Item 2.01 Completion of Acquisition or Disposition of Assets.
As previously disclosed in the Current Report on Form 8-K filed by ImmunityBio, Inc., a Delaware corporation (the “Company,” “we” or “us”), with the Securities and Exchange Commission (“SEC”) on January 12, 2022, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Athenex, Inc., a Delaware corporation (“Seller”), pursuant to which Seller agreed to sell, assign and transfer to us all of Seller’s rights, and we agreed to assume all of Seller’s duties and obligations under, various third-party agreements (the “Facility Agreements”), subject to the terms and conditions of the Purchase Agreement, relating to an approximately 409,000 square foot, newly constructed cGMP ISO Class 5 high potency pharmaceutical manufacturing facility located at 3805 Lakeshore Drive East, Dunkirk, New York (the “Dunkirk Facility”).
As of February 14, 2022, the closing conditions under the Purchase Agreement were met, including, without limitation, receipt of the consents of the New York State Urban Development Corporation d/b/a Empire State Development (“ESD”), the County of Chautauqua Industrial Development Agency (“CCIDA”), Fort Schuyler Management Corporation, a not-for-profit corporation affiliated with the State of New York (“FSMC”) and a lender of Seller, and payment by the Company to Seller of $40.0 million, representing the amount equal to Seller’s costs and obligations incurred with respect to the construction, build-out and equipment purchases for the Dunkirk Facility outside of certain grants from public authorities including ESD and CCIDA, and the Company’s acquisition of the Seller’s leasehold interest in the Dunkirk Facility under the Purchase Agreement (the “Dunkirk Facility Transaction”) was completed (the “Closing”).
Upon the Closing, the Company became the tenant of the Dunkirk Facility under the Fort Schuyler Management Corporation Lease, dated October 1, 2021 and as amended as of the Closing, with FSMC as landlord (together, the “Lease Agreement”). Our annual lease payment will be $2.00 per year for an initial 10-year term, with the option for us to renew under substantially the same terms and conditions for an additional 10-year term. As part of the assumed obligations under the Facility Agreements, we have committed to spend an aggregate of $1.52 billion on operational expenses during the initial 10-year term, and an additional $1.50 billion on operational expenses if we elect to renew the lease for the additional 10-year term. We also committed to hiring 450 employees at the Dunkirk Facility within the first five years of operations, with 300 such employees to be hired within the first two-and-a-half years of operations, following the effectiveness of the Lease Agreement on October 1, 2021. The agreements with the CCIDA provide for certain sales tax exemption savings during the development of the Dunkirk Facility and provide for certain property tax savings over the next 20 years, subject to certain terms and conditions including performance of certain of the aforementioned obligations.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on January 12, 2022 and is incorporated herein by reference. The foregoing description of the Lease Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Lease Agreement, which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the period ending March 31, 2022.