Exhibit 10.17
INTERIM RESEARCH AND DEVELOPMENT SERVICES AGREEMENT
THIS INTERIM RESEARCH AND DEVELOPMENT SERVICES AGREEMENT ("AGREEMENT") is
made by and between LIGHT SCIENCES CORPORATION, a Washington corporation (the
"COMPANY"), and Light Sciences Oncology, a Washington corporation ("SUB")
effective as of this 1st day of January 2005.
RECITALS
WHEREAS, the Company is a developer of innovative therapeutic solutions for
the treatment of proliferative diseases based on a therapy known as Light
Infusion Technology(TM) ("LITx(TM)").
WHEREAS, the Company has created Sub to continue to develop the Company's
LITx in the field of use of diagnosis, prophylaxis, treatment and monitoring of
tumors, malignant disease, cancers, neoplasias, metaplasias, hyperplasias
dysplasias in humans and/or animals. For example, Sub's Field of Use includes,
but is not limited to: tumors located anywhere in the body (brain, eye, ear,
head & neck, intra-oral, esophageal, intra-thoracic, lung, intra-abdominal,
stomach, ileum, pancreas, spleen, colon, kidney, gonads, uterus, rectum,
extremities, skin); carcinomas in situ, dysplastic tissues changes in organs and
surfaces, hyperplastic tissues in organs and surfaces; and sarcomas. The Field
of Use does not include: adipose, benign prostatic hyperplasia, uterine
fibroids, dermatology indications such as warts, psoriasis, and other benign
skin conditions.
WHEREAS, the board of directors of the Company determined that it is in the
Company's and its shareholders' best interests that the Company be restructured,
such that Sub will operate as a wholly-owned subsidiary of the Company.
WHEREAS, Sub is currently in the process of seeking funding from third
party institutional investors (the "PRIVATE PLACEMENT") and in the interim
requires funding from the Company's principal shareholder to continue
operations.
WHEREAS, to assist Sub in its day-to-day operations as a new corporate
entity prior to the closing of the Private Placement, Company has agreed to
provide certain services to Sub, and Sub desires to engage Company to provide
such services on an exclusive basis, for the term and on the conditions set
forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency is hereby acknowledged, the parties agree as follows:
ARTICLE I
PROVISION OF COMPANY SERVICES TO SUB; PAYMENT FOR COMPANY
SERVICES
1.1 SERVICES. Upon the terms and subject to the conditions of this
Agreement, Company shall provide all of the services to Sub necessary for Sub to
operate the Sub's business as described in the 2005 Sub Operating Plan as
submitted to the board of directors of the Company on December 3, 2004 (the "SUB
BUSINESS"). A summary of the services to be provided by the Company is set forth
on Exhibit A (the "COMPANY SERVICES"). In its sole discretion, Company will have
the right to cause third party subcontractors to perform any or all of the
Company Services provided for hereunder, provided that any such delegation by
Company will not relieve Company of its obligations hereunder.
1.2 FEES FOR COMPANY SERVICES. Sub shall pay Company for the Company
Services at cost as incurred by Company as described on Exhibit A (the "SERVICES
FEE"). Company shall submit invoices to Sub twenty (20) days after the end of
each month for the Services Fee for the Company Services performed in the
preceding month. Payment of the Services Fee shall be paid to Company within
five (5) days of receipt of invoice by Sub.
1.3 TERM. The term of this Agreement shall extend from the date of this
Agreement until the earlier to occur of the following: (i) the closing of a
Private Placement, or (ii) the one (1) year anniversary of the date of this
Agreement, or (iii) upon ten (10) days written notice by Company if approved by
the President of Company and the Company's Board of Directors (the "TERM").
Following the expiration of the Term, this Agreement shall be extended only by
the written consent of the parties hereto for such additional term as agreed by
the parties; provided, however that in the event of termination under (i) above,
the parties will use their best efforts to negotiate a modification of this
Agreement on a transitional basis or enter into a separate agreement.
1.4 REASONABLE BEST EFFORTS. Company agrees that it will at all times use
its commercially reasonable best efforts to perform any and all of the Company
Services to be provided pursuant to this Agreement to the reasonable
satisfaction of Sub and will at all times retain and utilize a sufficient number
of qualified personnel to perform all of such Company Services.
1.5 NO AGENCY. After such time that Company is no longer the sole
shareholder of Sub, Company shall not have, nor represent itself as having, any
authority under the terms of this Agreement to make agreements of any kind in
the name of or binding upon Sub, to pledge Sub's credit, or to extend credit on
Sub's behalf.
ARTICLE II
OTHER MATTERS
2.1 EXCEPTIONS TO REQUIREMENT TO PROVIDE SERVICES. In the sole discretion
of Company, Company shall not be obliged to provide Company Services if the
performance of such Company Services presents an unavoidable conflict of
interest between Company and Sub that the parties are unable to resolve pursuant
to arms-length
good faith negotiations. Notwithstanding Section 1.1, during the Term, Sub
agrees that it will exclusively acquire the Company Services from Company,
unless otherwise agreed to in writing by the President of Company, the Company's
Board of Directors and the President of Sub.
2.2 ASSET TRANSFER UPON COMPLETION OF PRIVATE PLACEMENT. The Company
Services are being provided by Company pursuant to this Agreement in order to
operate the Sub Business in the interim and with an understanding that in the
event that Sub completes the Private Placement, Company will, subject to the
approval of the Board of Directors and shareholders of the Company, transfer to
Sub substantially all of the assets necessary to operate the Sub Business,
including, without limitation, all federal Food & Drug Administration
indications, pursuant to license agreements and other agreements to be finalized
between Sub and Company immediately prior to the closing of the Private
Placement. For avoidance of doubt, until such time immediately prior to the
consummation of a Private Placement, legal title to all assets necessary to
operate the Sub Business will remain with Company including all developments
thereto during the Term whether made by Company or Sub.
ARTICLE III
MISCELLANEOUS
3.1 ENTIRE AGREEMENT. All prior or contemporaneous oral agreements,
contracts, promises, representations and statements, if any, among the parties
hereto, or their representatives, are merged into this Agreement and this
Agreement shall constitute the entire agreement and understanding among them
with respect to the subject matter hereof. No modification or waiver of the
terms hereof shall be valid unless in writing signed by the party to be charged
and only to the extent therein set forth.
3.2 BENEFIT OF AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors; provided, however, that this Agreement is not assignable,
in whole or in part, directly or indirectly, by either party hereto without the
written consent of the other which consent shall not be unreasonably withheld.
This Agreement is not intended to create or vest any particular benefits in any
third party including, but not limited to, any employees of Company or Sub.
3.3 FURTHER DOCUMENTS; COMPLIANCE; GOVERNMENTAL APPROVALS. Both Company and
Sub shall make, execute, acknowledge and deliver such other instruments and
documents, and take all such other actions, as may be reasonably required in
order to effectuate the purposes of this Agreement and to consummate the
transactions contemplated hereby. Both Company and Sub shall, in connection with
entering into this Agreement, performing its obligations hereunder and taking
any and all actions relating hereto, (i) comply with all applicable laws,
regulations, orders and decrees, (ii) obtain all required consents and approvals
and make all required filings with any governmental agency, other regulatory or
administrative agency, commission or similar authority, and
(iii) promptly provide the other with all such information as the other may
reasonably request in order to be able to comply with the provisions of this
section.
3.4 NOTICES. All notices, requests, instructions and other communications
provided for herein to any party shall be deemed given if contained in a written
instrument (or multiple written instruments as long as they are consistent) when
(i) delivered in person or by facsimile; (ii) the first business day following
the date of deposit into an overnight courier service; or (iii) on the earlier
of actual receipt or the third business day following the date of deposit in the
United States registered or certified mail, with return receipt requested,
addressed to the party at the address set forth on the signature page below.
3.5 ARBITRATION. If any controversy or claim arising out of this Agreement
cannot be settled by the parties, the controversy or claim shall be settled by
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association then in effect and judgment on the award may be entered
in any court having jurisdiction. The arbitration shall be conducted at Seattle,
Washington.
3.6 ATTORNEYS' FEES. In the event that any party maintains or defends any
cause of action against another party to this Agreement, the prevailing party
shall be entitled to recover all reasonable attorneys' fees and costs of
litigation and arbitration.
3.7 GOVERNING LAW. The provisions of this Agreement shall be governed by
and construed in accordance with the laws of the state of Washington.
3.8 HEADINGS. The captions appearing in this Agreement are inserted only as
a matter of convenience and for reference and in no way define, limit or
describe the scope and intent of this Agreement or any of the provisions hereof.
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SIGNATURE PAGE--INTERIM RESEARCH AND DEVELOPMENT
SERVICES AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
LIGHT SCIENCES CORPORATION LIGHT SCIENCES ONCOLOGY, INC.
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxx Xxxxxxx, M.D., Ph.D.
---------------------------------- -------------------------------------
Its Chief Executive Officer Its President
EXHIBIT A
COMPANY SERVICES
A. COMPANY SERVICES
- Human Resources, including benefits to Company employees servicing Sub
- Legal
- Tax
- Real Estate, including payment of pro rata portion of rent for and
maintenance of premises occupied by Company for the purposes of
providing the Company Services
- Storage & Facilities Services
- Corporate Accounting and Financing
- Information Technology
- Research and Development Support
- FDA Approval Services
- Regulatory Services
- Knowledge Resources
- Drug Manufacturing/Procurement
- Document Control Services
- Insurance Coverage Maintenance
B. PAYMENT OBLIGATIONS
Payment for the above services performed by employees, contractors and agents of
Company and shall be billed to Sub on a monthly basis based on the Company's
2005 Budget by Program related to Oncology set forth below. All payments shall
be made by Sub according to the Payment Schedule:
EXPENSES
EMPLOYEE RELATED 3,145,399
BUSINESS CONSULTANTS & SERVICES 558,063
SUPPLIES & EQUIPMENT 38,315
RESEARCH AND DEVELOPMENT:
PURCHASED R&D --
THIRD PARTY DEVELOPMENT & MATERIALS 3,970,754
THIRD PARTY RESEARCH & MATERIALS 49,083
GENERAL AND ADMINISTRATIVE 136,001
CAPITAL EQUIPMENT 190,000
-----------
TOTAL DIRECT EXPENSES $ 8,087,616
-----------
ALLOCATION OF TO BE ALLOCATED $ 2,090,147
-----------
TOTAL BUDGET $10,177,763
===========
Total Monthly funding for all services provided under the Interim Research and
Development Services Agreement between Company and Sub shall be made on or
before the 1st day of each month according to the Payment Schedule below
("Monthly Payment").
PAYMENT SCHEDULE TOTAL ALLOCATION TOTAL
MONTH DIRECT EXPENSES TO BE ALLOCATED MONTHLY PAYMENT
---------------- --------------- --------------- ---------------
JANUARY $ 861,156 $240,714 $ 1,101,870
FEBRUARY $ 801,848 $388,342 $ 1,190,190
MARCH $ 782,450 $290,375 $ 1,072,823
APRIL $ 746,541 $301,441 $ 1,047,982
MAY $ 785,297 $118,042 $ 903,339
JUNE $2,280,627 $513,437 $ 2,794,064
JULY $ 730,054 $ 82,356 $ 812,410
AUGUST $ 760,251 $140,540 $ 900,791
SEPTEMBER $ 825,983 $112,134 $ 938,117
OCTOBER $ 780,647 $262,711 $ 1,043,358
NOVEMBER $ 836,313 $264,044 $ 1,100,357
DECEMBER $ 741,252 $136,017 $ 877,269
-----------
TOTAL ANNUAL $10,177,763
===========
On the 20th day of each month Company will submit an invoice to Sub reflecting
actual expense charged plus the allocation of To Be Allocated expenses. All
monthly invoices shall be reconciled each month with the previous Monthly
Payment remitted by Sub.
