Exhibit 10.3
MANAGEMENT
SERVICES AGREEMENT
THIS MANAGEMENT SERVICES
AGREEMENT (this “Agreement”) is made as of March 17, 2015, by and between Checkpoint Therapeutics, Inc. a Delaware
corporation (the “Company”), and Fortress Biotech, Inc., a Delaware corporation (the “Manager”
and individually a “Party” or collectively the “Parties”).
WHEREAS, on the terms
and subject to the conditions contained in this Agreement, the Company desires to obtain certain management, advisory and consulting
services from the Manager, and the Manager has agreed to perform such management, advisory and consulting services;
WHEREAS, the Parties
are also entering into as of the date hereof the Founders Agreement for the transfer of the Assets (as defined in the Founders
Agreement), and the execution of this Agreement is a condition to the willingness of the Manager to transfer the Assets.
WHEREAS, this Agreement
has been approved by the Company’s Board of Directors.
NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto agree as follows:
1. Management, Advisory
and Consulting Services.
1.1 Board of Directors
Supervision. The activities of the Manager to be performed under this Agreement shall be subject to the supervision of the
Board of Directors (“Board”) and subject to reasonable policies not inconsistent with the terms of this Agreement
adopted by the Board and in effect from time-to-time. Where not required by applicable law or regulation, the Manager shall not
require the prior approval of the Board to perform its duties under this Agreement. Notwithstanding the foregoing, the Manager
shall not have the authority to bind the Company, and nothing contained herein shall be construed to create an agency relationship
between the Company and the Manager.
1.2 Services.
Subject to any limitations imposed by applicable law or regulation, the Manager shall render or cause to be rendered management,
advisory and consulting services to the Company, which services may include advice and assistance concerning any and all aspects
of the operations, clinical trials, financial planning and strategic transactions and financings of the Company and conducting
relations on behalf of the Company with accountants, attorneys, financial advisors and other professionals (collectively, the
“Services”). The Manager shall provide and devote to the performance of this Agreement such employees, Affiliates
and agents of the Manager as the Manager shall deem appropriate to the furnishing of the Services hereunder. Additionally, at
the request of Manager, the Company will utilize clinical research services, medical education, communication and marketing services
and investor relations/public relation services of companies or individuals designated by Manager, including Affiliates, employees
or consultants of Manager, provided those services are offered at market prices. “Affiliate” means a person or entity
that controls, is controlled by or is under common control with a party, but only for so long as such control exists. For the
purposes of this Section 1.1, the word “control” (including, with correlative meaning, the terms “controlled
by” or “under common control with”) means the actual power, either directly or indirectly through one or more
intermediaries, to direct the management and policies of such person or entity, whether by the ownership of at least 50% of the
voting stock of such entity, or by contract or otherwise.
1.3 Non-exclusivity,
Freedom to Pursue Opportunities and Limitation on Liability.
1.3.1 Non Exclusivity.
The Manager shall devote such time and efforts to the performance of Services contemplated hereby as the Manager deems reasonably
necessary or appropriate; provided, however, that no minimum number of hours is required to be devoted by the Manager on a weekly,
monthly, annual or other basis. The Company acknowledges that the Manager’s Services are not exclusive to the Company and
that the Manager will render similar Services to other persons and entities.
1.3.2 Freedom to
Pursue Opportunities. In recognition that the Manager and its Affiliates currently have, and will in the future have or will
consider acquiring, investments in numerous companies with respect to which the Manager or its Affiliates may serve as an advisor,
a director or in some other capacity, and in recognition that the Manager and its Affiliates have a myriad of duties to various
investors, and in anticipation that the Company and the Manager (or one or more Affiliates or clients of the Manager) may engage
in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in
recognition of the benefits to be derived by the Company hereunder and in recognition of the difficulties that may confront any
manager who desires and endeavors fully to satisfy such manager’s duties in determining the full scope of such duties in
any particular situation, the provisions of this Section 1.3.2 are set forth to regulate, define and guide the conduct of
certain affairs of the Company as they may involve the Manager.
Except as the Manager
may otherwise agree in writing after the date hereof:
(i) the Manager will
have the right: (A) to directly or indirectly engage in any business including, without limitation, any business activities or
lines of business that are the same as or similar to those pursued by, or competitive with, any of the Company’s, (B) to
directly or indirectly do business with any client or customer of the Company, (C) to take any other action that the Manager believes
in good faith is necessary to or appropriate to fulfill its obligations as described in the first sentence of this Section 1.3.2,
and (D) not to present potential transactions, matters or business opportunities to the Company, and to pursue, directly or indirectly,
any such opportunity for itself, and to direct any such opportunity to another person.
(ii) the Manager and
its officers, employees, partners, members, other clients, Affiliates and other associated entities will have no duty (contractual
or otherwise) to communicate or present any corporate opportunities to the Company or to refrain from any action specified in Section
1.3.2(i), and the Company on its own behalf and on behalf of its Affiliates, hereby renounces and waives any right to require
the Manager or any of its Affiliates to act in a manner inconsistent with the provisions of this Section 1.3.2.
(iii) Neither the Manager
nor any officer, director, employee, partner, member, stockholder, Affiliate or associated entity thereof will be liable to the
Company for breach of any duty (contractual or otherwise) by reason of any activities or omissions of the types referred to in
this Section 1.3.2 or of any such person’s participation therein.
1.3.3 Limitation
of Liability. In no event will the Manager or any of its Affiliates be liable to the Company for any indirect, special, incidental
or consequential damages, including, without limitation, lost profits or savings, whether or not such damages are foreseeable,
or for any third party claims (whether based in contract, tort or otherwise), relating to the Services to be provided by the Manager
hereunder. The Manager’s liability shall be limited to direct damages not to exceed the total fees paid to Manager for the
Services provided to the Company through the date of any claim.
2. Term. The
Manager shall provide the Services set forth in Section 1 above from the date hereof until the earlier of (a) termination
of this Agreement by mutual agreement of the Manager and the Company and (b) the 5th anniversary of this Agreement;
provided that this Agreement shall be automatically extended for additional five year periods unless the Manager or the
Company provides written notice of its desire not to automatically extend the term of this Agreement to the other Parties hereto
at least ninety (90) days prior to such date (such period, the “Term”).
No termination of this
Agreement, whether pursuant to this Section 2 or otherwise, will affect the Company’s duty to pay any Management Fee
(as defined herein in Section 3) accrued, or to reimburse any cost or expense incurred pursuant to Section 4 hereof,
prior to the effective date of such termination. Upon termination of this Agreement, the Manager’s right to receive any
further Management Fee or reimbursement for costs and expenses that have not accrued or been incurred to the date of termination
shall cease and terminate. Additionally, the obligations of the Company under Section 4 (Expenses), Section 7 (Indemnification),
the provisions of Section 1.3.2 above (whether in respect of or relating to Services rendered prior to termination of this
Agreement or in respect of or relating to any Services provided after termination of this Agreement) and the provisions of Section
14 (Governing Law) will also survive any termination of this Agreement to the maximum extent permitted under applicable law.
3. Compensation.
3.1 In
consideration of the management, consulting and financial services to be rendered, the Company will pay to the Manager an annual
base management and consulting fee in cash in the aggregate amount of five hundred thousand dollars ($500,000) (the “Annual
Consulting Fee”), payable in advance in equal quarterly installments on the first business day of each calendar quarter
in each year, provided, that such Annual Consulting Fee shall be increased to $1,000,000 for each calendar year in which
the Company has Net Assets in excess of $100,000,000 at the beginning of the calendar year. For purposes of this Agreement, “Net
Assets” shall mean the difference between total assets on the one hand and current liabilities and non-capitalized
long-term liabilities on the other hand.
The fees due to Manager
pursuant to this Section 3.1 shall be referred to as the “Management Fee.” Notwithstanding the foregoing,
the first Annual Consulting Fee payment shall be made on the first business day of the calendar quarter immediately following the
completion of the first equity financing for the Company that is in excess of $10,000,000 in gross proceeds. The first payment
shall include all amounts in arrears from the date hereof through such payment as well as the amounts in advance for such first
quarterly payment.
3.2 Any payment pursuant
to this Section 3 shall be made in cash by wire transfer(s) of immediately available funds to or among one or more
accounts as designated from time-to-time by the Manager to the Company in writing.
4. Expenses.
Actual and direct out-of-pocket expenses reasonably incurred by the Manager and its personnel in performing the Services shall
be reimbursed to the Manager by the Company upon the delivery to the Company of an invoice, receipt or such other supporting data
as the Company reasonably shall require. The Company shall reimburse the Manager by wire transfer of immediately available funds
for any amount paid by the Manager, which shall be in addition to any other amount payable to the Manager under this Agreement.
5. Reserved.
6. Decisions and
Authority of the Manager.
6.1 No
Liability. The Company reserves the right to make all decisions with regard to any matter upon which the Manager has rendered
advice and consultation, and there shall be no liability of the Manager for any such advice accepted by the Company pursuant to
the provisions of this Agreement. The Manager will not be liable for any mistakes of fact, errors of judgment or losses sustained
by the Company or for any acts or omissions of any kind (including acts or omissions of the Manager), except to the extent caused
by intentional misconduct of the Manager as finally determined by a court of competent jurisdiction.
6.2 Independent
Contractor. The Manager shall act solely as an independent contractor and shall have complete charge of its respective personnel
engaged in the performance of the Services under this Agreement. Neither the Manager nor its officers, employees or agents will
be considered employees or agents of the Company or any of its respective subsidiaries as a result of this Agreement. As an independent
contractor, the Manager shall have authority only to act as an advisor to the Company and shall have no authority to enter into
any agreement or to make any representation, commitment or warranty binding upon the Company or to obtain or incur any right,
obligation or liability on behalf of the Company. Nothing contained in this Agreement shall result in the Manager or any of its
partners or members or any of their Affiliates, investment managers, investment advisors or partners being a partner of or joint
venturer with the Company.
7. Indemnification.
7.1 Indemnification.
The Company shall (i) indemnify the Manager and its respective Affiliates, directors, officers, employees and agents (collectively,
the “Indemnified Party”), to the fullest extent permitted by law, from and against any and all actions, causes
of action, suits, claims, liabilities, losses, damages and costs and expenses in connection therewith, including without limitation
reasonable attorneys’ fees and expenses (“Indemnified Liabilities”) to which the Indemnified Party may
become subject, directly or indirectly caused by, related to or arising out of the Services or any other advice or Services contemplated
by this Agreement or the engagement of the Manager pursuant to, and the performance by such Manager of the Services contemplated
by, this Agreement, and (ii) promptly reimburse the Indemnified Party for Indemnified Liabilities as incurred, in connection with
the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by
or on behalf of the Company or Manager and whether or not resulting in any liability. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.
7.2 Limited
Liability. The Company shall not be liable under the indemnification contained in Section 7.1 hereof with respect to
the Indemnified Party to the extent that such Indemnified Liabilities are found in a final non-appealable judgment by a court
of competent jurisdiction to have resulted directly from the Indemnified Party’s willful misconduct or gross negligence.
The Company further agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to the Company, holders of its securities or its creditors related to or arising out of the engagement of the Manager
pursuant to, or the performance by the Manager of the Services contemplated by, this Agreement.
8. Notices.
All notices, demands, or other communications to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given or made when (i) delivered personally to the recipient, (ii) telecopied
to the recipient (with a hard copy sent to the recipient by reputable overnight courier service (charges prepaid)) if telecopied
before 5:00 p.m. Eastern Standard Time on a business day, and otherwise on the next business day, (iii) one (1) business
day after being sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) received via electronic
mail by the recipient if received via electronic mail before 5:00 p.m. Eastern Standard Time on a business day, and otherwise
on the next business day after such receipt. Such notices, demands and other communications shall be sent to the address for such
recipient indicated below or to such other address or to the attention of such other person as the recipient party has specified
by prior written notice to the sending party.
Notices
to the Manager
0 Xxxxxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxxx X. Xxxxxxxxx, MD
xx@xxxxxxxxxxxxxxx.xxx
Notices
to the Company:
0 Xxxxxxxx
Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attn: Xxxxxxx
X. Weiss
xx@xxxxxxxxxxxxxxx.xxx
9.
Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the Parties hereto shall use their best efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have
executed the remaining terms, provisions, covenants and restrictions without including any such terms, provisions, covenants and
restrictions which may be hereafter declared invalid, illegal, void or unenforceable.
10. Entire Agreement.
This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes any prior
communication or agreement with respect thereto.
11. Counterparts.
This Agreement may be executed in multiple counterparts, and any Party may execute any such counterpart, each of which when executed
and delivered will thereby be deemed to be an original and all of which counterparts taken together will constitute one and the
same instrument. The delivery of this Agreement may be effected by means of an exchange of facsimile or portable document format
(.pdf) signatures.
12.
Amendments and Waiver. No amendment or waiver of any term, provision or condition of this Agreement will be effective, unless
in writing and executed by both the Company and the Manager. No waiver on any one occasion will extend to, effect or be construed
as a waiver of any right or remedy on any future occasion. No course of dealing of any person nor any delay or omission in exercising
any right or remedy will constitute an amendment of this Agreement or a waiver of any right or remedy of any Party hereto.
13. Successors and
Assigns. All covenants and agreements contained in this Agreement by or on behalf of any of the Parties hereto will bind and
inure to the benefit of the respective successors and assigns of the Parties hereto whether so expressed or not. Neither the Company
nor the Manager may assign its rights or delegate its obligations hereunder without the prior written consent of the other Party,
which consent shall not be unreasonably withheld; provided, that the Manager may assign this Agreement to any of its Affiliates.
14. Governing Law.
This Agreement shall be governed by and construed in accordance with the substantive laws of the state of New York, without giving
effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction
other than the state of New York.
15. Waiver of Jury
Trial. To the extent not prohibited by applicable law which cannot be waived, each of the Parties hereto hereby waives, and
covenants that it will not assert (whether as plaintiff, defendant or otherwise), any right to trial by jury in any forum in respect
of any issue, claim, demand, cause of action, action, suit or proceeding arising out of or based upon this Agreement or the subject
matter hereof, in each case whether now existing or hereafter arising and whether in contract or tort or otherwise. Any of the
Parties hereto may file an original counterpart or a copy of this Agreement with any court as written evidence of the consent of
each of the Parties hereto to the waiver of its right to trial by jury.
16. No Strict Construction.
The Parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties hereto, and no presumption
or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
17. Headings; Interpretation.
The headings in this Agreement are for convenience and reference only and shall not limit or otherwise affect the meaning hereof.
The use of the word “including” in this Agreement will be by way of example rather than by limitation.
* * * * * *
IN WITNESS WHEREOF, the
Parties hereto have executed this Management Services Agreement as of the date first written above.
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FORTRESS BIOTECH, INC. |
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By: |
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/s/ Xxxxxxx X. Xxxxxxxxx |
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Name: |
Xxxxxxx X. Xxxxxxxxx, MD |
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Title: |
President |
