EXHIBIT 10.1
ECONOMIC DEVELOPMENT AGREEMENT
BETWEEN
THE STATE OF TEXAS
AND
THE TEXAS A&M UNIVERSITY SYSTEM
AND
LEXICON GENETICS INCORPORATED
JULY 15, 2005
THIS AGREEMENT ("Agreement") is by and among the State of Texas (the "State"),
acting by and through the Office of Economic Development and Tourism, a division
within the Office of the Governor ("OOGEDT"), Texas A&M University System
("TAMUS") and Lexicon Genetics Incorporated ("Lexicon"). The State, TAMUS, and
Lexicon are hereinafter referred to either individually as the "party," or
collectively as the "parties." The Effective Date of this Agreement is July 15,
2005.
RECITALS
WHEREAS, Texas' low taxes, budgetary discipline, reasonable regulations and
educated workforce continue to make the state a top location for businesses
looking to expand or relocate; and
WHEREAS, the State desires to become a world leader in genomics and
biotechnology; and
WHEREAS, TAMUS and Lexicon are known for research and development expertise and
Lexicon is particularly known for its gene knockout technology and expertise;
and
WHEREAS, gene knockout technology provides a means to systematically identify
the physiological functions of genes, offering the promise of discovering new
and more-effective ways to prevent and treat human and veterinary disease; and
WHEREAS, Lexicon employs more than 600 people in the State and had annual
revenues in 2004 of approximately $62 million; and
WHEREAS, TAMUS is a Texas public institution of higher education; and
WHEREAS, TAMUS and Lexicon have proposed a unique public-private collaboration
for human and veterinary medical research that would be endowed with two (2)
complete copies of a library consisting of three hundred fifty thousand
(350,000) knockout mouse embryonic stem cell clones (the "OmniBank II Library")
housed at two facilities, one being located in Houston and one being located in
College Station; and
WHEREAS, TAMUS and Lexicon have proposed that such collaboration be implemented
through the Texas Institute for Genomic Medicine ("TIGM"), a Texas non-profit
corporation formed for such purpose; and
WHEREAS, it is in the State's interest to expand and improve the research and
development capability of its public institutions of higher education, including
by facilitating the concentration of expertise in particular areas of scientific
research to enable the development of a platform for recruiting additional
researchers and to obtain related funding from other sources; and
WHEREAS, the new facilities and programs related to TIGM are estimated to create
at least 5,000 new full-time jobs for Texans, with an ultimate average annual
payroll of more than $450 million; and
WHEREAS, Article III, Section 52-A of the Texas Constitution expressly
authorizes the State to use public funds for the public purposes of development
and diversification of the economy of the State, the elimination of unemployment
or underemployment in the State, or the development of commerce in the State;
and
WHEREAS, SB 1771 of the 78th Texas Legislature established the Texas Enterprise
Fund ("TEF") to be used with the express written approval of the Governor,
Lieutenant Governor, and Speaker of the House of Representatives for economic
development, infrastructure development, community development, job training
programs, and business incentives, and HB 7 of the 78th Texas Legislature
appropriated $295 million from the Texas Economic Stabilization Fund to the TEF
for the 2004-2005 biennium; and
WHEREAS, the State values Lexicon as a distinguished and important corporate
citizen, and wishes to receive a commitment that Lexicon will expand its
presence and payroll in Texas and provide the intellectual property resources to
enable TAMUS and Lexicon to establish TIGM, and Lexicon wishes to provide such
commitment; and
WHEREAS, TAMUS is willing to undertake commitments related to constructing and
renovating facilities for TIGM and supporting the operations of TIGM to carry
out its planned research and development activities, as well as to the creation
of new jobs in the State; and
WHEREAS, the Governor, Lieutenant Governor, and Speaker have each approved a
grant from the TEF to TAMUS and Lexicon, as evidenced in the letter attached as
Exhibit A hereto; and
WHEREAS, to ensure that the benefits the State provides under this Agreement are
utilized in a manner consistent with Article III, Section 52-a of the Texas
Constitution, and other laws, TAMUS and Lexicon have agreed to comply with
certain conditions and deliver certain performance, including achieving
measurable job creation and retention commitments, in exchange for receiving
these benefits; and
WHEREAS, the parties desire to have such proposals set forth in a valid, binding
and enforceable agreement; and
WHEREAS, the State believes it is in the best public interest to enter into this
Agreement for the reasons set forth above;
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AGREEMENTS
NOW, THEREFORE, in consideration of the mutual promises herein, the parties
agree as follows:
1. STATE OF TEXAS COMMITMENT
x. XXXXX OF FUNDS FROM THE TEXAS ENTERPRISE FUND TO TAMUS. The State shall
pay cash from the Texas Enterprise Fund to TAMUS in the amount of Fifteen
Million Dollars ($15,000,000) as soon as practicable following the execution of
this Agreement (but no later than thirty (30) days after the Effective Date
provided that all necessary documents for disbursement of the funds have been
provided to the State as required), of which (i) Ten Million Dollars
($10,000,000) shall be used by TAMUS to build a facility in College Station to
house one copy of the OmniBank II Library and (ii) Five Million Dollars
($5,000,000) shall be used by TAMUS to renovate existing space at the Institute
of Biosciences and Technology ("IBT") at the Health Science Center in Houston to
house the other copy of the OmniBank II Library, in each case in accordance with
this Agreement.
x. XXXXX OF FUNDS FROM THE TEXAS ENTERPRISE FUND TO LEXICON. The State
shall pay cash from the Texas Enterprise Fund to Lexicon in the amount of
Thirty-Five Million Dollars ($35,000,000) as soon as practicable following the
execution of this Agreement (but no later than thirty (30) days after the
Effective Date provided that all necessary documents for disbursement of the
funds have been provided to the State as required), including (i) Thirty Million
Dollars ($30,000,000) for the generation and delivery of the OmniBank II Library
and related intellectual property licenses and (ii) Five Million Dollars
($5,000,000) for the acquisition of bioinformatics software and related
intellectual property licenses, in each case in accordance with this Agreement.
2. TAMUS AND LEXICON FUNDING CONDITIONS
TAMUS and Lexicon must meet all of the following "Funding Conditions" or will be
subject to liquidated damages and/or repayment in accordance with this
Agreement. The Funding Conditions are as follows:
a. ESTABLISHMENT OF THE TEXAS INSTITUTE FOR GENOMIC MEDICINE. TAMUS and
Lexicon shall establish TIGM, the initial members of which shall be TAMUS
(participating through Texas A&M University and the Texas A&M Health Science
Center) and Lexicon. TAMUS and Lexicon shall provide the State with sufficient
evidence to confirm TIGM's formation.
b. AGREEMENTS BETWEEN LEXICON AND TAMUS. TAMUS and Lexicon have entered
into, and shall perform their obligations under, agreements with respect to the
matters described in attached Exhibit B. TAMUS and Lexicon shall certify in
writing to the State that the Agreements have been entered into and materially
and substantially comply with the terms as set forth in Exhibit B.
It is understood that this Agreement does not grant the State, apart
from TAMUS, any right to acquire intellectual property transferred to or
developed by TIGM.
c. SECURITY. TAMUS shall provide the state with sufficient evidence that
the State has been provided security for its investment by a pledge of the lease
payments and other revenue from TIGM to TAMUS.
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d. JOB TARGETS. TAMUS and Lexicon shall be responsible to the State for
creating, in the aggregate, at least Five Thousand ("5,000") new Employment
Positions in Texas by December 31, 2015, and TAMUS shall be responsible to the
State for maintaining such new Employment Positions in Texas from December 31,
2015 to December 31, 2027. Each of TAMUS and Lexicon shall be responsible for
the respective portions of such aggregate commitment set forth below (such
portion representing the party's respective "Job Target") in accordance with the
following schedule:
(1) 94 jobs by December 31, 2006 (TAMUS portion 45; Lexicon
portion 49),
(2) 198 jobs by December 31, 2007 (TAMUS portion 73; Lexicon
portion 125),
(3) 357 jobs by December 31, 2008 (TAMUS portion 148; Lexicon
portion 209),
(4) 581 jobs by December 31, 2009 (TAMUS portion 280; Lexicon
portion 301),
(5) 894 jobs by December 31, 2010 (TAMUS portion 492; Lexicon
portion 402),
(6) 1,345 jobs by December 31, 2011 (TAMUS portion 832; Lexicon
portion 513),
(7) 1,801 jobs by December 31, 2012 (TAMUS portion 1,166; Lexicon
portion 635),
(8) 2,562 jobs by December 31, 2013 (TAMUS portion 1,657; Lexicon
portion 905),
(9) 3,573 jobs by December 31, 2014 (TAMUS portion 2,345; Lexicon
portion 1,228), and
(10) 5,000 jobs by December 31, 2015 (TAMUS portion 3,384; Lexicon
portion 1,616).
For the purposes of this Agreement, "Employment Positions" shall be defined as
jobs meeting all of the following criteria:
(i) New full-time or full-time equivalent employment positions in
Texas,
(ii) With an average annual gross compensation (not including
benefits) of at least $60,000, which shall be adjusted for
inflation but not to exceed 3% per year, such adjustment to
occur first for the compensation standard applicable to 2007,
and
(iii) Which may include (A) in the case of Lexicon's portion of the
commitment, positions with Lexicon and its affiliates in which
Lexicon has a 50% or higher ownership interest, and (B) in the
case of TAMUS's portion of the commitment, positions with
TIGM, positions with TIGM members, positions with employers in
the biotechnology or pharmaceutical industries, and other
positions for which TIGM or TIGM members are significantly
responsible for creating through efforts specifically targeted
at attracting or creating biotechnology and pharmaceutical
industry-related positions to Texas, in each case without
duplication. For clarity, from and after December 31, 2015 (or
earlier, if Lexicon has already satisfied its Job Target
commitment in full), positions with Lexicon and its affiliates
in which Lexicon has a 50% or higher ownership interest shall
be included for purposes of TAMUS's commitment to the State to
create and maintain new Employment Positions over the
remaining term of the contract.
e. ANNUAL COMPLIANCE VERIFICATION. By January 31 of each year during
the term of this Agreement, beginning in January 2007 and continuing every year
thereafter through January 2028, for TAMUS, and January 2016, for Lexicon, each
of TAMUS and Lexicon, as applicable, must deliver to OOGEDT a compliance
verification signed by a duly authorized representative of the reporting party
that shall certify the number of and generally describe the Employment Positions
existing as of December 31 of the year preceding (an "Annual Compliance
Verification"). There will be a total of twenty-two (22) Annual Compliance
Verifications due, covering jobs created and maintained in years 2006 through
2027. TAMUS and/or Lexicon may, at its option, deliver an Annual Compliance
Verification in January 2006 with respect to Surplus
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Job Credits, if any, attributable to any new Employment Positions created in
2005. All Annual Compliance Verifications shall be in a form reasonably
satisfactory to OOGEDT and shall provide appropriate back-up data for the
Employment Position numbers provided.
3. LIQUIDATED DAMAGES
a. JOB TARGET. As set forth in Section 2.d above, annually during the term
of this Agreement, through January 2028, TAMUS and, through January 2015,
Lexicon must deliver to OOGEDT an Annual Compliance Verification demonstrating
that their respective Job Targets have been met for the year just ended. The
consequences to TAMUS or Lexicon of satisfying, failing to satisfy or exceeding
its respective Job Target are as follows:
i. COMPLIANCE WITH JOB TARGET. If an Annual Compliance Verification
demonstrates that the applicable party's Job Target has been met for the year
just ended, then such party will be deemed to have met its obligations for such
preceding year and no damages shall be due.
ii. FAILURE TO MEET JOB TARGET. If an Annual Compliance Verification
that demonstrates that such party's Job Target has not been met for the year
just ended, then OOGEDT may require the responsible party to pay liquidated
damages in the amount of Two Thousand Four Hundred Fifteen Dollars ($2,415) per
job for every Employment Position by which it is short that year. It is
understood that as a state agency, TAMUS may not, and does not, guarantee the
obligations of Lexicon. Nor does Lexicon guarantee the obligations of TAMUS.
Neither party shall have any obligation for any shortfalls in the Job Target
obligations of the other party, and each party shall be responsible solely for
its own payment obligations to the State.
iii. EXCEEDING JOB TARGET. If an Annual Compliance Verification
demonstrates that such party's Job Target has been exceeded for the year just
ended, such party will be deemed to have exceeded its Job Target obligations and
will receive a "Surplus Job Credit" for each extra Employment Position generated
and maintained above its Job Target for that year. For purposes of the
foregoing, all Employment Positions created in 2005 will be considered Surplus
Job Credits. TAMUS and Lexicon may utilize their respective earned Surplus Job
Credits in any following year as follows:
A. such party may expend a Surplus Job Credit in lieu of
paying liquidated damages in the amount of $2,415 per job (for
example, if a party owes liquidated damages in the amount of
$241,500 for 100 Employment Positions lacking in a particular year,
it may discharge this amount by expending 100 Surplus Job Credits it
has earned in prior years); or
B. such party may apply their respective Surplus Job Credits
toward meeting their remaining Job Target for future years, such
that if TAMUS and Lexicon accumulate enough Surplus Job Credits they
will be deemed to have fulfilled all of its obligations under the
Agreement, and will be released from the Agreement early (for
example, if TAMUS and Lexicon accumulated at least 5,000 unused
Surplus Job Credits by December 31, 2026, then TAMUS may apply these
Surplus Job Credits forward to fulfill its Job Target for 2027, and
may thereby fulfill its obligations and be released from the
Agreement one year early).
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b. OFFSETS FOR EXTERNAL FUNDING. One of the State's primary objectives
under this Agreement is to support the development of TIGM as a national center
of excellence in genomic medicine, which will require TIGM to successfully
compete for available funding from sources other than the State. Generating such
funding directly benefits the State. In light of these benefits, and without
affecting TAMUS and Lexicon's expectation and intention of satisfying their
respective Job Target commitments set forth in Section 2.d. above, TAMUS and
Lexicon will be entitled to an offset against liabilities, if any, that they may
incur for liquidated damages under Section 3.a. above, calculated as set forth
below, on account of funds received by TIGM and, to the extent related to
research using materials obtained from TIGM, by TIGM members directly or
indirectly from funding sources other than the State, including, without
limitation, all such funds received under grants and contracts from the National
Institutes of Health, other federal government agencies, research institutes,
foundations, and companies in the biotechnology and pharmaceutical industries.
The parties will collectively be entitled to an offset equivalent to the
liquidated damages liability associated with the creation or maintenance of
5,000 jobs for one year for each $25 million of such funding. A maximum of $300
million of such external funding may be applied. The offset shall be allocated
between Lexicon and TAMUS as follows:
i. One-half of such offset (e.g., for each $25 million in such
funding, an amount equivalent to the liquidated damages liability associated
with the creation or maintenance of 2,500 jobs for one year) will be applied
to reduce the amount of TAMUS's potential liquidated damages liability for
shortfalls in achieving or maintaining its portion of the Job Target
commitment.
ii. The other one-half of such offset will be applied to reduce the
amount of Lexicon's potential liquidated damages liability for shortfalls in
achieving or maintaining its portion of the Job Target commitment.
Lexicon and TAMUS will be entitled to proportional credit for funding amounts
less than those set forth above. In any event, TAMUS agrees to be responsible
for 5,000 jobs by December 31, 2016, and 5,000 jobs by December 31, 2017, and
maintaining them, both in accordance with the provisions of this Agreement.
The offset contemplated above will be applied as follows:
(1) Lexicon's portion of the offset will be applied first to Lexicon's potential
liquidated damages liability for shortfalls in achieving or maintaining its
portion of the Job Target commitment in the final year of such commitment (2015)
and thereafter to Lexicon's potential liquidated damages liability for each
preceding year, until the potential liquidated damages liability for such year
is fully accounted for by such offset.
(2) TAMUS's portion of the offset will be applied as follows: (A) eighty percent
(80%) will be applied first to TAMUS's potential liquidated damages liability
for shortfalls in maintaining the Job Target commitment in the final year of
such commitment (2027) and thereafter to TAMUS's potential liquidated damages
liability for each preceding year, until the potential liquidated damages
liability for such year is fully accounted for by such offset, and (B) the
remaining twenty percent (20%) of such offset may be applied to TAMUS's
repayment liability for shortfalls in achieving or maintaining its portion of
the Job Target commitment in such year(s) as TAMUS may designate.
c. TRANSITION AFTER LEXICON DISCHARGE OF ITS OBLIGATIONS. At such time as
Lexicon has discharged its job related obligations as provided under this
Agreement, then
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i. All unused Lexicon Surplus Job Credits shall transfer
automatically to TAMUS,
ii. All unused offset amounts allocated to Lexicon pursuant to
Section 3.b.ii shall automatically transfer to TAMUS, and
iii. Thereafter, all Employment Positions created or maintained by
Lexicon and its affiliates shall be counted as TIGM created or
maintained Employment Positions.
d. ADJUSTMENT FOR SALES TAX RATE CHANGES. The $2,415 repayment penalty per
Employment Position shall be proportionately reduced for the remainder of the
contract in the event the State's sales tax rate is increased from the 6.25%
rate in effect at the Effective Date.
4. TAMUS AND LEXICON ADDITIONAL COMMITMENTS
a. OOGEDT AUDIT RIGHTS.
(i) DUTY TO MAINTAIN RECORDS. Each of TAMUS and Lexicon shall
maintain adequate records to support its charges, procedures and
performances to OOGEDT for all work related to this Agreement. Each of
TAMUS and Lexicon also shall maintain such records as are reasonably
deemed necessary by the OOGEDT and auditors of the State of Texas or
United States, or such other persons or entities designated by the OOGEDT,
to ensure proper accounting for the expenditure of funds provided under
this Agreement and for the performance by each of them under this
Agreement.
(ii) RECORDS RETENTION. Each of TAMUS and Lexicon shall maintain and
retain for a period of four (4) years after the submission of the final
expenditure report, or until full and final resolution of all audit or
litigation matters which arise after the expiration of the four (4) year
period after the submission of the final expenditure report, whichever
time period is longer, the records described in Section 4(a)(i).
(iii) AUDIT TRAILS. Appropriate audit trails shall be maintained by
Lexicon to provide accountability for updates and changes to automated
personnel and financial systems. Audit trails maintained by Lexicon will,
at a minimum, identify the changes made, the individual making the change
and the date the change was made. An adequate history of transactions
shall be maintained by Lexicon to permit an audit of the system by tracing
the activities of individuals through the system. Lexicon's automated
systems must provide the means whereby authorized personnel have the
ability to audit and establish individual accountability for any action
that can potentially cause access to, generation of, or modification of
information related to the performances of this Agreement. Lexicon agrees
that Lexicon's failure to maintain adequate audit trails and corresponding
documentation shall create a presumption that the performances were not
performed. As an agency of the State, TAMUS shall comply with applicable
State law and policies as regards its accounting and auditing processes
and procedures.
(iv) ACCESS. Each of TAMUS and Lexicon shall grant access to all
paper and electronic records, books, documents, accounting procedures,
practices or any other items relevant to the performance of this agreement
to OOGEDT and auditors of the State of Texas, or such other persons or
entities designated by OOGEDT for the purposes of
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inspecting and auditing such books and records. All records, books,
documents, accounting procedures, practices or any other items relevant to
the performance of this agreement shall be subject to examination or audit
by the OOGEDT and auditors of the State of Texas, or such other persons or
entities designated by the OOGEDT in accordance with all applicable state
and federal laws, regulations or directives. Each of TAMUS and Lexicon
will direct any subcontractor with whom it has established a contractual
relationship to discharge TAMUS and Lexicon's obligations to likewise
permit access to, inspection of, and reproduction of all books and records
of TAMUS and Lexicon's subcontractor(s) which pertain to this agreement.
Notwithstanding the foregoing, it is recognized that the purpose for which
access is to be granted is to monitor compliance with the express
obligations of TAMUS and Lexicon hereunder, and that it would severely
adversely affect the very objectives of this Agreement if confidential,
proprietary technical or business data were to be released or become
available to the public as a result of any examination by or on behalf of
the State. Accordingly, TAMUS and Lexicon may, require that the State and
its representatives, to the extent permitted by law, follow protocols
designed to protect such information.
(v) LOCATION. Any such audit shall be conducted at TAMUS and
Lexicon's principal place of business during TAMUS and Lexicon's normal
business hours and at OOGEDT 's expense, provided all costs incurred by
OOGEDT in conducting any such audit shall be reimbursed by TAMUS or
Lexicon, as applicable, in the event such audit reveals a material
discrepancy in the compliance with this Agreement, by TAMUS or Lexicon, as
applicable.
(vi) REIMBURSEMENT. If any audit or examination reveals that TAMUS
or Lexicon's reports for the audited period are not accurate for such
period and that additional amounts of liquidated damages were owed to
OOGEDT above what was paid or discharged with credits, then the applicable
party (TAMUS or Lexicon) shall, within 30 days, pay to OOGEDT, or apply
additional credits to discharge, such additional amounts.
(vii) CORRECTIVE ACTION PLAN. If any audit reveals any discrepancies
or inadequacies which must be corrected to maintain compliance with this
Agreement, the applicable party (TAMUS or Lexicon) agrees within thirty
(30) calendar days after its receipt of the audit findings, to propose and
submit to OOGEDT a corrective action plan to correct such discrepancies or
inadequacies subject to the approval of the OOGEDT. Such party shall
complete the corrective action approved by OOGEDT within thirty (30)
calendar days after OOGEDT approves the corrective action plan, at the
sole cost of the applicable party.
(viii) REPORTS. Each of TAMUS and Lexicon shall provide to OOGEDT
periodic status reports in accordance with OOGEDT's audit procedures
regarding TAMUS and Lexicon's resolution of any audit-related compliance
activity for which TAMUS and Lexicon is responsible.
b. ANNUAL ECONOMIC IMPACT REPORTS; PERIODIC PROGRESS BRIEFINGS. By January
31 of each year during the term of this Agreement, beginning in January 2006 and
continuing every year thereafter through January 2028, in a manner consistent
with the need to protect privacy and the intellectual property of TAMUS, TAMUS
will provide to OOGEDT annual reports on the general activities at and progress
of TIGM (the "Annual Economic Impact Reports"). The Annual Economic Impact
Reports will include an economic impact analysis, highlighting the direct and
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indirect business and job creation and other economic benefits of TIGM to the
State. Lexicon will provide to TAMUS a non-confidential summary to be used as an
addendum to each Annual Economic Impact Report that will describe generally the
activities of Lexicon in the State for the applicable year. TAMUS and Lexicon
will also provide to OOGEDT periodic briefings on the activities of TIGM and
Lexicon, respectively, in Texas (the "Periodic Progress Briefings") as
reasonably requested by OOGEDT.
c. USE AND RETENTION OF TEXAS SUPPLIERS. Each of TAMUS and Lexicon will
use reasonable efforts to use qualified Texas-based suppliers to provide
products and services under this Agreement, provided however, TAMUS and Lexicon
may in its sole discretion select suppliers and contractors based on program
needs, scientific criteria, and industry standards.
d. FINANCIAL INFORMATION. Lexicon will furnish to OOGEDT a copy of
Lexicon's year-end audited financial statements, which may be by reference to
public filings. The financial statements of TAMUS, as a state agency, are
available to OOGEDT.
e. INDEMNITY AND HOLD HARMLESS. Each of TAMUS, but only to the extent
permitted by law, and Lexicon agrees to indemnify and hold the State, the maker
of this grant, and its agents, officers, and employees harmless for any and all
losses, claims, suits, actions, and liability, including any litigation costs,
that arise from any act or omission of TAMUS and Lexicon, respectively, or any
of it's officers, employees, agents, contractors, assignees, and affiliates
relating to the project for which this grant is made regardless of whether the
act or omission is related to job creation or other stated purpose of the grant.
Neither TAMUS nor Lexicon is responsible for the actions of the other or its
officers, employees, agents, contractors, assignees, and affiliates.
5. DEFAULTS AND REMEDIES
Each of the following acts or omissions of TAMUS and Lexicon or occurrences
shall constitute an act of default under this agreement:
a. FAILURE TO ESTABLISH TIGM. If TAMUS and Lexicon fail to establish TIGM
for the purposes and in accordance to the terms of this Agreement by December
31, 2005, all funds advanced pursuant to this Agreement will be subject to an
immediate refund to the State of Texas, plus interest at the rate of 4.2% per
year.
b. FAILURE TO PAY LIQUIDATED DAMAGES FOR JOB CREATION. TAMUS or Lexicon,
as applicable, shall have sixty (60) days after receiving written notice from
the State demanding payment of outstanding damages owed by such party under
Section 3 in which to pay such outstanding damages; provided, that if such
damages are the subject of a good faith dispute, such period shall be extended
until thirty (30) days after such dispute is resolved. If the responsible party
does not pay after this period, all amounts that could potentially be claimed
under Section 3 for such party's failure to meet its future job obligations
shall become due and payable immediately on demand of the State of Texas.
c. FAILURE TO PROVIDE VERIFICATION. If after the end of a calendar year
TAMUS or Lexicon fails to provide an Annual Compliance Verification by the later
of the deadline therefor or 60 days after demand from OOGEDT, OOGEDT may make a
good faith estimate, based on information available to OOGEDT, of the Employment
Positions at TAMUS or Lexicon , as applicable, as of December 31 of that year
and, if the estimated Employment Positions fall short of the Job Target, require
corresponding liquidated damages in accordance with Section 3.a.ii.
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above. Neither TAMUS nor Lexicon will be eligible to earn Surplus Job Credits
for any such year for which it fails to provide an Annual Compliance
Verification by the later of the deadline therefor or 60 days after demand from
OOGEDT.
d. FAILURE TO PROVIDE ANNUAL ECONOMIC IMPACT REPORTS. Neither TAMUS nor
Lexicon will be eligible to earn Surplus Job Credits for any year for which it
fails to provide its portion of an Annual Economic Impact Report by the later of
the deadline therefor or 60 days after demand from OOGEDT.
e. INTEREST ON OVERDUE PAYMENTS. Each of TAMUS and Lexicon shall pay
interest on any overdue amounts owed by it to OOGEDT from the date due until
paid at a rate of 4.2% per year.
6. GENERAL PROVISIONS
a. AUTHORITY. Each party represents that it has obtained all necessary
authority to enter into this Agreement.
b. RELATIONSHIP OF PARTIES AND DISCLAIMER OF LIABILITY. The parties will
perform their respective obligations under this Agreement as independent
contractors and not as agents, employees, partners, joint venturers, or
representatives of the other party. No party can make representations or
commitments that bind any other party. Lexicon is not a "governmental body" by
virtue of this Agreement or the use of TEF or other funding.
c. LIMITATION OF LIABILITY. In no event will any party be liable to any
other party for any indirect, special, punitive, exemplary, incidental or
consequential damages. This limitation will apply regardless of whether or not
the other party has been advised of the possibility of such damages.
d. TERM. The term of this Agreement commences on the Effective Date of the
Agreement and continues until January 31, 2028, unless terminated earlier
pursuant to the terms of this Agreement.
e. TERMINATION FOR CAUSE. Either party may terminate this Agreement for
Cause upon thirty (30) days prior written notice to the other party. "Cause" is
any failure to perform a material obligation under this Agreement within the
specified time taking into consideration grace periods set forth herein;
including a material breach of a Funding Condition. This Agreement may not be
terminated if the alleged Cause is cured within the specified thirty-day period.
The sole remedy for any termination for Cause (and for the "cause" giving rise
to the termination) shall be that each party is relieved of its obligation to
perform hereunder, however, following termination by the State, TAMUS and
Lexicon will continue to be obligated to the State for liquidated damages and/or
repayment of funds in accordance with applicable provisions of this Agreement.
f. DISPUTE RESOLUTION AND APPLICABLE LAW.
(i) INFORMAL MEETINGS. The parties' representatives will meet as
needed to implement the terms of this Agreement and will make a good faith
attempt to informally resolve any disputes.
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(ii) NON-BINDING MEDIATION. Except to prevent irreparable harm for
which there is no adequate remedy at law, no party shall file suit to enforce
this Agreement without first submitting the dispute to confidential, non-binding
mediation before a mediator mutually agreed upon by the parties and conducted in
accordance with the rules of the American Arbitration Association ("AAA").
(iii) APPLICABLE LAW AND VENUE. This Agreement is made and entered
into in the State of Texas, and this Agreement and all disputes arising out of
or relating thereto shall be governed by the laws of the state of Texas, without
regard to any otherwise applicable conflict of law rules or requirements that
would require or permit the application of the law of another jurisdiction.
TAMUS and Lexicon agrees that any action, suit, litigation or other
proceeding (collectively "litigation") arising out of or in any way relating to
this Agreement, or the matters referred to therein, shall be commenced
exclusively in the Xxxxxx County District Court or the United States District
Court for the Western District of Texas, Austin Division, and hereby irrevocably
and unconditionally consent to the exclusive jurisdiction of those courts for
the purpose of prosecuting and/or defending such litigation. TAMUS and Lexicon
hereby waive and agree not to assert by way of motion, as a defense, or
otherwise, in any suit, action or proceeding, any claim that (a) TAMUS and
Lexicon is not personally subject to the jurisdiction of the above-named courts,
(b) the suit, action or proceeding is brought in an inconvenient forum or (c)
the venue of the suit, action or proceeding is improper.
g. PUBLICITY. The parties agree to cooperate fully to coordinate with each
other in connection with all press releases and publications regarding this
Agreement.
h. NO WAIVER OF SOVEREIGN IMMUNITY. Nothing in this agreement may be
construed to be a waiver of the sovereign immunity of the State to suit.
7. MISCELLANEOUS PROVISIONS
a. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in establishing proof of this Agreement to produce or account for
more than one such counterpart.
b. MERGER. This document constitutes the final entire agreement between
the parties and supersedes any and all prior oral or written communication,
representation or agreement relating to the subject matter of this Agreement.
c. SEVERABILITY. Any term in this Agreement prohibited by, or unlawful or
unenforceable under, any applicable law or jurisdiction is void without
invalidating the remaining terms of this said Agreement. However, where the
provisions of any such applicable law may be waived, they are hereby waived by a
party, as the case may be, to the fullest extent permitted by the law, and the
affected terms are enforceable in accordance with the parties' original intent.
d. SURVIVAL OF PROMISES. Notwithstanding any expiration, termination or
cancellation of this Agreement, the rights and obligations pertaining to payment
or repayment of funds and/or liquidated damages, confidentiality, disclaimers
and limitation of liability, indemnification, and any other provision implying
survivability will remain in effect after this Agreement ends.
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e. BINDING EFFECT. This Agreement and all terms, provisions and
obligations set forth herein shall be binding upon and shall inure to the
benefit of the parties and their successors and assigns and shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns and all other state agencies and any other agencies,
departments, divisions, governmental entities, public corporations and other
entities which shall be successors to each of the parties or which shall succeed
to or become obligated to perform or become bound by any of the covenants,
agreements or obligations hereunder of each of the parties hereto.
f. SUCCESSORS AND ASSIGNS. TAMUS and Lexicon, or any legal successor
thereto or prior assignee thereof, may assign its rights and obligations under
this Agreement, including by merger or operation of law, to any legal successor
or any person or entity that acquires all or substantially all of its business
and operations. In addition, with the prior written consent of the State, which
consent shall not be unreasonably withheld or delayed, TAMUS and Lexicon, or any
legal successor company thereto or prior assignee thereof, may assign its rights
and obligations under this Agreement to any parent or wholly owned subsidiary
that it currently has in place or later establishes, if it is constituted as a
separate legally recognized business entity. Any such assignment will be made
without additional consideration being payable to the State. This Agreement
shall survive any sale, change of control or similar transaction involving TAMUS
and Lexicon, any successor thereto or prior assignee thereof and no such
transaction shall require the consent of the State.
g. FORCE MAJEURE. Neither Lexicon nor TAMUS shall be required to perform
any obligation under this Agreement or be liable or responsible for any loss or
damage resulting from its failure to perform so long as performance is delayed
by force majeure or acts of God, including but not limited to strikes, lockouts
or labor shortages, embargo, riot, war, revolution, terrorism, rebellion,
insurrection, flood, natural disaster, or interruption of utilities from
external causes.
h. NOTICE. All notices, requests, demands and other communications will be
in writing and will be deemed given and received (i) on the date of delivery
when delivered by hand, (ii) on the following business day when sent by
confirmed simultaneous telecopy, (iii) on the following business day when sent
by receipted overnight courier, or (iv) three (3) business days after deposit in
the United States Mail when mailed by registered or certified mail, return
receipt requested, first class postage prepaid, as follows:
If to the State to:
General Counsel
Office of the Governor
X.X. Xxx 00000
Xxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
If to TAMUS to:
A&M System Building Suite 2043
000 Xxxxxxxxxx Xxx
Xxxxxxx Xxxxxxx, XX 00000-0000
Attention: Chancellor
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
A&M System Building
Suite 2043
000 Xxxxxxxxxx Xxx
Xxxxxxx Xxxxxxx, XX 00000-0000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Lexicon to:
Lexicon Genetics Incorporated
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
Copy to: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
{SIGNATURE PAGE FOLLOWS}
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The parties have caused this Economic Development Agreement to be executed by
their duly authorized representatives as of the date first specified above.
THE STATE OF TEXAS
_____________________________
GOVERNOR XXXX XXXXX
TEXAS A&M UNIVERSITY SYSTEM
_____________________________
CHANCELLOR
LEXICON GENETICS INCORPORATED
_____________________________
PRESIDENT & CEO
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EXHIBIT A
LETTER FROM GOVERNOR, LIEUTENANT GOVERNOR AND SPEAKER APPROVING GRANT TO
TAMUS AND LEXICON FROM THE TEXAS ENTERPRISE FUND
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EXHIBIT B
AGREEMENTS BETWEEN LEXICON AND TAMUS.
TAMUS and Lexicon have entered into, and shall perform their obligations under,
agreements with respect to the following matters:
a. Lexicon's generation and delivery to TIGM of the OmniBank II
Library. As among the State, TAMUS and TIGM, title to both copies of
the library will be held in the name of TAMUS, and TAMUS will
provide TIGM with access to the libraries pursuant to the
arrangements described below.
b. Restrictions for a specified period on Lexicon's ability to make a
new library of gene trapped knockout mouse embryonic stem cell
clones in direct competition with the OmniBank II Library, or grant
any license to a third party the right under the relevant gene
trapping patent rights and know-how to make such a library for such
purposes. For clarity, no restrictions whatsoever will be imposed
with respect to Lexicon's existing OmniBank library.
c. Lexicon's licensing and delivery to TIGM of bioinformatics software
for the management of data relating to the OmniBank II Library and
the generation and phenotypic analysis of knockout mice.
d. Lexicon's provision of services necessary at each of the two TIGM
locations (A) to install the bioinformatics software and to load the
software databases with the OmniBank II Library gene xxxxxxxx xxxx
and (B) to train TIGM staff in the use of the OmniBank II Library
and the bioinformatics software, and the generation, genotyping and
phenotyping of knockout mice.
e. Lexicon's grant to TIGM of (A) a non-exclusive license under the
relevant gene trapping patent rights and know-how controlled by
Lexicon to use the OmniBank II Library and to make, use and sell
knockout mice derived therefrom, (B) a non-exclusive sublicense
under specified gene targeting patent rights and know-how controlled
by Lexicon to make (but not have made) and use gene targeted
knockout mice, and (C) a non-exclusive license under the copyrights
and know-how controlled by Lexicon to use the bioinformatics
software delivered by Lexicon.
f. Until the two copies of the OmniBank II Library are fully
established and operational, access under specified terms and
conditions to knockout mouse ES cell clones from Lexicon's existing
OmniBank library, at an agreed-upon cost.
g. TAMUS's lease to TIGM of the facilities constructed to house the
OmniBank II Library.
h. TIGM's responsibility to TAMUS for satisfying TAMUS's Job Target
obligations set forth in this Agreement, in each case subject to the
applicable Funding Offsets and Surplus Job Credits described below.
i. TAMUS's furnishing to TIGM of the operating funds and/or in-kind
services needed to fund TIGM's operations until it has established
sufficient revenue to be self-sufficient,
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but in no event shall TAMUS be obligated to furnish more than $3
million in cumulative funds and in-kind services.
k. TAMUS's right to receive the net assets of TIGM (including Lexicon
licenses) upon its dissolution and to step in to protect the
viability of the program if TIGM is failing to perform.
l. TIGM's obligation to comply with reasonable financial and operating
covenants in favor of TAMUS so long as TAMUS is exposed to the
refund risk to the State
m. Lexicon's and TAMUS's obligations to share information related to
job creation and retention in advance of the due dates for the
Annual Compliance Verifications (defined below) in order to
determine and know in advance the content of their respective Annual
Compliance Verifications; and including provisions for Lexicon to
continue to report to TAMUS after Lexicon has satisfied its
obligations to generate and maintain jobs the job activity of
Lexicon and its affiliates that would allow TAMUS to prepare on a
timely basis its Annual Compliance Verifications, with all
appropriate credit for job creation and retention by Lexicon and its
affiliates.
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