EXHIBIT 10.1.3
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;
(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
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.
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
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Xxxxxx Xxxx, individually and on behalf
Of Galaxy Technology, Canada
GENEREX PHARMACEUTICALS INC.
Per: S/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, President
Per: S/E. Xxxx Xxxxx
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E. Xxxx Xxxxx, Chairman
GENEREX BIOTECHNOLOGY CORP.
Per: S/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, President
Per: S/E. Xxxx Xxxxx
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E. Xxxx Xxxxx, Chairman
GHI, INC.
Per: S/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, President
Per: S/E. Xxxx Xxxxx
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E. Xxxx Xxxxx, Chairman
