to negotiation by separate agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first written above.
GENEREX PHARMACEUTICALS INC.
Per: /S/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: President
/S/ Xxxxxx Xxxx
-------------------------- ---------------------------------
Witness XX. XXXXXX XXXX
