Exhibit 10.1

 

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3535 General Atomics Court, Suite 200 • San Diego, CA 92121 • 858.875.1800
Office • 858.875.1843 Fax • www.fatetherapeutics.com

 

 

 

Edward J. Dulac III

May 20, 2020

 

Dear Ed,

Fate Therapeutics, Inc. (“Fate” or the “Company”) is pleased to offer you an
exempt full-time position as Chief Financial Officer, reporting to the Company’s
President & Chief Executive Officer. This position has an anticipated start date
of August 24, 2020 (“Start Date”), and requires that you provide full-time
services at the Company’s corporate headquarters in San Diego, California during
the Company’s business days of operation.

While you render services to the Company, you will not engage in any other
employment, consulting or other business activity other than for charitable
purposes (whether full-time or part-time) unless approved in advance in writing
by the Company’s Chief Executive Officer. By signing this Letter Agreement, you
confirm to Fate that you have reviewed the duties and responsibilities of this
position, and that you are not subject to any contractual commitments or other
legal obligations that would prohibit you from performing your duties for Fate.

In consideration of your employment, you will be paid at an annualized base
salary rate of $390,000.00 (“Base Salary”), less applicable withholding, to be
paid on Fate’s regularly scheduled payroll dates, which currently are every two
weeks. Your Base Salary shall be reviewed by the Company periodically, but at
least on an annual basis, for adjustment.

Subject to approval by our Board of Directors, you will be granted a
non-qualified option to purchase 160,000 shares of the Company’s common stock at
an exercise price equal to the closing price per share of the Company’s common
stock as reported on NASDAQ on your Start Date (the “Option”). The Option will
vest and become exercisable in accordance with the following schedule:
twenty-five percent (25%) of the shares shall vest and become exercisable on the
first anniversary of your Start Date, and 1/48th of the shares shall vest and
become exercisable monthly thereafter so that one hundred percent (100%) of the
shares shall be vested and exercisable on the fourth anniversary of your Start
Date, subject to your continued employment with the Company. The Option will be
granted pursuant to a stock option agreement which you will be required to sign
as a condition of receiving the Option.

Furthermore, subject to approval by our Board of Directors, you will be granted
an award of 40,000 restricted stock units (the “Award”), with each restricted
stock unit equal to one share of the Company’s common stock. The Award shall
vest in accordance with the following schedule: twenty-five percent (25%) of the
restricted stock units underlying the Award shall vest on the first anniversary
of the Start Date, and thereafter twenty-five percent (25%) of the restricted
stock units underlying the Award shall vest on an annual basis from the Start
Date so that one hundred percent (100%) of the restricted stock units shall be
vested on the fourth (4th) anniversary of the Start Date, subject to your
continued employment with the Company.

 

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The Option and the Award will be subject to the terms and conditions of the
Company’s Inducement Equity Plan (as amended, restated or otherwise modified
from time to time, the “Inducement Plan”), and the Award will be granted
pursuant to the applicable form of restricted stock unit agreement under the
Inducement Plan, which you will be required to sign as a condition of receiving
the Award.

The Company has determined your annual target bonus will be 40% of your
then-existing annual base salary, to be pro-rated for the period of time
actually worked during the year, where the pro-rated amount for the year ending
December 31, 2020 will be based on a start date of June 1, 2020; provided,
however that in any event the award and actual amount of any annual bonus
(including any equity awards) will be determined, and payment thereof made, in
accordance with the terms and conditions of the Company’s annual bonus plan and
equity award grant policy, and any such bonus or equity award is subject to the
discretion and approval of the Company’s Board of Directors. In the event that
you are awarded an annual target bonus, such bonus shall be paid in the manner
in which annual bonuses are paid to other executive officers of the Company also
awarded an annual target bonus.

In addition, you will be eligible to participate in the Company’s Executive
Severance and Change in Control Policy, an employee health benefits program, a
401(k) plan, a bonus plan (including annual grants of equity awards in
connection with annual performance reviews) and a vacation plan.

In connection with your employment by the Company, the Company will provide you
(i) a one-time signing bonus in the amount of $100,000, less applicable
withholding (“Signing Bonus”), and (ii) temporary monthly housing assistance in
the amount of $8,000 per month, less applicable withholding, for a period of
nine months beginning August 1, 2020 (“Temporary Housing Assistance”). In
addition, so long as your full-time relocation to the San Diego area is complete
by September 30, 2020, and subject to your continued employment at the time of
your relocation, the Company will provide you relocation assistance in the form
of a one-time payment of $80,000, less applicable withholding, payable upon the
completion of such full-time relocation (“Relocation Assistance”). You agree
that (a) the actual payment of amounts owed by the Company to you for any
Signing Bonus, Temporary Housing Assistance incurred from August 1, 2020 through
December 31, 2020, and Relocation Assistance shall be made on Fate’s first
regularly scheduled payroll date for the calendar year 2021, but in no event
later than March 15, 2021, and (b) any remaining amounts owed by the Company to
you for any Temporary Housing Assistance incurred from and after January 1, 2021
shall be paid on a monthly basis thereafter, subject in each case to your
continued employment with the Company through such applicable payment date.

You acknowledge that your receipt and retention of any Signing Bonus, Temporary
Housing Assistance, and Relocation Assistance are contingent upon your continued
employment with the Company under the terms of this Letter Agreement for a
period of eighteen (18) months from your Start Date. You agree to repay in full
any amount paid by the Company relating to your Signing Bonus, Temporary Housing
Assistance, and Relocation Assistance, if within eighteen (18) months from your
Start Date, you resign from employment with the Company without Good Reason (as
defined below), or if your employment is terminated by the Company for Cause (as
defined below). If you refuse or fail to relocate to the San Diego area after
the Company has paid any amounts for

 

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Temporary Housing Assistance or Relocation Assistance, you agree to repay in
full any and all amounts paid by the Company for Temporary Housing Assistance
and Relocation Assistance. Furthermore, you agree that the Company may deduct
from any amounts owed to you by the Company, including without limitation any
salary, wages, bonuses, vacation or other paid leave, severance or separation
pay, and expense reimbursements, any amounts owed to the Company by you,
including repayment of your Signing Bonus, Temporary Housing Assistance and
Relocation Assistance, subject to applicable law. If such deduction by the
Company does not fully satisfy the amounts owed to the Company by you, you agree
to immediately repay the remaining balance to the Company within fourteen (14)
days of your terminating employment or refusal or failure to relocate, as
applicable.

“Good Reason” means the occurrence of any of the following actions undertaken by
the Company without your consent: (i) a material diminution in your
responsibilities, authority or duties; (ii) a material diminution in your base
compensation except for across-the-board compensation reductions similarly
affecting all or substantially all similarly situated senior level employees of
the Company; or (iii) a change of more than twenty-five (25) miles in the
geographic location at which you must regularly report to work and provide
services to the Company, in each case so long as you provide at least 60 days’
notice to the Company following the initial occurrence of any such event, the
Company fails to cure such event within 30 days thereafter and you terminate
your employment within 30 days after the end of such cure period. “Cause” means
any of the following: (i) the making of dishonest statements or acts with
respect to the Company or any affiliate of the Company, or any current or
prospective customers, suppliers, vendors or other third parties with which such
entity does business; (ii) your commission of (A) a felony or (B) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) any
conduct by you that would reasonably be expected to result in material injury or
reputational harm to the Company or any of its subsidiaries and affiliates if
you were retained in your position; (iv) your failure to perform your assigned
duties and responsibilities to the reasonable satisfaction of the Company which
failure continues, in the reasonable judgment of the Company, after written
notice given to you by the Company; (v) your gross negligence, willful
misconduct or insubordination with respect to the Company or any affiliate of
the Company; or (vi) your material violation of any provision of any
agreement(s) between you and the Company relating to noncompetition,
nonsolicitation, nondisclosure and/or assignment of inventions.

As a condition of your employment, you will be required to complete and sign the
Company’s standard form Employee Proprietary Information and Inventions
Agreement attached hereto (the “PIIA”). In part, the PIIA requires that
employees comply with the Company’s requirements to protect its proprietary and
confidential information at all times. In addition, by signing this Letter
Agreement, you represent that your compliance with the terms of the PIIA and
provision of services as an employee of the Company will not violate any duty
which you may have to any other person or entity (such as a present or former
employer or client), including obligations concerning providing services to
others, and confidentiality of proprietary information and assignment of
inventions, ideas, patents or copyrights, and further agree that you will not do
anything in your performance as a Company employee that would violate any such
duty. In particular, you will not disclose to the Company, or use in your
performance as a Company employee, any information that you are obligated to
keep secret pursuant to an existing confidentiality agreement with a third
party, and nothing in this Agreement will

 

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impose any obligation on you to the contrary. Additionally, under federal
immigration laws, the Company is required to verify each new employee's identity
and legal authority to work in the United States. Accordingly, please be
prepared to furnish appropriate documents satisfying those requirements as this
offer of employment is conditioned on submission of satisfactory documentation
and its verification. You will also be subject to and expected to comply with
Fate’s workplace policies and rules, which will be provided to you separately.

All forms of compensation referred to in this Letter Agreement are subject to
reduction to reflect applicable withholding and payroll taxes and other
deductions to the extent required by law. You hereby acknowledge that you have
had an adequate opportunity to consult with your own tax advisors regarding the
compensation set forth in this Letter Agreement, the Company does not have a
duty to design its compensation policies in a manner that minimizes your tax
liabilities, and you will not make any claim against the Company or its Board of
Directors related to tax liabilities arising from your compensation.

We hope that you and Fate will find mutual satisfaction with your employment.
All of us at Fate are very excited about you joining our team and look forward
to a beneficial and fruitful relationship. Nevertheless, employees have the
right to terminate their employment at any time, with or without cause or
notice, and Fate reserves for itself an equal right with respect to your
employment, where this type of relationship is called “at-will” employment.

This Letter Agreement and the PIIA attached hereto contain the entire terms and
conditions with respect to your employment, and they supersede all prior
communications, negotiations, representations and/or agreements between you and
Fate. The terms and conditions of this offer may only be changed by written
agreement by a duly authorized representative of Fate, although Fate may, from
time to time, in its sole discretion, adjust the salary, benefits, other forms
of compensation paid to you, and/or other policies and procedures in connection
with your employment.

In the event of any dispute or claim relating to or arising out of this Letter
Agreement or our employment relationship, you and the Company agree to an
arbitration in which (i) you are waiving any and all rights to a jury trial, but
all court remedies will be available in arbitration, (ii) we agree that all
disputes between you and the Company shall be fully and finally resolved by
binding arbitration, (iii) all disputes shall be resolved by a single neutral
arbitrator who shall issue a written opinion, (iv) the arbitration proceeding
shall provide for adequate discovery, and (v) the Company shall pay all
arbitration fees in excess of any court fees which you would be required to pay
if the dispute were decided in a court of law. Any such arbitration shall be
conducted in the San Diego Area by Judicial Arbitration and Mediation Services
(JAMS) under the JAMS Employment Arbitration Rules and Procedures.
Notwithstanding the foregoing, you and the Company agree that the above
agreement to arbitration shall not be construed as a waiver of any rights you
may have to seek public injunctive relief in any forum.

 

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If this offer is acceptable to you, kindly indicate your consent to its terms
and conditions by signing and returning a copy of this Letter Agreement and a
completed PIIA attached hereto to me by the close of business on May 22, 2020,
it being understood that this offer will expire if not accepted, signed and
returned on or before such date (although that expiration date may be extended
at the discretion of Fate). Upon your signature below, this Letter Agreement,
including Appendix A, will become our binding agreement with respect to your
employment, containing all terms and conditions as to the specifics thereto.

 

Very truly yours,

/s/ J. Scott Wolchko

J. Scott Wolchko

President & CEO

 

I agree to and accept employment with Fate Therapeutics, Inc. on the terms and
conditions set forth in this Letter Agreement, including the Employee
Proprietary Information and Inventions Agreement attached hereto as Appendix A:

 

 

/s/ Edward J. Dulac III

 

5/22/20

 

 

 

Edward J. Dulac III

 

Date

 

 

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Appendix A

Employee Proprietary Information and Inventions Agreement