Exhibit 10.17

December 15, 2014

Page 1

 

SUBLEASE

1.

PARTIES.

This Sublease, dated December 15, 2014 is made between THE SCRIPPS RESEARCH
INSTITUTE (“Sublessor”), and FATE THERAPEUTICS, INC. (“Sublessee”).

2.

MASTER LEASE.

Sublessor is the lessee under a written lease dated September 27, 2007, as
amended by the First Amendment to Lease, dated May 1, 2013 (collectively the
“Master Lease”), wherein ARE-3535/3565 GENERAL ATOMICS COURT, LLC (“Lessor”)
leased to Sublessor the real property located in the City of San Diego, County
of San Diego, State of California, described as: 19,606 rentable square feet of
the first floor and 1,570 usable square feet of the parking garage of a building
located at 3535 General Atomics Ct., San Diego, CA 92121 (“Master Premises”).
Master Lease is shown in Exhibit B. All capitalized terms used in this Sublease,
if not defined herein, shall have the meanings ascribed to such terms as
provided in the Master Lease.

3.

PREMISES.

Sublessor hereby subleases to Sublessee on the terms and conditions set forth in
this Sublease the following portion of the Master Premises: approximately 5,620
rentable square feet (5,155 usable square feet) along with unrestricted access
to the common areas required to enter and exit the Premises from the Building
lobby as shown in Exhibit A (the “Premises”).

4.

USE.

General office, laboratory and other support functions for a biotechnology
company.

5.

OPERATING HOURS.

Sublessee shall have 24 hours per day, 7 days per week, 365 days per year access
to Premises.

6.

WARRANTY BY SUBLESSOR.

Sublessor warrants and represents to Sublessee that to the best of its actual
knowledge as of the date of this Sublease referenced above that Sublessor is not
in default or breach of any of the provisions of the Master Lease, and that
Sublessor has not received notice from the Lessor of any claim by Lessor that
Sublessor is in default or breach of any of the provisions of the Master Lease.

7.

TERM.

The Term of this Sublease shall commence on the date of the last to occur of the
following conditions (the “Commencement Date”): (i) possession of the Premises
has been given to Sublessee by Sublessor with substantial completion of the
Tenant Improvements (described in Section 10 below) and the Construction (as
described in Section 18 below), and (ii) Lessor consents to this Sublease and
Sublessee receives a letter from the Lessor consenting to this executed
Sublease. The Commencement Date is estimated to occur on approximately January
16, 2015, such date to be adjusted based on the actual date of commencement;
provided, however, that in no event shall this Sublease commence before January
16, 2015. In the event that this Sublease has not commenced by February 15,
2015, Sublessee shall have the right upon five (5) days’ written notice to
Sublessor to terminate the Sublease and all payments paid by Sublessee to
Sublessor shall be promptly refunded. This Sublease shall expire on September
30, 2017. The “Term” shall mean the period commencing on the Commencement Date
and ending on expiration or earlier termination of this Sublease. For clarity,
in the event that Sublessee terminates this Sublease in accordance with the
foregoing, all consideration previously paid by Sublessee to Sublessor on
account of this Sublease shall be returned to Sublessee, this Sublease shall
thereafter be of no further force or effect, and neither party shall have any
further liability to the other party on account of such delay or cancellation.

 

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8.

RENT.  

Sublessee shall pay to Sublessor as Rent, without deduction, setoff, notice or
demand, at The Scripps Research Institute, 10550 North Torrey Pines Road, La
Jolla, CA 92037, or at such other place as Sublessor shall designate from time
to time by written notice to Sublessee, paid on the first day of each month of
the Term, Sublessor’s current actual rental rate per the Master Lease, estimated
to be the amount of $4.31 per rentable square feet (“RSF”) times the 5,620
rentable square feet of the Premises, as of the Commencement Date of the
Sublease, which rental rate shall increase by Sublessor’s actual increased
rental rate per the Master Lease as of the first day of November of each year
during the Term. Sublessee shall pay to Sublessor upon execution of this
Sublease, and Sublessee’s receipt of a letter from Lessor consenting to this
executed Sublease, $24,222.20 as Rent for the first month of the Term. If the
Term begins on a day other than the first day of a month, the Rent for the
partial months shall be prorated on a per diem basis based on the actual number
of days in the month in which the Sublease commences. Additional provisions:

 

·

Sublessee shall also deposit with Sublessor $24,222.20 as a security deposit
(“Security Deposit”), in the form of cash or check, at the sole discretion of
Sublessee, upon execution of this Sublease and Sublessee’s receipt of a letter
from the Lessor consenting to this executed Sublease. The Security Deposit shall
be held by Sublessor as security for the performance of Sublessee’s obligations
under this Sublease. The Security Deposit, or any balance thereof (i.e., after
deducting therefrom all amounts to which Sublessor is entitled under the
provisions of this Sublease) shall be returned to Sublessee within sixty (60)
days after the expiration or earlier termination of this Sublease. If Sublessor
transfers its interest in this Sublease, Sublessor shall either (1) transfer any
Security Deposit then held by Sublessor to a person or entity assuming
Sublessor’s obligations or (2) return to Sublessee any Security Deposit then
held by Sublessor and remaining after any deductions permitted under this
Sublease.

 

·

During the Term, Sublessee shall pay to Sublessor its pro-rata share, on a
direct pass through basis as charged to Sublessor by Lessor, of all operating
expense costs charged to Sublessor under the Master Lease. For purposes of
clarification, the parties mutually agree that Sublessee’s pro-rata share (i.e.,
the proportional share the Premises bears to the Master Premises) shall be set
at 26.83% of the total cost of the above-referenced operating expenses charged
to Sublessor under the Master Lease. One twelfth (1/12) of the annualized
amounts owed by Sublessee under this section for operating costs shall be paid
to Sublessor on the first day of each month during the Term.

 

·

Sublessor shall be entitled to use all or any portion of the Security Deposit,
as reasonably necessary, to (i) cure Sublessee’s default in the payment of Rent,
operating expenses, and/or any other amounts due under this Sublease; (ii)
repair any damage or loss, excluding ordinary wear and tear, caused or
contributed to by Sublessee or its invitees; (iii) clean the Premises, if
necessary to return the Premises to the condition it was in prior to Sublessee
occupying the Premises, upon the expiration or termination of this Sublease;
and/or (iv) replace or restore furnishings, fixtures, equipment or other
appurtenances other than due to normal wear and tear as a result of Sublessee’s
use of the Premises. The Security Deposit shall not be used by Sublessee in lieu
of payment of the last months’ Rent. If all or any portion of the Security
Deposit is used by Sublessor as permitted hereunder during the Term, Sublessee
agrees to pay to Sublessor an amount sufficient to reinstate the Security
Deposit to its original amount within five (5) days after receiving Sublessor’s
written notice to reinstate such Security Deposit. In addition, no interest will
be paid on the Security Deposit.

9.

OTHER PROVISIONS OF SUBLEASE.

The terms and conditions of the Master Lease are hereby incorporated into and
made a part of this Sublease as if Sublessor was the Landlord thereunder,
Sublessee was the Tenant thereunder, and the Premises was the Master Premises,
except for the following: (1) Sublessee shall have no restoration obligation
related to Telecommunications Installations or Linking Work as described in
Section 11 of the Master Lease, (2) Sublessee’s only obligations with respect to
repairs and restoration shall be those repairs that are necessary due to any
damage, loss, action or inaction caused by Sublessee or its invitees, (3) the
terms of Exhibit C Work Letter do not apply to Sublessee. Sublessee assumes and
agrees to perform all of the Sublessor’s obligations under the Master Lease
during the Term to the extent that such obligations would reasonably apply to
the Premises, except that the obligation to pay rent and operating expenses to
Lessor under the Master Lease shall be considered performed by Sublessee only
when Sublessee timely pays the amount of rent and operating costs to Sublessor
in accordance with Section 8 of this Sublease. Sublessee shall not commit or
suffer any act or omission that will violate any of the provisions of the Master
Lease. Sublessor shall exercise due diligence in attempting to cause Lessor to
perform its obligations under

 

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the Master Lease for the benefit of Sublessee (but shall not be liable to
Sublessee in any way for Lessor’s inability or failure to perform Lessor’s
obligations), and shall not voluntarily terminate Master Lease. If the Master
Lease terminates, this Sublease shall automatically terminate and the parties
shall be relieved of any further liability or obligation under this Sublease,
except for any of Sublessee’s obligations that accrued prior to the termination
date of the Master Lease. Notwithstanding the foregoing, if the Master Lease
gives Sublessor any right to terminate the Master Lease in the event of the
partial or total damage, destruction, or condemnation of the Master Premises or
the building or project of which the Master Premises are a part, the exercise of
such right by Sublessor shall not constitute a default or breach hereunder.

10.

TENANT IMPROVEMENTS.

Sublessor, at Sublessor’s sole expense, shall: (1) repair/replace any defective
or damaged flooring, millwork, ceiling tiles, light fixtures and window blinds
in the Premises, (2) re-key the locks to doors leading into Premises such that
Sublessee will have secure access to Premises, and (3) shall thoroughly clean
Premises. Sublessor shall also separate the data cabling serving the Premises
from the main data room so that Sublessee can, at Sublessee’s sole expense, set
up its own secure network within Premises.

11.

HAZARDOUS MATERIALS.

Sublessor shall deliver Premises free of any Hazardous Materials and shall
provide Sublessee with a certified statement from a commercially recognized
third party environmental services firm stating that the Premises is free from
Hazardous Materials as of the date Sublessor delivers possession of the Premises
to Sublessee. In addition to Sublessee’s indemnity to Sublessor pursuant to
Section 16 of the Master Lease, Sublessee shall indemnify Sublessor from any
claims arising from Sublessee’s use of any Hazardous Materials and shall use
such materials in compliance with all governmental codes and restrictions.
Sublessee shall have the right to bring into the Premises and use therein the
Hazardous Materials listed in Exhibit C. In the event Sublessee desires to use
any Hazardous Materials in the Premises other than those listed in Exhibit C,
Sublessee shall, prior to such use, provide a list of such proposed additional
Hazardous Materials to Sublessor and obtain the written approval of Sublessor
and Lessor prior to any such use. Sublessee shall use all Hazardous Materials
that are listed in Exhibit C and which may be approved in the future by
Sublessor and Lessor in compliance with all applicable laws, ordinances and
regulations. Upon the earlier expiration or termination of this Sublease,
Sublessee shall remove all Hazardous Materials it has brought into Premises and
shall provide Sublessor with a certified statement from a commercially
recognized third party environmental services firm stating that the Premises is
free from Hazardous Materials at the expiration or earlier termination of
Sublease.

12.

BUILDING CONDITION.

Sublessor shall, or shall ensure that Lessor shall, provide that the roof,
existing HVAC systems, electrical, lighting, fire sprinkler and plumbing systems
serving and within the Premises (collectively the “Building Systems”) are in
good working condition (ordinary wear and tear excepted), have recently been
operated and have been regularly serviced. Sublessee shall have no obligation to
maintain or repair any Building Systems unless caused by Sublessee’s or its
invitees’ misuse or damage of such Building Systems.

13.

ATTORNEYS’ FEES.

If Sublessor or Sublessee shall commence legal action against the other arising
out of or in connection with this Sublease, the prevailing party shall be
entitled to recover its costs of suit and reasonable attorneys’ fees.

14.

COMMISSION.

Sublessor shall pay a leasing commission for the procurement of the Sublessee to
Hughes Marino upon Commencement of the Sublease equal to four percent (4%) of
the aggregate Net Rent. There shall be no commission due related to the
representation of Sublessor.

 

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15.

AGENCY DISCLOSURE.  

Sublessor and Sublessee each warrant that they have dealt with no other real
estate broker in connection with this transaction except Hughes Marino which
represents both Sublessor and Sublessee. Sublessor and Sublessee hereby confirm
that they were timely advised of the dual representation and that they consent
to the same, and that they do not expect Hughes Marino to disclose to either of
them the confidential information of the other party.

16.

NOTICES.

All notices and demands which may or are to be required or permitted to be given
by either Sublessor or Sublessee on the other hereunder shall be in writing. All
notices and demands by the Sublessor to Sublessee shall be mailed to the
Sublessee at the Premises, or to such other place as Sublessee may from time to
time designate in a notice to the Sublessor. All notices and demands by the
Sublessee to Sublessor shall be mailed to the Sublessor at the address set forth
above, and to such other person or place as the Sublessor may from time to time
designate in a notice to the Sublessee.

17.

ENTIRE AGREEMENT

This Sublease, including the Exhibits and documents referenced herein, contains
the entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior agreements or understandings regarding this
subject matter. This Agreement shall not be modified except in writing signed by
both Sublessor and Sublessee.

18.

EXTENSION OF COMMENCEMENT DATE

The parties acknowledge that during December, 2014, Lessor will be making
certain improvements to the Building where the Premises are located, which will
involve some work in the Premises and the Master Premises (the “Construction”).
The work in the Premises is scheduled to be completed by December 31, 2014. In
the event that the Construction is not substantially completed by January 15,
2015 so as to provide Sublessee with use and enjoyment of the Premises without
substantial disturbance to its overall business operations caused by such
Construction, Sublessee shall have the right to extend the Commencement Date, by
written notice to Sublessor, to the date when such Construction is substantially
complete so that Sublessee has use and enjoyment of the Premises without
substantial disturbance to its overall business operations caused by such
Construction. Sublessee’s rights under this Section 18 are in addition to
Sublessee’s rights under Section 7 of this Sublease.

 

SUBLESSOR:

 

SUBLESSEE:

 

 

 

 

 

 

 

By:

 

/s/ Donna Weston

 

By:

 

/s/ Scott Wolchko

Name:

 

Donna Weston

 

Name:

 

Scott Wolchko

Title:

 

CFO

 

Title:

 

CFO

Date:

 

12/16/2014

 

Date:

 

15 Dec 2014

 

 

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December 15, 2014

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Exhibit A – Premises

 

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Exhibit B – Copy of Master Lease

 

 

 

 

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Exhibit C – List of Sublessee Hazardous Materials

 

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