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EXHIBIT 10.12
AGREEMENT
AGREEMENT, dated and effective this 1st day of November 1994, by and
among Texas Research and Technology Foundation, a Texas non-profit corporation
("TRTF"), CTRC Research Foundation, a Texas non-profit corporation ("CTRC")
(TRTF and CTRC are sometimes collectively referred to herein as the
"Foundations"), TRTF/CTRCRF Building Corporation, a non-profit corporation (the
"Building Corporation"); and Biovensa Inc., a Delaware corporation
("Biovensa").
WITNESSETH
WHEREAS, the Foundations desire to build a small scale (pilot) bulk
manufacturing plant ("GMP Plant") that produces bulk anticancer drugs for
clinical trials, which GMP Plant will be leased to and/or operated by Biovensa;
WHEREAS, to facilitate this goal, TRTF has decided to contribute to
the Building Corporation up to $750,000 in cash, a triple net lease of a
building shell and related real property as described in Exhibit A hereto (the
"Property") and all proceeds it may have a right to from Economic Development
Administration ("EDA") grant No. 00-00-00000 (the "Grant"); and CTRC has
decided to contribute to the Building Corporation up to $750,000 in cash and
all proceeds it may have a right to from the Grant;
WHEREAS, Biovensa desires that the Foundations make these
contributions to the Building Corporation and that the Building Corporation
build the GMP Plant to Biovensa or contract with Biovensa for its operation;
and
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WHEREAS, Biovensa may be forced to make arrangements to manufacture
certain drugs at other facilities in the event the GMP Plant construction is
not commenced as soon as possible;
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
GENERAL
1.01. On and subject to the terms and conditions of this Agreement,
TRTF hereby agrees to contribute to the Building Corporation and equal amount
as contributed by CTRC up to $750,000 in cash together with the Property which
is described in the Grant Application as required to construct the GMP Plant in
consideration for the right to appoint or elect two of the four members of the
Board of Directors of the Building Corporation and the right to one-half of any
distributions or grants, if any, made by the Building Corporation.
1.02. On and subject to the terms and conditions of this Agreement,
CTRC hereby agrees to contribute to the Building Corporation and equal amount
as contributed by TRTF up to $750,000 in cash, and all proceeds from the Grant
as required to construct the GMP Plant in consideration for the right to
appoint or elect two of the four members of the Board of Directors of the
Building Corporation and the right to one-half of the distributions, if any,
made by the Building Corporation.
1.03. On and subject to the terms and conditions of this Agreement,
TRTF and CTRC hereby agree to use their respective best efforts to effectuate
the assignment to
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the Building Corporation of all right, title and interest they have to the
Grant proceeds. Upon such assignment, Building Corporation agrees to abide by
terms and conditions of the Grant.
1.04. On and subject to the terms and conditions of this Agreement,
Biovensa hereby agrees to enter into a lease and/or operating agreement of the
GMP Plant with the Building Corporation or its assigns which contains the terms
and conditions outlined in Exhibit B hereto, along with such other
representations, warranties, agreements of indemnity, and other provisions as
are customary in connection with such lease and/or operating agreements.
ARTICLE II
CONTINGENCIES
2.01. In the event that agreements and/or leases for the GMP Plant
containing additional satisfactory terms and conditions cannot be reached with
Biovensa by November 30, 1994, and unless the Foundations unanimously agree to
continue the development of the GMP Plant, the Foundations and the Building
Corporation agree as follows:
a. The Building Corporation shall discontinue
construction of the GMP Plant and attempt to minimize
losses as appropriate; and
b. The Building Corporation shall file Articles of
Dissolution with the Secretary of State of the state
of incorporation and provide in its plan of
liquidation that each Foundation will receive back
all non-cash property which was contributed by that
Foundation, and that all other assets of the Building
Corporation shall be distributed to the Foundations
in proportion to their right to appoint or elect
members to the Board of Directors of the Building
Corporation.
This provision, however, is not intended to address or limit the Foundations'
or the Building Corporation's rights, if any, to proceed against Biovensa.
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2.02. In the event that the Foundations are unable to assign the
Grant proceeds to the Building Corporation, the parties hereto agree as
follows:
a. The Foundations shall make a good faith effort to
restructure the proposed transaction in order to
effectuate the goals discussed in this Agreement
without jeopardizing the tax-exempt status of either
of the Foundations; including, but not limited to,
the assignment by the Building Corporation of the
agreement providing for the construction of the GMP
Plant to any new entity created for the purpose of
owning such facility and receiving the Grant
Proceeds;
b. Biovensa shall continue its obligations hereunder
with the assigns of the Building Corporation and
shall enter into any further agreements to operate
the GMP Plant with the entity designated by the
Foundations to own such facility after the
restructure has taken place; provided, however, that
the amount of capital of such new entity shall not
materially differ from the capital currently proposed
for the Building Corporation;
c. In the event the Foundations are unable to
restructure the proposed transaction without
jeopardizing the tax-exempt status of either of the
Foundations or substantially changing the material
terms of the transaction, the Foundation and the
Building Corporation agree as follows:
i. The Building Corporation shall discontinue
construction of the GMP Plant and attempt to
minimize losses as appropriate; and
ii. The Building Corporation shall file Articles
of Dissolution with the Secretary of State of
the state of incorporation and provide in its
plan of liquidation that each Foundation will
receive back all non-cash property which was
contributed by that Foundation, and that all
other assets of the Building Corporation
shall be distributed to the Foundations in
proportion to their right to appoint members
to the Board of Directors of the Building
Corporation.
2.03. In the event that the Board of Directors of the Building
Corporation unanimously agree prior to February 28, 1995 that it is not in its
or the Foundations' best interest to proceed with construction of the GMP
Plant, Biovensa releases and forever discharges the Foundations and the
Building Corporation from any and all
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damages arising from the Building Corporation's failure to proceed in the
construction of the GMP Plant.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
TEXAS RESEARCH AND TECHNOLOGY
FOUNDATION
By: /s/ XX XXXXXXX
------------------------------------------------
Name: XX Xxxxxxx
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Title: President
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CTRC RESEARCH FOUNDATION
By: /s/ XXXXX XXXXXXXX
------------------------------------------------
Name: Xxxxx Xxxxxxxx
----------------------------------------------
Title: Cheif Operating Officer
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TRTF/CTRCRF BUILDING CORPORATION
By: /s/ YORK XXXXXX
------------------------------------------------
Name: York Xxxxxx
----------------------------------------------
Title: President
---------------------------------------------
BIOVENSA INC.
By: /s/ XXXXXXX X. LOVE
------------------------------------------------
Name: Xxxxxxx X. Love
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Title: President
---------------------------------------------
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EXHIBIT A
PROPOSED TERMS OF
TRTF LEASE TO BUILDING CORPORATION
. One Dollar ($1.00) per year lease payment
. Term of the lease is for a period of fifteen (15) years with the
option by Building Corporation to renew for three additional terms of
five (5) years each.
. Customary and usual provisions relating to:
. Indemnity
. Use Restrictions
. Insurance Coverage
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EXHIBIT B
TRTF/CTRC GMP BUSINESS TERMS OF
PROPOSED OPERATING AGREEMENT
SEPTEMBER 14, 1994
1. TRTF/CTRC Joint Venture will enter into an agreement with BioVensa to
lease and operate the GMP facility.
2. BioVensa intends on diligently pursuing the growth of a pharmaceutical
a manufacturing business in the Texas Research Park and expects to
eventually build a commercial scale manufacturing plant for bulk drugs
(Phase II) and a commercial scale manufacturing plant for finished
dose forms (Phase III).
3. Lease term will be 15 years beginning with occupancy. BioVensa will
have 3 options to extend the primary term by 5 years each. The terms
and conditions for each option period will be negotiated at least 180
days prior to the expiration of the initial term and/or option period,
respectively.
4. No base lease payments will be made in years 1 and 2.
5. The base lease payments will be calculated to amortize over a 13-year
period the total cash contributions of TRTF and CTRC Research to build
the facility (approximately $1.7 million) at 4% Interest; annual
payment will be approximately $170,250 for a total of $2,213,250.
6. BioVensa will make additional royalty payments during the primary term
as follows:
A. BioVensa will pay the JV royalties based on gross sales of
products manufactured in the Texas Research Park according to
the following schedule:
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Royalties on Gross Sales ($ Millions)
-----------------------------------------------------------------------------------------------------------
Yr 1 Yr 2 Yr 3 Yr 4
---- ---- ---- ----
-----------------------------------------------------------------------------------------------------------
greater than 2 0% greater than 2 0% greater than 1.5 0%
-----------------------------------------------------------------------------------------------------------
2+ 3% on 1st 2+ 3% on 1st 1.5-2 3% 0-2 3%
2
-----------------------------------------------------------------------------------------------------------
2+ 3% on 1st
2
-----------------------------------------------------------------------------------------------------------
2-5 2% 2-5 2% 2-5 2% 2-5 2%
-----------------------------------------------------------------------------------------------------------
5-100 1% 5-100 1% 5-100 1% 5-100 1%
-----------------------------------------------------------------------------------------------------------
B. All product sales will be at market value for royalty
calculations. If only a portion of the final product is
manufactured in facilities at the Texas Research Park, the
ratio of the product costs for the portion manufactured at the
Texas Research Park divided by the total costs will be applied
to the total product sales.
C. In keeping with the mission of TRTF as an economic developer
for the area, and in keeping with the intent of job creation
in the Texas Research Park pursuant to the EDA application
receiving approval, any additions or expansions of the GMP
facility or any Phase II or III facilities will be located in
the Texas Research Park, unless 1) environmental or
governmental regulations prohibit projects of this nature, 2)
occurrences beyond the control of CRTC or BioVensa prohibit
future development of projects of this nature, or 3) BioVensa
decides, for good and valid business reasons, to locate its
Phase II and/or III manufacturing operations at a location
other than the Texas Research Park and pays TRTF a fee
according to the following schedule:
Years 0 through 7 $1,000,000
Years 8 through 10 $ 750,000
Years 11 through 12 $ 500,000
In addition, if BioVensa relocates the GMP facility as a part
of its relocation of a Phase II or III facility, BioVensa will
pay to the JV up to two years of base lease payments if a
worthy tenant is not found to lease the GMP facility within
the initial two-year period after termination of the Operating
Agreement. BioVensa may not relocate the GMP facility except
in conjunction with a Phase II and/or III expansion, or unless
BioVensa is purchased by a third party.
BioVensa agrees in good faith that it will not make a decision
to relocate primarily to reduce its royalty obligation to the
JV. In the event
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BioVensa relocates, the JV will assist BioVensa in finding a
tenant to occupy the GMP facility who will not cause the EDA
to demand repayment of its grant. However, if the relocation
of BioVensa does result in an EDA demand for repayment of the
grant, BioVensa will repay grant on behalf of the JV, TRTF and
CTRC.
D. TRTF agrees to provide any expansion or new facility with
recruitment incentives at least equal to those offered to any
other entity or facility it is attempting to attract to the
Texas Research Park, including using its best efforts to
assist BioVensa in obtaining any third party benefit or
relief, such as tax abatement.
E. In the event either party decides to sell its Interest in the
JV, the selling party will offer the remaining party a first
right of refusal to acquire it's Interest pursuant to good
faith negotiations. In the event that JV decides to sell the
GMP facility and is permitted to do so by the Economic
Development Administration, JV will offer BioVensa the first
right of refusal to purchase the facility pursuant to good
faith negotiations.
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