| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 23, 2019, Molecular Templates, Inc. (the “Company”) entered into a sublease agreement (the “Sublease”) with State Farm Mutual Automobile Insurance Company (“State Farm”) to sublet office and laboratory space consisting of approximately 57,085 total rentable square feet of space in the building located at 8900 Amberglen Blvd., Austin, Texas (the “Premises”).
The term of the Sublease is approximately nine andone-half years. The term of the Sublease will commence upon the satisfaction of certain conditions, including the issuance of the consent of the overlandlord to the Sublease. The commencement date is expected to occur within approximately thirty (30) days of the execution of the Sublease. The term of the Sublease will expire on August 30, 2028, unless earlier terminated pursuant to the terms of the Sublease. The Company has aone-time right of first refusal (“Right of First Refusal”) to sublease the remaining two wings located on the third floor of the Premises, collectively or individually, on the same terms and conditions as the initial Sublease. The Company is also required to maintain certain insurance requirements and deliver within 30 days of execution of the Sublease an irrevocable and unconditional letter of credit (“Letter of Credit”) in an initial amount of $3.0 million dollars, provided, however, that the amount of the Letter of Credit may be reduced over time pursuant to the terms and conditions of the Sublease and the satisfaction of certain criteria.
Base rent payments due under the Sublease for the Premises are expected to be approximately $14.8 million in the aggregate over the term of the Sublease. Rental payments are scheduled to commence on the earlier to occur of (i) 151 days following the commencement of the term of the Sublease and (ii) 5 business days following completion of the Company’sbuild-out of the Premises. The Company is also responsible for certain other costs under the Sublease, such as certain operating expenses, taxes, assessments, maintenance, insurance, and utilities.
The Company is responsible for thebuild-out of the space for its use and will receive a contribution from State Farm towards such work not to exceed $1,997,975.00, in addition to other reimbursements and work costs.
The foregoing description of certain terms of the Sublease does not purport to be complete and is qualified in its entirety by reference to the full text of the Sublease that the Company expects to file as an exhibit to its Annual Report on Form10-K for the year ending December 31, 2018.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
The Company’s entry into the Sublease resulted in the creation of a direct financial obligation. The information set forth in Item 1.01 of this Current Report on Form8-K is incorporated into this Item 2.03 of this Current Report on Form8-K by reference.
