GENEREX BIOTECHNOLOGY CORPORATION
AND
ELI LILLY AND COMPANY
DEVELOPMENT AND LICENSE AGREEMENT*
September 5, 2000
* This copy of the Agreement has been redacted to omit trade secrets and
confidential commercial and financial information ("Confidential
Information"). Text omissions are indicated by asterisks (i.e., "* * * *")
in the place of omitted text. Pagination of this version of the Agreement
differs from the non-redacted version due to the textual omissions.
Section and paragraph designations, however, have been maintained.
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DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement ("Agreement") is made and entered
into as of the 5th day of September, 2000 (the "Effective Date") by and between
GENEREX BIOTECHNOLOGY CORPORATION, a Delaware corporation, having its principal
place of business at 33 Harbour Square, Suite 202, Toronto, Canada M5J 2G2
("Generex") and ELI LILLY AND COMPANY, an Indiana corporation, having its
principal place of business at Lilly Corporate Center, Indianapolis, Indiana
46285 ("Lilly"). Generex and Lilly are sometimes referred to herein individually
as a "Party" and collectively as "Parties," and references to "Generex" and
"Lilly" shall include their respective Affiliates.
Recitals
WHEREAS, Lilly is engaged in discovering, developing and marketing
pharmaceutical products.
WHEREAS, in pursuit of these objectives, Lilly has developed and is
commercializing insulin products for markets throughout the world.
WHEREAS, Generex is engaged in the research and development of proprietary
devices and formulations for buccal drug delivery.
WHEREAS, Lilly desires to pursue development of a Generex Formulation (as
defined below) of insulin together with a suitable Device (as defined below) for
buccal delivery of insulin and at Lilly's option certain other compounds.
WHEREAS, Lilly desires to obtain an exclusive, worldwide license to
commercialize Products (as defined below) based upon such Formulation of insulin
together with a suitable Device developed pursuant to the terms of this
Agreement.
WHEREAS, Generex desires to have Lilly pursue development of such
Formulation together with a suitable Device and to grant an exclusive license
thereto pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises contained in this Agreement, the Parties hereto agree as follows
and intending to be legally bound hereby:
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ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Adverse Event" means any untoward happening in a patient or subject
during or after administration of Compound via Device, without regard to a
causal relationship between Compound, Device and the event. "Serious
Adverse Event" means any Adverse Event with the following conditions:
death, life-threatening, hospitalization, permanent disability, or
congenital anomaly.
1.2 "Affiliate" of a Party hereto means any corporation or business entity of
which such Party, at the time in question, is directly or indirectly
controlling, controlled by, under common control, owned by or owns an
amount of more than * * * * of the stock having the right to vote for
directors thereof or demonstrates controlling management presence (i.e.,
possesses the power to direct or cause the direction of the management and
policies of such entity) at * * * * or less of the aforementioned stock.
1.3 "Calendar Quarter" means the three-month period ending on March 31, June
30, September 30, or December 31.
1.4 "Calendar Year" means the twelve-month period ending on December 31.
1.5 "cGCP" means the then current Good Clinical Practice Standards promulgated
or endorsed by the FDA (or in the case of foreign jurisdictions, comparable
regulatory standards), including those regulations or guidelines expressed
or implied in the regulatory filings made with respect to the Product with
the FDA or foreign regulatory agents.
1.6 "cGLP" means the then current Good Laboratory Practices promulgated or
endorsed by the FDA (or in the case of foreign jurisdictions, comparable
regulatory standards), including those procedures expressed or implied in
the regulatory filings made with respect to the Product with the FDA or
foreign regulatory agents.
1.7 "cGMP" means current Good Manufacturing Practices as defined in the U.S.
regulations 21 CFR ss.210 et seq., and the EEC Guide to Good Manufacturing
Practices for Medicinal Products (Vol. IV Rules Governing Medicinal
Products in the European Community 1992).
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1.8 "Change of Control" means, with respect to either Party, any of the
following events: (i) the acquisition by any Person or Group, other than a
Person or Group controlling such Party as of the Effective Date, of
"beneficial ownership" (as defined in Rule 13d-3 under the United States
Securities Exchange Act of 1934, as amended), directly or indirectly, of
* * * * or more of the shares of such Party's capital stock the holders of
which have general voting power under ordinary circumstances to elect at
least a majority of such Party's Board of Directors or equivalent body (the
"Board of Directors") (the "Voting Stock"); (ii) the first day of which
less than two-thirds of the total membership of such Party's Board of
Directors shall be Continuing Directors (as such term is defined below);
(iii) the approval by the shareholders of such Party of a merger, share
exchange, reorganization, consolidation or similar transaction of such
Party (a "Transaction"), other than a Transaction which would result in the
Voting Stock of such Party outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than * * * * of the Voting
Stock of such Party or such surviving entity immediately after such
Transaction; or (iv) approval by the shareholders of such Party of a
complete liquidation of such Party or a sale or disposition of all or
substantially all of the assets of such Party. For purposes of this
definition, "Continuing Directors" means individuals serving as of the date
hereof on such Party's Board of Directors and any individuals elected after
the date hereof whose election or nomination was approved by at least a
majority of the Continuing Directors serving at the time.
1.9 "Compound" means insulin, * * * *, fragments, mimetics, peptides and
related proteins acting in a similar manner to insulin including, without
limitation, * * * *.
1.10 "Compound Product" means a category of Product developed in the Field that
all contain the named Compound. For example, one category of Compound
Product will be "Insulin Product" where the term Insulin Product shall
include all Products that contain insulin. Other categories of Compound
Product could be * * * *.
1.11 "Compulsory License" means a compulsory license under the Generex Patents
or Generex Know-How obtained by a Third Person through the order, decree,
or grant of a competent governmental authority, authorizing such Third
Person to manufacture, use, sell, offer for sale or import a Product in a
particular Territory.
1.12 "Confidential Information" means each Party's confidential information,
inventions, know-how (including Program Know-How) and data, and shall
include, without limitation, information relating to research and
development plans, experiments, results and plans, the existence of
compounds, therapeutic leads, candidates and products, clinical and
preclinical data, trade secrets and
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manufacturing, marketing, financial, regulatory, personnel and other
business information and plans, whether in oral, written, graphic or
electronic form and whether in existence as of the Effective Date or
developed or acquired later, except where such information (i) is public
knowledge at the time of disclosure by the disclosing Party, (ii) becomes
public knowledge through no fault of the receiving Party, (iii) was in the
possession of the receiving Party at the time of disclosure by the
disclosing Party as evidenced by proper business records, or (iv) is
disclosed to the disclosing Party by a Third Person, to the extent such
Third Person's disclosure was not made on a confidential basis or in
violation of any obligation of confidentiality.
1.13 "Control" (including variations thereof such as "Controls," "Controlling"
and "Controlled") means the ability to grant a license or sublicense as
provided for herein without violating the terms of any agreement or other
arrangement with any Third Person.
1.14 "Cover" (including variations thereof such as "Covering", "Covered", and
"Coverage") means that the manufacture, use, import, offer for sale or sale
of a Product would infringe a Valid Claim; provided, with respect to a
process or manufacturing patent, that such a Valid Claim therein
effectively precludes a Third Person from manufacturing, using, importing,
offering for sale, or selling the Product. The determination of whether a
Product is Covered by a particular Valid Claim shall be made on a
country-by-country basis. A Valid Claim shall be deemed to provide
effective preclusion hereunder where (i) there is no competing buccal spray
product being marketed, or (ii) if a buccal spray product is being marketed
by a competitor, it infringes a Valid Claim (including any period in which,
and provided that, the Valid Claim is being litigated).
1.15 "Device" means any device for the buccal delivery of drugs designed and/or
manufactured by or for Generex or Lilly. "Standard Device" means the
preliminary device Generex is currently developing for use for buccal
delivery of drugs, which is substantially similar to that represented by
the prototype in existence as of the Effective Date, as well as any
improvements and/or changes (material or otherwise) to the Device which
occur as a result of development efforts hereunder after the Effective
Date. Specifications for the Standard Device represented by the prototype
in existence as of the Effective Date will be provided by Generex as
Exhibit F and which shall include updates and amendments by the Parties
thereto. Unless otherwise noted, the use of the term "Device" in this
Agreement is not intended to indicate the definition of "device" in the
Federal Food, Drug and Cosmetic Act, as amended or to definitions by other
regulatory authorities in the Territory.
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1.16 "EMEA" means European Medicine Evaluation Agency or any successor agency
having the administrative authority to regulate the approval for marketing
of new human pharmaceutical or biological therapeutic products in the
European Union.
1.17 "FDA" means the United States Food and Drug Administration or any successor
agency having the administrative authority to regulate the approval for
marketing of new human pharmaceutical or biological therapeutic products in
the United States.
1.18 "Field" means the buccal delivery of Product.
1.19 "Generex Formulation" or "Formulation" means the formulation owned and
Controlled by Generex that Generex has been researching including research
carried out in Phase I and Phase II Clinical Trials prior to the Effective
Date. A description of the Formulation including the quantity and identity
of all ingredients and a general description of how to make such
Formulation have been provided by Generex to Lilly by letter dated the
Effective Date.
1.20 "Generex's Fully Burdened Manufacturing Costs" means the sum of the
following costs incurred by Generex to the extent allocable to Products and
components thereof sold to Lilly: Generex's cost of direct materials,
direct labor and manufacturing overhead. For avoidance of any doubt,
notwithstanding anything to the contrary in this Agreement, Generex's Fully
Burdened Manufacturing Cost shall specifically exclude: * * * *. Generex's
Fully Burdened Manufacturing Cost shall be calculated in a manner
consistent with Generally Accepted Accounting Principles ("GAAP")
consistently applied. Furthermore, the methodology to be used in making the
allocations referred to above shall be disclosed by Generex to Lilly and
shall be consistent with Generex's methodology for other products and shall
be consistent from year-to-year.
1.21 "Generex Know-How" means all Know-How that is (a) owned and Controlled by
Generex or any of its Affiliates before the Effective Date of this
Agreement, and (b) useful or necessary in the Field. Generex Know-How does
not include Generex Patent Rights.
1.22 "Generex Patent Rights" means (a) all patent applications including any
provisionals, substitutes, renewals, registrations, confirmations,
re-examinations, extensions, reissues, divisionals, continuations,
continued prosecutions, continuation-in-part and any foreign counterparts
thereof; and (b) any patents that issue from such patent applications that
contain or result in a Valid Claim that Covers a method, apparatus,
composition, formulation, including the Generex Formulation, or process
necessary or useful in the Field, which patent or patent application is
owned or Controlled by Generex or any of its Affiliates, as of the
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Effective Date. A list of Generex Patent Rights will be provided by Generex
to Lilly and attached to this Agreement as Exhibit E and shall include
updates and modifications provided quarterly by Generex. Generex Patent
Rights do not include Generex Know-How.
1.23 "Generex Rights" means Generex Patent Rights and Generex Know-How.
1.24 "Group" means two (2) or more Persons acting in concert to acquire and
jointly exercise control of a Party.
1.25 "IND" means an Investigational New Drug application filed with FDA or any
equivalents of such items in countries within the Territory.
1.26 "Initiation of Phase III Clinical Trials" means the first administration of
a Compound Product in a patient pursuant to Phase III Clinical Trials
conducted by Lilly.
1.27 "Intellectual Property Rights" means all patents, copyrights, trademarks,
trade secrets and know-how necessary to make, use, sell, offer for sale,
and import Products and/or components thereof.
1.28 "Know-How" means any and all information, data, items, material and
knowledge in the Field including, without limitation, any and all
suggestions, descriptions, ideas, inventions that are not patented,
know-how, trade secrets, techniques, strategies, methods, syntheses,
processes, practices, skills, experience, documents, apparatus, devices,
chemical formulations, compounds, composition of matter, chemical samples,
assays, screens, databases, databases structures and data analysis methods
in the Field.
1.29 "Lilly Know-How" means all Know-How that is (a) owned and Controlled by
Lilly or any of its Affiliates before the Effective Date of this Agreement,
and (b) useful or necessary in the Field. Lilly Know-How does not include
Lilly Patent Rights.
1.30 "Lilly Patent Rights" means (a) all patent applications including any
provisionals, substitutes, renewals, registrations, confirmations,
re-examinations, extensions, reissues, divisionals, continuations,
continued prosecutions, continuation-in-part and any foreign counterparts
thereof; and (b) any patents that issue from such patent applications that
contain or result in a Valid Claim that Covers a method, apparatus,
composition, formulation, or process necessary or useful in the Field,
which patent or patent application is owned or Controlled by Lilly or any
of its Affiliates, as of the Effective Date.
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1.31 "Lilly Rights" means Lilly Patent Rights and Lilly Know-How.
1.32 "Major Market" means * * * *.
1.33 "Manufacturing Agreement" means a manufacturing and supply agreement to be
negotiated by the Parties if Generex is selected to supply the initial
Product to Lilly as set forth in Article 7 of this Agreement.
1.34 "Manufacturing Responsibilities Document" or "MRD" means a document that
may contain certain specifications, procedures, logistics and personal
contacts relating to the manufacture for sale and supply of the Product by
Generex to Lilly that will be compiled and agreed upon between the Parties.
The MRD contains Product information such as information related to Product
quality and regulatory compliance. The MRD shall include, as part of the
MRD or as a separate document, a Quality Responsibilities Document which
defines quality activities and responsibilities of each Party. The MRD also
describes how Generex and Lilly will work together in coordinating the
forecasting, manufacturing, packaging, ordering, storing and transporting
of the Product. The MRD may be modified from time to time through the
issuance of a revision signed on behalf of each of the Parties by
authorized representatives incorporating the modification and stating the
effective date of the revision. A non-exhaustive table of contents of the
MRD is attached hereto as Exhibit B of this Agreement.
1.35 "MHW" means the Japanese Ministry of Health and Welfare, or any successor
agency having the administrative authority to regulate the approval for
marketing of new human pharmaceutical or biological therapeutic products in
Japan.
1.36 "Net Sales" means, with respect to a Product, the gross amount invoiced by
Lilly (including an Affiliate and/or sublicensee of Lilly) to Third
Persons, for the Product in the Territory, less:
(a) Trade, quantity and cash discounts allowed;
(b) Commissions, discounts, refunds, rebates, chargebacks, retroactive
price adjustments, and any other customary allowances paid to Third
Persons which effectively reduce the net selling price;
(c) Actual Product returns and allowances;
(d) That portion of the sales value associated with non-pharmaceutical
drug delivery devices other than Generex's Standard Device;
(e) That portion of the invoice amount that represents any tax imposed on
the production, sale, delivery or use of the Product, including,
without limitation, sales, use, excise or value added taxes;
(f) Allowance for actual distribution expenses not to exceed * * * *; and
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(g) Any other similar and customary deduction from Net Sales provided that
such deduction is in accordance with U.S. GAAP, or mutually agreed to,
in writing, by the Parties.
Such amounts shall be determined from the books and records of Lilly
maintained in accordance with GAAP consistently applied. Lilly further
agrees that in determining such amounts, it will use Lilly's then current
standard procedures and methodology, including Lilly's then current
standard exchange rate methodology for the translation of foreign currency
sales into United States Dollars ("U.S. Dollars").
In the event that the Product is sold in combination with any other
active compound(s) and/or ingredients ("Combination Product"), the Net
Sales of the Product, for the purposes of determining royalty payments,
shall be determined by multiplying the Net Sales (as defined above) of the
Combination Product by the fraction A / (A+B), where A is the weighted
average sale price of the Product when sold separately in finished form,
and B is the weighted average sale price of the other product(s) sold
separately in finished form.
In the event that the weighted average sale price of the Product can
be determined but the weighted average sale price of the other product(s)
cannot be determined, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the
Combination Product by the fraction A / C, where A is the weighted average
sale price of the Product when sold separately in finished form and C is
the weighted average selling price of the Combination Product.
In the event that the weighted average sale price of the other
product(s) can be determined but the weighted average sale price of the
Product cannot be determined, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the
Combination Product by the following formula: one (1) minus (B / C), where
B is the weighted average sale price of the other product(s) when sold
separately in finished form and C is the weighted average selling price of
the Combination Product.
In the event that the weighted average sale price of both the Product
and the other product(s) in the Combination Product cannot be determined,
the Net Sales of the Product shall be deemed to be equal to fifty percent
(50%) of the Net Sales of the Combination Product.
The weighted average sale price for a Product, other product(s), or
Combination Product shall be calculated at the end of each Calendar Year
and such price shall be used during all applicable royalty reporting
periods for the entire following Calendar Year. When determining the
weighted average sale
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price of a Product, other product(s), or Combination Product, the
weighted average sale price shall be calculated by dividing the sales
dollars (translated into U.S. Dollars) by the units of active ingredient
sold during the twelve (12) months (or the number of months sold in a
partial Calendar Year) of the preceding Calendar Year for the respective
Product, other product(s), or Combination Product. In the initial Calendar
Year, a forecasted weighted average sale price will be used for the
Product, other product(s), or Combination Product. Any over or under
payment due to a difference between forecasted and actual weighted average
sale prices will be paid or credited in the first royalty payment of the
following Calendar Year.
In general, the Parties agree to negotiate in good faith for an
equitable determination of Net Sales of Product, on a country-by-country
basis, in the event that Lilly sells Product in such a manner that gross
sales of Product are not readily identifiable (e.g., where several products
are sold together for one price, i.e., bundling).
1.37 "New Drug Application" or "NDA" means (a) the single application or set of
applications for Products and/or pre-market approval to make and sell
commercially both a formulation of Compound and a compatible commercial
Device to be marketed as Product, filed by Lilly with the appropriate
regulatory authority within the Territory, and (b) any related
registrations with or notifications to the appropriate regulatory authority
within the Territory. This term does not include any of Lilly's Regulatory
Approvals in the Territory for any insulin products other than the Products
contemplated in this Agreement.
1.38 "Option Compound" means * * * * which Lilly has an option under this
Agreement to develop and commercialize a product containing such compound
together with any and all Devices and/or components thereof for buccal
delivery.
1.39 "Person" means a natural person, a corporation, a partnership, a trust, a
joint venture, a limited liability company, any governmental authority or
any other entity or organization.
1.40 "Phase I Clinical Trials" means small scale human clinical trials conducted
in normal volunteers and designed to evaluate the safety of the Product.
1.41 "Phase II Clinical Trials" means small scale human clinical trials
conducted in patients and designed to indicate a statistically significant
level of efficacy for Product in the treatment of the disease state being
studied, as well as to obtain some indication of the dosage regimen
required.
1.42 "Phase III Clinical Trials" means large scale human clinical trials
conducted in patients and designed to establish Product efficacy in the
treatment of the disease
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state being studied and required to obtain clinical registration of Product
with health regulatory authorities such as the FDA.
1.43 "Product(s)" means any and all formulations of Compound together with any
and all Devices and/or components thereof under development pursuant to
this Agreement or in final form for sale in the Field.
1.44 "Product Development Plan" means a plan as set forth in Section 2.5 of this
Agreement that fully addresses the key elements necessary for the
successful development of Product(s) under this Agreement.
1.45 "Product Development Program" means the development of the Product and
implementation of the Product Development Plan (as amended from time to
time by the Steering Committee), as set forth in Sections 2.1 and 3.1 of
this Agreement.
1.46 "Program Know-How" means all Know-How that is discovered or developed by
either Party on or after the Effective Date pursuant to research carried
out under the Product Development Program and which is reasonably useful or
necessary in the Field. Program Know-How does not include Program Patent
Rights or Regulatory Material.
1.47 "Product Launch" means the first commercial sale of a particular Product
for use by the general public by Lilly or its sublicensees in any
particular country following final Regulatory Approval required for
marketing of the Product in such country.
1.48 "Program Patent Rights" means (a) all patent applications including any
provisionals, substitutes, renewals, registrations, confirmations,
re-examinations, extensions, reissues, divisionals, continuations,
continued prosecutions, continuation-in-part and any foreign counterparts
thereof; and (b) any patents that issue from such patent applications that
contain or result in a Valid Claim that Covers a method, apparatus,
composition, formulations excluding the Generex Formulation or process
necessary or useful in the Field which invention is conceived or actually
first reduced to practice after the Effective Date pursuant to the joint
research carried out by the Parties under the Product Development Program.
1.49 "Program Rights" means Program Patent Rights and Program Know-How.
1.50 "Quality System Regulations (QSRs)" means current Quality System
Regulations as defined in the U.S. Code of Federal Regulations, 21 CFR Part
820 and, in the case of foreign jurisdictions, comparable regulatory
standards.
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1.51 "Regulatory Approval" means (a) in the United States, approval by the FDA
of an NDA, 510K, PMA or similar application for marketing approval, and
satisfaction of any related applicable FDA registration and notification
requirements (if any), and (b) in any country other than the United States,
approval by regulatory authorities having jurisdiction over such country of
a single application or set of applications comparable to an NDA and
satisfaction of any related applicable regulatory and notification
requirements, if any, together with any other approval necessary to make
and sell pharmaceuticals and medical devices commercially in such country.
1.52 "Regulatory Material" means regulatory submissions and approvals including,
without limitation, clinical trial data, Toxicology and Bioavailability
Studies, IND, NDA, clinical trial exemption, governmental pricing
approvals, and any other foreign equivalents to the extent such material is
generated under this Agreement and is solely related to the Field.
1.53 "Royalty Period" means the period commencing on Product Launch of a
particular Product in the particular country at issue until the later of
either: (i) the expiration date of the last-to-expire patent of any
relevant Generex Patent Rights or Program Patent Rights (a) existing in
such country at issue which Covers the use, sale, offer for sale or
importation of the Product at issue, or (b) existing in the country in
which the Product is manufactured which Covers such manufacture for use,
sale, or importation in the country at issue in such a manner that the use,
sale, offer for sale, or importation of such Product by Lilly in the
country at issue or the manufacture of the Product in the country of
manufacture would constitute infringement of such Generex Patent Rights and
Program Patent Rights but for the license granted to Lilly under Section
5.1 and Section 5.2, hereof or (ii) * * * *. In addition to the foregoing,
if the Royalty Period expires in a particular country as to a particular
Product and a Generex Patent or Program Patent subsequently issues with the
effect that either Covers (x) the use, sale, offer for sale, or importation
of the Product in the country at issue or Covers (y) the manufacture of
such Product would constitute infringement of such subsequently issued
patent but for the license granted to Lilly under Sections 5.1 and 5.2
hereof, then the Royalty Period as to that particular Product in that
particular country shall include an additional period commencing on the
date such subsequent patent issues and ending at such time as such
subsequent patent (i) no longer Covers the Product at issue or (ii) expires
or is abandoned, whichever occurs first.
1.54 "Steering Committee" means a joint committee responsible for strategic
management of the Product Development Program, as set forth in Section 2.2
of this Agreement.
1.55 "Territory" means the world.
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1.56 "Third Person" means any Person other than Lilly, Generex, or an Affiliate
or sublicensee of either of them.
1.57 "Toxicology and Bioavailability Studies" means all non-human toxicology and
absorption, distribution, metabolism and elimination (ADME) studies which
are needed to conduct Phase I, Phase II or Phase III Clinical Trials and
obtain Regulatory Approval for Product.
1.58 "Valid Claim" means any claim issued in an unexpired patent which has not
been held unenforceable, unpatentable or invalid by a decision of a court
or other governmental agency of competent jurisdiction following exhaustion
of all possible appeal processes, and which has not been admitted to be
invalid or unenforceable through reissue, reexamination or disclaimer.
1.59 "Wasted Compound" means, to the extent that Generex performs any research
and development activities or manufactures Product under this Agreement,
unreasonable wastage, loss or other damage to Compound that exceeds a
certain wastage limit to be negotiated under the Manufacturing Agreement or
that is due to Generex's negligence, misconduct or noncompliance with the
Product Development Plan or Manufacturing Agreement that renders the
Compound unusable, as set forth in Sections 3.5 and 7.1(f)(5) of this
Agreement.
ARTICLE 2
PRODUCT DEVELOPMENT PROGRAM
SCOPE, GOVERNANCE AND ADMINISTRATIVE MATTERS
2.1 Purpose and Scope of Development. In accordance with, and subject to, the
terms described herein, the Parties agree to collaborate in the research
and development of Product(s) using the Generex Formulation and Device for
the ultimate purpose of commercialization by Lilly of such Product(s). As
more fully described in Article 3, Generex will have principal
responsibility for any modification to the Generex Formulation until such
time as the Generex Formulation is determined by Lilly to be substantially
suitable for development and commercialization, any non-clinical research
and development of the Formulation (including its use in the Device), and
any Device research and development. Lilly will have principal
responsibility for clinical development and sole responsibility for
commercialization of Product(s).
Each Party agrees to pursue their respective development obligations
under the Product Development Program at least as diligently as the Party
develops its other products of similar probabilities of technical success,
commercial potential and at similar stages of development, provided that
failure
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by Lilly or Generex to meet its diligence obligation due to reasons beyond
Lilly's or Generex's control, respectively, including lack of technical
success of the Product(s), will not constitute lack of diligence for
purposes of this Agreement.
2.2 Steering Committee. The Steering Committee shall be responsible for overall
direction and management of the Product Development Program. The operation
and authority of the Steering Committee shall be as follows:
(a) Responsibilities. The Steering Committee shall have general authority
over the strategic direction and overall management of the Product
Development Program. The Steering Committee shall periodically review
such Plan from a strategic perspective and make changes as it deems
necessary to accomplish the purpose of the Product Development
Program. The Steering Committee shall also consider any amendments to
the Product Development Plan proposed by the Working Team described in
Section 2.3, below. Additionally the Steering Committee will have
responsibility for articulation of the strategy consistent with the
agreement between the Parties, for assuring clarity of roles and
responsibilities in implementation of the Product Development Program,
for assuring resources are allocated appropriately, and that
appropriate performance measures are in place. The Steering Committee
will also be responsible for ensuring that both Parties are kept
apprised of progress and any issues that may lead to deviation from
the Product Development Plan.
(b) Review of Activities. The Steering Committee shall periodically review
the results of the Product Development Program to ensure, to the
extent reasonably practical, that the Parties are providing their
commitments of both human and financial support for the research and
development of a Product and the fulfillment of all contractual
obligations between the Parties. The Steering Committee shall resolve
any disputes referred to it by the Working Team in accordance with
paragraph (e) below.
(c) Representation. Generex and Lilly shall each appoint * * * *
representatives as their representatives to serve on the Steering
Committee. One member from each Party will be designated as the
Program Leader for their respective Party. Such Program Leader shall
serve as a contact person for their respective Party. The initial
members of the Steering Committee are listed in Schedule 2.2. Either
Party may change its representation on the Steering Committee at any
time upon written notification to the other Party.
(d) Meetings. The Steering Committee shall meet from time to time as
determined by the Steering Committee members. It is expected that the
Steering Committee shall meet in person at least four (4) times per
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Calendar Year. The location of Steering Committee meetings shall
alternate between Generex's and Lilly's offices unless otherwise
agreed by the Parties. Each Party will bear all expenses associated
with attendance of its employees and consultants at such meetings. If
the Steering Committee members all agree, a meeting may be held by
telephone. Consultants and non-member employees of the Parties may
attend meetings of the Steering Committee as required to further the
Product Development Program.
(e) Minutes. Minutes of all such meetings setting forth decisions of the
Steering Committee relative to the Product Development Program will be
prepared by the Party hosting the meeting. Minutes shall be deemed
approved unless any member of the Steering Committee objects to the
accuracy of such minutes within * * * * of receipt.
(f) Decisions. Decisions of the Steering Committee shall be made by
majority vote. If the Steering Committee is unable resolve a dispute,
then the issue shall be referred to the CEO of Generex and the
President of the Diabetes and Growth Disorders Group of Lilly (or
successor position) for further discussion and resolution. These
individuals shall, as soon as practicable, attempt in good faith to
resolve the dispute and, thereby, make the decision on behalf of the
Steering Committee. These individuals may obtain the advice of other
employees as they deem necessary or advisable in order to make the
decision. If such issue is not resolved within thirty (30) days after
it has been referred to such persons for resolution, the President of
the Diabetes and Growth Disorders Group (or successor position) at
Lilly shall make the final decision regarding such issue.
2.3 Working Team. The day-to-day management of the Product Development Program
for a particular Product shall be the responsibility of the Working Team
for that Product. The Working Team shall be subordinate to the Steering
Committee, which shall have the right upon timely appeal as provided below
to review, accept, reject or modify all actions of the Working Team. A
Working Team may have responsibility for the development of more than one
Product, if practical. The Steering Committee will ensure that the Working
Team has clarity as to its responsibilities under the Product Development
Program in accordance with the expectations of the Steering Committee. The
operation and responsibility of the Working Team shall be as follows:
(a) Responsibilities of Working Team. The Working Team shall be
responsible for planning, managing, directing and overseeing specific
activities under this Agreement, including but not limited to,
non-clinical research and development of the Generex Formulation for
use in the Device, stability testing, toxicology studies,
bioavailability studies,
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activities relating to manufacture of both clinical supplies and
Product, conduct of clinical trials and preparation of regulatory
submissions.
In order to accomplish these objectives, the Working Team
shall implement a Product Development Plan. Pursuant to the Product
Development Plan, the Working Team shall (1) allocate tasks and
coordinate activities required to carry out the objectives of the
Product Development Program, (2) monitor progress of the Product
Development Program, and (3) discharge such other obligations as are
assigned to the Working Team under this Agreement or by the Steering
Committee.
(b) Representation. Within * * * * of the Effective Date, the Steering
Committee shall appoint a Working Team consisting of Lilly
representatives as needed from various functional areas such as
medical, ADME, Toxicology, CM&C and the like and Generex
representatives to consult on the research and development activities
carried out by the Working Team. Either Party may change its
representatives on the Working Team at any time by written
notification to the other Party.
(c) Meetings. The Working Team shall meet as frequently as necessary to
accomplish the objectives of the Product Development Plan. The
location of such meetings will alternate between the offices of
Generex and Lilly, unless the Parties agree otherwise. Each Party will
bear all expenses associated with attendance of its employees and
consultants at such meetings.
(d) Decisions. Decisions of the Working Team shall be made by unanimous
consensus when possible, and otherwise by majority vote, subject to
the right of either Party to appeal any decision of the Working Team
to the Steering Committee. No vote of the Working Team may be taken
unless a majority of the members of the Working Team are present,
including at least one (1) representative of each Party.
(e) Minutes. The Working Team shall keep minutes of any meeting at which a
decision is to be reached and shall circulate such minutes to all
members of the Working Team and the Steering Committee. Responsibility
for the preparation of the minutes shall rest with the hosting Party.
Minutes shall be deemed approved unless any member of the Working Team
or the Steering Committee objects to the accuracy of such minutes
within five (5) business days of receipt.
(f) Disputes. Any Party desiring to appeal a decision of the Working Team
to the Steering Committee shall make its appeal in writing to all
Steering Committee members within * * * * of receipt of the minutes
for the meeting at which the decision was made. Action pursuant to any
decision
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appealed to the Steering Committee shall be suspended pending a
determination by the Steering Committee to accept, reject or modify
the decision of the Working Team. Any Party may at any time request
reconsideration of any issue if such Party in good faith believes that
substantial changes in circumstances have occurred that necessitates
such reconsideration.
2.4 Sub-Teams. The Steering Committee and Working Team (with the approval of
the Steering Committee), may appoint one (1) or more Sub-Teams to perform
such functions as the Steering Committee or Working Team, respectively, may
determine necessary or useful. Unless a Party elects not to participate on
a particular Sub-Team, all such Sub-Teams shall have at least one (1)
representative of each Party. Such Sub-Teams may provide advice and make
written recommendations to the Steering Committee or Working Team, but
shall have no authority to bind the Steering Committee, Working Team or
either of the Parties.
2.5 Product Development Plan. As provided in Section 2.3, the Working Team is
responsible for the preparation, modification (if appropriate) and
implementation of a detailed development plan (the "Product Development
Plan") that fully addresses, consistent with the terms of this Agreement
and consistent with the roles of the Parties under the Product Development
Program as described in Section 3.1, the key elements reasonably necessary
for the research, development, formulation, manufacture and clinical
testing of Product through Regulatory Approval. The Product Development
Plan for the initial Product shall include at a minimum a formulation that
will meet the needs of the Parties from a scientific and business
perspective including, but not limited to, the following critieria:
* * * *. The Product Development Plan shall establish comprehensive and
detailed plans designed to accomplish the goals of the Product Development
Program and fully address * * * *.
2.6 Disagreements. Disputes not resolved by the Working Team shall be referred
to the Steering Committee. Disputes not resolved by the Steering Committee
shall be resolved in accordance with Section 2.2(e).
2.7 Governance Following Product Launch. As soon as practical following launch
of a Product in a Major Market, the Parties shall meet to review whether it
is appropriate to continue the Product Development Program for that Product
under the day-to-day management of the Working Team for that Product, or
whether the objectives of the Working Team have been substantially achieved
and it is appropriate to disband or reorganize the Working Team. Regardless
of whether the Parties elect to disband or reorganize the Working Team, the
Steering Committee shall continue to provide overall direction to the
Product Development Program for that Product.
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2.8 Quarterly Status Report. During the Product Development Program, each Party
shall provide the Steering Committee with a quarterly status report within
fifteen (15) days after the end of each Calendar Quarter that generally
summarizes research and development efforts conducted by such Party under
the Product Development Program or with regard to any research on the
Product during such Calendar Quarter. Such report shall include, without
limitation, a general summary of important events and/or milestones
achieved, personnel changes, learning points and other matters that the
Steering Committee may deem appropriate.
2.9 Subcontracting Permitted. The Parties acknowledge and agree that portions
of the work involved in the Product Development Program may be performed on
behalf of the Party responsible for work thereunder by Third Persons
provided that (a) the Working Team shall have previously obtained approval
to use such Third Person from the Steering Committee, (b) the
subcontracting Party shall first have obtained a written confidentiality
agreement with the subcontractor and written obligation to assign all
rights including any patent rights and Know-How that such subcontractor may
develop by reason of work performed under this Agreement, and (c) the work
which the subcontracting Party desires to subcontract is required to be
performed according to appropriate quality standards (i.e., cGLPs, cGMPs or
QSRs).
2.10 Miscellaneous.
(a) Meetings of the Working Team and any other team can be conducted by
telephone, if each Party so agrees.
(b) Each Party shall have reasonable access on an informal basis to
employees and agents of the other Party assigned to work on the
Product Development Program.
(c) The Steering Committee, at its discretion, may review the
qualifications of the employees and agents assigned to the Product
Development Program to determine whether such personnel are reasonably
qualified to perform the work assigned to them.
2.11 Remaining Compound. Upon Lilly's written request, Generex will return
or immediately destroy (as designated by Lilly) any Compound remaining
upon completion of the Product Development Program.
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ARTICLE 3
PRODUCT DEVELOPMENT PROGRAM
3.1 Commencement and Roles. Upon commencement of the Product Development
Program, the Parties shall have certain roles and responsibilities as
detailed in this Agreement. Although each of the Parties has been given
principal responsibility for certain activities, all significant decisions
with respect to such activities (other than those relating to regulatory
strategy and commercialization of Product which shall be the sole
responsibility of Lilly) shall be made under the purview of the Working
Team and Steering Committee. The Parties shall provide the Steering
Committee and the Working Team with quarterly status reports summarizing
their efforts under this Agreement, as described in Section 2.8.
(a) Generex's Role. As of the Effective Date and subject to the terms
herein, and in accordance with Lilly's role as described in Section
3.1(b), * * * *.
(b) Lilly's Role. As of the Effective Date and subject to the terms
herein, Lilly shall be responsible for all aspects of research and
development necessary to establish that the Generex Formulation is
substantially suitable to develop and commercialize and all aspects of
Toxicological and Bioavailability studies and clinical development for
Product in accordance with the Product Development Plan.
* * * *
3.2 Funding of Product Development Program. * * * *
3.3 Funding of Subsequent Compound Product Development Programs. The cost
sharing arrangement as set forth in Section 3.2 shall apply with respect to
Lilly's development of any subsequent Compound Product pursued by Lilly
under this Agreement.
3.4 Transfer of Generex Know-How. As soon as reasonably practicable and to the
extent reasonably necessary or useful to facilitate Lilly's furtherance of
its responsibilities under the Product Development Program, Generex shall
furnish all Generex Know-How to Lilly that is pertinent to the research and
development of the Generex Formulation including, without limitation,
transferring possession and legal ownership to all appropriate Regulatory
Materials, if any, and shall cause any subcontractor used by Generex to
provide services hereunder to transfer possession and legal ownership to
all appropriate Regulatory Materials, except for legal title to the DMFs
(as defined in Section 4.1), if any, which shall be handled in accordance
with Section 4.1 of this Agreement.
3.5 Supply of Compound and Product.
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* * * *
ARTICLE 4
REGULATORY
4.1 Regulatory Filings. All regulatory strategies and filings shall be handled
by Lilly, and Lilly shall be responsible for preparing, filing, and
maintaining, and shall own, the Regulatory Material relating to Product as
set forth below:
(a) Preparation, Maintenance and Ownership. Lilly, its sub-licensees or
Affiliates shall be responsible for the registration strategies and
preparation of any regulatory filings and/or suitable applications
required in order to conduct clinical trials and achieve Regulatory
Approval (including, without limitation, achievement of marketing
approval) for Product and shall be the owner and party of record for
all such Regulatory Materials. Lilly shall have the right to request
that Generex take responsibility for preparation of regulatory filing
and/or suitable applications required to conduct trials to obtain
valid scientific evidence to support a determination that there is
reasonable assurance that the Device is safe and effective for its
conditions of use and is approved for marketing. Lilly, its
sub-licensees or Affiliates shall, further, be responsible for
managing all interactions regarding such applications and/or
regulatory filings with all regulatory authorities in the Territory.
Generex shall cooperate with Lilly, as Lilly reasonably requires in
preparing such applications or in managing such interactions with
regulatory authorities. Lilly, its sub-licensees or Affiliates shall
determine those countries of the Territory where marketing is
intended. Upon reasonable request to Lilly, Generex shall have a right
of access to such regulatory filings, as long as, Generex has
contributed to such filings and Lilly has a right to redact its
Confidential Information.
(b) Drug and Device Master Files. * * * *.
4.2 Quality Assurance Audit Request. Lilly, at its own expense, shall have the
right to conduct quality assurance audits with respect to all facilities,
operations, and laboratories where work under this Agreement is conducted
by Generex (including, without limitation, work conducted by Generex
related to the Product Development Plan) and to verify Generex's
conformance with applicable cGMP, cGLP, cGCP, QSRs and other regulatory
requirements including, without limitation, verifying appropriate inventory
control and material accountability systems with respect to Compound. Such
audits shall only be conducted upon reasonable notice during reasonable
business hours. Generex shall make
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necessary changes as required by such audit based on an action plan agreed
to by the Parties
4.3 Adverse Event Reporting. During the Product Development Program and
thereafter, Lilly will report Adverse Events and Serious Adverse Events
that occur during the development of Product to Generex and the relevant
regulatory authorities promptly according to the applicable regulations. In
addition, Generex will report to Lilly Adverse Events and Serious Adverse
Events which occur during the development of the Product and, after Product
launch, Generex will report to Lilly Serious Adverse Events and
spontaneously reported Adverse Events of which it becomes aware and has the
right to disclose, as such events relate to the use of Device for other
products, within two (2) working days of Generex's initial receipt of such
information, in order that Lilly can fulfill its obligations to the
appropriate regulatory authorities. Finally, Generex will supply specially
formatted safety information (Lilly will instruct Generex on the
appropriate format) to Lilly upon request, with reasonable notice, in order
that Lilly can comply with U.S. Food and Drug Administration requirements
for annual reports and safety updates. Specific details of the types of
report information and timing of event exchange will be identified in
Exhibit G to this Agreement, which will be developed as required using the
then current Lilly adverse reporting policies consistent with those
policies of the relevant regulatory authority.
ARTICLE 5
LICENSE AND OPTION
5.1 Exclusive License to Lilly Under Generex Rights. Generex hereby grants
Lilly a sole and exclusive license in the Territory, with a right to
sublicense consistent with the terms of this Agreement, under Generex
Rights to make (subject to the terms and conditions of this Agreement and
any agreement between the Parties for the supply of Products), use, sell,
offer for sale and import the Products in the Field. Upon completion of the
Royalty Period, Lilly shall have a fully paid up exclusive license in the
Territory to the Generex Rights to make, use, sell, offer for sale and
import Products in the Field. Lilly shall notify Generex if any sublicenses
are granted to Third Persons, and upon Generex request, Lilly shall provide
a copy of such agreement which may be appropriately redacted to protect
confidential information.
5.2 Exclusive License to Lilly Under Program Rights. Generex shall grant to
Lilly a sole and exclusive license, with the right to sublicense consistent
with the terms of this Agreement, under Program Rights (to the extent that
Generex has an interest in such Program Rights) to make (subject to the
terms and conditions of
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this Agreement and any agreement between the Parties for the supply of
Products), use, sell, offer for sale and import the Products in the Field.
5.3 Generex Rights under Generex Rights. Notwithstanding the foregoing
exclusive license grants to Lilly under Generex Rights under Section 5.1,
Generex shall retain during the Product Development Program nonexclusive
rights to Generex Rights but only to the extent useful or necessary to
fulfill its obligations under the Product Development Program or for uses
other than the buccal delivery of Compound(s).
5.4 Generex Rights under Program Rights. Notwithstanding the foregoing
exclusive license grants to Lilly under Program Rights under Section 5.2,
Generex shall retain during the Product Development Program nonexclusive
rights to Program Rights (to the extent that Generex has as interest in
such Program Rights) but only to the extent useful or necessary to fulfill
its obligations under the Product Development Program or for uses other
than the buccal delivery of Compound(s).
5.5 Generex Rights under Lilly Rights. Nothing in the present Agreement is
intended to give Generex any rights under any Lilly Rights.
5.6 Assistance. Generex shall promptly provide Lilly with all information
included in Generex Rights, reasonably useful or necessary for Lilly to
exploit the licenses granted in Section 5.1 and Section 5.2 of this
Agreement. Moreover, Generex shall provide Lilly with reasonable technical
assistance in connection with the disclosure and use of such information.
5.7 No Prior License. Generex represents and warrants that as of and prior to
the Effective Date, it owns and Controls the Generex Rights it is
transferring herein and it has not granted any license under Generex Rights
to make, use, sell, offer to sell or import Product in the Field.
5.8 Right to Intellectual Property. The Parties agree that all rights and
licenses granted under or pursuant to Section 5.1 and Section 5.2 of this
Agreement are, and shall be deemed to be, for purposes of Section 365(n) of
the United States Bankruptcy Code, as such section may be amended, licenses
to rights to "intellectual property" as defined in the Bankruptcy Code. The
Parties agree that Lilly, as licensee of such rights, shall retain and may
exercise all of its rights and elections under the Bankruptcy Code,
including, without limitation, Section 365(n).
5.9 Subsequent Compound Products. Lilly and Generex agree to pursue a minimum
of three (3) additional Compound Products in the Field. The Parties
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agree that the selection of which Compounds will be developed shall be made
solely at Lilly's discretion. In addition, the Parties agree that Lilly is
under no obligation to pursue such other Compound Products until after (a)
Initiation of Phase III Clinical Trials for the initial Product under this
Agreement, and (b) Generex's platform technology is validated in terms of
quality and standards (i.e. is commercially viable).
5.10 Lilly Option. Generex herein grants Lilly an option to obtain the exclusive
right to research, develop and commercialize either one or both of the
Option Compounds. Generex and Lilly shall negotiate in good faith an
agreement to govern the development and commercialization of any Product(s)
containing such Option Compounds(s).
5.11 Term of Option. The option granted in Section 5.10 shall expire * * * *
unless, within such period, Lilly gives Generex notice that it intends to
exercise the option as to * * * * Option Compounds. If Lilly gives such
notice, the option shall be extended for an additional six (6) months from
the original expiration date, and the Parties shall negotiate in good faith
to reach a definitive agreement covering the research, development and/or
commercialization of the Option Compound(s) specified in Lilly's notice (an
"Option Compound Development Agreement"). If the parties do not enter into
an Option Compound Development Agreement within eighteen (18) months
following the initiation of Phase III Clinical Trials, then the option
shall terminate. Notwithstanding anything to the contrary herein, the
option shall terminate if and at such time as the Agreement is terminated.
ARTICLE 6
COMMERCIALIZATION
6.1 Marketing and Commercialization. Subject to the terms described in this
Agreement, Lilly shall have the sole right to obtain Regulatory Approval,
market, sell, distribute and otherwise commercialize the Product in each
country in the Territory as Lilly may deem appropriate. Lilly will be as
diligent in commercialization of Product as with other Lilly products of
similar probabilities of technical success and commercial potential. Lilly
shall at its expense, control the marketing plans for Product in the Field,
including but not limited to branding of Device and packaging materials
with Lilly trademarks and logos. Lilly shall have the sole right to select
the trademark(s) for the Products developed and commercialized under this
Agreement. * * * *.
6.2 Signing Fee and Up-front Fees. * * * *.
6.3 Royalties.
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(a) Royalties. Subject to the provisions of this Agreement, during the
Royalty Period, Lilly (except to the extent previously paid by a
sub-licensee thereof) shall pay Generex a royalty (a) * * * *.
(b) Compulsory License. If, in any country, a Third Person obtains a
Compulsory License, then Lilly shall promptly notify Generex. If the
royalty rate payable by the grantee of the Compulsory License is less
than the then-current royalty rate payable under this Agreement, then
the royalty rate, payable under this Agreement, shall be reduced to
such lower rate in the subject country for so long as sales are made
pursuant to the Compulsory License.
(c) Access to Third Person Rights. If, after the Effective Date, access to
a Third Person's intellectual property rights becomes necessary or, in
the mutual opinion of Generex and Lilly, advantageous or reasonably
useful to make, use, sell, offer to sell and/or import a particular
Product in the Field in a particular country ("Third Person Rights"),
Lilly shall have the right to acquire access to the Third Person
Rights via license or otherwise. Upon such acquisition the following
circumstances shall apply * * * *
(d) Current Royalty Obligations (as of Effective Date). Notwithstanding
anything to the contrary in this Agreement (including, without
limitation, Section 6.3(c)), both Parties acknowledge and hereby agree
that * * * *.
(e) Royalty Payments. Lilly shall pay royalties owed under this Section
6.3 as follows:
* * * *
6.4 Milestones. In addition to the royalty payments provided in Section 6.3 and
the signing fees in Section 6.2, Lilly shall make the following * * * *
milestone payments * * * * :
6.5 Failure Credit. In the event that after reaching any of the milestones
listed above, the development of a Compound Product is terminated, * * * *.
6.6 Currency of Payment/Exchange Rates. All payments to be made under this
Agreement shall be made in U.S. Dollars. For those sales involving Product
which occur outside the United States, the royalty due on such sales will
be calculated on the basis of the local currency sales figures translated
into U.S. Dollars according to Lilly's standard methodology. The
methodology employed by Lilly shall be that methodology used by Lilly in
the translation of its foreign
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currency operating results for external reporting and shall be consistent
with United States GAAP.
6.7 Taxes. Any and all income or similar taxes levied on account of royalties
or milestones accruing to Generex under this Article 6 shall be paid by
Generex. If laws or regulations require withholding of taxes, such taxes
will be deducted by Lilly or its sublicensee from such remittable royalties
or milestones and will be paid by Lilly or its sublicensee to the proper
taxing authority. Proof of each payment shall be sent to Generex within
ninety (90) days following December 31st of each reporting year.
6.8 Status of Generex Patent Rights. Within sixty (60) days (or a reasonable
time period as approved by Lilly) after each Calendar Year-end, Generex
shall provide Lilly with a report describing the status of the Generex
Patent Rights. Such report shall include, at a minimum, the patent country,
patent and application numbers, filing date, issue date, expiration date
and any other relevant information title or an abstract of the patent or
patent application. Such report shall be mailed to:
Eli Lilly and Company
Attention: Royalty Administration, D.C. 1058
Lilly Corporate Center
Indianapolis, IN 46285
ARTICLE 7
SUPPLY OF FORMULATION AND DEVICES
7.1 Manufacturing Agreement. For purposes of this Article 7, the use of Product
shall refer specifically to initial Product. If Generex is selected by the
Parties to supply Product as set forth below, the Parties agree to enter
into a Manufacturing Agreement between Lilly and Generex for Product. In
order for Generex to be selected to manufacture and supply Product to
Lilly, Generex must establish to both Parties that it can manufacture and
supply Product having appropriate quality, cost and on time delivery
relative to the quality, cost and delivery capability of Lilly or a Third
Person to manufacture and supply the Product. In addition, Generex must
establish that it can supply initial Product in compliance with all
applicable cGMP's, regulatory requirements and quality standards. The
Manufacturing Agreement shall include but not be limited to the terms and
provisions as described in this Article 7.
(a) General and Purchase Price. * * * *.
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(b) Parallel Manufacturing Facility. Lilly shall have the right to have
parallel manufacturing facilities in place to protect the quality,
integrity and supply of Compound Product(s).
(c) Profit Cap. Generex profits resulting from Generex's supply to Lilly
of Product under the Manufacturing Agreement will be capped
at * * * *.
(d) Most Favored Partner. If Generex is selected to supply Product, the
Product and or components thereof shall be sold by Generex to Lilly at
prices no less favorable to Lilly than those Generex offers to Third
Persons for the supply of comparable products and/or components
thereof for comparable volumes and terms excluding any cost savings
that Generex achieves as described in Section 7.1(a) of this
Agreement. As part of the Manufacturing Agreement between Lilly and
Generex, Lilly and Generex shall agree upon a mechanism to allow
Lilly, through a Third Person, to monitor Generex's compliance with
this clause.
(e) Failure to Supply. Should Generex ever fail to supply all of Lilly's
(as well as any sublicensee of Lilly's) needs for Products to the
extent Lilly has forecasted such needs or if there is a Change in
Control of Generex, Lilly may then either by itself, and/or by
utilizing the services of a Third Person, manufacture and supply
Products and/or components thereof without any payment obligation to
Generex except payments under Sections 6.3 and 6.4. In such event, the
following terms shall apply:
1. License Amendment. Lilly's license in Section 5.1 and Section 5.2
shall be amended to include "make" Product without restriction.
Generex shall transfer to Lilly all manufacturing documents,
including, without limitation, standard operating procedures,
manufacturing tickets, and quality control and assurance
documentation for manufacture of Product and shall permit Lilly
to have the right to reference the DMFs and, if necessary,
utilize any information in the DMFs to manufacture, and obtain
any regulatory approval to manufacture Product.
2. Transfer of or Access to Generex Know-How. If Lilly chooses to,
either by itself or by utilizing the services of a Third Person,
manufacture and supply Products (and/or components thereof),
Generex shall transfer to, or otherwise grant satisfactory access
to, Lilly or such Third Person, as appropriate, any Generex
Know-How required in order to enable Lilly or such Third Person
to manufacture and supply such items to Lilly and shall provide
Lilly or such Third Person, as appropriate, all reasonable
assistance required in order to accomplish such Third Person or
Lilly manufacture and supply. Generex shall, to the extent that
it has not
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already done so under other provisions of this Agreement,
also grant Lilly or such Third Person any, as appropriate
and as designated by Lilly, royalty-free licenses
with no costs to Lilly (i.e., no milestones, fees or other
consideration to be paid by Lilly other than as provided in this
Agreement) to Generex Rights necessary for Lilly or such Third
Person to manufacture and supply any of such items to Lilly.
3. Fill Finish. Should Lilly (either by itself or by utilizing the
services of a Third Person) choose to fill, package and supply
Products to Lilly, Lilly may choose to process such formulations
required for such Products itself, utilize services of a Third
Person in any processing required for such Products or may use
Generex for such processing (at a cost mutually agreed upon by
Generex and Lilly).
4. Limitations on use of Generex Rights to Manufacture. Should Lilly
or any Third Person manufacture Product or any component thereof
pursuant to this Section 7.1(e), such Third Person or Lilly shall
only be entitled to utilize Generex Rights for the manufacture of
Product for Lilly (or any sublicense of Lilly) and for no other
purpose.
5. Technology Transfer Costs. Should Lilly decide, either by itself
or by utilizing the services of a Third Person, to manufacture
Products and/or components thereof pursuant to the provisions of
this section, * * * *.
(f) Additional Manufacturing & Supply Agreement Terms. In addition to
negotiating the items described above in this Section 7.1, as part of
the Manufacturing Agreement between Lilly and Generex, if Generex is
selected to supply Product, the Parties hereby agree to the following:
1. Compound Supply. * * * *.
2. Capital Expenditures. * * * *.
3. Product Recall. Lilly, after consultation with Generex, shall
have the right and responsibility to determine whether Product
must or should be recalled. Lilly shall also be responsible for
managing the recall and Generex will cooperate with Lilly as
Lilly may reasonably request. Generex shall be responsible for
all costs incurred due to a recall that is the result of the
manufacture of the Product by Generex (a "Manufacture Related
Recall"). Notwithstanding the foregoing, under no circumstance
shall the obligation of Generex under this Section 7.1(e)(3)
exceed the total payments made to Generex by Lilly in any given
twelve (12) month period from the date of such recall including,
without limitation, milestones, royalties and manufacturing
compensation.
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Further, it is understood that Generex shall not be
responsible for the cost associated with the cost of Compound
that is recalled in a Manufacture Related Recall; however,
Generex will be responsible for the cost associated with
reprocessing any affected Compound or new Compound to the extent
of such recall at no cost to Lilly. Product recall costs incurred
by Generex in a Manufacture Related Recall shall be specifically
excluded from Generex Fully Burdened Manufacturing Cost.
Lilly shall bear the costs of any Product recall that is not a
Manufacture Related Recall.
4. Disaster Recovery Plan. Generex shall have in place an
appropriate disaster recovery plan to handle in an efficient and
effective manner any unexpected events that may occur in
manufacturing Product.
5. Wasted Compound. Generex shall be solely responsible for any
wastage, loss or other damage to Compound that would render such
Compound unusable for manufacturing into Product that either
exceeds a certain wastage limit to be negotiated under the
Manufacturing Agreement or that was caused due to Generex's
negligence, misconduct or noncompliance with the Manufacturing
Agreement (i.e. Wasted Compound") and, therefore, Generex shall
promptly reimburse Lilly for any such Wasted Compound an amount
to be determined as part of the Manufacturing Agreement. Wasted
Compound costs incurred by Generex shall be specifically excluded
from Generex Fully Burdened Manufacturing Cost. Notwithstanding
any other provision in this Section, Lilly shall be solely
responsible for any Wasted Compound cost resulting from Lilly
negligence, misconduct or noncompliance with the Manufacturing
Agreement.
6. Subcontracting by Generex. To ensure that the quality of Product
(and/or major components thereof) is maintained, the Parties
agree that any subcontracting of the manufacture of Product
(and/or major components thereof) by Generex is only permissible
provided such subcontract and business terms related thereto is
first approved in writing by the Parties. Furthermore, in
connection with any subcontracting of manufacturing rights by
Generex to a Third Person, such subcontractor shall be required
to perform all subcontracted work in accordance with, and in
facilities that meet, cGLPs, cGMPs or QSRs to the extent
applicable.
7.2 Packaging. Unless otherwise negotiated between Generex and Lilly pursuant
to the Manufacturing Agreement, if Generex is selected to supply Product,
Generex shall supply Lilly with Product, labeled to at least the minimal
legal requirements
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for individual Devices and delivered to Lilly in Indianapolis or
such other single United States location Lilly chooses. Lilly may
have Generex deliver Product and/or components thereof to multiple
sites, both in the United States and countries outside the United
States, or to sites located in countries outside the United States so long
as Lilly pays the cost of any incremental shipping costs required to ship
Products to sites other than Indianapolis or the other single United States
location selected by Lilly. Lilly shall be responsible for developing any
further packaging and labeling required for such Products. If Generex so
requests, and to the extent allowable by law, Lilly will identify, in
packaging and package inserts for Products developed under this Agreement,
Generex as the licensor and/or manufacturer of such Products.
ARTICLE 8
RECORD-KEEPING AND AUDITS
8.1 Records Retention. The Parties shall keep complete and accurate records
pertaining to the development, use and sale of Products in sufficient
detail to permit the other Party to confirm, in the case of Generex, its
research and development efforts hereunder, and in the case of Lilly, its
research, development and commercialization efforts and the accuracy of
calculations of all payments due hereunder. For those records pertaining to
Lilly's commercialization efforts or to the accuracy of calculations for
any payment due hereunder, such records shall be maintained for a minimum
of * * * * following the year in which any such efforts or payments were
made hereunder. For those records pertaining to Generex's research and
development efforts hereunder or Lilly's development efforts, such records
shall be maintained for a period consistent with confidentiality in Article
14. Notwithstanding the foregoing, for those records pertaining to
regulatory filings and other regulatory commitments (e.g., manufacturing
tickets, manufacturing procedures, etc.), such records shall be held for
such period as is mutually agreed upon between the Parties in writing that
is reasonably necessary to comply with regulatory requirements.
8.2 Audit Request. Each of the Parties shall have the right to request an audit
of such records, at its own expense and on an annual basis, to determine,
with respect to any of * * * *, the correctness of any report or payment
made under this Agreement. If a Party desires to audit such records, it
shall utilize an independent, certified public accountant (including, if
the Party so determines, the accountant of the other Party), to examine
financial records and may utilize an independent scientist reasonably
acceptable to the other Party to audit scientific records. Such
accountant/scientist shall be instructed to provide the Party desiring the
audit a report on the findings of the agreed upon procedures which verifies
any previous report made, payment submitted, or work performed by the
audited Party during such period. The expense of such audit shall be borne
by the
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auditing Party; provided, however, that if an error in favor of the
auditing Party of * * * * is discovered, then such expenses shall be paid
by the audited Party. Any Information received by a Party pursuant to this
Section 8.2 shall be deemed to be Confidential Information hereunder.
8.3 Survival. This Article 8 shall survive any termination of this Agreement
for a period of * * * *.
ARTICLE 9
PROGRAM INTELLECTUAL PROPERTY
9.1 Ownership of Program Know-How. Any and all Program Know-How shall be
jointly owned by the Parties.
9.2 Notification of Program Know-How. Upon the discovery, generation or
development of any particular Program Know-How, the Party so discovering,
generating or developing such Program Know-How shall promptly disclose to
the other Party the particular Program Know-How at issue. In addition, each
Party shall inform the other Party promptly upon any decision to file a
patent application that discloses or claims any invention directed at
Program Know-How no later than the filing date of such application.
Inventorship shall be mutually determined by the Parties after the Parties
have had a reasonable opportunity to review and discuss the particular
invention.
9.3 Ownership of Program Patent Rights. Ownership of Program Patent Rights)
shall be assigned to the Parties in accordance with the United States laws
of inventorship. Specifically, patents that claim inventions that were
invented solely by one Party's employees including any persons working on
the Program under that Party's direction where such persons have an
obligation to assign inventions to that Party ("Sole Invention") shall be
assigned solely to that Party. Patents relating to Program Know-How
invented jointly by employees of both Parties, including any persons
working on the Program under a Party's direction where such persons have an
obligation to assign inventions to that Party ("Joint Invention"), shall be
assigned jointly to both Parties.
9.4 Patent Filing and Prosecution. Each Party will prepare, file, and prosecute
patent applications and maintain patents that Cover inventions for its Sole
Inventions and shall be responsible for related interference proceedings
and opposition proceedings. Each Party will endeavor to file and prosecute
patent applications that contain valid claims which the Parties in good
faith believe to be patentable, and which, if issued would be Valid Claims
that Cover the Product(s). In addition, the Parties will ensure that such
patent applications are filed before any public use or public disclosure by
either Party in order to maintain the validity
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of patent applications filed outside of the United States. The Parties will
also ensure that any patent applications filed in the United States are
filed within one (1) year after any publication, offer for sale or
commercial use of such invention. Each Party shall cooperate with the other
in preparing, filing and prosecuting any patent applications relating to
Program Patents. Each Party shall also cooperate with the other in
executing and delivering any instrument required to assign, convey or
transfer to such other Party its interest should such assignment,
conveyance or transfer be required by the terms of this Agreement. At least
thirty (30) days prior to the contemplated filing date, each Party shall
submit to the other a substantially complete draft of any patent
application for Sole Inventions arising under this Agreement and will make
every reasonable effort to adopt the other Party's suggestions regarding
such draft. Furthermore, each Party will confer with the other, and make
every reasonable effort to adopt the other Party's suggestions regarding
the prosecution of such patent applications of Sole Inventions and will
copy the other Party with any official actions and submissions in such
patent applications.
9.5 Patent Costs. * * * *.
9.6 Discontinuance of Patent Coverage. Should either Party not wish to file or
prosecute any patent application, or issue or maintain any patent within
(a) their Program Patent Rights as determined according to Section 9.3, or
(b) the Generex Patent Rights, in any particular country, that Party will
so notify the other Party of its intentions ("Discontinuance Election").
Upon receipt of such Discontinuance Election, the other Party may elect to
have the right to file, prosecute, maintain or issue such patent
application or patent at its own expense by providing written notice of the
same within thirty (30) days of its receipt of the Discontinuance Election.
Upon such election: (i) the discontinuing Party shall grant the other Party
any necessary authority to file, prosecute, issue and maintain such patent
application and/or patent; and (ii) shall assign such patent application or
patent to the other Party. Until such assignment is complete, the
discontinuing Party shall take reasonable efforts to maintain or otherwise
ensure that patent protection will not be lost with respect to such patent
application and/or patent provided the other Party does not unreasonably
delay the assignment thereof. Finally, upon any such assignment by Generex,
the patent and/or patent application at issue shall no longer be considered
a Generex Patent Right. Any such transfer shall be without charge by the
transferor but at the expense of the transferee.
9.7 Notice of Certification. Generex and Lilly each shall immediately give
notice to the other of any certification filed under the U.S. "Drug Price
Competition and Patent Term Restoration Act of 1984" claiming that a patent
under Generex Patent Rights or Lilly Patent Rights is invalid or that an
infringement will not arise from the manufacture, use, import, offer for
sale or sale of any Product by a Third Person. If Generex decides not to
bring infringement proceedings against
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the entity making such a certification, Generex shall give notice to Lilly
of its decision not to bring suit within twenty-one (21) days after receipt
of notice of such certification. Lilly may then, but is not required to,
bring suit against the party that filed the certification. Any suit by
Lilly or Generex shall either be in the name of Lilly or in the name of
Generex, or jointly by Lilly and Generex, as may be required by law. For
this purpose, the Party not bringing suit shall execute such legal papers
necessary for the prosecution of such suit as may be reasonably requested
by the Party bringing suit.
9.8 Patent Term Extensions. The Parties shall cooperate with each other in
gaining patent term extension wherever applicable to any patents including
any Generex Patent Rights or Program Patents that contain a Valid Claim
that Covers Product. The Party first eligible to seek extension of such
patent shall have the right to do so; provided, the first Party shall
consult with the other Party before making the election. If more than one
patent is eligible for extension, the Steering Committee (with advice from
appropriate patent counsel) shall agree upon a strategy that will maximize
patent protection for the Product. All filings for such extensions and
certificates shall be made by the Party to whom the patent is assigned,
provided, however, that in the event that the Party to whom the patent is
assigned elects not to file for an extension or supplementary protection
certificate, such Party shall (i) inform the other Party of its intention
not to file and (ii) grant the other Party the right to file for such
extension or certificate.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Generex Representations. Generex hereby represents and warrants to Lilly as
follows:
(a) Patents, Prior Art. Generex represents and warrants that, to the best
of Generex's belief, it has sufficient legal and/or beneficial title
under Generex Patent Rights and Generex Know-How including any and all
rights to the Generex Formulation, including the Device, as is
necessary to grant the licenses contained herein.
* * * *
(b) Freedom to Operate. Generex further represents and warrants that, to
the best of Generex's belief, the Generex Patent Rights and Generex
Know-How are sufficient rights to enable the Parties to achieve the
purposes of this Agreement and that there are no Intellectual Property
Rights owned or Controlled by any Third Person that would be necessary
for such purposes.
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(c) Full Disclosure. Generex represents and warrants that it believes that
it has provided Lilly with all information that Lilly has requested
for deciding the merits of entering into this Agreement and all
information reasonably useful or necessary to enable Lilly to make an
informed decision regarding entering into this Agreement including,
without limitation, all material information that potentially could
have an impact on this Agreement and/or any rights granted hereunder.
* * * *.
(d) Product Quality. If Generex is selected to supply Product, Generex
hereby represents and warrants that:
1. it will use diligent efforts to set in place any applicable
quality systems necessary for Lilly to obtain appropriate ISO9000
series designation in the U.S. and C.E. marking in Europe, for
Devices, if necessary, in accordance with the Product Development
Plan; and
2. any Product manufactured by Generex hereunder shall: (i) conform
to the specifications for the Product in effect at the time of
delivery; (ii) not be adulterated or misbranded within the
meaning of the U.S. Food, Drug and Cosmetic Act of 1938, as
amended from time to time, nor constitute an article that may not
be introduced into interstate commerce under the provisions of
Section 505 of said Act; (iii) conform to the certificates of
analysis supplied with the shipment of the Product; (iv) meet
applicable cGLPs, cGMPs and QSRs and be manufactured in
facilities that meet applicable cGMPs and QSRs; and (v) be
packaged and shipped in accordance with mutually agreed to
procedures.
(e) Employee Obligations. Generex hereby represents and warrants that all
of its employees, officers and consultants who will work on the
Product Development Program have legal obligations requiring, in the
case of employees and officers, assignment to Generex of all
inventions made during the course of and as a result of their
association with Generex and obligating the individual to maintain as
confidential the Confidential Information of Generex, as well as the
Confidential Information of a Third Person which Generex may receive.
(f) Compliance with Laws. Generex hereby represents and warrants that in
carrying out its work under the Product Development Program such work
will be carried out in compliance with any applicable laws including,
without limitation, federal, state, or local laws, regulations, or
guidelines governing the work at the site where such work is being
conducted. Moreover, Generex represents and warrants that in
connection with carrying out
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its work under the Product Development Program, as applicable based
on the specific work to be conducted, it will carry out such work
under the Product Development Program in accordance with current
cGLP, cGCP, cGMP and QSRs.
(g) No Debarment. Generex hereby represents and warrants that it will
comply at all times with the provisions of the Generic Drug
Enforcement Act of 1992 and will upon request certify in writing to
Lilly that none of it, its employees, or any person providing services
to Generex in connection with the collaboration contemplated by this
Agreement have been debarred under the provisions of such Act.
10.2 Lilly Representations. Lilly hereby represents and warrants to Generex as
follows:
(a) Employee Obligations. Lilly hereby represents and warrants that all of
its employees, officers and consultants have legal obligations
requiring, in the case of employees and officers, assignment to Lilly
of all inventions made during the course of and as a result of their
association with Lilly and obligating the individual to maintain as
confidential the confidential information of Lilly, as well as the
confidential information of a Third Person which Lilly may receive.
(b) Compliance with Laws. Lilly hereby represents and warrants that in
carrying out its work under the Product Development Program such work
shall be carried out in compliance with any applicable laws including,
without limitation, federal, state, or local laws, regulations, or
guidelines governing the work at the site where such work is being
conducted. Moreover, Lilly represents and warrants that in connection
with carrying out its work under the Product Development Program, as
applicable based on the specific work to be conducted, it will carry
out such work under the Product Development Program in accordance with
current cGLP, cGCP, cGMP.
(c) No Debarment. Lilly hereby represents and warrants that it will comply
at all times with the provisions of the Generic Drug Enforcement Act
of 1992 and will upon request certify in writing to Generex that none
of it, its employees, or any person providing services to Lilly in
connection with the collaboration contemplated by this Agreement have
been debarred under the provisions of such Act.
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ARTICLE 11
INFRINGEMENT OF THIRD PERSON RIGHTS
11.1 Notice. If the research, development, manufacture, use, sale, offer for
sale or importation of a Product results in a claim for patent
infringement, the Party to this Agreement first having notice shall
promptly notify the other Party in writing. The notice shall set forth the
facts of the claim in reasonable detail.
11.2 Litigation Involving Product. Lilly shall defend against any such Third
Person claim of infringement involving the manufacture, use, sale, offer
for sale or importation of a Product. Generex shall cooperate with Lilly at
Lilly's request in such defense and shall have the right to be represented
by counsel of its own choice at Generex's expense. If Lilly is required by
a final court order or a settlement entered into in good faith to make
payments (including royalty payments on future Net Sales of Products by
Lilly) to a Third Person in connection with the disposition of such claim,
Lilly shall make all such payments, which shall be deemed a cost associated
with the acquisition of intellectual property as described in Section
6.3(c) and, therefore shall be creditable against royalties in accordance
with and subject to the provisions of Section 6.3(c) of this Agreement.
ARTICLE 12
INFRINGEMENT BY THIRD PERSONS
12.1 Notice. If any Generex Right that involves Product is infringed and/or
misappropriated by a Third Person, the Party first having knowledge of such
infringement/misappropriation shall promptly notify the other in writing.
The notice shall set forth the facts of such infringement and/or
misappropriation in reasonable detail.
12.2 Prosecution of Actions Involving Product.
(a) Lilly shall have the primary right, but not the obligation, to
institute, prosecute and control any action or proceeding with respect
to any infringement/misappropriation of any of the Generex Rights
arising from the use thereof and involving Product, by counsel of its
own choice. Generex shall cooperate with Lilly at Lilly's request in
the prosecution of such action or proceeding. If Lilly reasonably
determines that Generex is an indispensable party to the action,
Generex hereby consents to be joined. In such event, Generex shall
have the right to be represented in that action by counsel of its own
choice and at Generex's expense.
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(b) If Lilly fails to bring an action or proceeding within a period of
ninety (90) days after receiving written notice from Generex or
otherwise having knowledge of that infringement/misappropriation of
Generex Rights involving Product, as described in Section 12.2(a) of
this Agreement, Generex shall have the right to bring and control any
such action by counsel of its own choice and expense. If Generex
reasonably determines that Lilly is an indispensable party to the
action, Lilly hereby consents to be joined. In such event, Lilly shall
have the right to be represented in that action by counsel of its own
choice and at Lilly's expense.
(c) No settlement, consent judgment or other voluntary final disposition
of a suit under this Section 12.2 may be entered into without the
joint consent of Lilly and Generex (which consent shall not be
unreasonably withheld).
(d) If Lilly brings action, any damages or other monetary awards recovered
by Lilly attributable to sales of Products, shall be applied first to
defray the reasonable costs and expenses incurred in the action by
both Parties. If any balance remains, Lilly shall pay Generex an
amount equal to * * * *.
(e) If Lilly fails to bring action and Generex brings action, any damages
or other monetary awards recovered by Generex attributable to sales of
Product derived therefrom, shall be applied first to defray the
reasonable costs and expenses incurred in the action by both Parties.
If any balance remains, Generex shall first retain an amount equal to
* * * * any remaining balance would be paid to Lilly.
12.3 Infringement of Generex Rights Outside Field. In the event that any Generex
Rights that have application outside the Field are infringed and/or
misappropriated outside the Field by a Third Person, the Party first having
knowledge of such infringement and/or misappropriation shall notify the
other as set forth above and the Parties shall consult with each other as
to how they should proceed, but each Party shall be free to pursue or
protect its own respective interests to the extent it is legally entitled
to do so. Generex hereby agrees to use commercially reasonable efforts to
diligently enforce such Generex Rights that have application outside the
Field provided that Generex shall not be required to initiate litigation in
connection with said efforts.
ARTICLE 13
MUTUAL INDEMNIFICATION
13.1 Responsibility and Control. Lilly and Generex shall each be solely
responsible for the safety of its own employees, agents, licensees or
sublicensees with respect to Product research and development, marketing,
selling and detailing the
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Products, and each shall hold the other harmless with regard to any
liability for damages or personal injuries resulting from acts of its
respective employees, agents or Affiliates.
13.2 Generex's Right to Indemnification. Lilly shall indemnify each of Generex,
its successors and assigns, and the directors, officers, employees, agents
and counsel thereof (the "Generex Indemnitees"), defend and hold each
Generex Indemnitee harmless from and against any and all liabilities,
damages, losses, settlements, claims, actions, suits, penalties, fines,
costs or expenses (including, without limitation reasonable attorneys'
fees) (any of the foregoing, "Damages") incurred by or asserted against any
Generex Indemnitee of whatever kind or nature, including, without
limitation, any claim or liability based upon negligence, warranty, strict
liability, violation of government regulation or infringement of patent or
other proprietary rights, but only to the extent arising from or occurring
as a result of a claim or demand made by a Third Person (a "Third Person
Claim") against any Generex Indemnitee because of
(a) breach of any warranty made by Lilly pursuant to Article 10;
(b) the safety or dosage of the Product, unless attributable to an item
identified in Section 13.3 below which is under the responsibility of
Generex;
(c) the manufacture, processing, testing, packaging, sale or promotion of
any Product, or the establishment of specifications for the
manufacture, processing, testing, sale or packaging of a Product by or
on behalf of Lilly or its sublicensees (except activities undertaken
by Generex);
(d) the failure of Lilly to disclose any material or drug safety
information in Lilly's possession to Generex regarding any Product;
(e) the labeling, warehousing, distribution or detailing of any Product by
or on behalf of Lilly or its sublicensees; or
(f) any breach of this Agreement by Lilly, except, in each such case, to
the extent that such Damages are finally determined to have resulted
from the negligence or misconduct of Generex or an Affiliate of
Generex.
Generex shall promptly notify Lilly of any Third Person Claim, upon
becoming aware thereof, shall permit Lilly at Lilly's cost to defend
against such Third Person Claim and to control the defense and disposition
(including, without limitation, all decisions to litigate, settle or
appeal) of such claim and shall cooperate in the defense thereof. Generex
may, at its option and expense, have its own counsel participate in any
proceeding that is under the direction of Lilly and shall cooperate with
Lilly and its insurer in the disposition of any such matter.
13.3 Lilly's Right to Indemnification. Generex shall indemnify each of Lilly,
its successors and assigns, and the directors, officers, employees, agents
and counsel thereof (the "Lilly Indemnitees"), defend and hold each Lilly
Indemnitee
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harmless from and against any and all Damages incurred by or
asserted against any Lilly Indemnitee of whatever kind or nature,
including, without limitation, any claim or liability based upon
negligence, warranty, strict liability, violation of government regulation
or infringement of patent or other proprietary rights, but only to the
extent arising from or occurring as a result of a Third Person Claim
against any Lilly Indemnitee because of
(a) breach of any warranty made by Generex pursuant to Article 10;
(b) the failure of Generex to manufacture, process, test or package
Product according to specifications, and the sale or promotion of any
Product by or on behalf of Generex (except for activities undertaken
by Lilly);
(c) the failure of Generex to disclose any material or drug safety
information in Generex's possession to Lilly regarding any Product;
(d) the labeling, warehousing, distribution or detailing of a Product by
Generex; or
(e) any breach of this Agreement by Generex, except, in each such case, to
the extent that such Damages are finally determined to have resulted
from the negligence or misconduct of Lilly, sublicensee of Lilly or an
Affiliate of Lilly.
Lilly shall promptly notify Generex of any Third Person Claim, upon
becoming aware thereof, and permit Generex at Generex's cost to defend
against such Third Person Claim and to control the defense and disposition
(including, without limitation, all decisions to litigate, settle or
appeal) of such Third Person Claim and shall cooperate in the defense
thereof. Lilly may, at its option and expense, have its own counsel
participate in any proceeding that is under the direction of Generex and
will cooperate with Generex or its insurer in the disposition of any such
matter.
ARTICLE 14
CONFIDENTIALITY AND PUBLICATIONS
14.1 Confidentiality. Unless otherwise set forth in this Agreement, for a period
from the Effective Date until * * * * following the later of: (a) the
expiration or termination of this Agreement, or (b) if Lilly is marketing a
Product, the date on which Lilly ceases to market any Product, Lilly and
Generex shall maintain in confidence all Confidential Information disclosed
by the other Party (the "Disclosing Party") or generated pursuant to a
Product Development Plan, and shall not, except as contemplated by this
Agreement, use such Confidential Information for its benefit or the benefit
of others, without the written consent of the Disclosing Party. In
addition, Lilly and Generex agree not to disclose any trade secret
information belonging to the other Party for so long as the trade secret
remains confidential. Documents made available to the receiving Party shall
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remain the property of the Disclosing Party and shall be returned upon
written request, except that one copy of all such information may be
retained for legal archival purposes by the receiving Party.
14.2 Publications. While it is understood that employees of Lilly and Generex at
some point shall be free to publish the results of their studies carried
out under this Agreement, each Party agrees that the Steering Committee
will review and approve a discolosure policy to provide the Parties with
guidance as to the content and timing of all disclosures. In addition, each
Party shall provide the other Party the opportunity to review any proposed
manuscripts that disclose research carried out under the Product
Development Program at least sixty (60) days prior to their intended
submission for disclosure and, upon request, shall delay submission for a
period sufficient to permit adequate steps to be taken to seek patent
protection for any patentable subject matter referred to therein. The
disclosing Party shall avoid disclosure of any Confidential Information or
trade secret information of the other Party. Each Party agrees to respond
to requests for review within sixty (60) days of receipt. In the event the
Parties disagree with respect to the nature of the disclosure to be made in
a proposed disclosure, the Parties shall refer such disagreement to the
Steering Committee for resolution. All publications shall give due credit
to all individuals contributing to the developments described in the
publication.
Notwithstanding the provisions of Section 14.1 hereof, Generex and
Lilly may, to the extent necessary, disclose and use Confidential
Information to secure patent protection for an invention developed as a
result of the collaboration undertaken pursuant to this Agreement or to
obtain institutional or government approval to clinically test or market
any Product.
ARTICLE 15
PUBLICITY
15.1 Disclosure of Agreement. Neither Party to this Agreement may release any
Confidential Information to any Third Person regarding the terms or
existence of this Agreement without the prior written consent of the other
Party. Without limitation, this prohibition applies to press releases,
educational and scientific conferences, promotional materials, governmental
filings and discussions with public officials and the media. However, this
provision does not apply to any internal publications, disclosures
regarding this Agreement or related information to regulatory agencies such
as the FDA, Securities and Exchange Commission or Federal Trade Commission
and/or Department of Justice which may be required by law, including
requests for a copy of this Agreement or related information by tax
authorities. If either Party to this Agreement determines a release of
information regarding the existence or terms of this Agreement is required
by law,
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that Party will notify the other Party as soon as practical and give
as much detail as possible in relation to the disclosure required. The
Parties will then cooperate with respect to determining what information
will actually be released; notwithstanding, Lilly shall have the right to
review and comment on all filings required by the SEC or other agencies.
The Parties hereby agree to issue a press release upon complete execution
of this Agreement. Such press release may reference insulin products and
may state that the Device may be used for other products without
specifically indicating which products. However, the press release on this
Agreement shall not identify the Option Compounds. In addition, the press
release shall not provide financial information. A copy of such press
release is attached hereto as Exhibit C of this Agreement.
15.2 Cooperation on Hart-Scott-Rodino Filing and Approval. If in the reasonable
opinion of either or both Parties, filing under the HSR Act is required,
then as soon as reasonably practicable after the date that both Parties
have executed this Agreement, both Lilly and Generex will file with the
Federal Trade Commission ("FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") the notification and report form (the
"HSR Report") required of each of them regarding the transactions described
in this Agreement. After submitting such HSR Report, each Party will use
its reasonable efforts, including promptly producing documents, witnesses,
and information, rightfully requested by the FTC or DOJ, to obtain HSR Act
approval of such transaction, whether pursuant to expiration or early
termination of applicable HSR Act waiting periods or court approval
("Required HSR Approval"). Each Party will cooperate with the other to the
extent necessary in preparing the other Party's HSR Report and in obtaining
Required HSR Approval. Each Party will be responsible for its own costs,
expenses, and filing fees associated with any of its filings under the HSR
Act.
15.3 Termination. Both Parties agree that if this Agreement is terminated,
neither Party will disclose its reasons for not proceeding to any Third
Person without the express written consent of the other Party.
ARTICLE 16
TERM AND TERMINATION
16.1 Term. This Agreement shall commence as of the Effective Date and, unless
sooner terminated in whole or in part as specifically provided in the
Agreement, shall continue in effect with respect to a particular Compound
Product until the expiration of the Royalty Period applicable to that
Compound Product.
16.2 Termination By Lilly.
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(a) Termination Right prior to Product Launch. Lilly may terminate this
Agreement for any reason at any time prior to Product Launch provided
Lilly furnishes Generex with * * * * written notice of the same.
(b) Termination Right after Product Launch. Lilly may terminate this
Agreement for any reason at any time after Product Launch provided
Lilly furnishes Generex with * * * * notice of the same.
(c) Consequences of Termination under this Section 16.2. In addition to
the provisions set forth in Sections 16.5 and 16.6, in the event that
Lilly terminates this Agreement pursuant to this Section 16.2 of this
Agreement, Generex, upon the effective date of such termination, shall
be entitled to the following:
1. License Termination. The following licenses shall terminate after
Lilly and Generex have negotiated the cost to Generex of transferring
Regulatory Material from Lilly to Generex under this Section
16.2(c)(2):
* * * *.
For avoidance of doubt, any Program Patent Rights that claim
Joint Inventions shall remain jointly owned.
2. Access to Regulatory Material. * * * *.
3. Supply Agreement. * * * *.
4. Sales of Product. * * * *.
Notwithstanding the foregoing, if Lilly terminates this Agreement under
this Section 16.2 because of Product safety or health concerns Lilly shall
be under no obligation to transfer possession and legal ownership to
Regulatory Material to Generex under this Section 16.2 of this Agreement.
Further, if Lilly terminates this Agreement under Section 16.2 because of a
Product's unacceptable clinical trial results or for any other significant
technical failure, Lilly shall retain non-exclusive rights under any
Program Patent Rights that claim Sole Inventions of Generex and Program
Know-How that relate to a Lilly Compound.
16.3 Termination for Breach.
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(a) Notification and Opportunity to Cure. If either Party believes the
other Party is in breach of any material obligations under this
Agreement or the Manufacturing Agreement, it may give notice of such
breach to the other Party, which Party shall have * * * * in which to
remedy such breach. Such * * * * period shall be extended in the case
of a breach not capable of being remedied in such * * * * period so
long as the defaulting Party uses diligent efforts to remedy such
breach and is pursuing a course of action that, if successful, will
effect such a remedy. If such breach is not remedied in the time
period set forth above or if the Party alleged to be in breach
disputes the exisitence of any breach, the Party alleging breach shall
refer the matter to the President of Generex and to the Lilly
President of Diabetes and Growth Disorders Product Group (or successor
position) for business issues and the Lilly Executive Director of
BioPharma Science/Delivery Systems (or successor position) for
scientific issues who shall meet and confer within fifteen (15) days
after notice from the non-defaulting Party of its desire for such a
meeting.
(b) Generex Material Breach. In the case of any dispute relating to a
breach that Lilly claims is a Generex Material Breach (as defined
below) that is not resolved pursuant to (a) above, Lilly may give
written notice to Generex of termination of this Agreement pursuant to
this Section 16.3, which termination shall be effective * * * * after
such notice. Upon such termination, the following terms shall apply: *
* * *.
(c) Generex Material Breach Defined. For purposes of this Section 16.3,
the term Generex Material Breach shall mean a breach of this Agreement
by Generex that* * * *.
In addition, any breach of a representation or warranty by Generex
relating to intellectual property is deemed to be a Generex Material
Breach.
(d) Remedies Following Termination Under Section 16.3 Upon a final
judicial determination of whether Generex has breached this Agreement,
whether or not any such breach is a Generex Material Breach, and the
amount of damages that Lilly has incurred as a result of any such
breach, the following provisions shall apply:
* * * *
(e) Generex's Termination due to Lilly's breach. If Generex terminates
this Agreement because of Lilly's material breach, the Parties agree
to the following, subject to a court determination that Lilly has
materially breached the Agreement:
* * * *
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16.4 Termination for Insolvency. Either Party may terminate this Agreement upon
notice to the other should the other Party become insolvent or file or
consent to the filing of a petition under any bankruptcy or insolvency law
or have any such petition filed against it which has not been stayed within
sixty (60) days of such filing.
16.5 Change of Control. In the event of a Change of Control, Generex shall
notify Lilly of such change specifying the effective date of the change and
the name(s) of the controlling party or parties. * * * *.
16.6 Surviving Rights. Termination of this Agreement shall not terminate Lilly's
obligation to pay all milestone payments, royalties and other payments
which shall have accrued hereunder (including any milestone payments then
accrued but not yet due under Section 6.4). The obligations of the Parties
under Articles 8 (Record-Keeping and Audits), 9 (Intellectual Property), 12
(Infringement by Third Persons), 13 (Mutual Indemnification), 14
(Confidentiality) and 16 (Termination) of this Agreement will survive the
termination or expiration of this Agreement.
16.7 Accrued Rights, Surviving Obligations. Termination, relinquishment or
expiration of the Agreement for any reason shall be without prejudice to
any rights which shall have accrued to the benefit of either Party prior to
(or as a result of, including, without limitation, rights available under
law and equity) such termination, relinquishment or expiration. Such
termination, relinquishment or expiration shall not relieve either Party
from obligations that are expressly indicated to survive termination or
expiration of the Agreement.
16.8 Remedies Not Exclusive. The remedies provided in this Section 16 are not
exclusive and, therefore, shall neither preclude nor prejudice any other
rights or remedies available to the Parties including, without limitation,
any rights or remedies that may be available at law or in equity.
ARTICLE 17
EXCLUSIVITY
17.1 Exclusivity. During the term of this Agreement, each Party agrees to work
exclusively with the other in the Field notwithstanding Lilly's right to
sublicense in accordance with Section 5.1 and Section 5.2, herein, and
Generex shall not license or collaborate with any Third Person with regard
to Compounds.
* * * *
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ARTICLE 18
MISCELLANEOUS
18.1 Agency. Neither Party is, nor shall be deemed to be, an employee, agent,
co-venturer or legal representative of the other Party for any purpose.
Neither Party shall be entitled to enter into any contracts in the name of,
or on behalf of the other Party, nor shall either Party be entitled to
pledge the credit of the other Party in any way or hold itself out as
having the authority to do so.
18.2 Assignment. Except as otherwise provided herein, neither this Agreement nor
any interest hereunder shall be assignable by any Party without the prior
written consent of the other (which consent shall not be unreasonably
withheld; provided, however, that either Party may assign this Agreement to
any wholly-owned subsidiary or to any successor by merger or sale of
substantially all of its business unit to which this Agreement relates in a
manner such that the assignor (if it continues as a separate entity) shall
remain liable and responsible for the performance and observance of all its
duties and obligations hereunder. This Agreement shall be binding upon the
successors and permitted assignees of the Parties and the name of a Party
appearing herein shall be deemed to include the names of such Party's
successors and permitted assigns. Any assignment not in accordance with
this section shall be void.
18.3 Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this
Agreement.
18.4 Force Majeure. Neither Party shall be liable to the other for loss or
damages or shall have any right to terminate this Agreement for any default
or delay attributable to any force majeure event, including but not limited
to acts of God, acts of government, war, fire, flood, earthquake, strike,
labor dispute and the like, if the Party affected shall give prompt notice
of any such cause to the other Party. The Party giving such notice shall
thereupon be excused from such of its obligations hereunder as it is
thereby disabled from performing for so long as it is so disabled and for
sixty (60) days thereafter; provided, however, that such affected Party
commences and continues to take reasonable and diligent actions to cure
such cause.
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18.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed effective upon actual receipt given if
delivered personally or by facsimile transmission (receipt verified),
telexed, mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by express courier service, to the
Parties at the following addresses (or at such other address for a Party
as shall be specified by like notice; provided, that notices of a change
of address shall be effective only upon receipt thereof):
If to Lilly, addressed to: Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attn: General Counsel
If to Generex, addressed to: Generex Biotechnology Corporation
33 Harbour Square, Suite 202
Toronto, Ontario
CANADA M5J 2G2
Attn: Anna Gluskin, CEO
18.6 Amendment. No amendment, modification or supplement of any provision of
the Agreement shall be valid or effective unless made in writing and
signed by a duly authorized officer of each Party.
18.7 Waiver. No provision of the Agreement shall be waived by any act, omission
or knowledge of a Party or its agents or employees except by an instrument
in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party.
18.8 Counterparts. The Agreement may be executed simultaneously in two
counterparts, either one of which need not contain the signature of more
than one Party but both such counterparts taken together shall constitute
one and the same agreement.
18.9 Descriptive Headings. The descriptive headings of this Agreement are for
convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
18.10 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the substantive laws of the State of New York, without
regard to its choice of law rules.
18.11 Severability. Whenever possible, each provision of the Agreement will be
interpreted in such manner as to be effective and valid under applicable
law, but if
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any provision of the Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of the Agreement. In the event of such invalidity, the Parties
shall seek to agree on an alternative enforceable provision that preserves
the original purpose of this Agreement.
18.12 Compliance with Law. Nothing in the Agreement shall be deemed to permit
Lilly to export, re-export or otherwise transfer any Information
transferred hereunder or Products manufactured therefrom without
compliance with applicable laws.
18.13 Entire Agreement of the Parties. This Agreement, including the Exhibits
attached hereto, constitutes and contains the complete, final and
exclusive understanding and agreement of the Parties hereto, and cancels
and supersedes any and all prior negotiations, correspondence,
understandings and agreements, whether oral or written, between the
Parties respecting the subject matter hereof. In the event there is a
discrepancy between the Exhibits and the Agreement the Agreement shall
control.
18.14 Jointly Prepared. This Agreement has been prepared jointly and shall not
be strictly construed against either party.
18.15 Dispute Resolution. Disputes arising under this Agreement regarding the
Product Development Program and/or Product Development Plan thereunder
shall be submitted in the first instance to the Chief Executive Officer of
Generex (or successor position) and the President of the Diabetes Care and
Growth Disorders Products Group at Lilly (or successor position). The
President of the Diabetes Care and Growth Disorders Products Group at
Lilly will make the ultimate determination as to how a dispute will be
resolved.
Any other disputes arising under this Agreement, including its
interpretation and the enforcement of any rights or obligations hereunder,
shall be resolved in a court of law. For avoidance of doubt, disputes
relating to ownership of patents are considered disputes relating to
enforcement of rights.
18.16 Non-Solicitation of Employees. While the Parties are conducting the
Product Development Program under this Agreement, and for a period of one
(1) year thereafter, each Party agrees that it will not directly recruit,
solicit or induce any employee of the other Party who is directly
associated with the Product Development Program to terminate his or her
employment with such other Party. However, nothing set forth in this
section shall prohibit a Party from indirectly recruiting, soliciting or
inducing such employees to leave the other Party through the use of
advertisements in trade journals and the like or from discussing
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employment opportunities with such employees to the extent such employees
contact such Party first.
IN WITNESS WHEREOF, the Parties hereto have as of the Effective Date duly
executed this Agreement.
ELI LILLY AND COMPANY GENEREX BIOTECHNOLOGY CORPORATION
By: By:
---------------------------------- -----------------------------------
Name: August M. Watanabe Name: Anna E. Gluskin
Title: Executive Vice President Title: President
-- Science/Technology
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Exhibit A
Royalty Calculation Example
* * * *
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Exhibit B
MANUFACTURING RESPONSIBILITIES DOCUMENT (MRD)
TABLE OF CONTENTS GUIDELINE
* * * *
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Exhibit C
Example Press Release (Draft)
Lilly and Generex Sign Agreement To Develop
Buccal Form of Insulin
Eli Lilly and Company (NYSE: LLY) and Generex Biotechnology Corporation (NASDAQ:
GNBT) today announced that they have signed an agreement to develop a buccal
formulation of insulin that is administered as a fine spray into the oral cavity
using Generex proprietary technology.
Under the terms of the agreement, Generex will receive certain initial fees and
milestone payments. Generex will also receive royalty payments based on product
sales. In exchange, Lilly will receive exclusive worldwide rights to products
resulting from the collaboration. Lilly will be responsible for conducting
clinical trials, securing regulatory approvals and marketing on a worldwide
basis. Clinical trials of the first product candidate are under way in North
America and Europe. Lilly will also have the option to develop a number of
additional products depending on the success of the initial product.
"We look forward to working with Generex, whose buccal spray delivery technology
potentially represents a novel approach to drug delivery," said James A. Harper,
president, diabetes and growth disorders products for Lilly. "A buccal spray
formulation of insulin could provide an attractive alternative for people with
diabetes."
"The opportunity to partner with Lilly, the global leader in diabetes care, to
develop the world's first marketed buccal insulin spray represents very good
news for millions of patients with diabetes throughout the world," said Anna
Gluskin, chief executive officer of Generex. "We are pleased that Lilly has
recognized the potential of buccal delivery of insulin and Generex's
RapidMist(TM) technology for systemic delivery of proteins, peptides and other
large molecule drugs."
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Today, worldwide costs for treating diabetes and its complications are estimated
to exceed $200 billion annually. It is also estimated that, over the next
decade, the number of people with this disease will more than double. Lilly has
been a leader in diabetes care for more than 70 years. The company continues to
aggressively pursue the goal of being a complete diabetes care company and
intends to provide innovative products to treat all types and stages of
diabetes.
Generex is engaged in the research and development of drug delivery systems and
technologies. To date, it has focused on developing a platform technology for
the buccal delivery (absorption through the inner cheek walls) of large molecule
drugs which, historically, have been administered only by injection. Additional
information about Generex can be found at www.generex.com.
Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of best-in-class pharmaceutical products by applying the latest
research from its own worldwide laboratories and from collaborations with
eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly
provides answers - through medicines and information - for some of the world's
most urgent medical needs.
Certain statements set forth above may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Although Generex and Lilly believe that such statements are based on reasonable
assumptions within the bounds of their knowledge of their business and
operations, there can be no assurance that: (i) Lilly or Generex will not
terminate the collaboration, (ii) that any products will be developed,
manufactured or commercialized successfully, or (iii) that significant funding
will be received by Generex as a result of this collaboration.
Each company's business is subject to significant risks and there can be no
assurance that actual results of the companies' development activities and
results of their operations will not differ materially from expectations. For
information with respect to other factors, which could cause actual results to
differ from expectations, reference is made to the 10-K and 10-Q reports filed
by Generex and Lilly, respectively, with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
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Exhibit D
Product Development Plan
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Exhibit E
Generex Patents
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Exhibit F
Description of Device
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Exhibit G
ADVERSE EVENT REPORTING PROCEDURES
* * * *
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Exhibit H
Cost Savings Adjustment Example
* * * *
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