To seek approval of a Transition Agreement between the City of Peoria and BioAccel in order to wind-down BioAccel’s operation and management function as part of the BioInspire Program.  The Transition Agreement hereto attached is substantially in its final form.

In November 2011, as part of the Economic Development Implementation Strategy (EDIS), the City of Peoria made a long-range investment in entrepreneurship and innovation-driven economic development with the launch of the BioInspire medical device incubator/accelerator. The 5-year contract with BioAccel to operate and manage BioInspire ended in November 2016. The Transition  Agreement covers those outstanding items remaining after the 5-year contract with BioAccel expired.

Summary of Transition Agreement Terms:

• Set an established repayment amount for funds advanced to BioAccel under the 5-year contract;

• Set an established repayment structure for the City to be repaid for the settlement amount and seed fund investments;
•  Set an established City right to equity and cash resulting from equity conversions originating from assisted portfolio companies under the BioInspire Program; and

• Set a process for the City to track company equity conditions and conversions over time (BioAccel reporting and quarterly meetings).

Equity Distribution Priorities:

Upon an equity event whereby a BioAccel assisted company, under the BioInspire Program, converts equity into cash as part of the commercialization process, the following priority distributions of cash is established through the agreement:

• First Priority: the City receives all cash from portfolio equity conversions until the settlement amount is repaid.  The principal source of repayment is through portfolio companies’ equity distributions, with no guarantee of an equity conversion. BioAccel will make a minimum $10,000 good-faith effort payment on or before December 1, 2017, and annually thereafter;

• Second Priority: The City receives all cash from any remaining equity conversions equal to the City’s seed funding investment in the portfolio companies;

• Third Priority: After the City is made whole, remaining funds will be used to reimburse BioAccel for limited legal and accounting costs associated with the commercialization process for portfolio companies;

• Fourth Priority: BioAccel and the City share any remaining equity equally in a 50/50 split.

If BioAccel exercises a right that may cause distribution of funds from one of the companies, they will consult with the City prior to exercising any such right, provided the consultation does not violate any law or contract outlined in the Agreement.

The Transition Agreement was presented to City Council in Executive Session on February 21, 2017.

A.  Approve the Transition Agreement between the City of Peoria and BioAccel.  

B. Do not approve the Transition Agreement between the City of Peoria and BioAccel.