<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GERON CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 2834 75-2287752
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
incorporation or organization)
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200 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(415) 473-7700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RONALD W. EASTMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GERON CORPORATION
200 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(415) 473-7700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
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JOSHUA L. GREEN JEROME L. COBEN
EDGAR B. CALE, III Skadden, Arps, Slate,
Venture Law Group Meagher & Flom
A Professional Corporation 300 South Grand Avenue
2800 Sand Hill Road Los Angeles, California 90071
Menlo Park, California 94025 (213) 687-5000
(415) 854-4488
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS PROPOSED MAXIMUM AGGREGATE
OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
Common Stock, $0.001 par value
per share................... 2,875,000 $13.00 $37,375,000 $12,888
</TABLE>
(1) Includes 375,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
GERON CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS IN PART I OF FORM S-1
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ITEM NUMBER AND HEADING IN FORM S-1
REGISTRATION STATEMENT LOCATION IN PROSPECTUS
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1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page; Front of
Registration Statement
2. Inside Front and Outside Back Cover Pages of
Prospectus................................. Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Prospectus Summary; Risk Factors; The
Company
4. Use of Proceeds.............................. Use of Proceeds
5. Determination of Offering Price.............. Underwriting
6. Dilution..................................... Dilution
7. Selling Security Holders..................... Not Applicable
8. Plan of Distribution......................... Outside and Inside Front Cover Pages;
Underwriting; Outside Back Cover Page
9. Description of Securities to Be Registered... Prospectus Summary; Dividend Policy;
Capitalization; Description of Capital
Stock; Shares Eligible for Future Sale
10. Interests of Named Experts and Counsel....... Legal Matters
11. Information with Respect to the Registrant... Outside and Inside Front Cover Pages;
Prospectus Summary; Risk Factors;
Special Note Regarding Forward-Looking
Statements; Kyowa Hakko Direct
Placement; The Company; Use of Proceeds;
Dividend Policy; Capitalization;
Dilution; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Investment Company Act Considerations;
Certain Transactions; Principal
Stockholders; Description of Capital
Stock; Shares Eligible for Future Sale;
Underwriting; Legal Matters; Experts;
Additional Information; Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
</TABLE>
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS Subject to Completion
Dated June 12,
1996
2,500,000 Shares
[LOGO]
Common Stock
(par value $0.001 per share)
All of the Common Stock ("Common Stock") offered hereby is being offered by
Geron Corporation, a Delaware corporation ("Geron" or the "Company").
Prior to the Offering, there has been no public market for the Common Stock. It
is currently anticipated that the initial public offering price of the Common
Stock will be between $11.00 and $13.00 per share. See "Underwriting" for
information relating to the factors to be considered in determining the initial
public offering price of the Common Stock. Application has been made to have the
Common Stock quoted on the Nasdaq National Market under the symbol "GERN."
Kyowa Hakko Kogyo Co., Ltd. ("Kyowa Hakko"), a collaborative partner of the
Company, has committed to purchase $2,500,000 of Common Stock at the initial
public offering price (208,333 shares of Common Stock at an assumed initial
public offering price of $12.00 per share) in a private placement that will
close simultaneously with the closing of the Offering. The Underwriters are not
involved in the sale of shares of Common Stock to Kyowa Hakko. See "Kyowa Hakko
Direct Placement."
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
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Per Share $ $ $
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Total (3) $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
See "Underwriting."
(2) Before deducting expenses of the Offering payable by the Company estimated
at $ .
(3) The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 375,000
shares of Common Stock on the same terms as set forth above, solely to cover
over-allotments, if any. If such option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
The shares of Common Stock offered by this Prospectus are being offered by the
Underwriters, subject to prior sale, when, as and if delivered to and accepted
by the Underwriters, and subject to approval of certain legal matters by
Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriters. It is
expected that delivery of the shares of Common Stock offered hereby will be made
against payment therefor on or about , 1996 at the offices
of J.P. Morgan Securities Inc., 60 Wall Street, New York, New York.
J.P. MORGAN & CO.
MONTGOMERY SECURITIES
SALOMON BROTHERS INC
, 1996
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[GRAPHICS]
2
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No person has been authorized to give any information or to make any
representations not contained in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the Common Stock in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that there has
been no change in the affairs of the Company subsequent to the date hereof.
No action has been or will be taken in any jurisdiction by the Company or by any
Underwriter that would permit a public offering of the Common Stock or
possession or distribution of this Prospectus in any jurisdiction where action
for the purpose is required, other than in the United States. Persons into whose
possession this Prospectus comes are required by the Company and the
Underwriters to inform themselves about and to observe any restrictions as to
the offering of the Common Stock and the distribution of this Prospectus.
TABLE OF CONTENTS
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PAGE
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Prospectus Summary......................... 4
Risk Factors............................... 7
Special Note Regarding Forward-Looking
Statements............................... 14
Kyowa Hakko Direct Placement............... 14
The Company................................ 14
Use of Proceeds............................ 14
Dividend Policy............................ 14
Capitalization............................. 15
Dilution................................... 16
Selected Financial Data.................... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 18
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PAGE
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Business................................... 21
Management................................. 34
Investment Company Act Considerations...... 42
Certain Transactions....................... 43
Principal Stockholders..................... 45
Description of Capital Stock............... 47
Shares Eligible for Future Sale............ 48
Underwriting............................... 50
Legal Matters.............................. 51
Experts.................................... 51
Additional Information..................... 51
Index to Financial Statements.............. F-1
</TABLE>
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
The Company intends to furnish its stockholders with annual reports containing
audited financial statements examined by its independent auditors and will make
available quarterly reports containing interim unaudited financial statements
for each of the first three quarters of each fiscal year.
Geron and the Geron logo are trademarks of the Company. All other brand names or
trademarks appearing in this Prospectus are the property of their respective
holders.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE "UNDERWRITING."
3
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements, and
notes thereto, appearing elsewhere in this Prospectus. Except as otherwise noted
herein, all information in this Prospectus (i) assumes no exercise of the
Underwriters' over-allotment option, (ii) assumes the issuance of shares of
Common Stock with an aggregate purchase price equal to $2.5 million (208,333
shares at an assumed initial public offering price of $12.00 per share) to Kyowa
Hakko Kogyo Co., Ltd. ("Kyowa Hakko") in a private placement that will close
simultaneously with the closing of the Offering ("the Kyowa Hakko Direct
Placement"), (iii) assumes the issuance of 7,805 shares of Common Stock to be
issued upon the net exercise of 12,055 outstanding warrants upon the closing of
the Offering at an assumed initial public offering price of $12.00 per share,
(iv) assumes the filing of the Company's Amended and Restated Certificate of
Incorporation, authorizing a class of 3,000,000 shares of undesignated Preferred
Stock and effecting the 1-for-3.4 reverse stock split with respect to the Common
Stock and (v) reflects the conversion of all outstanding shares of the Company's
Preferred Stock, in accordance with the terms thereof, into shares of Common
Stock upon the closing of the Offering.
THE COMPANY
Geron is a biopharmaceutical company exclusively focused on discovering and
developing therapeutic and diagnostic products based upon common biological
mechanisms underlying cancer and other age-related diseases. As the pioneer in
researching these mechanisms, the Company focuses on telomeres, which are
structures at the ends of chromosomes that the Company has shown act as a
molecular "clock" of cellular aging, and telomerase, an enzyme which appears to
stop the "clock" and lead to cellular immortality. The Company and its
collaborators have established that these mechanisms play a role in cancer and
many other age-related diseases and conditions, and thus the Company believes it
has a broadly applicable, proprietary platform for discovering and developing
novel small molecule therapeutics and diagnostics for such diseases. The most
advanced of the Company's three therapeutic programs is in the area of
telomerase inhibition for the treatment of cancer. Geron will continue to build
upon its leadership position in the field of telomere biology and telomerase
regulation by selectively collaborating with companies and research institutions
and by aggressively pursuing an extensive patent portfolio. The Company owns or
has certain exclusive rights to three issued United States patents and 52 United
States patent applications.
Cancer and other age-related diseases and conditions, including skin aging,
atherosclerosis, osteoporosis and Alzheimer's disease, are difficult and costly
to diagnose and treat. In many cases, entirely effective means of treating and
diagnosing these diseases and conditions are not currently available. Further,
with the progressive "graying" of the population, the incidence of cancer and
other age-related diseases and conditions is expected to increase and to place a
steadily growing financial burden on the health care system. Significant
improvements in the treatment and diagnosis of these diseases and conditions are
expected to offer attractive commercial opportunities.
Geron's scientific approach focuses on telomere shortening and telomerase
regulation as common biological mechanisms underlying cancer and other
age-related diseases and conditions. Geron and its collaborators have
demonstrated both in vivo and in vitro that telomeres, the repeated sequences of
DNA located at the ends of chromosomes, shorten throughout a normal cell's
replicative lifespan. The Company and its collaborators have also shown that
when telomeres reach a certain short length, cells stop dividing and become
senescent. Senescent cells display an altered pattern of gene expression
relative to replicatively young cells that leads to an imbalance in the
production of proteins and other cell products. This imbalance, which occurs in
many tissues throughout the body, can have a direct and destructive effect on
surrounding tissues and appears to contribute to age-related diseases and
conditions.
Cancer cells escape senescence and maintain an extended ability to divide
through mutations. Geron and its collaborators have shown that for most
cancerous tumors to attain life threatening size, or for cancer to metastasize
throughout the body, cancer cells must become immortal through an alteration
which prevents their telomeres from shortening with each division. In almost all
cases examined to date, a germ line enzyme called telomerase is abnormally
reactivated in these cancer cells to repair their telomeres with each cell
division, thereby conferring cellular immortality. Geron has shown telomerase to
be present in all of the over 20 types of cancer that it has studied, including
breast, prostate, lung, colon, and bladder cancers. The Company believes that
telomerase inhibition has the potential to be a universal and highly specific
cancer therapy. Geron has identified several series of small molecule compounds
that selectively inhibit telomerase.
4
<PAGE> 7
In order to develop novel therapeutic and diagnostic products, the Company is
focused on three programs:
- - Telomerase Inhibition and Detection Geron's goal is to develop both small
molecule telomerase inhibitors as potentially universal and highly specific
cancer therapies and telomerase assays for the detection of cancer. Geron has
demonstrated in vitro with a small molecule compound that telomerase
inhibition results in renewed telomere shortening in cancer cells and eventual
cancer cell death. Geron is currently optimizing a number of small molecule
compounds as potential telomerase inhibitors in order to select a lead
compound for preclinical development. With one of its collaborators, the
Company has initiated studies of these small molecule compounds in animal
models of human tumor growth. The Company has established a research and
development collaboration with Kyowa Hakko, a leading oncology company in
Japan, for the development and commercialization in certain Asian countries of
a telomerase inhibitor for the treatment of cancer. The Company has retained
all rights to a telomerase inhibitor outside these countries.
The Company believes that telomerase is a universal and highly specific marker
of cancer and that its detection and quantification may have significant
clinical utility for cancer diagnosis, prognosis, monitoring and screening. In
the research use only market, the Company has licensed its telomerase
detection technologies to Oncor, Inc., Boehringer Mannheim and Dako
Corporation. In May 1996, Oncor began commercial sale of the Company's
proprietary Telomeric Repeat Amplification Protocol ("TRAP") assay for use in
cancer research. The Company has also established collaborations with Dianon
Systems, Inc. and Ventana Medical Systems, Inc. primarily for additional
technology development and clinical assessment.
- - Cell Senescence Modulation Geron seeks to develop therapeutics to treat
age-related diseases and conditions through modulation of the biological
processes leading to and regulating cell senescence. The Company is pursuing
two distinct approaches to modulate cell senescence. The objective of the Cell
Lifespan Extension program is to slow telomere loss, thereby extending the
period of normal cell replication and delaying the destructive onset of cell
senescence. Geron and its collaborators have demonstrated that telomere length
and replicative senescence can be modulated with synthetic compounds. This
research is initially directed at T cell therapy and bone marrow
transplantation applications. The Genomics of Aging program applies
proprietary genomics techniques to target and modulate the destructive genetic
changes that occur in senescent cells. The Company has identified genes that
are differentially expressed by replicatively young versus senescent cells and
mortal versus immortal cells. This program is initially focused on skin aging
and atherosclerosis.
- - Primordial Stem Cell Therapies Geron seeks to generate a broad array of cell
types from primordial stem cells ("PS cells") for cellular transplantation. PS
cells are germ line cells that are unique in that they are both immortal,
consistent with their normal telomerase expression, and capable of
differentiation into any and all types of cells and tissues in the body. The
Company is in the early stages of research directed towards growing and
differentiating PS cells. This program is initially focused on differentiating
PS cells into cardiomyocytes for the treatment of congestive heart failure and
neurons for the treatment of Parkinson's disease.
The Company's strategy combines the following key elements: focusing on
fundamental mechanisms of cellular aging and cellular immortality to treat
cancer and other age-related diseases and conditions; developing high value
programs based on its common scientific platform; selectively pursuing strategic
collaborations; retaining the ability to develop and market products
independently; and enhancing its proprietary leadership position in the field.
RISK FACTORS
Prospective investors should carefully consider "Risk Factors" immediately
following this Prospectus Summary.
THE OFFERING
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COMMON STOCK OFFERED.............................. 2,500,000 shares
COMMON STOCK TO BE OUTSTANDING AFTER
THE OFFERING(1)................................. 10,191,905 shares
USE OF PROCEEDS BY THE COMPANY.................... For research and development, acquisition of laboratory
and other equipment, working capital and other general
corporate purposes. See "Use of Proceeds."
PROPOSED NASDAQ NATIONAL MARKET SYMBOL............ "GERN"
</TABLE>
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(1) Based on shares outstanding as of May 31, 1996. Includes (i) shares of
Common Stock with an aggregate purchase price equal to $2.5 million (208,333
shares of Common Stock at an assumed initial public offering price of $12.00 per
share) to be issued in the Kyowa Hakko Direct Placement and (ii) 7,805 shares of
Common Stock to be issued upon the assumed net exercise of 12,055 outstanding
warrants upon the closing of the Offering, based on an assumed initial public
offering price of $12.00 per share. Does not include (i) 1,437,977 shares of
Common Stock issuable upon exercise of options outstanding as of May 31, 1996,
(ii) 56,248 shares of Common Stock issuable upon exercise of outstanding
warrants expected to remain outstanding after the Offering and (iii) an
aggregate of 1,080,781 shares of Common Stock reserved for future grant under
the Company's 1992 Stock Option Plan, 1996 Directors' Stock Option Plan and 1996
Employee Stock Purchase Plan. See "Capitalization," "Management -- Stock Plans,"
"Description of Capital Stock" and Notes 6 and 10 of Notes to Financial
Statements.
5
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SUMMARY FINANCIAL DATA
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INCEPTION
(NOVEMBER
28,
1990)
TO THREE
DECEMBER YEARS ENDED DECEMBER 31, MONTHS
Dollars in thousands, except share and per 31, ---------------------------------------- ENDED
share data 1991 1992 1993 1994 1995 -------
------- ------- -------- ------- -------
1995
-------
STATEMENT OF OPERATIONS DATA:
Revenues -- contract.......................... $ -- $ -- $ -- $ -- $ 5,490 $ --
Operating expenses:
Research and development.................... 47 726 3,975 8,099 11,321 2,455
General and administrative.................. 52 661 2,220 2,397 2,888 573
------ ------ ------ ------ ------ ------
Total operating expenses................. 99 1,387 6,195 10,496 14,209 3,028
------ ------ ------ ------ ------ ------
Loss from operations.......................... (99) (1,387) (6,195) (10,496) (8,719) (3,028)
Interest and other income..................... 2 27 351 638 919 167
Interest and other expense.................... -- -- (103) (320) (399) (93)
------ ------ ------ ------ ------ ------
Net loss.................................... $ (97) $(1,360) $ (5,947) $(10,178) $(8,199) $(2,954)
====== ====== ====== ====== ====== ======
Pro forma net loss per share (1).............. $ (1.03)
Shares used in computing pro forma net loss
per share (1)............................... 7,954,863
</TABLE>
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MARCH 31, 1996
----------------------------
ACTUAL
--------
Dollars in thousands AS ADJUSTED (2)
---------------
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............................. $ 13,939 $ 43,539
Working capital............................................................... 12,490 42,090
Total assets.................................................................. 18,101 47,701
Noncurrent portion of capital lease obligations and equipment loans........... 1,471 1,471
Accumulated deficit........................................................... (28,221) (28,221)
Total stockholders' equity.................................................... 14,662 44,262
</TABLE>
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(1) See Note 1 of Notes to Financial Statements for information concerning
calculation of pro forma net loss per share.
(2) Adjusted to reflect (i) the sale of 2,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $12.00 per share, after
deducting estimated underwriting discounts and offering expenses, (ii) the
issuance of shares of Common Stock with an aggregate purchase price equal to
$2.5 million (208,333 shares at an assumed initial public offering price of
$12.00 per share) in the Kyowa Hakko Direct Placement and (iii) the issuance of
7,805 shares of Common Stock upon the assumed net exercise of 12,055 outstanding
warrants upon the closing of the Offering at an assumed initial public offering
price of $12.00 per share, and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."
6
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RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Accordingly, prospective investors should consider carefully the
following factors, together with the information contained in this Prospectus,
in evaluating the Company and its business before purchasing the shares of
Common Stock offered hereby. This Prospectus contains forward-looking statements
that involve risk and uncertainty. Actual results and the timing of certain
events could differ materially from those projected in the forward-looking
statements as a result of the risk factors set forth below and other factors
discussed elsewhere in this Prospectus. See "Special Note Regarding
Forward-Looking Statements."
TECHNOLOGICAL UNCERTAINTY
The study of the mechanisms of cellular aging and cellular immortality,
including telomere biology and telomerase, is a relatively new area of research,
and there can be no assurance that this research will lead to the discovery or
development of any therapeutic or diagnostic product. If and when potential lead
drug compounds or product candidates are identified through the Company's
research programs, they will require significant preclinical and clinical
testing prior to regulatory clearance in the United States and elsewhere, and
there can be no assurance that any of these efforts will result in a product
that can be marketed. Because of the significant additional scientific,
regulatory and commercial milestones necessary for the Company's research
programs to be successful, there can be no assurance that any program will not
be abandoned after significant resources have been expended. The abandonment of
any research program could have a material adverse effect on the Company.
As a result of its drug discovery efforts to date, the Company has identified
compounds in in vitro studies that demonstrate potential for inhibiting
telomerase in vivo. However, additional development efforts will be required
prior to the selection of a lead compound for preclinical development and
clinical trials as a telomerase inhibitor for cancer. Once selected, the
Company's lead compound may prove to have undesirable and unintended side
effects or other characteristics affecting its efficacy or safety that may
prevent or limit its commercial use. For example, telomerase is active in
reproductive cells and transiently expressed in certain hematopoietic (blood),
skin and gastrointestinal cells. There can be no assurance that any product
based on the inhibition of telomerase will not adversely affect such cells and
result in unacceptable side effects. In addition, it is expected that telomerase
inhibition will have delayed efficacy as telomeres resume normal shortening and,
as a result, will in most cases be used in conjunction with traditional cancer
therapies. The abandonment of the Telomerase Inhibition and Detection program
would have a material adverse effect on the Company.
With respect to the development and commercial application of the Company's
proprietary telomerase detection technology, there is, as yet, insufficient
clinical data to confirm its full utility to diagnose, prognose, monitor or
screen for cancer. Although the Company's licensee, Oncor, Inc. has commenced
the sale of a diagnostic kit for research use, additional development work and
regulatory consents will be necessary prior to the introduction of tests for
clinical use. The Company's Cell Lifespan Extension program, designed to
modulate telomere length, is at an early stage of development. While telomere
length and replicative capacity have been extended in vitro, there can be no
assurance that the Company will discover a compound that will modulate telomere
length or increase replicative capacity effectively for clinical use. With
respect to the Company's Genomics of Aging program, the Company has identified
certain genes that are expressed differentially in senescent cells versus
replicatively young cells. However, the Company has not identified any compounds
that have been demonstrated to modulate such gene expression, and there can be
no assurance that any such compound will be discovered or developed. The
Company's Primordial Stem Cell program is also at a very early stage. While
primate PS cells have recently been isolated and allowed to differentiate into
numerous cell types, there can be no assurance that the Company's efforts in
this program will result in any commercial applications.
The Company may become aware of technology controlled by third parties that is
advantageous to the Company's business. There can be no assurance that the
Company will be able to acquire or license such technology on reasonable terms,
if at all. In the event that the Company is unable to acquire such technology,
the Company may be required to expend significant time and resources to develop
similar technology, and there can be no assurance that it will be successful in
this regard. If the Company cannot acquire or develop necessary technology, it
may be prevented from pursuing its business objectives. Moreover, a competitor
of the Company could acquire or license such technology. Any such event would
have a material adverse effect on the Company. See "Business -- Research
Programs" and "-- Patents, Proprietary Technology and Trade Secrets."
EARLY STAGE OF DEVELOPMENT
Geron is at an early stage in the development of therapeutic and diagnostic
products. The Company has not yet selected a lead compound for any of its drug
development programs. In order to identify and select such a compound, it must
have access to sufficient numbers of chemical compounds and resources, of which
there can be no assurance. Products that may result from the Company's research
and development programs are not expected to be commercially available for a
significant number of years, if at all. The Company's program to identify a
telomerase inhibitor is currently at the drug discovery stage, while the
Company's other programs are currently focused on research efforts prior to drug
discovery or preclinical development. It is difficult to predict when, if ever,
the Company will select a lead compound for drug development as a telomerase
inhibitor. In addition, there can be no assurance that the Company's other
programs will move beyond their current stage. Assuming the Company's research
advances and the Company is able
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to identify and select a lead compound for telomerase inhibition, certain
preclinical development efforts will be necessary to determine whether the
potential product has sufficient safety to enter clinical trials. If such a
potential product receives authorization from the United States Food and Drug
Administration ("FDA") to enter clinical trials, then it may be subjected to a
multiphase, multicenter clinical study to determine its safety and efficacy. It
is not possible to predict the length or extent of clinical trials or the period
of any required patient follow-up, but it is presently expected to extend a
number of years. Assuming clinical trials of any potential product are
successful and other data are satisfactory, the Company will submit an
application to the FDA and appropriate regulatory bodies in other countries to
permit marketing of the product. Typically, the review process at the FDA takes
several years, and there can be no assurance that the FDA will clear the
Company's application or will not require additional clinical trials or other
data prior to clearance. Furthermore, even if such clearance is ultimately
obtained, delays in the clearance process could have a material adverse effect
on the Company. In addition, there can be no assurance that any potential
product will be capable of being produced in commercial quantities at a
reasonable cost or that such product will be successfully marketed. Based on the
foregoing, the Company does not anticipate being able to commence marketing of
any therapeutic products for many years, if at all. There can be no assurance
that any of the Company's product development efforts will be successfully
completed, that regulatory approvals will be obtained, or that the Company's
products, if any, will achieve market acceptance. See "Business -- Research
Programs" and "-- Government Regulation."
DEPENDENCE ON STRATEGIC AND RESEARCH COLLABORATIONS
The Company's strategy for the development, clinical testing and
commercialization of its products includes entering into collaborations with
corporate partners, licensors, licensees and others, and is dependent upon the
subsequent success of these other parties in performing their respective
responsibilities. The success of any collaboration depends on the continued
cooperation of its partners, as to which there can be no assurance. The amount
and timing of resources to be devoted to activities by its collaborators are not
within the direct control of the Company. There can be no assurance that such
partners will perform their obligations as expected or that the Company will
derive any revenue from such arrangements. There can also be no assurance that
the Company's current collaborators or any future collaborators will not pursue
existing or alternative technologies in preference to those being developed in
collaboration with the Company.
The Company currently has no manufacturing infrastructure and no marketing or
sales organization, and intends to rely in substantial part on its current and
future strategic partners for the manufacture of any product and the principal
marketing and sales responsibilities for any such product. To the extent that
the Company chooses not to or is unable to establish such arrangements, the
Company will require substantially greater capital to undertake its own
manufacturing, marketing and sales of any product.
In April 1995, the Company entered into a corporate collaboration with Kyowa
Hakko for the development and commercialization in certain Asian countries of a
telomerase inhibitor for the treatment of cancer (the "Kyowa Hakko Agreement").
Under the collaboration, Kyowa Hakko provides certain funding for the Company's
research and development activities and is responsible for all clinical,
regulatory, manufacturing, marketing and sales efforts and expenses in the
covered territory. The Kyowa Hakko Agreement provides that Kyowa Hakko will not
pursue research and development independent of its collaboration with Geron with
respect to telomerase inhibition for the treatment of cancer in humans until
April 24, 1999, at the earliest. The Kyowa Hakko Agreement provides in general
that, while Geron exercises significant control during the research phase, Kyowa
Hakko exercises significant control during the development and commercialization
phases of the collaboration. There can be no assurance that the collaboration
will be successful. The Company has also entered into licensing arrangements
with several diagnostic companies for the Company's telomerase detection
technology. However, because of their limitation to the research use only
market, such arrangements are not expected to generate significant commercial
revenues.
There can be no assurance that the Company will be able to negotiate additional
strategic arrangements in the future on acceptable terms, if at all, or that
such strategic arrangements will be successful. In the absence of such
arrangements, the Company may encounter significant delays in introducing any
product into certain markets or find that the research, development,
manufacture, marketing or sale of any product in such markets is adversely
affected. In the event that the Company does not enter into such arrangements,
it may be materially adversely affected.
The Company has relationships with collaborators and scientific advisors at
academic and other institutions, some of whom conduct research at the Company's
request. These collaborators and scientific advisors are not employees of the
Company and may have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to the Company. The Company has
limited control over the activities of these collaborators and advisors and,
except as otherwise required by its collaboration and consulting agreements, can
expect only limited amounts of their time to be dedicated to the Company's
activities. See "Business -- Research Programs," "-- Strategic Collaborations"
and "-- Research Collaborations."
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DEPENDENCE ON PROPRIETARY TECHNOLOGY AND UNCERTAINTY OF PATENT PROTECTION
Geron's success will depend in part on its ability to obtain and enforce its
patents and maintain trade secrets, both in the United States and in other
countries. As of May 31, 1996, Geron owned, had licensed exclusively or held an
option to license exclusively three issued United States patents and 52 United
States patent applications, plus certain counterpart foreign patent
applications. The patent positions of pharmaceutical, biopharmaceutical and
biotechnology companies, including the Company, are highly uncertain and involve
complex legal and technical questions for which legal principles are not firmly
established. There can be no assurance that the Company has developed or will
continue to develop products or processes that are patentable or that patents
will issue from any of the pending applications, including patent applications
that have been allowed. There can also be no assurance that the Company's
current patents, or patents that issue on pending applications, will not be
challenged, invalidated or circumvented, or that the rights granted thereunder
will provide proprietary protection or competitive advantages to the Company.
Because (i) patent applications in the United States are maintained in secrecy
until patents issue, (ii) patent applications are not generally published until
many months or years after they are filed and (iii) publication of technological
developments in the scientific and patent literature often occurs long after the
date of such developments, the Company cannot be certain that it was the first
to invent the subject matter covered by the patent applications or that it was
the first to file patent applications for such inventions. Litigation to
establish the validity of patents, to defend against patent infringement claims
of others and to assert infringement claims against others can be expensive and
time consuming even if the outcome is favorable to the Company. If the outcome
of patent prosecution or litigation is unfavorable to the Company, the Company
could be materially adversely affected.
Patent law relating to the scope and enforceability of claims in the fields in
which the Company operates is still evolving. The degree of future protection
for the Company's proprietary rights, therefore, is highly uncertain. In this
regard, there can be no assurance that independent patents will issue from each
of the 52 United States patent applications referenced above, which include many
interrelated applications directed to common or related subject matter. The
Company is aware of certain patent applications that have been filed by others
with respect to telomerase and telomere length. In this regard, Iowa State
University has filed United States and corresponding foreign patent applications
claiming methods and reagents relating to the RNA component of human telomerase,
and Isis Pharmaceuticals, Inc. has filed United States and corresponding foreign
patent applications relating to oligonucleotide-like reagents asserted to have
telomere length modulating activity. In addition, there are a number of issued
patents and pending applications owned by others directed to differential
display, stem cell and other technologies relevant to the Company's research,
development and commercialization efforts. There can be no assurance that the
Company's technology can be developed and commercialized without a license to
such patents or that such patent applications will not be granted priority over
patent applications filed by the Company. Furthermore, there can be no assurance
that others will not independently develop similar or alternative technologies
to those of the Company, duplicate any of the Company's technologies, or design
around the patented technologies developed by the Company or its licensors, any
of which may have a material adverse effect on the Company.
The commercial success of the Company depends significantly on its ability to
operate without infringing patents and proprietary rights of others. There can
be no assurance that the Company's technologies do not and will not infringe the
patents or proprietary rights of others. In the event of such infringement, the
Company may be enjoined from pursuing research, development or commercialization
of its potential products or may be required to obtain licenses to these patents
or other proprietary rights or to develop or obtain alternative technologies.
There can be no assurance that the Company will be able to obtain alternative
technologies or any required license on commercially favorable terms, if at all,
and if any such license is or alternative technologies are not obtained, the
Company may be delayed or prevented from pursuing the development of certain of
its potential products. The Company's breach of an existing license or failure
to obtain or delay in obtaining alternative technologies or a license to any
technology that it may require to develop or commercialize its products may have
a material adverse effect on the Company.
Litigation, which could result in substantial costs to the Company, may also be
necessary to enforce any patents issued or licensed to the Company or to
determine the scope and validity of another's proprietary rights. There can be
no assurance that the Company's issued or licensed patents would be held valid
or infringed in a court of competent jurisdiction or that a patent held by
another will be held invalid or not infringed in such court. An adverse outcome
in litigation or an interference to determine priority or other proceeding in a
court or patent office could subject the Company to significant liabilities to
other parties, require disputed rights to be licensed from other parties or
require the Company to cease using such technology, any of which could have a
material adverse effect on the Company. In addition, the Company could incur
substantial costs if litigation is required to defend itself in patent suits
brought by third parties or if Geron initiates such suits.
Geron also relies on trade secrets to protect its proprietary technology,
especially in circumstances in which patent protection is not believed to be
appropriate or obtainable. Geron attempts to protect its proprietary technology
in part by confidentiality agreements with its employees, consultants and
certain contractors. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors.
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The Company is party to various license agreements which give it rights to use
certain technologies in its research, development and commercialization
activities. Disputes have arisen and may continue to arise as to the
inventorship and corresponding rights in know-how and inventions resulting from
the joint creation or use of intellectual property by the Company and its
licensors, research collaborators and consultants. There can be no assurance
that the Company will be able to continue to license such technologies on
commercially reasonable terms, if at all, or to maintain the exclusivity of its
exclusive licenses. In this regard, the Company's license with the licensing arm
of the University of Wisconsin for the PS cells derived from primates is
currently exclusive for two years and non-exclusive thereafter. The failure of
the Company to maintain exclusive or other rights to such technologies could
have a material adverse effect on the Company. See "Business -- Patents,
Proprietary Technology and Trade Secrets."
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial capital resources in order to conduct its
operations. The Company's future capital requirements will depend on many
factors, including, among others, continued scientific progress in its research
and development programs; the magnitude and scope of these activities; the
ability of the Company to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and marketing; progress
with preclinical and clinical trials; the time and costs involved in obtaining
regulatory consents; the costs involved in preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims; or the potential for new
technologies and products. The Company intends to seek such additional funding
through collaborative arrangements, public or private equity or debt financings
and capital lease transactions; however, there can be no assurance that
additional financing will be available on acceptable terms, if at all.
Additional equity financings could result in significant dilution to
stockholders after this Offering. Further, in the event that additional funds
are obtained through arrangements with collaborative partners, such arrangements
may require the Company to relinquish rights to certain of its technologies,
product candidates or products that the Company would otherwise seek to develop
or commercialize itself. If sufficient capital is not available, the Company may
be required to delay, reduce the scope of or eliminate one or more of its
research or development programs, each of which would have a material adverse
effect on the Company. Based on current projections, the Company estimates that
its existing capital resources, including the net proceeds from the Offering and
the Kyowa Hakko Direct Placement and the interest income thereon, together with
facility and equipment financing and expected revenues from its collaboration
with Kyowa Hakko, will be sufficient to fund its current and planned operations
through 1998. There can be no assurance that the assumptions underlying such
estimates are correct or that such funds will be sufficient to meet the capital
needs of the Company during such period. In addition, a substantial amount of
the payments to be made by Kyowa Hakko are dependent upon the achievement by the
Company of development and regulatory milestones and there can be no assurance
that such milestones will be achieved. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
Geron has incurred net operating losses in every year of operation since its
inception in 1990. As of March 31, 1996, the Company had an accumulated deficit
of approximately $28.2 million. Losses have resulted principally from costs
incurred in connection with the Company's research and development activities
and from general and administrative costs associated with the Company's
operations. The Company expects to incur additional operating losses over the
next several years as the Company's research and development efforts and
preclinical testing are expanded and clinical testing is commenced.
Substantially all of the Company's revenues to date have been research support
payments under the Kyowa Hakko Agreement. The Company's right to receive
research support payments under the Kyowa Hakko Agreement is scheduled to expire
in April 1998. In addition, the Company is unable to determine at this time the
level of the revenue to be received from the sale of diagnostic products and
does not expect to receive material revenues from the sale of the research kits.
The Company's ability to achieve profitability is dependent on its ability,
alone or with others, to successfully select therapeutic compounds for
development, obtain the required regulatory consents and manufacture and market
any resulting products. There can be no assurance when or if the Company will
receive revenues from product sales or achieve profitability. Failure to
generate significant additional revenues and achieve profitability could impair
the Company's ability to sustain operations.
SUBSTANTIAL COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE
The pharmaceutical and biopharmaceutical industries are intensely competitive.
The Company believes that certain pharmaceutical and biopharmaceutical companies
as well as certain research organizations currently engage in or have in the
past engaged in efforts related to the biological mechanisms of cell aging and
cell immortality, including the study of telomeres and telomerase. In addition,
other products and therapies that could compete directly with the products that
the Company is seeking to develop and market currently exist or are being
developed by pharmaceutical and biopharmaceutical companies, and by academic and
other research organizations. Many companies are also developing alternative
therapies to treat cancer and, in this regard, are competitive with the Company.
The pharmaceutical companies developing and marketing such competing products
have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical and clinical testing, obtaining
regulatory consents and marketing than the Company. Smaller companies may also
prove to be significant competitors, particularly through collaborative
arrangements with large pharmaceutical and established biotechnology companies.
Academic institutions, government agencies and other public and
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private research organizations may also conduct research, seek patent protection
and establish collaborative arrangements for clinical development and marketing
of products similar to those of the Company. These companies and institutions
compete with the Company in recruiting and retaining qualified scientific and
management personnel as well as in acquiring technologies complementary to the
Company's programs. There is also competition for access to libraries of
compounds to use for screening. Any inability of the Company to secure and
maintain access to sufficiently broad libraries of compounds for screening
potential targets would have a material adverse effect on the Company. In
addition to the above factors, Geron will face competition with respect to
product efficacy and safety, the timing and scope of regulatory consents,
availability of resources, reimbursement coverage, price and patent position,
including potentially dominant patent positions of others. There can be no
assurance that competitors will not develop more effective or more affordable
products, or achieve earlier patent protection or product commercialization than
the Company or that such products will render the Company's products obsolete.
See "Business -- Competition."
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the principal members of its scientific and
management staff, the loss of whose services might significantly delay or
prevent the achievement of research, development or business objectives. Except
for Mr. Eastman, Dr. Harley and Dr. West, the Company does not maintain "key
person" life insurance on any officer, employee or consultant of the Company. In
addition, the Company relies on consultants and advisors, including the members
of its Scientific Advisory Board and Clinical Advisory Board to assist the
Company in formulating its research and development strategy. Retaining and
attracting qualified scientific and management personnel, consultants and
advisors is critical to the Company's success. The Company faces competition for
qualified individuals from numerous pharmaceutical, biopharmaceutical and
biotechnology companies, as well as academic and other research institutions.
There can be no assurance that the Company will be able to attract and retain
such individuals on acceptable terms, if at all, and the failure to do so would
have a material adverse effect on the Company. See "Business -- Scientific and
Clinical Advisors" and "Management."
ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF PRIMORDIAL STEM CELL THERAPIES
The Company's PS Cell Therapies program may involve the use of human primordial
stem cells that would be derived from human embryonic tissue, and therefore may
raise certain ethical, legal and social issues regarding the appropriate
utilization of this tissue. The use of embryonic tissue in scientific research
is an issue of national interest. Many research institutions, including certain
of the Company's scientific collaborators, have adopted policies regarding the
ethical use of these types of human tissue. These policies may have the effect
of limiting the scope of research conducted in this area, resulting in reduced
scientific progress. In addition, the United States government and its agencies
currently do not fund research which involves the use of such tissue and may in
the future regulate or otherwise restrict its use. The inability of the Company
to conduct research on these cells due to such factors as government regulation
or otherwise could have a material adverse effect on the program. In the event
the Company's research related to PS cell therapies becomes the subject of
adverse commentary or publicity, the Company's name and goodwill could be
adversely affected. See "Business -- Research Programs."
GOVERNMENT REGULATION
The preclinical testing and clinical trials of any compounds developed by the
Company or its collaborative partners and the manufacturing and marketing of any
new drugs resulting therefrom are subject to regulation by federal, state and
local governmental authorities in the United States, the principal one of which
is the FDA, and by similar agencies in other countries in which drugs developed
by the Company or its collaborative partners may be tested and marketed (each of
such federal, state, local and other authorities and agencies, a "Regulatory
Agency"). Any compound developed by the Company or its collaborative partners
must receive all relevant Regulatory Agency consents, if any, before it may be
marketed in a particular country. The regulatory process, which includes
preclinical testing and clinical trials of each compound in order to establish
its safety and efficacy, can take many years and requires the expenditure of
substantial resources. Data obtained from preclinical and clinical activities
are susceptible to varying interpretations which could delay, limit or prevent
Regulatory Agency consent. In addition, delays or rejections may be encountered
based upon changes in Regulatory Agency policy during the period of drug
development and/or the period of review of any application for Regulatory Agency
consent for a product. Delays in obtaining Regulatory Agency approvals could
adversely affect the marketing of any drugs developed by the Company or its
collaborative partners, impose costly procedures upon the Company's and its
collaborative partners' activities, diminish any competitive advantages that the
Company or its collaborative partners may attain and adversely affect the
Company's ability to receive royalties and generate revenues and profits. There
can be no assurance that, even after such time and expenditures, any required
Regulatory Agency approvals will be obtained for any compounds developed by or
in collaboration with the Company. Moreover, if Regulatory Agency clearance for
a new drug is obtained, such approval may entail limitations on the indicated
uses for which it may be marketed that could limit the potential market for any
such drug. Furthermore, approved drugs and their manufacturers are subject to
continual review, and discovery of previously unknown problems with a drug or
its manufacturer may result in restrictions on such drug or manufacturer,
including withdrawal of the drug from the market. See "Business -- Government
Regulation."
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NO ASSURANCE OF MARKET ACCEPTANCE; UNCERTAINTY OF PHARMACEUTICAL PRICING; IMPACT
OF HEALTH CARE REFORM MEASURES
There can be no assurance that any products successfully developed by the
Company or its collaborative partners, if approved for marketing, will achieve
market acceptance. The products which the Company is attempting to develop will
compete with a number of traditional drugs and therapies manufactured and
marketed by major pharmaceutical companies, as well as new products currently
under development by such companies and others. The degree of market acceptance
of any products developed by the Company will depend on a number of factors,
including the establishment and demonstration in the medical community of the
clinical efficacy and safety of the Company's product candidates, their
potential advantage over alternative treatment methods, and reimbursement
policies of government and third-party payors. There is no assurance that
physicians, patients or the medical community in general will accept and utilize
any products that may be developed by the Company or its collaborative partners.
In both domestic and foreign markets, sales of the Company's products, if any,
will depend in part on the availability of reimbursement from third party payors
such as government health administration authorities, private health insurers,
health maintenance organizations, pharmacy benefit management companies and
other organizations. Both federal and state governments in the United States and
foreign governments continue to propose and pass legislation designed to contain
or reduce the cost of health care through various means. Legislation and
regulations affecting the pricing of pharmaceuticals may change or be adopted
before any of the Company's potential products is approved for marketing. Cost
control initiatives could decrease the price that the Company receives for any
product it may develop in the future and have a material adverse effect on the
Company. In addition, third-party payors are increasingly challenging the price
and cost-effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products,
including pharmaceuticals. There can be no assurance that the Company's
potential products will be considered cost effective or that adequate
third-party reimbursement will be available to enable Geron to maintain price
levels sufficient to realize an appropriate return on its investment in product
development. In any such event, the Company may be materially adversely
affected.
REGULATIONS RELATING TO HAZARDOUS MATERIALS
The Company's research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. As a
consequence, the Company is subject to numerous environmental and safety laws
and regulations. Any violation of, and the cost of compliance with, these
regulations could materially adversely affect the Company's operations. Although
the Company believes that its safety procedures for handling and disposing of
such materials comply with the standards prescribed by state and federal
regulations, the risk of accidental contamination or injury from these materials
cannot be eliminated. In the event of such an accident, the Company could be
held liable for any damages that result, and any such liability could have a
material adverse effect on the Company.
POTENTIAL PRODUCT LIABILITY CLAIMS; ABSENCE OF INSURANCE
Although the Company believes it does not currently have any exposure to product
liability claims, the Company's future business will expose it to potential
product liability risks that are inherent in the testing, manufacturing and
marketing of human therapeutic and diagnostic products. The Company currently
has no clinical trial liability insurance and there can be no assurance that it
will be able to obtain and maintain such insurance for any of its clinical
trials. In addition, there can be no assurance that the Company will be able to
obtain or maintain product liability insurance in the future on acceptable terms
or with adequate coverage against potential liabilities.
CONTROL BY MANAGEMENT AND CURRENT STOCKHOLDERS
Upon completion of the Offering, executive officers and directors of the
Company, together with entities affiliated with them, will own or control
approximately 42.9% of the outstanding shares of Common Stock (approximately
41.5% if the Underwriters' over-allotment option is exercised in full) and will
be able to continue its significant influence with regard to the election of the
Company's Board of Directors and other corporate actions requiring stockholder
approval, as well as significantly influence the direction and policies of the
Company. See "Principal Stockholders" and "Underwriting."
POTENTIAL ADVERSE MARKET IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of the Common Stock in the public market after the
Offering could adversely affect the market price of the Common Stock. Upon
completion of the Offering, the Company will have outstanding 10,191,905 shares
of Common Stock. All of the 2,500,000 shares sold in the Offering will be freely
transferable as of the date of this Prospectus by persons other than
"affiliates" of the Company without restriction or further registration under
the Securities Act of 1933, as amended (the "Securities Act"). The remaining
7,691,905 shares of Common Stock that will be outstanding upon completion of the
Offering (the "Restricted Shares") will be held by officers, directors,
employees, consultants and other stockholders of the Company. The Restricted
Shares were sold by the Company in reliance upon exemptions from the
registration requirements of the Securities Act and are "restricted securities"
under the Securities Act. The officers, directors, employees and stockholders of
the Company, who together hold the Restricted Shares, have
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<PAGE> 15
agreed not to sell their shares without the prior written consent of J.P. Morgan
Securities Inc. for a period of 180 days from the date of this Prospectus. Kyowa
Hakko has agreed not to sell the shares of Common Stock to be issued in the
Kyowa Hakko Direct Placement for a period of two years from the closing of the
Offering. Beginning 180 days after commencement of the Offering, approximately
6,290,045 Restricted Shares that are subject to lock-up agreements (as described
below under "Underwriting") will become eligible for sale in the public market
subject to Rule 144 and Rule 701 under the Securities Act. The remaining
approximately 1,401,860 Restricted Shares, which are also subject to such
lock-up agreements, will have been held for less than two years upon the
expiration of such lock-up agreements and will become eligible for sale under
Rule 144 at various dates thereafter as the holding period provisions of Rule
144 are satisfied. As of May 31, 1996, 1,437,977 shares were issuable upon
exercise of currently outstanding options and, taking into account the effect of
the lock-up agreements with the holders of options, 501,929 of such shares will
be fully vested and eligible for sale in the public markets beginning 180 days
after commencement of the Offering, subject, in the case of sales by affiliates,
to the volume, manner of sale, notice and public information requirements of
Rule 144. Certain holders of shares of Common Stock and securities convertible
into or exercisable for shares of Common Stock have certain registration rights
under a registration rights agreement among such holders and the Company. The
shares of Common Stock covered by these registration rights include: 6,887,228
outstanding shares of Common Stock and 56,248 shares of Common Stock issuable
upon exercise of outstanding warrants. These registration rights have been
waived in connection with the Offering but will, subject to the lock-up
agreements referred to above, continue to apply to the aforementioned shares of
Common Stock upon completion of the Offering. In addition, following completion
of the Offering, the Company intends to register under the Securities Act
approximately 2,518,758 shares of Common Stock subject to outstanding stock
options or reserved for issuance under the Company's 1992 Stock Option Plan,
1996 Directors' Stock Option Plan and 1996 Employee Stock Purchase Plan. See
"Management -- Stock Plans" and "Shares Eligible for Future Sale."
ABSENCE OF PRIOR TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common Stock, and
there can be no assurance that an active trading market for the Common Stock
will develop or that shares of Common Stock can be resold at or above the
initial public offering price after the Offering. The initial public offering
price of the Common Stock will be established by negotiation between the Company
and the Representatives of the Underwriters. See "Underwriting." There has been
a history of significant volatility in the market prices for shares of
biopharmaceutical companies, and it is likely that the market price of the
Common Stock will be similarly volatile. Prices for the Common Stock following
the Offering may be influenced by many factors, including the depth of the
market for the Common Stock, investor perception of the Company, fluctuations in
the Company's operating results and market conditions relating to the
biotechnology, biopharmaceutical and pharmaceutical industries. In addition, the
market price of the Common Stock may be influenced by announcements of
technological innovations, new commercial products or clinical progress or the
lack thereof by the Company, its collaborative partners or its competitors. In
addition, announcements concerning regulatory developments, developments with
respect to proprietary rights and the Company's collaborations as well as other
factors could also have a significant impact on the Company's business and the
market price of the Common Stock. Finally, future sales of substantial amounts
of Common Stock by existing stockholders could also adversely affect the
prevailing price of the Common Stock. See "Description of Capital Stock,"
"Shares Eligible for Future Sale" and "Underwriting."
EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS; CERTAIN ANTI-TAKEOVER PROVISIONS
Upon completion of the Offering, the Company's Board of Directors will have the
authority to issue up to 3,000,000 shares of undesignated Preferred Stock and to
determine the rights, preferences, privileges and restrictions of such shares
without further vote or action by the Company's stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. The Company has no present plans to issue shares of
Preferred Stock. In addition, upon completion of the Offering, certain
provisions of the Company's charter documents, including the elimination of the
ability of stockholders to take actions by written consent and the staggered
election of the Company's Board of Directors, and certain provisions of Delaware
law could delay or make difficult a merger, tender offer or proxy contest
involving the Company. These provisions could also limit the price that
investors are willing to pay in the future for shares of Common Stock. See
"Description of Capital Stock."
DILUTION
The initial public offering price is expected to be substantially higher than
the net tangible book value per share of Common Stock. Investors purchasing
shares of Common Stock in the Offering will, therefore, incur immediate and
substantial dilution. Assuming an initial public offering price of $12.00 per
share, the immediate dilution to purchasers of shares of Common Stock in the
Offering will be $7.58 per share of Common Stock or 63.2%. Additional dilution
is likely to occur upon the exercise of options and warrants granted by the
Company. See "Dilution."
13
<PAGE> 16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this Prospectus,
including without limitation, statements containing the words "believes,"
"anticipates," "expects" and words of similar import, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Geron, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: technological
uncertainty; the early stage of the Company's research programs; dependence on
strategic collaborations; dependence on proprietary technology and uncertainty
of patent protection; the availability and terms of capital to fund the
expansion of Geron's business; history of operating losses; substantial
competition; dependence on key personnel; existing government regulations and
changes in, or the failure to comply with, government regulations; legislative
proposals for healthcare reform; the ability to attract and retain qualified
personnel; and other factors referenced in this Prospectus. Certain of these
factors are discussed in more detail elsewhere in this Prospectus, including,
without limitation, under the captions "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Business." Given these uncertainties, prospective investors
are cautioned not to place undue reliance on such forward-looking statements.
Geron disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
KYOWA HAKKO DIRECT PLACEMENT
Pursuant to the Kyowa Hakko Agreement, Kyowa Hakko has agreed to purchase that
number of shares of Common Stock that is equal to $2.5 million divided by the
initial public offering price of the Common Stock simultaneously with the
closing of the Offering. Assuming an initial public offering price of $12.00 per
share, Kyowa Hakko is obligated to purchase 208,333 shares of Common Stock upon
the closing of the Offering. Such shares of Common Stock will be sold by the
Company in reliance on exemptions from the registration requirements of the
Securities Act and will be "restricted securities" within the meaning of Rule
144 under the Securities Act. Kyowa Hakko has agreed not to sell the shares of
Common Stock to be issued in the Kyowa Hakko Direct Placement for a period of
two years from the closing of the Offering. The Underwriters are not involved in
the sale of shares of Common Stock to Kyowa Hakko.
THE COMPANY
The Company was incorporated in Delaware in November 1990. The Company's
principal executive offices are located at 200 Constitution Drive, Menlo Park,
California 94025, and its telephone number is (415) 473-7700. In this
Prospectus, unless the context otherwise indicates, the terms "Company" and
"Geron" refer to Geron Corporation.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of Common
Stock offered hereby are estimated to be $27.1 million ($31.3 million if the
Underwriters over-allotment option is exercised in full), assuming an initial
public offering price of $12.00 per share, after deducting estimated
underwriting discounts and other offering expenses payable by the Company. In
addition, the net proceeds from the Kyowa Hakko Direct Placement will be $2.5
million.
The Company presently expects to use a portion of the net proceeds from the
Offering and the Kyowa Hakko Direct Placement, (i) to fund approximately $21.7
million of research and development expense, (ii) to fund approximately $1.0
million of laboratory and other equipment purchases and (iii) for other working
capital and general corporate purposes. The Company may also use a portion of
such net proceeds to acquire or invest in businesses that are complementary to
those of the Company, although no such acquisitions are planned or being
negotiated as of the date of this Prospectus, and no portion of the net proceeds
has been allocated for any specific acquisition. The actual amount and timing of
these expenditures will depend on numerous factors, including the progress of
the Company's research and development programs. Pending such uses, the Company
intends to invest such funds in short-term, investment grade interest-bearing
debt obligations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
Based on current projections, the Company estimates that its existing capital
resources, the net proceeds from the Offering, the proceeds from the Kyowa Hakko
Direct Placement, payments under the Kyowa Hakko Agreement, interest income and
equipment financing will be sufficient to fund its current and planned
operations through 1998.
DIVIDEND POLICY
The Company has never paid cash dividends on its capital stock and does not
anticipate paying cash dividends in the foreseeable future, but intends instead
to retain its capital resources for reinvestment in its business. Any future
determination to pay cash dividends will be at the discretion of the Board of
Directors and will be dependent upon the Company's financial condition, results
of operations, capital requirements and such other factors as the Board of
Directors deems relevant.
14
<PAGE> 17
CAPITALIZATION
The following table sets forth as of March 31, 1996 (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the Company,
giving effect to the conversion of all series of Preferred Stock into Common
Stock upon the closing of this Offering and (iii) the pro forma capitalization
as adjusted to reflect (a) the sale of 2,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $12.00 per share, after
deducting estimated underwriting discounts and offering expenses, (b) the
issuance of shares of Common Stock with an aggregate purchase price equal to
$2.5 million (208,333 shares at an assumed initial public offering price of
$12.00 per share) in the Kyowa Hakko Direct Placement and (c) the issuance of
7,805 shares of Common Stock upon the assumed net exercise of 12,055 outstanding
warrants upon the closing of the Offering at an assumed initial public offering
price of $12.00 per share, and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
---------------------------------------------------
<S> <C> <C> <C>
MARCH 31, 1996
---------------------------------------------------
ACTUAL
---------- AS
Dollars in thousands, except share data PRO FORMA ADJUSTED
--------------- ----------
Noncurrent portion of capital lease obligations
and equipment loans........................... $ 1,471 $ 1,471 $ 1,471
Stockholders' equity:
Preferred stock, $0.001 par value: 6,410,759
shares authorized, 6,364,274 shares issued
and outstanding, actual; 3,000,000 shares
authorized, none issued or outstanding, pro
forma and as adjusted...................... 6 -- --
Common stock, $0.001 par value: 10,294,117
shares authorized, 929,390 shares issued
and outstanding, actual; 25,000,000 shares
authorized, pro forma and adjusted;
7,293,664 shares issued and outstanding,
pro forma, 10,009,802 shares issued and
outstanding, as adjusted(1)................ 1 7 10
Additional paid-in capital.................... 43,191 43,191 72,788
Notes receivable from stockholders............ (303) (303) (303)
Deferred compensation......................... (12) (12) (12)
Accumulated deficit........................... (28,221) (28,221) (28,221)
---------- --------------- ----------
Total stockholders' equity.................... 14,662 14,662 44,262
---------- --------------- ----------
Total capitalization....................... $ 16,133 $ 16,133 $ 45,733
========== =============== ==========
</TABLE>
- ---------------
(1) Does not include (i) 375,000 shares of Common Stock subject to the
Underwriters' over-allotment option, (ii) 1,055,421 shares of Common Stock
issuable upon the exercise of outstanding options as of March 31, 1996 at a
weighted average exercise price of $0.77 per share under the Company's 1992
Stock Option Plan and (iii) 56,248 shares of Common Stock issuable upon exercise
of warrants expected to remain outstanding after the Offering, which are
exercisable at a weighted average exercise price of $7.93. As of May 31, 1996,
1,437,977 shares of Common Stock were issuable upon exercise of outstanding
options at a weighted average exercise price of $1.32. See "Management -- Stock
Plans," "Description of Capital Stock" and Notes 6 and 10 of Notes to Financial
Statements.
15
<PAGE> 18
DILUTION
The pro forma net tangible book value of the Company as of March 31, 1996 was
$14.7 million or $2.01 per share. Pro forma net tangible book value per share
represents the total tangible assets of the Company reduced by the Company's
total liabilities and divided by the number of shares of Common Stock
outstanding (on a pro forma basis to give effect to the conversion of all shares
of the Preferred Stock). Without taking into account any changes in net tangible
book value after March 31, 1996, other than to give effect to (i) the sale of
2,500,000 shares of Common Stock offered hereby at an assumed initial public
offering price of $12.00 per share, after deducting estimated underwriting
discounts and offering expenses, (ii) the issuance of shares of Common Stock
with an aggregate purchase price equal to $2.5 million (208,333 shares at an
assumed initial public offering price of $12.00 per share) in the Kyowa Hakko
Direct Placement and (iii) the issuance of 7,805 shares of Common Stock upon the
assumed net exercise of 12,055 outstanding warrants upon the closing of the
Offering at an assumed initial public offering price of $12.00 per share and the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company at March 31, 1996 would have been $44.3 million, or
$4.42 per share. This represents an immediate increase in net tangible book
value of $2.41 per share to existing stockholders and an immediate dilution in
net tangible book value of $7.58 per share to purchasers of the Common Stock
offered hereby. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share $12.00
Net tangible book value per share as of March 31, 1996 $2.01
Increase in net tangible book value per share attributable to purchasers of
the Common Stock offered hereby 2.41
-----
Pro forma net tangible book value per share, as adjusted after the
Offering 4.42
------
Dilution per share to purchasers of the Common Stock offered hereby $ 7.58
======
</TABLE>
The following table sets forth on a pro forma basis as of March 31, 1996 the
differences between the number and percentage of shares of Common Stock
purchased from the Company, assuming conversion of all outstanding shares of
Preferred Stock into Common Stock, the total consideration (assuming an initial
public offering price of $12.00 per share) and percentage of total consideration
paid to the Company and the average price per share paid by existing
stockholders and by purchasers of the Common Stock offered hereby:
<TABLE>
<CAPTION>
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TOTAL
SHARES PURCHASED
-------------------- CONSIDERATION
----------------- AVERAGE PRICE
NUMBER PERCENT PERCENT PER SHARE
---------- ------- ------- -------------
AMOUNT
-------
Existing stockholders 7,293,664 73% $43,331 57% $ 5.94
Purchasers of the Common Stock offered hereby 2,716,138 27 32,500 43 12.00
--------- ----- ------ -----
Total 10,009,802 100% $75,831 100%
========= ===== ====== =====
</TABLE>
The foregoing tables and discussion do not include (i) 375,000 shares of Common
Stock subject to the Underwriters' over-allotment option, (ii) 1,055,421 shares
of Common Stock issuable upon the exercise of outstanding options as of March
31, 1996 at a weighted average exercise price of $0.77 per share under the
Company's 1992 Stock Option Plan and (iii) 56,248 shares of Common Stock
issuable upon exercise of warrants expected to remain outstanding after the
Offering, which are exercisable at a weighted average exercise price of $7.93.
As of May 31, 1996, 1,437,977 shares of Common Stock were issuable upon exercise
of outstanding options at a weighted average exercise price of $1.32. See
"Management -- Stock Plans," "Description of Capital Stock" and Notes 6 and 10
of Notes to Financial Statements.
16
<PAGE> 19
SELECTED FINANCIAL DATA
The following selected financial data for the period from inception (November
28, 1990) to December 31, 1991, and for the four years ended December 31, 1995,
are derived from the financial statements of Geron Corporation audited by Ernst
& Young LLP. The financial data for the three month periods ended March 31, 1995
and 1996 are derived from unaudited financial statements. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, which the Company considers necessary for a fair presentation of the
financial position and the results of operations for these periods. Operating
results for the three months ended March 31, 1996, are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1996. The financial data is qualified in its entirety by, and the
data should be read in conjunction with, Management's Discussion and Analysis of
Financial Condition and Results of Operations and the financial statements,
including the related notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCEPTION
(NOVEMBER 28,
1990) TO
DECEMBER 31,
--------------
1991 THREE MONTHS ENDED
-------------- YEARS ENDED DECEMBER 31, MARCH 31,
Dollars in thousands, except ---------------------------------------- -------------------
share and per share data 1993 1994 1995 1996
1992 ------- -------- --------- 1995 ---------
------- -------
STATEMENTS OF OPERATIONS
DATA:
Revenues -- contract......... $ -- $ -- $ -- $ -- $ 5,490 $ -- $ 1,335
Operating expenses:
Research and development... 47 726 3,975 8,099 11,321 2,455 3,294
General and
administrative.......... 52 661 2,220 2,397 2,888 573 681
---- ------- ------- -------- --------- ------- ---------
Total operating
expenses......... 99 1,387 6,195 10,496 14,209 3,028 3,975
---- ------- ------- -------- --------- ------- ---------
Loss from operations......... (99) (1,387) (6,195) (10,496) (8,719) (3,028) (2,640)
Interest and other income.... 2 27 351 638 919 167 306
Interest and other expense... -- -- (103) (320) (399) (93) (101)
---- ------- ------- -------- --------- ------- ---------
Net loss..................... $ (97) $(1,360) $(5,947) $(10,178) $ (8,199) $(2,954) $ (2,435)
==== ======= ======= ======== ========= ======= =========
Pro forma net loss per
share(1)................... $ (1.03) $ (0.30)
Shares used in computing pro
forma
net loss per share(1)...... 7,954,863 8,009,240
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31,
-----------------------------
1993
------- MARCH 31,
Dollars in thousands 1994 1995 1996
-------- -------- ---------
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............. $11,931 $ 13,915 $ 15,553 $ 13,939
Working capital............................................... 10,247 12,410 12,115 12,490
Total assets.................................................. 14,406 17,072 19,749 18,101
Noncurrent portion of capital lease obligations and equipment
loans....................................................... 1,360 1,647 1,654 1,471
Accumulated deficit........................................... (7,405) (17,604) (25,773) (28,221)
Total stockholders' equity.................................... 11,293 13,689 14,308 14,662
</TABLE>
- ---------------
(1) See Note 1 of Notes to Financial Statements for information concerning the
calculation of pro forma net loss per share.
17
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements which involve risks and
uncertainties. Actual results may differ materially from those projected in the
forward-looking statements. See "Special Note Regarding Forward-Looking
Statements." Factors that might cause such a difference include, but are not
limited to, those discussed in "Risk Factors."
OVERVIEW
Geron is a biopharmaceutical company exclusively focused on discovering and
developing therapeutic and diagnostic products based upon the common biological
mechanisms underlying cancer and other age-related diseases.
The Company has entered into a strategic collaboration with Kyowa Hakko to
develop and commercialize a telomerase inhibitor in certain Asian countries for
the treatment of cancer. Pursuant to the Kyowa Hakko Agreement, the Company
received research support payments of $7.0 million in 1995 and $4.0 million in
1996. The research payments are recorded as deferred revenue and recognized as
revenue as the related costs are incurred. Geron is entitled to receive
additional annual research support payments of $4.0 million and $1.0 million in
1997 and 1998, respectively. Further, the Agreement provides that Kyowa Hakko
will pay for all clinical expenses associated with product approvals in the
territory covered by the Agreement. Geron is also entitled to receive milestone
payments upon the achievement of certain milestones related to drug development
and regulatory progress totaling $11.5 million and royalty payments on product
sales. The Company has also entered into collaborative agreements with Ventana
and Dianon to develop telomerase diagnostic technology and royalty-bearing
licensing agreements with Oncor, Boehringer Mannheim and Dako for the sale of
diagnostic kits solely for the research use only market. Oncor commenced
commercial sale of the Company's proprietary telomerase assay for use in cancer
research in May 1996. The Company does not expect revenue from the sale of any
diagnostics kits for the research use only market to be material. See
"Business -- Strategic Collaborations."
The Company also has entered into a number of collaborations with academic
institutions and others to sponsor research in exchange for commercial rights to
any technology developed as a result of such research. In general, these
agreements provide for research payments by the Company over one to three years
and are renewable at the option of the Company. The Company has made research
payments of $315,000, $954,000, $930,000 and $833,000 in the three months ended
March 31, 1996 and in 1995, 1994 and 1993, respectively. The Company currently
is committed to make research payments of $1.1 million, $275,000 and $75,000
pursuant to existing research collaborations in 1996, 1997 and 1998,
respectively. See "Business -- Research Collaborations."
The Company has incurred significant losses since inception, with an accumulated
deficit of approximately $28.2 million as of March 31, 1996, due primarily to
ongoing expenditures related to its research and development programs. The
Company's results of operations have fluctuated from period to period and may
continue to fluctuate in the future based upon the timing and composition of
funding under various collaborative agreements, as well as the progress of its
research and development efforts. Results of operations for any period may be
unrelated to results of operations for any other period. In addition, historical
results should not be viewed as indicative of future operating results. Geron is
subject to risks common to companies in its industry, including risks inherent
in its research and development efforts, reliance upon collaborative partners,
enforcement of patent and proprietary rights, need for future capital, potential
competition, and uncertainty of regulatory approval. In order for a product to
be commercialized based on the Company's research, it will be necessary for
Geron and its collaborators to conduct preclinical tests and clinical trials,
demonstrate efficacy and safety of the Company's product candidates, obtain
regulatory clearances and enter into manufacturing, distribution and marketing
arrangements, as well as obtain market acceptance. The Company does not expect
to receive revenues or royalties based on therapeutic products for many years.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 and 1995
Revenues The Company recognized revenues of $1.3 million for the three months
ended March 31, 1996, compared to no revenues for the three months ended March
31, 1995. The revenues were research support payments under the Kyowa Hakko
Agreement. The Company expects to recognize $4.0 million of additional research
funding revenue from the Kyowa Hakko Agreement during 1996. There were no
revenues from the diagnostic agreements in either three month period.
Research and Development Expenses The Company's research and development
expenses were $3.3 million for the three months ended March 31, 1996, compared
to $2.5 million for the three months ended March 31, 1995. The growth was
largely due to expenses related to additional personnel, expanded patent related
activities and greater purchases of research materials and laboratory supplies
related to the expansion of the Company's research programs. The Company expects
research and development expenses to increase in the future as a result of
continued efforts under its research programs and the amortization of deferred
compensation. The Company intends to record and amortize, over the related
vesting periods, deferred compensation representing the difference between
18
<PAGE> 21
the price of certain options granted and the deemed fair market value of the
underlying Common Stock at the time of grant. These options generally vest over
a five year period. The amortization of deferred compensation in future periods
will aggregate approximately $1.3 million as the related options vest,
substantially all of which will be classified as research and development
expenses.
General and Administrative Expenses General and administrative expenses were
$681,000 for the three months ended March 31, 1996, compared to $573,000 for the
three months ended March 31, 1995. The increase was primarily due to greater
compensation expense related to additional personnel and increased legal, travel
and other expenses related to business development. The Company expects general
and administrative expenses to increase in the future to support the expansion
of its business development activities, the amortization of deferred
compensation and increased expenses associated with being a public company.
Interest and Other Income Interest income was $200,000 for the three months
ended March 31, 1996, compared to $151,000 for the three months ended March 31,
1995. This increase was due to an increase in average cash balances in 1996
related to proceeds received from the sale of equity securities and research
funding received under the Kyowa Hakko Agreement. The Company expects interest
income to increase in 1996 due to an increase in average cash balances as a
result of the consummation of the Offering and the Kyowa Hakko Direct Placement.
In addition to revenues from the Kyowa Hakko Agreement, Geron received payments
from government grants totaling $106,000 for the three months ended March 31,
1996, compared to $16,000 for the three months ended March 31, 1995. The Company
does not expect revenues from government grants to be significant in the
foreseeable future.
Interest and Other Expense Interest and other expense was $101,000 for the
three months ended March 31, 1996 compared to $93,000 for the three months ended
March 31, 1995. This increase was due to an increase in capital lease balances
outstanding in 1995.
Net Loss Net loss was $2.4 million for the three months ended March 31, 1996,
compared to $3.0 million for the three months ended March 31, 1995. This
decrease was primarily attributable to the recognition of research funding
revenue from the Kyowa Hakko Agreement.
Years Ended December 31, 1995, 1994 and 1993
Revenues The Company recognized $5.5 million in research funding revenue from
the Kyowa Hakko Agreement for the year ended December 31, 1995. No revenues were
recognized prior to 1995.
Research and Development Expenses The Company's research and development
expenses were $11.3 million, $8.1 million and $4.0 million in the years ended
December 31, 1995, 1994 and 1993, respectively. The increases were primarily due
to greater expenses associated with additional personnel hired to support the
Company's growing research efforts and related research materials and laboratory
supplies.
General and Administrative Expenses The Company's general and administrative
expenses were $2.9 million, $2.4 million and $2.2 million in the years ended
1995, 1994 and 1993, respectively. Expenses increased as a result of the
increase in compensation, and benefits paid to and the costs related to the
hiring of additional personnel.
Interest and Other Income Interest income was $643,000, $440,000 and $312,000
for the years ended December 31, 1995, 1994 and 1993, respectively. The
increases were primarily due to increases in average cash balances as a result
of the sale of equity securities. Income received from government grants was
$276,000, $198,000 and $39,000 for the years ended December 31, 1995, 1994 and
1993, respectively.
Interest and Other Expense Interest and other expense was $399,000, $320,000
and $103,000 for the years ended December 31, 1995, 1994, and 1993,
respectively. This increase was due to higher outstanding capital lease balances
in 1994 and 1995.
Net Loss Net loss was $8.2 million, $10.2 million and $5.9 million in the years
ended December 31, 1995, 1994 and 1993, respectively. The decrease in net loss
from 1994 to 1995 was the result of the recognition of revenue from research
support payments from the Kyowa Hakko Agreement. The increase in net loss from
1993 to 1994 was due to the expansion of the Company's research and development
programs.
The Company has not generated taxable income to date. At December 31, 1995, the
Company had federal and state net operating loss carryforwards of approximately
$24.3 million and $4.4 million, respectively. The carryforwards expire at
various dates beginning in 2006 through 2010 if not utilized. Future utilization
of the carryforwards may be limited in any one fiscal year pursuant to the
Internal Revenue Code and similar state provisions. As a result of the annual
limitation, a portion of these carryforwards may expire before becoming
available to reduce the Company's federal income tax liabilities.
19
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private placements of preferred equity securities, funds provided under the
Kyowa Hakko Agreement and equipment financing. As of March 31, 1996, the Company
had received approximately $42.9 million in net proceeds from the sale of equity
securities and $7.0 million pursuant to the Kyowa Hakko Agreement.
Cash and investments at March 31, 1996 were $13.9 million compared to $15.6
million at December 31, 1995. The Company's funds are currently invested in
short-term, investment grade interest-bearing debt obligations. In April 1996,
the Company received $4.0 million in research funding under the Kyowa Hakko
Agreement.
Net cash used in operations in 1995 was $6.3 million, compared to $10.1 million
in 1994. Net cash used in operations declined due to the receipt of research
funding under the Kyowa Hakko Agreement which more than offset an increase in
research and development expenditures. Net cash used in operations increased to
$4.2 million for the three months ended March 31, 1996 from $3.1 million for the
three months ended March 31, 1995 as a result of expanded research and
development programs. The Company expects net cash used in operations to
increase for the year 1996 over 1995.
Through March 31, 1996, the Company had invested approximately $4.3 million in
property and equipment, of which approximately $4.0 million was financed through
equipment financing. The present value of obligations under equipment financing
at March 31, 1996 was $2.5 million. Minimum annual principal payments due under
the equipment financing facility are expected to total approximately $996,000,
$895,000 and $582,000 in 1996, 1997 and 1998, respectively. The Company made
principal payments under the equipment financing facility of $233,000 in the
three months ended March 31, 1996 and $769,000 in 1995. The Company expects its
capital expenditures in 1996 to be approximately $2.7 million, consisting of
approximately $1.7 million for leasehold improvements and approximately $1.0
million for laboratory and other equipment purchases. On May 1, 1996, the
Company renewed its existing committed equipment financing facility to provide
for an incremental $2.0 million availability. The commitment period for
additional drawdowns ends on April 30, 1997.
The Company presently expects to use a portion of the net proceeds from the
Offering and the proceeds from the Kyowa Hakko Direct Placement, (i) to fund
approximately $21.7 million of research and development expense, (ii) to fund
approximately $1.0 million for laboratory and other equipment purchases and
leasehold improvements and (iii) for other working capital and general corporate
purposes. Based on current projections, the Company estimates that its existing
capital resources, the net proceeds from the Offering, the Kyowa Hakko Direct
Placement, payments under the Kyowa Hakko Agreement, interest income and
equipment financing will be sufficient to fund its current and planned
operations through 1998. There can be no assurance, however, that changes in the
Company's research and development plans or other changes affecting the
Company's operating expenses will not result in the expenditure of available
resources before such time, and in any event, the Company will need to raise
substantial additional capital to fund its operations in future periods. The
Company intends to seek additional funding through collaborative arrangements,
public or private equity or debt financings, capital lease transactions or other
financing sources that may be available. If additional funds are raised by
issuing equity securities, substantial dilution to existing stockholders may
result. However, there can be no assurance that additional financing will be
available on acceptable terms, if at all. If adequate funds are not available,
the Company may be required to delay, reduce the scope of, or eliminate one or
more of its research or development programs or to obtain funds through
collaborative arrangements that are on unfavorable terms or that may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to retain.
20
<PAGE> 23
BUSINESS
Geron is a biopharmaceutical company exclusively focused on discovering and
developing therapeutic and diagnostic products based upon common biological
mechanisms underlying cancer and other age-related diseases. As the pioneer in
researching these mechanisms, the Company focuses on telomeres, which are
structures at the ends of chromosomes that the Company has shown act as a
molecular "clock" of cellular aging, and telomerase, an enzyme which appears to
stop the "clock" and lead to cellular immortality. The Company and its
collaborators have established that these mechanisms play a role in cancer and
many other age-related diseases and conditions, and thus the Company believes it
has a broadly applicable, proprietary platform for discovering and developing
novel small molecule therapeutics and diagnostics for such diseases. The most
advanced of the Company's three therapeutic programs is in the area of
telomerase inhibition for the treatment of cancer. Geron will continue to build
upon its leadership position in the field of telomere biology and telomerase
regulation by selectively collaborating with companies and research institutions
and by aggressively pursuing an extensive patent portfolio. The Company owns or
has certain exclusive rights to three issued United States patents and 52 patent
United States applications.
Cancer and other age-related diseases and conditions, including skin aging,
atherosclerosis, osteoporosis and Alzheimer's disease, are difficult and costly
to diagnose and treat. In many cases, entirely effective means of treating and
diagnosing these diseases and conditions are not currently available. Further,
with the progressive "graying" of the population, the incidence of cancer and
other age-related diseases and conditions is expected to increase and to place a
steadily growing financial burden on the health care system. Significant
improvements in the treatment and diagnosis of these conditions and diseases are
expected to offer attractive commercial opportunities.
Geron's scientific approach focuses on telomere shortening and telomerase
regulation as common biological mechanisms underlying cancer and other
age-related diseases and conditions. Geron and its collaborators have
demonstrated both in vivo and in vitro that telomeres, the repeated sequences of
DNA located at the ends of chromosomes, shorten throughout a normal cell's
replicative lifespan. The Company and its collaborators have also shown that
when telomeres reach a certain short length, cells stop dividing and become
senescent. Senescent cells display an altered pattern of gene expression
relative to replicatively young cells that leads to an imbalance in the
production of proteins and other cell products. This imbalance, which occurs in
many tissues throughout the body, can have a direct and destructive effect on
surrounding tissues and appears to contribute to age-related diseases and
conditions.
Cancer cells escape senescence and maintain an extended ability to divide
through mutations. Geron and its collaborators have shown that for most
cancerous tumors to attain life threatening size, or for cancer to metastasize
throughout the body, cancer cells must become immortal through an alteration
which prevents their telomeres from shortening with each division. In almost all
cases examined to date, a germ line enzyme called telomerase is abnormally
reactivated in these cancer cells to repair their telomeres with each cell
division, thereby conferring cellular immortality. Geron has shown telomerase to
be present in all of the over 20 types of cancer that it has studied, including
breast, prostate, lung, colon, and bladder cancers. The Company believes that
telomerase inhibition has the potential to be a universal and highly specific
cancer therapy. Geron has identified several series of small molecule compounds
that selectively inhibit telomerase. With one of its collaborators, the Company
has initiated studies of these small molecule compounds in animal models of
human tumor growth.
In order to develop novel therapeutic and diagnostic products, the Company is
initially focused on three programs: (i) Telomerase Inhibition and
Detection -- developing both telomerase inhibitors as potentially universal and
highly specific cancer therapies and telomerase assays for the detection of
cancer; (ii) Cell Senescence Modulation -- delaying the onset of cell senescence
and regulating the pattern of destructive gene expression in senescent cells;
and (iii) Primordial Stem Cell Therapies -- generating a broad array of cell
types from primordial stem cells ("PS cells") for cellular transplantation. In
support of these programs, the Company employs advanced drug discovery
technologies, including proprietary assays, high throughput screening,
combinatorial chemistry, proprietary differential gene expression techniques,
protein purification, and gene sequencing to discover and design novel small
molecule therapeutics and diagnostic tools.
The Company's strategy combines the following key elements: focusing on
fundamental mechanisms of cellular aging and cellular immortality to treat
cancer and other age-related diseases and conditions; developing high value
programs based on its common scientific platform; selectively pursuing strategic
collaborations; retaining the ability to develop and market products
independently; and enhancing its proprietary leadership position in the field.
SCIENTIFIC BACKGROUND: CELLULAR AGING AND CELLULAR IMMORTALIZATION
Cells are the building blocks for all tissues in the human body. Cell division
plays an important role in the normal growth, maintenance and repair of human
tissue. However, cell division is a limited process in that cells generally
divide only 60 to 100 times in the course of their normal lifespan. Once cells
reach the end of their replicative capacity, they senesce. Cellular aging or
senescence, although influenced by environmental factors, is a genetically
determined process. Geron and its collaborators have demonstrated that
telomeres, the repeated sequences of DNA at the ends of each chromosome, are key
genetic elements involved in this process. Telomeres are necessary for
protecting chromosomes from degradation and fusion. Each time a normal cell
divides, however, telomeres shorten because cells are unable to replicate fully
these repeated DNA sequences. Thus, Geron believes that telomeres serve as a
molecular "clock" governing normal cell replication and lifespan.
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[Figure 1: telomere shortening series]
Geron has demonstrated that once telomeres reach a certain short length, cell
division is halted, a condition known as cell senescence. Although senescent
cells have stopped dividing, these cells are still metabolically active and
demonstrate an altered pattern of gene expression. Specifically, in senescent
cells, some genes expressed by young and healthy cells are turned off and other
genes are turned on, creating an imbalance of proteins and other cell products
that has a direct and potentially destructive effect on the surrounding tissue.
Geron believes that this cellular dysfunction, which occurs in numerous tissues
throughout the body, causes or contributes to age-related diseases and
conditions.
The converse of cell senescence occurs in cancer cells. Normal cells have the
potential to become cancerous if random mutations activate various oncogenes and
deactivate tumor suppressor genes. With each mutation, pre-cancerous cells
become increasingly aberrant and uncontrolled, and may begin to generate a tumor
mass. The Company believes, however, that most cells which undergo such changes
are eliminated when telomere shortening leads to either cell senescence or
chromosomal instability and cell death. Geron and its collaborators' research
indicates that for most cancerous tumors to attain life threatening size, or for
cancer to metastasize throughout the body, cancer cells must become immortal,
through activation of telomerase.
Telomerase is a complex germ line enzyme, composed of RNA and protein
components, that maintains telomere length by replacing the DNA that is lost
each time a cell divides. The result is that telomeres do not shorten and cell
death is averted. Geron's research has shown that telomerase is abnormally
reactivated in all of the major cancer types and that, conversely, it is not
present in most normal cell types. Telomerase enables cancer cells to maintain
telomere length, providing them with indefinite replicative capacity or cellular
immortality.
[Figure 2: cancer cells with telomerase]
Telomerase is expressed in certain normal cells. Telomerase is present at high
levels and telomeres are very long in reproductive cells. It is widely believed
that telomerase is active in the germ line cells to ensure that the full genetic
code is passed from generation to generation. Telomerase is also present at very
low levels in certain hematopoietic (blood), skin and gastrointestinal cells and
may function to give these cells increased replicative capacity. However, these
cells still age and gradually lose telomeres, suggesting that telomerase may not
be essential for their normal functioning.
PS cells are germ line cells that appear for only a short period after
fertilization. These cells quickly differentiate into the many types of cells
found in the body. PS cells are the only known normal cells which are immortal
and have the potential to differentiate into any cell or tissue in the body.
Prior to differentiation, PS cells express telomerase activity. Studies
indicate, however, that once PS cells have differentiated into specialized
tissues or cells, telomerase activity is repressed and the differentiated cells
are destined to follow the senescence pathway.
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MARKET OPPORTUNITY
Cancer and other age-related diseases and conditions, including skin aging,
atherosclerosis, osteoporosis and Alzheimer's disease, are difficult and costly
to diagnose and treat. In many cases, entirely effective means of treating and
diagnosing these diseases and conditions are not currently available. Further,
with the progressive "graying" of the population, the incidence of cancer and
other age-related diseases and conditions is expected to increase and to place a
steadily growing financial burden on the health care system. By the year 2010,
the over-65 population in the United States is expected to double to
approximately 64 million people and worldwide this population will increase to
over one billion. Significant improvements in the treatment and diagnosis of
these diseases and conditions are expected to offer attractive commercial
opportunities.
Cancer
The incidence of cancer increases dramatically with age. Eighty-five percent of
cancers diagnosed occur in people over the age of 50. People over the age of 65
have, on average, a ten times greater risk of dying from cancer than the
under-65 population.
Over ten million Americans alive today have a history of cancer and, in 1996, an
estimated 1.4 million Americans will be diagnosed with cancers of the lung,
colon, breast, prostate, pancreas, ovary, kidney, and bladder, along with
lymphomas and leukemia and other cancers. Despite significant medical advances,
cancer researchers and clinicians have had little impact on cancer mortality
rates. In 1996, cancer is expected to claim 555,000 lives, or 25% of the total
projected deaths in the United States. Within the next decade, largely because
of population aging, cancer may become the leading cause of death in most
industrialized nations.
Cancer therapy relies heavily on three treatment modalities: surgery, to remove
the tumor mass; radiation, to destroy tumor localized to a small region; and
chemotherapy, to eliminate tumor cells in diffuse parts of the body. Surgery is
an invasive procedure that may not remove the entire cancer, and the use of
radiation is limited to certain areas of the body. While drug therapies are less
invasive than surgery or radiation, many drugs used to treat cancer generally
attack rapidly dividing cells indiscriminately, damaging normal as well as
cancer cells. The current cancer drug therapy market in the United States is
over $3.8 billion having grown at an annual compounded rate in excess of 15%
between 1985 and 1995. Even when a drug is effective initially against a
particular cancer, it is usually not effective against other types of cancer
and, over time, the particular cancer can become resistant to that drug and
progress. The Company believes that a telomerase inhibitor could overcome these
limitations and potentially be a universal and highly specific drug therapy for
cancer.
Other Age-related Diseases and Conditions
Age-related diseases and conditions are those whose incidence increases
dramatically with age and include chronic diseases and conditions, such as skin
aging atherosclerosis, osteoporosis and Alzheimer's disease. There are
significant unmet medical needs associated with these diseases and conditions.
Many current therapies simply address the symptoms of these diseases and
conditions. Despite the limitation of current therapies, drugs and medical
devices targeting these diseases and conditions represent some of the largest
selling pharmaceuticals and devices. For example, the United States market for
cardiovascular drugs is about $10 billion, while the market for drugs addressing
osteoporosis and osteoarthritis is approximately $5 billion. The market for
retinoids used for skin therapy exceeds $3 billion. The Company's focus on
cellular aging and cellular immortality is designed to produce therapeutics and
diagnostics that address these diseases and conditions, focusing on their causes
rather than their symptoms.
STRATEGY
Geron's strategy is to become the leading biopharmaceutical company exclusively
focused on discovering and developing therapeutic and diagnostic products based
upon common biological mechanisms underlying cancer and other age-related
diseases and conditions. The key elements of this strategy include:
Focus on Fundamental Mechanisms of Cellular Aging and Cellular
Immortality. Geron focuses its research and development on fundamental
mechanisms of cellular aging and cellular immortality. These include
telomere shortening and telomerase regulation. As the pioneer in
researching and modulating these mechanisms, which affect many tissues of
the body, the Company
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believes it has established a broadly applicable, proprietary platform for
discovering and developing novel small molecule therapeutics and
diagnostics for cancer and other age-related diseases and conditions.
Develop High Value Programs With a Common Scientific Platform Geron's
strategy is to leverage its expertise in cellular aging and cellular
immortality to develop those programs which offer the highest likelihood
and shortest development path for therapeutic and diagnostic products.
Geron is currently pursuing three research and development programs: (i)
the inhibition and detection of telomerase for the treatment and diagnosis
of cancer; (ii) cell senescence modulation for T cell therapy, bone marrow
transplantation, skin aging and atherosclerosis; and (iii) primordial stem
cell therapies for cell transplantation. The Company is employing advanced
and proven drug discovery technologies in support of these programs.
Pursue Strategic Collaborations Geron has established and will continue to
selectively establish collaborations with pharmaceutical and diagnostic
companies and leading academic institutions to enhance its research,
development and commercialization capabilities. Geron has entered into a
strategic alliance with Kyowa Hakko, a leading oncology company in Japan,
for the development and marketing in certain Asian countries of a
telomerase inhibitor to treat cancer. In addition, the Company has
established technology and clinical development collaborations with leading
diagnostic companies. Finally, Geron has formed numerous research and
clinical collaborations with the leading experts in the fields of cellular
aging and cellular immortality. See "-- Strategic Collaborations" and
"-- Research Collaborations."
Retain the Ability to Develop and Market Products Independently Geron
believes that its broad scientific platform will continue to generate
opportunities for a variety of collaborative arrangements. The Company
intends to retain significant rights to develop and market key therapeutic
and diagnostic applications of any discoveries it makes in its research
programs.
Enhance Proprietary Leadership Position Geron intends to maintain its
scientific leadership and accelerate its research programs by continuing to
attract and retain leaders in the fields of cellular aging and cellular
immortality, either as employees or research collaborators. In addition,
the Company is aggressively pursuing a broad and extensive patent portfolio
to protect its proprietary technology, including its drug discovery and
diagnostic development technologies. To date, the Company owns or has
certain exclusive rights to three issued United States patents and 52
United States patent applications, as well as a number of corresponding
foreign applications.
RESEARCH PROGRAMS
Geron is applying its proprietary scientific platform to discover and develop
novel therapeutics and diagnostics for cancer and other age-related diseases and
conditions. In support of its programs, the Company employs advanced drug
discovery technologies including proprietary assays, high-throughput screening,
combinatorial chemistry, proprietary differential gene expression techniques,
protein purification, and gene sequencing.
Telomerase Inhibition and Detection
Geron seeks to develop a small molecule telomerase inhibitor, which, by blocking
the activity of telomerase, will allow cancer cell telomeres to resume
shortening ultimately leading to cancer cell death. In addition, the Company
seeks to develop telomerase as a marker for cancer diagnosis, prognosis,
monitoring and screening.
Telomerase is not present in most normal cells and as a result these cells age
through telomere shortening. In contrast, telomerase is abnormally active in
cancer cells causing telomere length to be maintained, which in turn appears to
confer immortality to cancer cells in malignant tumors. Research has shown that
telomerase is present in all of the over 20 different cancer types that Geron
and its collaborators have studied, including the ten most prevalent cancers of
prostate, breast, lung, colon, bladder, uterus, and ovary, along with lymphomas,
melanomas and oral cancers. In all of these cancers, the majority of tumor
samples contain telomerase. Because telomerase is present in all cancer types
evaluated and is not biologically active in most normal cells, telomerase
appears to be a universal and highly specific marker of cancer. These
characteristics combine to make telomerase an attractive target for inhibition
to treat cancer, and for detection to diagnose cancer.
Therapeutic Geron's research has demonstrated that a telomerase inhibitor
blocks cancer cells from using telomerase to maintain telomere length. As a
result, the telomeres in the cancer cells resume shortening as the cells
continue to divide, reaching a certain short length, at which point the cancer
cells die. Specifically, Geron scientists have blocked human telomerase in tumor
cell lines in vitro using both a small molecule compound and an antisense
compound to the human telomerase RNA component. In both experiments, blocking
telomerase led to telomere shortening and cancer cell death. Based on these
results, Geron is aggressively pursuing the identification of a number of
telomerase inhibitors as potential lead compounds for preclinical and clinical
development. While it has identified several strategies for inhibiting
telomerase activity, Geron's primary focus is on developing a small molecule
inhibitor. With one of its collaborators, the Company has initiated studies of
these small molecule compounds in animal models of human tumor
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growth. The Company believes the small molecule approach will produce a
development candidate with a more favorable commercial profile -- oral
bioavailabilty, compound stability and low manufacturing cost.
To advance this program, Geron has established proprietary screening technology,
a structurally diverse library of small molecules and medicinal chemistry
capabilities. Specifically, the Company has developed a substantial automated
high throughput screening effort for the identification of telomerase inhibitors
using proprietary assays based on human telomerase. Geron has used this
proprietary screening capability to screen over 80,000 diverse small molecule
candidates that Geron has either acquired or created through its internal
combinatorial chemistry capabilities. As a result of its screening efforts,
Geron has identified several classes of compounds that demonstrate telomerase
inhibition and is actively pursuing structure/activity relationship studies to
develop lead compounds. Geron believes that these screens provide a strong
competitive advantage in view of the extreme difficulty and specialized skills
required for their development and use. The United States Patent and Trademark
Office has recently allowed a patent application on one of Geron's telomerase
inhibitor screens.
Geron believes that blocking telomerase activity will cause the affected cancer
cells to resume telomere shortening through cell division and thus lose their
immortality. When telomeres reach a certain short length, the cells will die.
Telomerase inhibition is therefore expected to have delayed efficacy as cancer
cell telomeres resume normal shortening. Although Geron envisions that a
telomerase inhibitor could be effective as a stand-alone treatment in certain
cases, it is expected that in most cases a telomerase inhibitor will be used in
conjunction with traditional anti-cancer therapies. There can be no assurance
that the delayed efficacy of a telomerase inhibitor will not have a materially
adverse effect on the preclinical and clinical development or marketability of a
telomerase inhibitor for the treatment of cancer.
Although the Company believes that a telomerase inhibitor will be an effective
cancer therapeutic for a broad range of cancers, there may be certain
limitations to its use. Because telomerase is present in reproductive cells, a
telomerase inhibitor, like most current cancer agents, may have a negative
impact on such cells. Telomerase is also transiently expressed in certain cells
in the hematopoietic (blood), skin and gastrointestinal tract. However, Geron
scientists and others have demonstrated that these tissues age and show gradual
telomere shortening during the course of cell division. As a result, the Company
believes that telomerase is not biologically critical for these tissues and that
telomerase inhibitors are unlikely to have a significant negative effect on
them. There can be no assurance that any product based on the inhibition of
telomerase will not adversely affect such cells and result in unacceptable side
effects.
Geron has established a strategic alliance with Kyowa Hakko, the leading
oncology company in Japan, for the development and commercialization in certain
Asian countries of a telomerase inhibitor for the treatment of cancer. The
Company has also established research collaborations for the study of telomerase
inhibition with the National Cancer Institute and the Memorial Sloan-Kettering
Institute for Cancer Research, and for the study of telomerase biology with Cold
Spring Harbor Laboratory.
Diagnostics The Company believes that telomerase is a universal and highly
specific marker of cancer and, therefore, the detection and quantification of
telomerase may have significant clinical utility for cancer diagnosis. While
most current cancer diagnostics apply to a single or limited number of cancer
types, telomerase-based diagnostics could potentially address a broad range of
cancer types. The Company also believes that the availability of
telomerase-based diagnostics for cancer will enhance the commercial opportunity
for a telomerase inhibitor by enhancing the understanding by clinicians of the
biological mechanisms underlying telomerase activity.
The Company has developed several proprietary assays for the detection of
telomerase based on its activity or components. The first generation assay is
the Telomeric Repeat Amplification Protocol ("TRAP") which detects telomerase
activity in malignant tumor tissue. The second generation assay detects the RNA
component of human telomerase, which was first cloned by Geron. This RNA
technology enables the Company to use proprietary in situ hybridization and
other detection methods to detect the presence of telomerase. The Company is the
exclusive licensee of an issued United States patent which it believes covers
cancer diagnostic applications of its TRAP technology, and the United States
Patent and Trademark Office has allowed one of Geron's patent applications
relating to the RNA component of telomerase.
Geron is conducting clinical evaluations to assess the full potential of its
telomerase detection technology. Preliminary data from a number of studies
indicate telomerase levels correlate with clinical outcome in cancer patients.
In the event evaluations of a larger number of patients continue to present
favorable results, the Company intends to proceed to full scale development of
its telomerase detection technology as a novel and important diagnostic for
numerous cancers.
Oncor and Boehringer Mannheim have licensed the Company's TRAP assay and Dako
has licensed the Company's RNA detection technology on a non-exclusive basis for
sale to the research use only market. Oncor commenced commercial sale of the
TRAP-ezeTM kit in May 1996. Although the Company does not expect significant
royalties from the sale of these kits, their use is expected to stimulate
additional, more reliable studies of telomerase activity by academic
laboratories. The Company has also concluded collaborative agreements with
Dianon and Ventana for additional technology development and clinical
assessment. In each of its clinical diagnostic agreements, Geron has retained
significant development and commercialization rights. The Company has also
established
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research collaborations for the study of telomerase detection with The Cleveland
Clinic, the University of Texas, San Antonio and the University of Texas
Southwestern Medical Center.
Cell Senescence Modulation -- Regulation of Cellular Aging
Geron seeks to develop therapeutics to modulate the biological processes leading
to and regulating cell aging or senescence. Telomere shortening occurs as cells
divide, which, Geron believes, eventually triggers the destructive genetic
changes found in senescent cells. The Company is pursuing two distinct
approaches to modulate cell senescence: (i) extending cell lifespan by slowing
telomere loss, thereby extending the period of normal cell replication and
delaying the destructive onset of cell senescence and (ii) applying proprietary
genomics and screening techniques to target and modulate the destructive genetic
changes that occur in senescent cells. Geron has entered into research
collaborations with several research institutions to support its cell senescence
modulation program, including Lawrence Berkeley Laboratories, Stanford
University, Baylor College of Medicine, Aarhus University (Denmark), the
University of Groningen (The Netherlands) and the University of Washington.
Cell Lifespan Extension Geron believes that maintaining telomere length will
extend cell lifespan by delaying the onset of cell senescence. The Company and
its collaborators have demonstrated in vitro that telomere length and
replicative senescence can be modulated with synthetic compounds. The Company's
initial focus is on the transient activation of telomerase to maintain telomere
length and postpone cell senescence without immortalizing an otherwise mortal
cell. As the first and fundamental step in this program, the Company is working
to complete the cloning of telomerase and its regulators. Geron has already
cloned, and has received an allowance for a United States patent application
relating to, the RNA component of human telomerase. Geron believes that the
cloning of the telomerase enzyme and its regulators may also provide the Company
with second generation telomerase inhibitor screens, new reagents for telomerase
detection and other markers useful in cancer diagnosis.
The initial therapeutic target of the cell lifespan extension effort is ex vivo
applications such as T cell therapy and bone marrow transplantation to treat
cancer or immune dysfunctions in the elderly. Ex vivo cell therapies typically
involve the extraction of certain cells from a patient, expansion of the number
of cells ex vivo and the reintroduction of the cells into the patient to
strengthen the patient's immune system. Current cell therapies have several
limitations, including, Geron believes, senescence of transplanted cells before
they can benefit the patient. Geron believes this is attributable in part to the
premature senescence of cells during the expansion process or during growth in
vivo. Geron's approach to extending cell lifespan could improve ex vivo therapy
by allowing enhanced expansion of extracted cells and the reintroduction to the
patient of cells with greater replicative capacity.
Genomics of Aging The goal of Geron's Genomics of Aging program is to treat
age-related diseases and conditions by modulating the destructive pattern of
gene expression that occurs in cells as they reach the end of their replicative
capacity, or become senescent. Geron's approach to genomics is unique in that it
focuses on the differences in gene expression between replicatively young and
senescent cells. Geron believes there is a significant advantage in defining
differences in gene expression between young and senescent cells and then
utilizing senescent cells in drug discovery screens. Most genomics companies use
diseased tissue, which is complex in structure and varies from patient to
patient. By comparison, Geron believes that senescent cells are more
representative of the disease process and provide a homogeneous and reproducible
population of cells for both gene and drug discovery.
Geron has developed proprietary high throughput genetic analysis techniques
called "Enhanced Differential Display" and "Subtractive Differential Display."
These technologies have enabled the Company to identify genes, including those
which express products at low levels, that are differentially expressed by
replicatively young versus senescent cells and mortal versus immortal cells. The
Company is using these gene targets and their products to design automated
screens to discover small molecule drugs that counteract the destructive effects
caused by these genes and their gene products.
The Company's Genomics of Aging program is targeted at a wide range of
age-related diseases and conditions, including skin aging, atherosclerosis,
osteoporosis and Alzheimer's disease. Geron's initial focus is on skin aging and
atherosclerosis.
Skin aging Geron and its collaborators have established that when dermal
fibroblasts age, or senesce, they undergo numerous changes in gene
expression. Geron and its collaborators have discovered over 100 gene
markers of genes that are differentially expressed in replicatively young
versus senescent dermal fibroblasts. Some of these gene products appear to
be destructive to the extracellular matrix. The Company believes that these
and other changes contribute to the characteristic age-related atrophy of
skin. Reversing or offsetting the effects of such altered gene expression
in senescent fibroblasts by targeted and cell-based drug discovery could
provide an effective treatment for dermal atrophy in aging adults. The
Company is establishing automated screens to discover small molecule
modulators of gene expression in senescent cells.
Atherosclerosis Atherosclerotic plaques frequently form in blood vessels
at areas of turbulent blood flow. Geron and its collaborators have shown
that endothelial cells lining arteries with turbulent blood flow, where
cell turnover and thus cell division is high, have shorter telomeres than
cells in regions with less blood turbulence and cell turnover. Further,
some gene products differentially expressed in senescent endothelial cells
have been shown to play a role in atherosclerosis. The Company believes
that
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altering expression of the senescence-associated genes and their products
in the vascular endothelium could provide a unique and effective therapy
for atherosclerosis.
Primordial Stem Cell Therapies
Geron seeks to generate a broad array of cell types from PS cells for cellular
transplantation. PS cells are germ line cells that are unique in that they are
both immortal, consistent with their normal telomerase expression, and capable
of differentiation into any and all types of cells and tissues in the body. The
Company believes that PS cells offer significant advantages over other stem
cells, which can differentiate only into a limited array of cell types, an
example being the hematopoietic stem cell which is capable of becoming only
blood cells. In addition, PS cells, unlike other stem cells, are immortal and
can potentially be expanded and grown indefinitely. Finally, these cells may be
used repeatedly for transplantation and they can be thoroughly characterized and
shown to be free of viruses or other pathogens.
Initially, Geron plans to pursue transplantation applications using PS cells
derived from non-human primates. These cells were recently derived for the first
time at the University of Wisconsin at Madison and are currently licensed
exclusively to Geron. These cells have been shown to differentiate into numerous
cell types that could be useful clinically. There are many strong similarities
between these primate tissues and human tissues that may prevent the rejection
seen with transplantation from other species. The Company is in the early stages
of research directed towards differentiating PS cells for transplantation in
circumstances in which the risk of histoincompatibility will be minimized.
Specifically, the Company is focused on cardiomyocytes for the treatment of
congestive heart failure and neurons for the treatment of Parkinson's disease.
STRATEGIC COLLABORATIONS
Geron believes that its broad scientific platform will generate significant
opportunities for a variety of strategic collaborative arrangements. Geron has
established and will continue to selectively establish collaborations with
leading pharmaceutical and diagnostic companies to enhance research, development
and commercialization capabilities and fund operating expenses thereby reducing
equity capital requirements. In each of these strategic collaborations, the
Company will seek to retain significant rights to participate in the commercial
success of its products and to develop and market therapeutic and diagnostic
applications resulting from its discoveries.
Kyowa Hakko Collaboration
In April 1995, the Company entered into a License and Research Collaboration
Agreement (the "Kyowa Hakko Agreement") with Kyowa Hakko. Under the Kyowa Hakko
Agreement, Kyowa Hakko agreed to provide $16.0 million of research funding over
four years to support the Company's program to discover and develop in certain
Asian countries a telomerase inhibitor for the treatment of cancer. In addition,
the Company is entitled to receive future payments totaling $11.5 million upon
the achievement of certain contractual milestones relating to drug development
and regulatory progress, and royalty payments on product sales. Kyowa Hakko also
agreed to purchase $2.5 million of Common Stock in connection with the Company's
initial public offering. Under the Kyowa Hakko Agreement, Geron exercises
significant control during the research phase and Kyowa Hakko exercises
significant control during the development and commercialization phases. Kyowa
Hakko will pay for all clinical expenses associated with product approval in the
covered territory. The Company granted Kyowa Hakko an exclusive license in
certain Asian countries to develop, manufacture and sell products resulting from
the collaboration for the treatment of human cancer. These countries are China,
Hong Kong, India, Indonesia, Kampuchea, Korea, Japan, Laos, Malaysia, Myan Mar,
the Philippines, Singapore, Taiwan, Thailand and Vietnam. Geron has retained all
rights to a telomerase inhibitor outside these countries. Kyowa Hakko may
terminate the agreement only in the event of breach or bankruptcy by Geron or in
the event that both parties agree that it is no longer reasonably practical to
pursue further research and development of an inhibitor of telomerase.
Dianon Collaboration
Geron has entered into a development agreement with Dianon pursuant to which the
parties will jointly develop telomerase detection technology and perform
clinical studies in order to demonstrate the full utility of telomerase as a
cancer diagnostic and prognostic marker. The agreement expires in January 1997,
unless extended by the parties. Each company will generally be responsible for
its respective expenses during the term of the agreement. Geron has granted
Dianon a non-exclusive right to license the Geron telomerase technology to
provide clinical reference or anatomical pathology laboratory services, and a
first right of negotiation to license Geron's technology for exclusive use in
diagnostic test services through January 1997.
Other Collaborations
Geron has entered into a development and license agreement with Ventana for
development and commercialization of the Company's telomerase detection
technology to make and sell licensed products solely for use on Ventana systems.
Ventana and Geron will share any profits resulting from this arrangement. Geron
has entered into non-exclusive royalty-bearing license agreements with Oncor and
Boehringer Mannheim for use of the Company's TRAP assay for use as a research
kit only on a worldwide basis excluding Japan. Oncor
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commenced commercial sale of the TRAP-ezeTM kit in May 1996. The Company has
also entered into a non-exclusive royalty-bearing license agreement with Dako
for use of Geron's RNA detection technology for research use only on a worldwide
basis.
RESEARCH COLLABORATIONS
The Company has entered into and intends to continue to selectively enter into
research agreements with leading academic and research institutions in order to
significantly enhance its research and development capabilities. Under these
agreements, the Company generally provides funding for scientific research in
exchange for exclusive commercial rights to such research. In each of these
agreements, the Company seeks to retain rights to develop and market
applications of any discoveries made under such collaborations by obtaining
options to license exclusively any technology developed under such programs,
including issued patents or patent applications filed in connection with such
programs.
The Company has established collaborations for the study of telomeres and
telomerase and the discovery and development of a telomerase inhibitor with the
National Cancer Institute, the Memorial Sloan-Kettering Institute for Cancer
Research, Cold Spring Harbor Laboratory, University of Texas Southwestern
Medical Center at Dallas, The Cleveland Clinic and the University of Texas, San
Antonio. In support of its Cell Senescence Modulation program, Geron has
established collaborations with Lawrence Berkeley Laboratories, Stanford
University, Baylor College of Medicine, Aarhus University (Denmark), University
of Groningen (The Netherlands) and the University of Washington. Geron has
established an exclusive license and collaboration agreement in support of its
PS Cell Therapies program with the licensing arm of the University of Wisconsin
at Madison.
PATENTS, PROPRIETARY TECHNOLOGY AND TRADE SECRETS
As of May 31, 1996, the Company owned, had exclusively licensed or held an
option to exclusively license three United States patents and 52 pending United
States patent applications, as well as six corresponding international filings
under the Patent Cooperation Treaty and nine pending foreign national patent
applications. Protection of the Company's proprietary compounds and technology
is important to the Company's business. The Company's policy is to seek, when
appropriate, patent protection for its lead compounds, gene discoveries,
screening technologies and certain other proprietary technologies through
licensing and by filing patent applications in the United States and certain
other countries. The Company believes its patent filings and patent licenses and
options may provide protection for its drug discovery and diagnostics
development programs and its patent applications disclose useful discoveries in
the field of telomere biology and telomerase regulation as well as cellular
senescence and cellular immortality. The Company's screening efforts have
resulted in the identification of several compounds that inhibit human
telomerase in vitro and the Company has filed United States patent applications
on certain of these chemical classes of telomerase inhibitors. The Company has
licensed an issued United States patent relating to telomerase activity-based
cancer diagnostic methods and has several United States patent applications
pending that are directed to the TRAP assay. The Company's in situ telomerase
RNA detection technology is the subject of several patent applications, one of
which relating to reagents used in the assay has received a notice of allowance
from the United States Patent and Trademark Office. The Company has also filed
patent applications on its technologies for identifying genes that are
differentially expressed in different cell types or at different stages of
cellular development, and the United States Patent and Trademark Office has
recently allowed claims relating to the Company's "Enhanced Differential
Display" technology. There can be no assurance that any allowed patent
applications will issue. See "Risk Factors -- Dependence on Proprietary
Technology and Uncertainty of Patent Protection."
While the Company believes its patents and patent applications provide
competitive advantage in its efforts to discover, develop and market useful
therapeutic and diagnostic products, the patent positions of pharmaceutical,
biopharmaceutical, and biotechnology companies, including the Company, are
highly uncertain and involve complex legal and technical questions for which
legal principles are not firmly established. There can be no assurance that the
Company has developed or will continue to develop products or processes that are
patentable or that patents will issue from any of the pending applications,
including patent applications that have been allowed. There can also be no
assurance that the Company's current patents, or patents that issue on pending
applications, will not be challenged, invalidated or circumvented, or that the
rights granted thereunder will provide proprietary protection or competitive
advantages to the Company. Because (i) patent applications in the United States
are maintained in secrecy until patents issue, (ii) patent applications are not
generally published until many months or years after they are filed and (iii)
publication of technological developments in the scientific and patent
literature often occur long after the date of such developments, the Company
cannot be certain that it was the first to invent the subject matter covered by
the patent applications or that it was the first to file patent applications for
such inventions. Litigation to establish the validity of patents, to defend
against patent infringement claims of others and to assert infringement claims
against others can be expensive and time consuming even if the outcome is
favorable to the Company. If the outcome of patent prosecution or litigation is
unfavorable to the Company, the Company could be materially adversely affected.
Patent law relating to the scope and enforceability of claims in the technology
fields in which the Company operates is still evolving. The degree of future
protection for the Company's proprietary rights, therefore, is highly uncertain.
In this regard, there can be no
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<PAGE> 31
assurance that independent patents will issue from each of the 52 United States
patent applications referenced above, which include many interrelated
applications directed to common or related subject matter. The Company is aware
of certain patent applications that have been filed by others with respect to
telomerase and telomere length. In this regard, Iowa State University has filed
United States and corresponding foreign patent applications claiming methods and
reagents relating to the RNA component of human telomerase, and Isis
Pharmaceuticals, Inc. has filed United States and corresponding foreign patent
applications relating to oligonucleotide-like reagents asserted to have telomere
length modulating activity. In addition, there are a number of issued patents
and pending applications owned by others directed to differential display, stem
cell and other technologies relating to the Company's research, development and
commercialization efforts. There can be no assurance that the Company's
technology can be developed and commercialized without a license to such patents
or that patent applications will not be granted priority over patent
applications filed by the Company. Furthermore, there can be no assurance that
others will not independently develop similar or alternative technologies to
those of the Company, duplicate any of the Company's technologies, or design
around the patented technologies developed by the Company or its licensors, any
of which may have a material adverse effect on the Company.
The commercial success of the Company depends significantly on its ability to
operate without infringing patents and proprietary rights of others. There can
be no assurance that the Company's technologies do not and will not infringe the
patents or proprietary rights of others. In the event of such infringement, the
Company may be enjoined from pursuing research, development or commercialization
of its potential products or may be required to obtain licenses to these patents
or other proprietary rights or to develop or obtain alternative technology.
There can be no assurance that the Company will be able to obtain alternative
technologies or any required license on commercially favorable terms, if at all,
and if any such license is or alternative technologies are not obtained, the
Company may be delayed or prevented from pursuing the development of certain of
its potential products. The Company's breach of an existing license or failure
to obtain or delay in obtaining alternative technologies or a license to any
technology that it may require to develop or commercialize its products may have
a material adverse effect on the Company.
Litigation, which could result in substantial costs to the Company, may also be
necessary to enforce any patents issued or licensed to the Company or to
determine the scope and validity of another's proprietary rights. There can be
no assurance that the Company's issued or licensed patents would be held valid
or infringed in a court of competent jurisdiction or that a patent held by
another will be held invalid or not infringed in such court. An adverse outcome
in litigation or an interference to determine priority or other proceeding in a
court or patent office could subject the Company to significant liabilities to
other parties, require disputed rights to be licensed from other parties or
require the Company to cease using such technology, any of which could have a
material adverse effect on the Company. In addition, the Company could incur
substantial costs if litigation is required to defend itself in patent suits
brought by third parties or if Geron initiates such suits.
Geron also relies on trade secrets to protect its proprietary technology,
especially in circumstances in which patent protection is not believed to be
appropriate or obtainable. Geron attempts to protect its proprietary technology
in part by confidentiality agreements with its employees, consultants and
certain contractors. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors.
The Company is party to various license agreements which give it rights to use
certain technologies in its research, development and commercialization
activities. Disputes have arisen and may continue to arise as to the
inventorship and corresponding rights in know-how and inventions resulting from
the joint creation or use of intellectual property by the Company and its
licensors, research collaborators and consultants. There can be no assurance
that the Company will be able to continue to license such technologies on
commercially reasonable terms, if at all, or to maintain its exclusive licenses.
In this regard, the Company's license with the licensing arm of the University
of Wisconsin for the PS cells derived from primates is currently exclusive for
two years and non-exclusive thereafter. The failure of the Company to maintain
exclusive or other rights to such technologies could have a material adverse
effect on the Company. See "Risk Factors -- Patents, Proprietary Technology and
Trade Secrets."
SCIENTIFIC AND CLINICAL ADVISORS
The Company has consulting agreements with a number of leading academic
scientists and clinicians who serve as members of its Scientific Advisory Board
("SAB"), Clinical Advisory Board ("CAB", and together with the SAB, the
"Advisory Boards") or as consultants. These individuals are distinguished
scientists and clinicians with expertise in the areas of genetics of aging, cell
senescence, telomerase, cell biology and molecular biology.
The SAB was established to consult with the Company with respect to scientific
programs and strategies. The individuals also provide important contacts
throughout the broader scientific community. The SAB meets as a whole
approximately once a year and in smaller groups to focus on certain scientific
issues on a more frequent basis. Individual members are called upon on an ad hoc
basis as appropriate. The CAB was established to help the Company define
clinical targets and diseases. The CAB meets on an as-needed basis.
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<PAGE> 32
Each member of the Advisory Boards has entered into an agreement with the
Company covering the terms of his or her position as a member of the Advisory
Board. Each member provides services on an as-needed basis. Most members of the
Advisory Boards have entered into separate agreements with the Company covering
additional consultation above and beyond their activities as Advisory Board
members. Certain Advisory Board members hold options to purchase or have
purchased Common Stock of the Company. In addition, members of the Advisory
Board generally receive a fee of $1,000 for attending each Advisory Board
meeting and are reimbursed for out-of-pocket expenses incurred in attending each
meeting. Most members of the Advisory Boards are employed by institutions other
than the Company and may have commitments to, or consulting or advisory
agreements with, other entities that may limit their availability to the
Company.
The Company's scientific and clinical advisors and consultants include the
following individuals:
ELIZABETH BLACKBURN, PH.D., is a Professor and Chair of the Department of
Microbiology and Immunology at the University of California at San Francisco and
a member of the National Academy of Sciences. Dr. Blackburn is known for her
pioneering characterization of telomeres and for her co-discovery of telomerase
with Dr. Carol Greider in 1985 and subsequent characterization of this important
enzyme.
GUNTER K. BLOBEL, M.D., PH.D., is an investigator at the Howard Hughes Medical
Institute, Rockefeller University and a member of the SAB. Dr. Blobel is a
member of the National Academy of Sciences, the recipient of the 1993 Lasker
Award, and past president of the American Society for Cell Biology. He is well
known for his work in protein translocation and is now turning much of his
research focus to nuclear trafficking.
DAVID BOTSTEIN, PH.D., is Professor and Chairman of the Department of Genetics,
Stanford University School of Medicine. He was elected to the National Academy
of Sciences in 1981 and to the Institute of Medicine in 1993. His current
research activities include studies of yeast genetics and cell biology and
linkage mapping of human genes predisposing to manic-depressive illness and the
development and maintenance of the Saccharomyces Genome Database on the World
Wide Web. He has received numerous awards, including the Eli Lilly Award in
Microbiology (1978), the Genetics Society of America Medal (1985), and the Allen
Award of the American Society of Human Genetics (1989). Dr. Botstein has served
on numerous committees including the NAS/NRC study on the Human Genome Project
(1987-88), the NIH Program Advisory Panel on the Human Genome (1989-90) and the
Advisory Council of the National Center for Human Genome Research (1990-1995).
ROBERT N. BUTLER, M.D., is a gerontologist and psychiatrist with broad
experience in aging research and advocacy. In 1982, he founded the first, and
still the only, department of geriatrics at a United States medical
school -- the Department of Geriatrics and Adult Development at the Mount Sinai
Medical Center -- where he continues to serve as Professor. Since 1990, he has
also been Director of the International Longevity Centers. In 1975, he became
the founding director of the National Institute on Aging of the National
Institutes of Health, a position he held until 1982. He currently serves on the
National Advisory Council of the National Institute on Aging and a member of the
Company's CAB. Dr. Butler also serves as editor-in-chief of the journal
Geriatrics and is the author of approximately 300 scientific and medical
articles. In 1976, he won the Pulitzer Prize for his book, Why Survive? Being
Old in America.
JUDITH CAMPISI, PH.D., is a Senior Scientist, Life Sciences Division, Department
of Cancer Biology, Lawrence Berkeley National Laboratory; Group Leader,
Carcinogenesis & Differentiation, Lawerence Berkeley National Laboratory; and
Acting Chair, Department of Cancer Biology, Lawerence Berkeley National
Laboratory. She has been an Established Investigator of the American Heart
Association and currently has a MERIT Award from the National Institute on
Aging, and serves on the NIA Board of Scientific Counselors. Her major interest
is the cell and molecular biology of senscense and tumorigenesis.
VINCENT CRISTOFALO, PH.D., is a Professor of Pathology and Laboratory Medicine,
and Director of the Center for Gerontological Research, Medical College of
Pennsylvania and Hahnemann University and a member of the Company's SAB. In
addition, he is professor emeritus at the University of Pennsylvania and adjunct
professor at The Wistar Institute. He sits on the Board of Scientific Counselors
of the National Institute on Aging and the Department of Veterans Affairs
Geriatrics and Gerontology Advisory Committee, as well as numerous editorial
boards.
CAROL GREIDER, PH.D., is a Senior Staff Scientist at the Cold Spring Harbor
Laboratory and a member of the Company's SAB. She is known for her co-discovery
of telomerase with Dr. Elizabeth Blackburn. Her pioneering work on the molecular
mechanisms of this enzyme and its role in cellular immortalization is widely
recognized.
DOUGLAS HANAHAN, PH.D., is a Professor of Biochemistry in the Department of
Biochemistry and Biophysics and Associate Director of the Hormone Research
Institute, University of California, San Francisco and a member of the Company's
SAB. His major research interests are the cellular and genetic mechanisms of
tumor development and autoimmunity. Prior to joining UCSF in 1988, Dr. Hanahan
was with the Cold Spring Harbor Laboratory for nine years, where he developed
technologies for recombinant DNA and molecular cloning, and established
transgenic mouse models to study cancer and autoimmune diseases.
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LEONARD HAYFLICK, PH.D., is a Professor of Anatomy at the University of
California, School of Medicine, San Francisco, and is a member of the Company's
SAB. Dr. Hayflick is best known for his pioneering work in tissue culture where
he discovered the finite replicative capacity of normal human cells which he
interpreted as aging at the cell level. This phenomenon is known as the
"Hayflick Limit" and Dr. Hayflick is widely known as the "father" of cellular
gerontology. Dr. Hayflick is the recipient of numerous national and
international research awards and honors, was President of the Gerontological
Society of America, is editor-in-chief of Experimental Gerontology, was a
founding member of the Council of the National Institute on Aging, and recently
authored the popular book, "How and Why We Age."
ERIC LANDER, PH.D., is a Professor of Biology at the Massachusetts Institute of
Technology and serves as the Director of the Whitehead Institute/MIT Center for
Genome Research. Dr. Lander is active in several organizations involved in human
genetics research, including serving on the board of directors for the Genetic
Society of America, acting as former chair of the Genome Research Review
Committee for NIH's National Center for Human Genome Research and the Company's
SAB. He brings broad experience in human and mammalian genetic research.
GEORGE M. MARTIN, M.D., is Professor of Pathology, Adjunct Professor of
Genetics, Director of Alzheimer's Disease Research Center, University of
Washington School of Medicine and a member of the Company's CAB. He has held
various positions in the departments of pathology and genetics at the University
of Washington School of Medicine since 1957, and was appointed director of the
Alzheimer Disease Research Center in 1985. Dr. Martin's recent awards include a
Research Medal granted by the American Aging Association in 1992 and the Robert
W. Kleemeier Award given by the Gerontological Society of America in 1993.
MALCOLM MOORE, PH.D., is a Professor of Biology at the Sloan-Kettering Division,
Cornell Graduate School of Medical Sciences. Also he is currently incumbent of
the Enid A. Haupt Chair of Cell Biology, Memorial Sloan-Kettering Cancer Center.
Dr. Moore most recently received the William B. Coley Award For Distinguished
Research in Immunology by the Cancer Research Institute (June 1995).
JERRY W. SHAY, PH.D., is a Professor of Cell Biology and Neuroscience,
University of Texas Southwestern Medical Center at Dallas and a member of the
Company's SAB. Dr. Shay's research focuses on molecular mechanisms of
tumorigenesis and immortalization with a particular emphasis on cancer of the
breast.
JAMES D. WATSON, PH.D., is the President of Cold Spring Harbor Laboratory and a
member of the Company's SAB. Dr. Watson is the former head of the NIH Human
Genome Project, a member of the National Academy of Sciences and is famous for
his 1953 discovery with Francis Crick, of the double helical structure of DNA,
for which he received the Nobel Prize.
WOODRING E. WRIGHT, M.D., PH.D., is a Professor of Cell Biology and Neuroscience
at the University of Texas Southwestern Medical Center at Dallas and a member of
the Company's SAB. He is widely recognized as a leading molecular biologist
working in the field of cellular senescence and on the molecular basis of muscle
development.
BUSINESS ADVISORS
The Company has also established a Business Advisory Board to advise it on
strategic business matters. Each member has entered into an agreement with the
Company covering the terms of his position. Both members hold options to
purchase or have purchased Common Stock of the Company. The members of the
Company's Business Advisory Board are:
JACK L. BOWMAN has over 30 years of health care management experience, most
recently as company group chairman of Johnson & Johnson. Prior to Johnson &
Johnson, Mr. Bowman was with American Cyanamid, where his positions included
President of Lederle Laboratories, and Ciba-Geigy Pharmaceuticals.
ROBERT A. SWANSON founded Genentech, Inc. in 1976 and served as its Chief
Executive Officer and as a director. Prior to Genentech, Mr. Swanson was a
partner with the venture capital firm, Kleiner Perkins Caufield & Byers. He is a
member of the Overseers Visiting Committee of the Harvard Medical School and the
Board of Fellows of the Faculty of Medicine at Harvard University.
GOVERNMENT REGULATION
Regulation by governmental entities in the United States and other countries
will be a significant factor in the production and marketing of any
pharmaceutical products, including a telomerase inhibitor, which may be
developed by the Company or one of its strategic partners. Most of the Company's
or its strategic partners' pharmaceutical products will require regulatory
approval by governmental agencies prior to commercialization. The nature and the
extent to which such regulation may apply to the Company or its strategic
partners will vary depending on the nature of any such pharmaceutical products.
Generally, biological drugs are regulated more rigorously than non-biological
drugs. In particular, human pharmaceutical therapeutic products are subject to
rigorous preclinical and clinical testing and other requirements by the FDA in
the United States and similar health authorities in foreign countries. Various
federal and, in some cases, state statutes and regulations also govern or
influence the manufacturing, safety, labeling, storage, record
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keeping and marketing of such pharmaceutical products. The process of obtaining
these clearances and the subsequent compliance with appropriate federal and
foreign statutes and regulations are time consuming and require the expenditure
of substantial resources.
Generally, in order to gain FDA pre-market approval, a company first must
conduct preclinical studies in the laboratory and in animal model systems to
gain preliminary information on a product's potential efficacy and to identify
any safety problems. The results of these studies are submitted as a part of an
investigational new drug application ("IND"), which must become effective before
human clinical trials of an investigational drug can start. In order to
commercialize any products, the Company or its strategic partners will be
required to sponsor and file an IND and will be responsible for initiating and
overseeing the clinical studies to demonstrate the safety, purity, efficacy and
potency in the case of biological drugs, or safety and efficacy in the case of
non-biological drugs that are necessary to obtain FDA approval of any such
products. Clinical trials are normally done in three phases and generally take
two to five years, but may take longer, to complete. After completion of
clinical trials of a new product, FDA marketing clearance must be obtained. If
the product is classified as a non-biologicial drug, the Company or its
strategic partner will be required to file a new drug application ("NDA") and
receive clearance before commercial marketing of the drug. In the case of a
biological drug, an Establishment License Application ("ELA") and Product
License Application ("PLA") will usually have to be filed and approved before
marketing can occur and the testing and approval processes require substantial
time and effort and there can be no assurance that any such clearance will be
granted on a timely basis, if at all. NDAs or PLAs/ELAs submitted to the FDA can
take, on average, two to five years to receive approval. If questions arise
during the FDA review process, clearance can take more than five years. Even if
FDA regulatory clearances are obtained, a marketed product is subject to
continual review, and later discovery of previously unknown problems or failure
to comply with the applicable regulatory requirements may result in restrictions
on the marketing of a product or withdrawal of the product from the market as
well as possible civil or criminal sanctions. For marketing outside the United
States, the Company will also be subject to foreign regulatory requirements
governing human clinical trials and marketing approval for pharmaceutical
products. The requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary widely from country to country.
Any diagnostic products to be developed by the Company or its strategic partners
are likely to be regulated by the FDA as devices rather than drugs. The nature
of the FDA requirements applicable to such medical diagnostic devices depends on
their classification by the FDA. A diagnostic device developed by the Company or
a strategic partner would most likely be classified as a Class III device,
requiring pre-market clearance. Obtaining pre-market clearance involves the
costly and time-consuming process, comparable to that for new drugs, of
conducting preclinical studies, obtaining an investigational device exemption to
conduct clinical tests, filing a pre-market clearance application, and obtaining
FDA clearance.
Both drugs and devices are subject to good manufacturing practice regulations
("GMPs"), often even at the clinical trial stages. Both drug and device GMPs
specify extensive record keeping requirements, including the maintenance of
product compliance files, as well as require compliance with various standards
governing personnel, equipment and raw materials, including product stability
requirements. There can be no assurance that the Company or its collaborators or
contract manufacturers, if any, will be able to maintain compliance with the GMP
regulations on a continuing basis. Failure to maintain such compliance could
have a material adverse effect on the Company's business.
The Company's research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive materials. The Company is
subject to federal, state and local laws and regulations governing the use,
storage, handling and disposal of such materials and certain waste products.
Although the Company believes that its safety procedures for handling and
disposing of such materials comply with the standard prescribed by state and
federal laws and regulations, the risk of accidental contamination or injury
from these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that result and any
liability could exceed the resources of the Company.
COMPETITION
The pharmaceutical and biopharmaceutical industries are intensely competitive.
The Company believes that certain pharmaceutical and biopharmaceutical companies
as well as certain research organizations currently engage in or have in the
past engaged in efforts related to the biological mechanisms of cell aging and
cell immortality, including the study of telomeres and telomerase. In addition,
other products and therapies that could compete directly with the products that
the Company is seeking to develop and market currently exist or are being
developed by pharmaceutical and biopharmaceutical companies, and by academic and
other research organizations. Many companies are also developing alternative
therapies to treat cancer and, in this regard, are competitive with the Company.
The pharmaceutical companies developing and marketing such competing products
have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical and clinical testing, obtaining
regulatory consents and marketing than the Company. Smaller companies may also
prove to be significant competitors, particularly through collaborative
arrangements with large pharmaceutical and established biotechnology companies.
Academic institutions, government agencies and other public and private research
organizations may also conduct research, seek patent protection and establish
collaborative arrangements for clinical development and marketing of products
similar to those of the Company. These companies and institutions compete with
the Company
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in recruiting and retaining qualified scientific and management personnel as
well as in acquiring technologies complementary to the Company's programs. There
is also competition for access to libraries of compounds to use for screening.
Any inability of the Company to secure and maintain access to sufficiently broad
libraries of compounds for screening potential targets would have a material
adverse effect on the Company. In addition to the above factors, Geron will face
competition with respect to product efficacy and safety, the timing and scope of
regulatory consents, availability of resources, reimbursement coverage, price
and patent position, including potentially dominant patent positions of others.
There can be no assurance that competitors will not develop more effective or
more affordable products, or achieve earlier patent protection or product
commercialization than the Company or that such products will render the
Company's products obsolete.
EMPLOYEES
The Company had 82 full-time employees at May 31, 1996, of whom 33 hold M.D. or
Ph.D. degrees and 18 hold other advanced degrees. Of the total workforce, 68 are
engaged in, or directly support, the Company's research and development
activities and 14 are engaged in business development, finance and
administration. The Company also retains outside consultants. None of the
Company's employees is covered by a collective bargaining agreement, nor has the
Company experienced work stoppages. The Company considers relations with its
employees to be good.
FACILITIES
Geron currently leases approximately 17,000 square feet of office space at 194
Constitution Drive and 200 Constitution Drive, Menlo Park, California. The
Company's lease for such office space expires in January 2002, with an option to
renew the lease for two additional periods of two and one-half years each. In
March 1996, the Company entered into a lease for an additional 24,000 square
feet of office space at 230 Constitution Drive, Menlo Park, California, of which
it expects to take possession on or about November 1996. The Company's lease for
such office space expires in January 2002, with an option to renew the lease for
two additional periods of two and one-half years each. The Company believes that
its existing facilities are adequate to meet its requirements for the near term
and that additional space will be available on commercially reasonable terms if
needed.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the executive
officers and directors of the Company as of May 31, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- ----------------------------------------------------------------
<S> <C> <C>
Ronald W. Eastman 44 President, Chief Executive Officer and Director
David L. Greenwood 44 Chief Financial Officer, Treasurer and Secretary
Richard T. Haiduck 48 Vice President of Corporate Development
Calvin B. Harley, Ph.D. 43 Vice President of Research
Jeryl L. Hilleman 38 Vice President of Operations
Kevin R. Kaster, Esq. 36 Vice President of Intellectual Property and Chief Patent Counsel
Daniel J. Levitt, M.D., Ph.D. 48 Vice President of Drug Development and Chief Medical Officer
Michael D. West, Ph.D. 43 Vice President of New Technologies and Director
Alexander E. Barkas, 48 Chairman of the Board of Directors
Ph.D.(1)(2)
Brian H. Dovey(1) 54 Director
Charles M. Hartman 54 Director
Thomas D. Kiley, Esq.(2) 53 Director
Patrick F. Latterell 38 Director
Robert B. Stein, M.D., Ph.D. 45 Director
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
RONALD W. EASTMAN has served as President, Chief Executive Officer and Director
of the Company since May 1993. From 1978 until joining the Company, Mr. Eastman
was employed with American Cyanamid Co., most recently as a Vice President and
General Manager of Lederle Laboratories, American Cyanamid's pharmaceutical
business. Mr. Eastman holds a B.A. from Williams College and an M.B.A. from
Columbia University.
DAVID L. GREENWOOD has served as Chief Financial Officer, Treasurer and
Secretary of the Company since July 1995. From 1979 until joining the Company,
Mr. Greenwood held various management positions with J.P. Morgan & Co.
Incorporated, an international banking firm, and its subsidiaries, J.P. Morgan
Securities Inc. and Morgan Guaranty Trust Company of New York. Mr. Greenwood
holds a B.A. from Pacific Lutheran University and an M.B.A. from Harvard
Business School.
RICHARD T. HAIDUCK has served as Vice President of Corporate Development of the
Company since October 1993. From March 1991 until joining the Company, Mr.
Haiduck was employed by ASB Meditest, a mobile medical testing company, as
Senior Vice President of Field Operations. From December 1989 to February 1991,
he was Chief Executive Officer of Lifescreen, Inc., a health screening company,
and from 1975 to 1989, Mr. Haiduck held various positions with Abbott
Laboratories, Inc., a pharmaceutical company. Mr. Haiduck holds a B.S. from
Miami University and an M.B.A. from Xavier University.
CALVIN B. HARLEY, PH.D., has served as Vice President of Research of the Company
since May 1994. From April 1993 to May 1994, Dr. Harley was Director, Cell
Biology of the Company. Dr. Harley was an Associate Professor from 1989 until
joining the Company, and an Assistant Professor from 1982 to 1989, of
Biochemistry at McMaster University. Dr. Harley also was the Chair of the
Canadian Association on Gerontology, Division of Biological Sciences from
October 1989 to October 1991 and Chairman Elect from 1987 to 1989. Dr. Harley
holds a B.S. from University of Waterloo and a Ph.D. from McMaster University,
and conducted postdoctoral work at the University of Sussex and the University
of California, San Francisco.
JERYL L. HILLEMAN has served as Vice President of Operations of the Company
since July 1995. From June 1992 until July 1995, Ms. Hilleman served as Vice
President of Administration and Finance of the Company. From 1987 until joining
the Company, Ms. Hilleman served as Vice President, Finance and Operations of
Cytel Corporation, a biotechnology company. Ms. Hilleman holds an A.B. from
Brown University and an M.B.A. from the Wharton Graduate School of Business.
KEVIN R. KASTER, ESQ., has served as Vice President of Intellectual Property and
Chief Patent Counsel of the Company since June 1994. From September 1991 until
joining the Company, Mr. Kaster was employed with Affymax, N.V., a biotechnology
company, as Director, Intellectual Property. From May 1988 until September 1991,
Mr. Kaster was a patent attorney with Cetus Corporation, a biotechnology
company. Prior to his employment with Cetus Corporation, he served as an
Associate Biologist and then as a Patent
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<PAGE> 37
Technician with Eli Lilly and Company, a pharmaceutical company. Mr. Kaster
holds a B.S. in Chemistry and Molecular Biology from Vanderbilt University and a
J.D. from Indiana University.
DANIEL J. LEVITT, M.D., PH.D., has served as Vice President of Drug Development
and Chief Medical Officer of the Company since February 1995. From 1990 until
joining the Company, Dr. Levitt held various positions at Sandoz Pharma Ltd., a
pharmaceutical company, most recently as Worldwide Head of Oncology Clinical
Research and Development. From 1986 to 1990, Dr. Levitt held various positions
with Hoffman-LaRoche, a pharmaceutical company, including Director of Clinical
Oncology and Immunology. He received post graduate training in Pediatrics at
Yale-New Haven Hospital and in Immunology and Oncology at the University of
Alabama-Birmingham Hospitals. Dr. Levitt was an Assistant Professor of
Pediatrics and Immunology at the University of Chicago Pritzker School of
Medicine from 1980 through 1983, and was a founding Scientist of the Guthrie
Research Institute. Dr. Levitt holds a B.A. from Brandeis University and an M.D.
and Ph.D. in Biology from the University of Chicago Pritzker School of Medicine.
MICHAEL D. WEST, PH.D., the founder of the Company, has served as a Director of
the Company since November 1990 and as Vice President of New Technologies of the
Company since October 1993. From February 1993 until October 1993, Dr. West
served as Executive Vice President of Business Development of the Company, and
from March 1992 until February 1993, he was Executive Vice President and Chief
Scientific Officer of the Company. From November 1990 until March 1992, Dr. West
served as President of the Company. Prior to joining the Company, Dr. West was a
Senior Research Scientist at the University of Texas Southwestern Medical Center
at Dallas in the Department of Cell Biology and Neuroscience and, from 1989 to
1990, was a Postdoctoral Research Fellow in the same department. Dr. West holds
a B.S. from Rensselaer Polytechnic Institute, an M.S. from Andrews University
and a Ph.D. from Baylor College of Medicine.
ALEXANDER E. BARKAS, PH.D., has served as Chairman of the Board since July 1993
and as a Director of the Company since March 1992. From March 1992 until May
1993, he served as President and Chief Executive Officer of the Company. He has
been a partner of Kleiner Perkins Caufield & Byers, a venture capital investment
firm, since 1990, prior to which he was a retained consultant to such firm for
two years. Dr. Barkas is also a director of Connective Therapeutics, Inc. and
several privately held medical technology companies. He holds a B.A. from
Brandeis University and a Ph.D. from New York University.
BRIAN H. DOVEY has served as a Director of the Company since June 1993. Mr.
Dovey has been a general partner of Domain Associates, a venture capital
investment firm, since 1988. From 1986 to 1988, Mr. Dovey was President of Rorer
Group, Inc. (now Rhone Poulenc Rorer, Inc.), a pharmaceutical company. Mr. Dovey
is also a director of Athena Neurosciences, Inc., Resound Corporation, NABI,
Inc., Creative BioMolecules, Inc., Vivus, Inc., Connective Therapeutics, Inc.
and several privately held companies. He holds a B.A. from Colgate University
and an M.B.A. from Harvard Business School.
CHARLES M. HARTMAN has served as a Director of the Company since August 1992. He
has been a general partner of CW Group, a venture capital partnership, since
1983. From 1965 to 1983, Mr. Hartman held a number of positions with Johnson &
Johnson. He is also a director of SUGEN, Inc., Ribozyme Pharmaceuticals, Inc.
and several privately held life sciences companies. He is also a director of the
Hastings Center, a nonprofit organization dedicated to the study of ethics in
medicine and the life sciences. Mr. Hartman holds a B.S. in Chemistry from Notre
Dame University and an M.B.A. from the University of Chicago.
THOMAS D. KILEY, ESQ., has served as a Director of the Company since September
1992. He has been self-employed since 1988 as an attorney, consultant and
investor. From 1980 to 1988, he was an officer of Genentech, Inc., a
biotechnology company, serving variously as Vice President and General Counsel,
Vice President for Legal Affairs and Vice President for Corporate Development.
From 1969 to 1980, he was with the Los Angeles law firm of Lyon & Lyon and was a
partner in such firm from 1975 to 1980. Mr. Kiley is also a director of Athena
Neurosciences, Inc., Pharmacyclics, Inc., Connective Therapeutics, Inc.,
Cardiogenesis Corporation and certain privately held biotechnology and other
companies. Mr. Kiley holds a B.S. in Chemical Engineering from Pennsylvania
State University and a J.D. from George Washington University.
PATRICK F. LATTERELL has served as a Director of the Company since March 1992.
Mr. Latterell is a General Partner of Venrock Associates, a venture capital
investment group, which he joined in 1989. From 1985 to 1989, he was a General
Partner at Rothschild Ventures Inc., a venture capital firm, where he was
responsible for its healthcare ventures. Prior to joining Rothschild, Mr.
Latterell was Manager of Corporate Development with Syntex Corporation, a
pharmaceutical company. Mr. Latterell is also a director of Biocircuits
Corporation, Pharmacyclics, Inc., Vical, Inc. and several privately held
biomedical companies. Mr. Latterell holds S.B. degrees in Biological Sciences
and Economics from the Massachusetts Institute of Technology and an M.B.A. from
Stanford Business School.
ROBERT B. STEIN, M.D., PH.D., has served as a Director of the Company since
April 1996. Since August 1993, Dr. Stein has been Senior Vice President and
Chief Scientific Officer of Ligand Pharmaceuticals Inc., a pharmaceutical
company, and from May 1990 to August 1993, he was Vice President of Research at
Ligand. From 1982 to 1990, Dr. Stein held various positions with Merck, Sharp,
and Dohme Research Laboratories, a pharmaceuticals company, including Senior
Director and Head of the Department of
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<PAGE> 38
Pharmacology from 1989 to 1990. Dr. Stein holds a B.S. in Biology and Chemistry
from Indiana University and an M.D. and Ph.D. in Physiology and Pharmacology
from Duke University.
BOARD OF DIRECTORS COMMITTEES, COMPENSATION OF DIRECTORS AND OTHER INFORMATION
The following directors were elected pursuant to a voting agreement, dated as of
March 20, 1992 and amended August 21, 1992 and June 3, 1993, between the Company
and certain stockholders of the Company: Drs. Barkas and West and Messrs. Dovey,
Hartman and Latterell. Upon the closing of the Offering, this voting agreement
will terminate pursuant to a separate agreement among the parties thereto.
The Company's Amended and Restated Bylaws provide for a classified Board of
Directors, which may have the effect of deterring hostile takeovers or delaying
changes in control or management of the Company. For purposes of determining
their terms of office, directors are divided into three classes: Class I, Class
II and Class III. Each director serves for a term ending on the date of the
third annual meeting of stockholders following the annual meeting at which the
director is elected, or until his or her earlier death, resignation or removal.
The initial Class I directors, Dr. West and Messrs. Hartman and Latterell, will
hold office until the 1997 annual meeting of stockholders; the initial Class II
directors, Messrs. Dovey, Eastman and Kiley, will hold office until the 1998
annual meeting of stockholders; and the initial Class III directors, Drs. Barkas
and Stein, will hold office until the 1999 annual meeting of stockholders. The
officers of the Company are appointed annually and serve at the discretion of
the Board of Directors.
Directors currently receive no cash fees for services provided in that capacity
but are reimbursed for out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The 1996 Director's Stock
Option Plan, under which current and future nonemployee directors will be
eligible to receive stock options in consideration for their services, was
adopted by the Board of Directors in June 1996 and will be submitted for
approval by the stockholders prior to the closing of the Offering. The 1996
Director's Stock Option Plan provides that each person who first becomes a
nonemployee director of the Company after the date of the Offering shall be
granted a nonstatutory stock option to purchase 25,000 shares of Common Stock
(the "First Option") on the date on which the optionee first becomes a
nonemployee director of the Company. The First Option will not be granted to
individuals currently serving as nonemployee directors as of the date of the
Offering. Thereafter, on the date of each annual meeting of the Company's
stockholders, each nonemployee director (including directors who were not
granted a First Option prior to the date of such annual meeting) shall be
granted an option to purchase 5,000 shares of Common Stock (a "Subsequent
Option") if, on such date, he or she has served on the Board of Directors for at
least six months. See "Management -- Stock Plans."
The Board of Directors currently has an Audit Committee and a Compensation
Committee. The Audit Committee, which was formed in May 1996, oversees the
actions taken by the Company's independent auditors and reviews the Company's
interim financial and accounting controls. The Audit Committee is currently
composed of Dr. Barkas and Mr. Kiley. The Compensation Committee was formed in
August 1993 to review and approve the compensation and benefits for the
Company's executive officers, administer the Company's stock plans and make
recommendations to the Board of Directors regarding such matters. The
Compensation Committee is currently composed of Dr. Barkas and Mr. Dovey. No
interlocking relationship exists between the Board of Directors or Compensation
Committee and the board of directors or compensation committee of any other
company, nor has any such interlocking relationship existed in the past. See
"Certain Transactions."
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that a director of a corporation will not be personally liable for
monetary damages for breach of such individual's fiduciary duties as a director
except for liability (i) for any breach of such director's duty of loyalty to
the corporation, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which a director derives an improper personal benefit.
The Company's Amended and Restated Bylaws provide that the Company will
indemnify its directors and may indemnify its officers, employees and other
agents to the full extent permitted by law. The Company believes that
indemnification under its Bylaws covers at least negligence and gross negligence
on the part of an indemnified party and permits the Company to advance expenses
incurred by an indemnified party in connection with the defense of any action or
proceeding arising out of such party's status or service as a director, officer,
employee or other agent of the Company upon an undertaking by such party to
repay such advances if it is ultimately determined that such party is not
entitled to indemnification.
The Company has entered into separate indemnification agreements with each of
its directors and officers. These agreements require the Company, among other
things, to indemnify such director or officer against expenses (including
attorneys' fees), judgments, fines and settlements (collectively, "Liabilities")
paid by such individual in connection with any action, suit or proceeding
arising out of such
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<PAGE> 39
individual's status or service as a director or officer of the Company (other
than Liabilities arising from willful misconduct or conduct that is knowingly
fraudulent or deliberately dishonest) and to advance expenses incurred by such
individual in connection with any proceeding against such individual with
respect to which such individual may be entitled to indemnification by the
Company. The Company believes that its Certificate of Incorporation and Bylaw
provisions and indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.
At present the Company is not aware of any pending or threatened litigation or
proceeding involving any director, officer, employee or agent of the Company in
which indemnification will be required or permitted.
EXECUTIVE COMPENSATION
The following table sets forth certain compensation paid by the Company during
the year ended December 31, 1995 to the Company's Chief Executive Officer and
the Company's four other most highly compensated executive officers whose total
cash compensation exceeded $100,000 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
--------------------------------------------------------------------
ANNUAL COMPENSATION
-------------------------------------- LONG-TERM
COMPENSATION
AWARDS
-----------------
----------------------------------------------- -----------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION (1) YEAR SALARY BONUS COMPENSATION(2) OPTIONS(#)
- ------------------------------------------ ----- --------- -------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Ronald W. Eastman 1995 $ 214,750 $ 38,660 $30,000 68,235
President and Chief Executive Officer
Richard T. Haiduck 1995 169,000 30,420 18,000 26,921
Vice President of Corporate Development
Calvin B. Harley, Ph.D. 1995 154,897 27,890 18,000 28,928
Vice President of Research
Jeryl L. Hilleman 1995 139,285 26,650 9,000 25,709
Vice President of Operations
Daniel J. Levitt, M.D., Ph.D.(3) 1995 136,581 28,490 10,000 79,417
Vice President of Drug Development and
Chief Medical Officer
</TABLE>
- ---------------
(1) Mr. Greenwood, the Company's Chief Financial Officer, Treasurer and
Secretary, joined the Company in July 1995 and currently receives an annual base
salary of $184,100. Had he been employed with the Company for the entire year
ended December 31, 1995, Mr. Greenwood would have been a Named Executive
Officer.
(2) Other annual compensation consists of monthly housing allowances.
(3) Dr. Levitt joined the Company in March 1995 and currently receives an annual
base salary of $197,200.
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<PAGE> 40
The following table provides certain information regarding options granted to
the Named Executive Officers during the year ended December 31, 1995. No stock
appreciation rights were granted to these individuals during the year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
NUMBER OF SHARES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(4)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1)(2) IN FISCAL YEAR(3) ($/SH) DATE 5%($) 10%($)
- ------------------------ ---------------- ------------------ ----------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Eastman 68,235 14.2% $0.82 7/27/05 $35,017 $ 88,740
Richard T. Haiduck 26,921 5.6 0.82 7/27/05 13,816 35,012
Calvin B. Harley, Ph.D. 28,928 6.0 0.82 7/27/05 14,845 37,621
Jeryl L. Hilleman 25,709 5.4 0.82 7/27/05 13,193 33,435
Daniel J. Levitt, M.D.,
Ph.D. 79,417 16.5 0.82 7/27/05 40,755 103,282
</TABLE>
- ---------------
(1) These stock options, which were granted under the 1992 Stock Option Plan,
are immediately exercisable for all option shares, but any shares purchased
under the option are subject to repurchase by the Company at the original
exercise price per share upon the cessation of the optionee's employment with
the Company. The Company's repurchase right generally lapses at the rate of
1/10th of the total number of shares at the end of the first six month period
after the commencement of the optionee's employment with the Company and 1/60th
of the total number of shares at the end of each month thereafter. The maximum
term of each option grant is ten years from the date of grant. The exercise
price is equal to the fair market value of the underlying stock on the grant
date.
(2) On April 30, 1996, the Board of Directors granted stock options to the above
Named Executive Officers as follows: Mr. Eastman, 91,761 shares; Mr. Haiduck,
25,489 shares; Dr. Harley, 25,489 shares; Ms. Hilleman, 25,489 shares; and Dr.
Levitt, 31,861 shares. In addition, on such date, the Board of Directors granted
a stock option to Mr. Greenwood for 42,482 shares. All of the foregoing options
will vest over a five year period from the date of grant and are exercisable at
$2.04, the fair market value per share on the date of grant as determined by the
Board of Directors.
(3) Based on an aggregate of 479,883 options granted by the Company in the year
ended December 31, 1995 to employees of the Company, including the Named
Executive Officers.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the Securities and Exchange Commission. There is no assurance
provided to any executive officer or any other holder of the Company's
securities that the actual stock price appreciation over the ten year option
term will be at the assumed 5% and 10% levels or at any other defined level.
Unless the market price of the Common Stock appreciates over the option term, no
value will be realized from the option grants made to the executive officers.
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<PAGE> 41
The following table sets forth information with respect to options exercised
during the year ended December 31, 1995 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END (#)(1)(2) AT FISCAL YEAR-END ($)(2)(3)
ACQUIRED ON VALUE -------------------------------- --------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(4) UNEXERCISABLE EXERCISABLE(4) UNEXERCISABLE
- --------------------------- ----------- ------------ --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Eastman 132,352 $63,000 164,622 0 $ 840 $0
Richard T. Haiduck 33,823 1,150 52,361 0 0 0
Calvin B. Harley, Ph.D. 0 0 75,508 0 1,850 0
Jeryl L. Hilleman 29,411 14,000 66,343 0 554 0
Daniel J. Levitt, M.D.,
Ph.D. 0 0 79,417 0 0 0
</TABLE>
- ---------------
(1) No stock appreciation rights were granted to the Named Executive Officers
during the fiscal year ended December 31, 1995.
(2) As of December 31, 1995, Mr. Greenwood held options to purchase 73,529
shares at an exercise price of $0.82 per share, all of which were then
exercisable. During the year ended December 31, 1995, Mr. Greenwood did not
exercise any options.
(3) Based on the fair market value of the Common Stock as of December 31, 1995,
as determined by the Board of Directors ($0.82 per share), minus the per share
exercise price, multiplied by the number of shares underlying the option.
(4) These stock options, which were granted under the 1992 Stock Option Plan,
are immediately exercisable for all option shares, but any shares purchased
under the option are subject to repurchase by the Company at the original
exercise price per share upon the cessation of the optionee's employment with
the Company. The Company's repurchase right generally lapses at the rate of
1/10th of the total number of shares at the end of the first six month period
after the commencement of the optionee's employment with the Company and 1/60th
of the total number of shares at the end of each month thereafter.
STOCK PLANS
1992 Stock Option Plan
The Company's 1992 Stock Option Plan (the "Stock Option Plan") was adopted by
the Board of Directors in May 1992 and approved by the stockholders in July
1992. In April 1996, the Stock Option Plan was amended by the Board of Directors
to increase the number of shares of Common Stock authorized for issuance
thereunder. In June 1996, the Stock Option Plan was amended by the Board of
Directors to comply with certain requirements of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, and the Internal Revenue Code of 1986, as
amended (the "Code"). In addition, the Stock Option Plan was amended to provide
that nonemployee directors will no longer be eligible to receive grants
thereunder. A total of 2,554,411 shares of Common Stock have been authorized for
issuance under the Stock Option Plan plus an automatic increase on the first
trading day of the 1997, 1998, 1999, 2000 and 2001 calendar years of an
additional number of shares equal to 2% of the number of shares of Common Stock
outstanding on December 31 of the immediately preceding calendar year, with no
such annual increase to exceed 300,000 shares. As of May 31, 1996, options to
purchase a total of 585,653 shares of Common Stock had been exercised, options
to purchase a total of 1,437,977 shares at a weighted average exercise price of
$1.32 per share were outstanding, and 530,781 shares remained available for
future option grants. Upon the effective date of the Offering, the Company
expects to grant options under the Stock Option Plan to purchase an aggregate of
194,491 shares to employees, officers, directors and consultants of the Company,
including the following executive officers: Mr. Eastman, 35,297 shares; Mr.
Greenwood, 16,341 shares; Mr. Kaster, 12,256 shares; Dr. Levitt, 12,256 shares;
Dr. West, 12,256 shares; Mr. Haiduck, 9,805 shares; Dr. Harley, 9,805 shares;
and Ms. Hilleman, 9,805 shares. These options will have an exercise price equal
to the initial public offering price and will vest over a five year period from
the date of grant.
The Stock Option Plan provides for the grant to employees of the Company
(including officers and employee directors) of "incentive stock options" within
the meaning of Section 422 of the Code and for the grant of nonstatutory stock
options to employees and consultants of the Company. To the extent an optionee
would have the right in any calendar year to exercise for the first time one or
more incentive stock options for shares having an aggregate fair market value
(under all plans of the Company and determined for each share as of the date the
option to purchase the share was granted) in excess of $100,000, any such excess
options will be treated as nonstatutory stock options.
The Stock Option Plan is administered by the Board of Directors or a committee
of the Board of Directors (the "Administrator"). A committee of nonemployee
directors grants options to Section 16 insiders. The Administrator determines
the terms of options granted
39
<PAGE> 42
under the Stock Option Plan, including the number of shares subject to the
option, exercise price, term and exercisability. However, in no event may any
one person participating in the Stock Option Plan receive options in any
calendar year for more than 500,000 shares. The exercise price of all incentive
stock options granted under the Stock Option Plan must be at least equal to the
fair market value of the Common Stock of the Company on the date of grant. The
exercise price of all nonstatutory stock options must equal at least 85% of the
fair market value of the Common Stock on the date of grant. The exercise price
of any incentive stock option granted to an optionee who owns stock representing
more than 10% of the voting power of the Company's outstanding capital stock (a
"10% Stockholder") must equal at least 110% of the fair market value of the
Common Stock on the date of grant. Payment of the exercise price may be made in
cash, promissory notes or other consideration determined by the Administrator.
The Administrator determines the term of options. The term of a stock option
granted under the Stock Option Plan may not exceed ten years; provided, however,
that the term of an incentive stock option may not exceed five years for 10%
Stockholders. No option may be transferred by the optionee other than by will or
the laws of descent or distribution, except that a nonstatutory stock option may
be assigned in accordance with the terms of a qualified domestic relations
order.
Each option may be exercised during the lifetime of the optionee only by such
optionee or a transferee under a qualified domestic relations order. Options
granted under the Stock Option Plan generally are immediately exercisable, and
the shares purchasable under such options are subject to repurchase by the
Company at their original exercise price, which repurchase rights generally
lapse in a series of installments at the rate of 10% of the total number of
shares after the six month period from the date of grant, and approximately
1.67% each month thereafter. In addition, the Stock Option Plan provides that
the Administrator, in its sole discretion, may assist any optionee in the
exercise of an option by authorizing the extension of a loan from the
Corporation to such optionee or by permitting such optionee to pay the exercise
price in installments over a period of years.
In the event an optionee ceases to be employed by the Company for any reason
other than death or disability, each outstanding option held by such optionee
will remain exercisable for the three month period following the date of such
cessation of employment. Should the optionee's employment terminate by reason of
disability, each outstanding option will remain exercisable for the six month
period following the date of such cessation of employment. Should the disability
be deemed a permanent disability or should the optionee's employment terminate
by reason of death, options held by such optionee will remain exercisable for 12
months following such cessation of employment. The Board will have full power
and authority to extend the period of time for which the option is to remain
exercisable following the optionee's termination of service.
In the event of certain transactions involving changes in control of the
Company, the Stock Option Plan requires that each outstanding option will
accelerate so that each option will be fully exercisable for all of the shares
subject to such option immediately prior to the effective date of the
transaction, unless assumed by the successor corporation. In addition, upon the
occurrence of such a transaction, the Stock Option Plan provides that all of the
outstanding repurchase rights of the Company with respect to shares of Common
Stock acquired upon exercise of options granted under the Stock Option Plan will
terminate, unless assigned by the Company to the successor corporation. The
Administrator has the authority to amend or terminate the Stock Option Plan as
long as such action does not adversely affect any outstanding option and
provided that stockholder approval will be required for an amendment to increase
the number of shares subject to the Stock Option Plan, to materially modify the
eligibility requirements for the grant of options under the Stock Option Plan,
to materially increase the benefits accruing to participants under the Stock
Option Plan, or to increase the annual limitation on grants to participants
under the Stock Option Plan. If not terminated earlier, the Stock Option Plan
will terminate in 2002.
1996 Employee Stock Purchase Plan
The Company's 1996 Employee Stock Purchase Plan (the "Stock Purchase Plan") was
adopted by the Board of Directors in June 1996 and will be submitted for
approval by the stockholders prior to the closing of the Offering. A total of
300,000 shares of Common Stock has been reserved for issuance under the Stock
Purchase Plan. If approved by the stockholders, the Stock Purchase Plan, which
is intended to qualify under Section 423 of the Code, will be implemented by a
series of offering periods of 12 months duration, with new offering periods
(other than the first offering period) commencing on or about January 1 and July
1 of each year. Each offering period consists of two consecutive purchase
periods of six months' duration, with the last day of such period being
designated a purchase date. The first such offering period is expected to
commence on the date of the Offering and continue through June 30, 1997, with
the first purchase date occurring on December 31, 1996 and subsequent purchase
dates to occur every six months thereafter. The Stock Purchase Plan is intended
to be administered by the Board of Directors or by a committee appointed by the
Board of Directors. Under the Stock Purchase Plan, employees (including officers
and employee directors) of the Company, or of any majority owned subsidiary
designated by the Board of Directors, are eligible to participate if they are
employed by the Company or any such subsidiary for at least 20 hours per week
and more than five months per year. No employee will be granted an option if
immediately after the grant, such employee would own stock or options to
purchase stock possessing 5% or more of the voting power or value of all classes
of stock of the Company. The Stock Purchase Plan permits eligible employees to
purchase Common Stock through payroll deductions, which may not exceed 10% of an
employee's compensation and other Stock Purchase Plan limitations, at a price
equal to the lower of 85% of the fair market value of the Common Stock at the
beginning of the offering period or the purchase date. If the fair market
40
<PAGE> 43
value of the Common Stock on a purchase date is less than the fair market value
at the beginning of the offering period, a new 12 month offering period will
immediately begin on the first business day following the purchase date with a
new fair market value. Employees may end their participation in the offering at
any time during the offering period, and participation ends automatically on
termination of employment with the Company. In addition, participants may
decrease their level of payroll deductions once during an offering period.
The Stock Purchase Plan provides that in the event of a merger of the Company
with or into another corporation or a sale of substantially all of the Company's
assets, each right to purchase stock under the plan will be assumed or an
equivalent right substituted by the successor corporation unless the Board of
Directors shortens the offering period so that employees' rights to purchase
stock under the plan are exercised prior to the merger or sale of assets. Under
the Stock Purchase Plan, the Board of Directors has the power to amend or
terminate the plan as long as such action does not adversely affect any
outstanding rights to purchase stock thereunder. If not terminated earlier, the
Stock Purchase Plan will have a term of 20 years.
1996 Directors' Stock Option Plan
The Company's Directors' Stock Option Plan (the "Directors Plan") was adopted by
the Board of Directors in June 1996 and will be submitted for approval by the
stockholders prior to the closing of the Offering. A total of 250,000 shares of
Common Stock has been reserved for issuance under the Directors' Plan. The
Directors' Plan provides for the automatic and nondiscretionary grant of
nonstatutory stock options to nonemployee directors of the Company. The
Directors' Plan is designed to work automatically without administration;
however, to the extent administration is necessary, it will be performed by the
Board of Directors.
The Directors' Plan provides that each person who first becomes a nonemployee
director of the Company after the date of the Offering will be granted a
nonstatutory stock option to purchase 25,000 shares of Common Stock (the "First
Option") on the date on which the optionee first becomes a nonemployee director
of the Company. The First Option will not be granted to individuals serving as
nonemployee directors as of the date of the Offering. Thereafter, on the date of
each annual meeting of the Company's stockholders, each nonemployee director
(including directors who were not granted a First Option prior to the date of
such annual meeting) will be granted an option to purchase 5,000 shares of
Common Stock (a "Subsequent Option") if, on such date, he or she has served on
the Board of Directors for at least six months.
The Directors' Plan sets neither a maximum nor a minimum number of shares for
which options may be granted to any one nonemployee director, but does specify
the number of shares that may be included in any grant and the method of making
a grant. No option granted under the Directors' Plan is transferable by the
optionee other than by will or the laws of descent or distribution or pursuant
to a qualified domestic relations order, and each option is exercisable, during
the lifetime of the optionee, only by such optionee or a transferee under a
qualified domestic relations order. The Directors' Plan provides that the First
Option will become exercisable in installments as to 33 1/3% of the total number
of shares subject to the First Option on each of the first, second and third
anniversaries of the date of grant of the First Option; each Subsequent Option
will become exercisable in full on the first anniversary of the date of grant of
that Subsequent Option. The exercise price of all stock options granted under
the Directors' Plan will be equal to the fair market value of a share of the
Company's Common Stock on the date of grant of the option. Options granted under
the Directors' Plan have a term of ten years.
If a nonemployee director ceases to serve as a director, he or she may exercise
his or her option within 90 days after such date, but only to the extent such
option is exercisable. In the event a nonemployee director is unable to continue
to serve as a director as a result of his or her total and permanent disability,
he or she may exercise his or her option within six months from the date of such
termination, but only to the extent such option is exercisable. In the event of
a director's death while serving as a director or within three months of
termination of such service, options may be exercised at any time within six
months following the date of death, but only to the extent of the right to
exercise that had accrued at the time of death unless the director died while
serving on the Board, in which case the option is exercisable to the extent of
the right to exercise that would have accrued had the director continued living
and remained a director without interruption for 12 months after the date of
death.
Under the Directors' Plan, in the event of the dissolution or liquidation of the
Company, a sale of all or substantially all of the assets of the Company, the
merger of the Company with or into another corporation in which the Company is
not the surviving corporation or any other capital reorganization in which more
than 50% of the shares of the Company entitled to vote are exchanged, the
Company will give to each nonemployee director either (i) a reasonable time
within which to exercise the option, including any part of the option that would
not otherwise be exercisable, prior to the effectiveness of any such transaction
at the end of which time the Option will terminate, or (ii) the right to
exercise the option, including any part of the option that would not otherwise
be exercisable (or receive a substitute option with comparable terms) as to an
equivalent number of shares of stock of the corporation succeeding the Company
or acquiring its business by reason of any such transaction. The Board of
Directors may amend or terminate the Directors' Plan; provided, however, that no
such action may adversely affect any outstanding option, and the provisions
regarding the grant of options under the plan may be amended only once in any
six month period, other than to comport with changes in the Code or the Employee
Retirement Income Security Act of 1974, as amended. If not terminated earlier,
the Directors' Plan will have a term of ten years.
41
<PAGE> 44
EMPLOYMENT AGREEMENTS
In February 1995, the Company entered into a letter agreement with Dr. Levitt,
pursuant to which Dr. Levitt agreed to serve as Vice President of Drug
Development for the Company. Under the terms of the agreement, Dr. Levitt
received a starting salary of $15,833 per month and is eligible to receive an
annual December bonus of up to 20% of his calendar year gross compensation. Dr.
Levitt's employment with the Company is "at-will" and may be terminated by Dr.
Levitt or the Company at any time for any reason with or without cause. In the
event the Company terminates Dr. Levitt without cause, the Company has agreed to
pay Dr. Levitt's salary for one year. Under the terms of the agreement, Dr.
Levitt was entitled to receive and has been granted an option to purchase 73,529
shares of Common Stock at the fair market value of such shares at the time of
the option grant.
INVESTMENT COMPANY ACT CONSIDERATIONS
The Investment Company Act of 1940, as amended (the "1940 Act"), requires the
registration of, and imposes various substantive restrictions on, certain
companies that engage primarily, or propose to engage primarily, in the business
of investing, reinvesting, or trading in securities, or that fail certain
statistical tests regarding the composition of assets and sources of income, and
are not primarily engaged in businesses other than investing, holding, owning or
trading securities. The Company believes that under the provisions of the 1940
Act, it is, and it intends to remain, primarily engaged in businesses other than
investing, reinvesting, owning, holding, or trading in securities. The Company
will seek temporarily to invest the proceeds of the Offering, pending their use
as described under "Use of Proceeds", and to apply the proceeds of the Offering
in the manner described under "Use of Proceeds" so as to avoid becoming subject
to the registration requirements of the 1940 Act. Such investment is likely to
result in the Company obtaining lower yields on the funds invested than might be
available in the securities market generally. However, there can be no assurance
that such investments and utilization can be made, or that any other exemption
would be available, so as to enable the Company to avoid the registration
requirements of the 1940 Act. If the Company were required to register as an
investment company under the 1940 Act, it would become subject to substantial
regulations with respect to its capital structure, management, operations,
transactions with affiliated persons (as defined in the 1940 Act) and other
matters. Application of the provisions of the 1940 Act would have a material
adverse effect on the Company. Rules have been proposed, but not yet adopted, to
exempt biotechnology companies from the 1940 Act provided they comply with
certain conditions relating to the development of their businesses and
investment of cash.
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<PAGE> 45
CERTAIN TRANSACTIONS
The price per share and number of shares presented herein give effect to the
1-for-3.4 reverse stock split which will be effected prior to the closing of the
Offering.
Since January 1993, the Company has issued in private placement transactions
(collectively, the "Private Placement Transactions") shares of Preferred Stock
as follows: an aggregate of 1,477,919 shares of Series A Preferred Stock at
$3.40 per share in March 1993; an aggregate of 1,429,228 shares of Series B
Preferred Stock at $7.65 per share in June 1993 and November 1993; an aggregate
of 1,550,851 shares of Series C Preferred Stock at $8.16 per share in June 1994,
July 1994, October 1995, January 1996 and May 1996; and an aggregate of
1,150,883 shares of Series D Preferred Stock at $10.20 per share in November
1995, December 1995, January 1996 and February 1996.
All of the Preferred Stock issued in the Private Placement Transactions will
convert into Common Stock on a 1-for-1 basis upon the closing of the Offering.
The following table summarizes the shares of Preferred Stock purchased by
executive officers, directors and 5% stockholders of the Company and persons and
entities associated with them in the Private Placement Transactions:
<TABLE>
<CAPTION>
---------------------------------------------------
SERIES A SERIES B SERIES C SERIES D
PREFERRED PREFERRED PREFERRED PREFERRED
STOCK STOCK STOCK STOCK
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTOR
DIRECTORS AND EXECUTIVE OFFICERS
Thomas D. Kiley, Esq. -- 14,705 15,318 9,803
Jeryl L. Hilleman 7,352 -- -- --
ENTITIES AFFILIATED WITH DIRECTORS
Entities affiliated with CW Group
(Charles M. Hartman)(1) 288,234 164,585 122,549 24,509
Domain Partners II, L.P.
(Brian H. Dovey) -- 370,370 220,588 24,509
Entities affiliated with Kleiner Perkins Caufield & Byers
(Alexander E. Barkas, Ph.D.)(2) 366,176 196,078 159,313 34,313
Entities affiliated with Venrock Associates
(Patrick F. Latterell)(3) 307,352 183,899 140,931 24,509
OTHER 5% STOCKHOLDERS
Oxford Venture Fund III, Limited Partnership 259,411 65,358 -- --
and Oxford Venture Fund III-A, Limited Partnership
The Aetna Casualty & Surety Company 220,588 101,307 12,255 --
Biotechnology Investments Limited -- 185,185 110,294 98,039
</TABLE>
- ---------------
(1) Entities affiliated with CW Group include CW Ventures II, L.P. and CW R&D II
(Financial Fund).
(2) Entities affiliated with Kleiner Perkins Caufield & Byers include Kleiner
Perkins Caufield & Byers VI and KPCB VI Founders' Fund.
(3) Entities affiliated with Venrock Associates include Venrock Associates and
Venrock Associates II, L.P.
In April 1996, the Company entered into a Consulting Agreement with Thomas D.
Kiley, a Director of the Company, pursuant to which Mr. Kiley agreed to provide
such advice and consultation as reasonably requested by the Company to its
officers and scientists on the direction, implementation and operations of its
scientific programs and business plans. As compensation for his services under
this agreement, Mr. Kiley has received an option to purchase 7,352 shares of
Common Stock at an exercise price of $2.04 per share, with vesting over a five
year period. Unless otherwise terminated by either the Company or Mr. Kiley,
this agreement will expire on April 10, 2001.
In May 1993, the Company provided an interest-free loan to Jeryl L. Hilleman,
Vice President of Operations, in the principal amount of $50,000, due May 20,
1996, pursuant to a note secured by a second deed of trust to Ms. Hilleman's
residence in Palo Alto, California. On May 20, 1996, the Company agreed to
extend the due date of this note to the earlier of May 22, 1997 or nine months
following the closing of an initial public offering of the Common Stock, with an
interest rate of 6% per annum, beginning as of May 21, 1996. In addition, in
connection with the exercise of an option to purchase Common Stock granted
pursuant to the Stock Option Plan, in March 1995, the Company provided a loan to
Ms. Hilleman, pursuant to a note secured by a stock pledge agreement, in the
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<PAGE> 46
principal amount of $9,900, with an interest rate of 7.07%, due upon the earlier
of March 10, 1998 or 30 days following any sale of the shares of Common Stock
purchased with the loan by Ms. Hilleman.
In July 1993, the Company provided a loan to Michael D. West, Vice President of
New Technologies and a Director of the Company, in the principal amount of
$55,000, with an interest rate of 3.95%, due July 7, 1996, pursuant to a note
secured by stock pledge agreement. On May 20, 1996, the Company agreed to extend
the due date of this note to the earlier of July 7, 1997 or nine months
following the closing of an initial public offering of the Company's Common
Stock, with an interest rate of 6.0% per annum, beginning as of July 8, 1996.
In July 1993, the Company provided an interest-free loan to Ronald W. Eastman,
President, Chief Executive Officer and a Director of the Company, in the
principal amount of $161,200, pursuant to a note secured by a second deed of
trust to Mr. Eastman's residence in Monte Sereno, California. The entire
outstanding principal balance under such note was repaid by Mr. Eastman in
August 1993. In addition, in connection with the exercise of an option to
purchase Common Stock granted pursuant to the Stock Option Plan, in March 1995,
the Company provided a loan to Mr. Eastman, pursuant to a note secured by a
stock pledge agreement, in the principal amount of $44,550, with an interest
rate of 7.07%, due upon the earlier of March 6, 1998 or 30 days following any
sale of the shares of Common Stock purchased with the loan by Mr. Eastman.
In December 1993, the Company provided an interest-free loan to Calvin B.
Harley, Vice President of Research, in the principal amount of $150,000, due
December 1, 1996, pursuant to a note secured by a second deed of trust to Dr.
Harley's residence in Palo Alto, California. In addition, in connection with the
exercise of an option to purchase Common Stock granted pursuant to the Stock
Option Plan, in October 1994, the Company provided a loan to Dr. Harley,
pursuant to a note secured by a stock pledge agreement, in the principal amount
of $14,850, with an interest rate of 5.91%, due upon the earlier of October 20,
1997 or 30 days following any sale of the shares of Common Stock purchased with
the loan by Dr. Harley.
In July 1995, the Company provided an interest-free loan to Daniel J. Levitt,
Vice President of Drug Development and Chief Medical Officer, in the principal
amount of $120,000, pursuant to a note secured by a second deed of trust to Dr.
Levitt's residence in San Francisco, California. Pursuant to the terms of the
note, the principal balance will be forgiven in four equal annual installments
of $30,000. As of May 31, 1996, $90,000 in principal amount remained outstanding
under such note. In addition, in connection with Dr. Levitt's relocation, the
Company purchased his former residence and resold it at a loss.
In September 1995, the Company provided two loans to David L. Greenwood, Chief
Financial Officer, Treasurer and Secretary, one in the principal amount of
$200,000, with an interest rate of 6.00%, due September 30, 1996, and the other
in the principal amount of $120,000, interest-free, due on the earlier of
September 30, 1998 or nine months following the closing of an initial public
offering of the Common Stock. Both loans were made pursuant to notes secured by
a second deed of trust to Mr. Greenwood's residence in Monte Sereno, California.
As of May 31, 1996, an aggregate of $200,000 in principal amount under such
notes remained outstanding.
In connection with the exercise of an option to purchase Common Stock granted
pursuant to the Stock Option Plan, in February 1995, the Company provided a loan
to Richard T. Haiduck, Vice President of Corporate Development, pursuant to a
note secured by a stock pledge agreement, in the principal amount of $26,335,
with an interest rate of 7.30%, due upon the earlier of February 27, 1998 or 30
days following any sale of the shares of Common Stock purchased with the loan by
Mr. Haiduck.
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<PAGE> 47
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of May 31, 1996 and as adjusted to reflect the
sale of shares offered hereby and assuming conversion of all outstanding shares
of the Preferred Stock, as to (i) each person (or group of affiliated persons)
known by the Company to own beneficially more than 5% of the outstanding Common
Stock, (ii) each of the Company's directors, (iii) each of the Named Executive
Officers and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
-----------------------------------------
SHARES BENEFICIALLY OWNED(1)
---------------------------------------------
PERCENT PERCENT
PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL HOLDER NUMBER THE OFFERING THE OFFERING
- ------------------------------------------------------------------------ --------- ------------ ------------
<S> <C> <C> <C>
Kleiner Perkins Caufield & Byers VI(2) 983,082 13.15% 9.65%
2750 Sand Hill Road
Menlo Park, California 94025
Venrock Associates(3) 832,421 11.13 8.17
30 Rockefeller Plaza, Room 5508
New York, New York 10112
CW Ventures II, L.P.(4) 743,993 9.95 7.30
1041 Third Avenue
New York, New York 10021
Domain Partners II, L.P. 635,074 8.50 6.23
One Palmer Square, Suite 515
Princeton, New Jersey 08542
Oxford Venture Fund III, Limited Partnership and 454,471 6.08 4.46
Oxford Venture Fund III-A, Limited Partnership(5)
315 Post Road West
Westport, Connecticut 06880
The Aetna Life Insurance Company 444,442 5.95 4.36
City Place
Hartford, Connecticut 06156
Biotechnology Investments Limited 403,321 5.40 3.96
St. Peter Port House, Sausmarez Street
St. Peter Port, Guernsey GX13PH
Alexander E. Barkas, Ph.D.(2)(6) 1,035,431 13.79 10.13
Brian H. Dovey(7) 660,073 8.83 6.48
Charles M. Hartman(4)(8) 766,050 10.22 7.50
Thomas D. Kiley, Esq.(9) 79,529 1.06 *
Patrick F. Latterell(3)(10) 854,478 11.41 8.37
Robert B. Stein, M.D., Ph.D.(11) 7,352 * *
Ronald W. Eastman(12) 388,733 5.03 3.72
Richard T. Haiduck(13) 111,673 1.49 1.09
Calvin B. Harley, Ph.D.(14) 145,114 1.92 1.41
Jeryl L. Hilleman(15) 131,535 1.74 1.28
Daniel J. Levitt, M.D., Ph.D.(16) 111,278 1.47 1.08
Michael D. West, Ph.D.(17) 271,409 3.59 2.64
All Directors and executive officers as a group (14 persons)(18) 4,774,987 56.83 42.94
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1% of the Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that person,
shares of Common Stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of May 31, 1996 are deemed
outstanding. Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of each other person. The persons named in
this table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community property
laws where applicable and except as indicated in the other footnotes to this
table.
(2) Includes 862,181 shares held by Kleiner Perkins Caufield & Byers VI and
120,901 shares held by KPCB VI Founders' Fund. Alexander E. Barkas, a Director
of the Company, is a limited partner of KPCB VI Associates, the general partner
of Kleiner Perkins Caufield & Byers VI and KPCB VI Founders' Fund, and as such,
may be deemed to share voting and investment power with respect to such shares.
Dr. Barkas disclaims beneficial ownership of such shares except to the extent of
his pecuniary interest in such shares.
45
<PAGE> 48
(3) Includes 574,674 shares held by Venrock Associates and 257,747 shares held
by Venrock Associates II, L.P . Patrick F. Latterell, a Director of the Company,
is a general partner of Venrock Associates and Venrock Associates II, L.P. and,
as such, may be deemed to share voting and investment power with respect to such
shares. Mr. Latterell disclaims beneficial ownership of such shares except to
the extent of his pecuniary interest in such shares.
(4) Includes 434,834 shares held by CW Ventures II, L.P. and 309,159 shares held
by CW R&D II (Financial Fund), L.P. Charles M. Hartman, a Director of the
Company, is a general partner of CW Ventures and CW R&D II (Financial Fund) and,
as such, may be deemed to share voting and investment power with respect to such
shares. Mr. Hartman disclaims beneficial ownership with respect to such shares
except to the extent of his pecuniary interest in such shares.
(5) Includes 363,578 shares held by Oxford Venture Fund III, Limited Partnership
("Oxford III") and 90,893 shares held by Oxford Venture Fund III Adjunct,
Limited Partnership ("Oxford III-A"). Oxford Partners III, Limited Partnership
is the general partner of Oxford III. Oxford Partners III-A, Limited Partnership
is the general partner of Oxford III-A.
(6) Includes 22,056 shares held directly by Alexander E. Barkas and 29,411
shares issuable upon the exercise of outstanding options held by Dr. Barkas
exercisable within 60 days of May 31, 1996, at which date no shares were vested.
Also includes 882 shares issuable upon the exercise of outstanding options held
by Linda Wijcik, the spouse of Dr. Barkas, exercisable within 60 days of May 31,
1996, at which date all of such shares were fully vested. The address of Dr.
Barkas is c/o Kleiner Perkins Caufield & Byers, 2750 Sand Hill Road, Menlo Park,
California 94025.
(7) Includes 635,074 shares held by Domain Partners II, L.P. and 24,999 shares
held by Domain Associates. By contractual arrangement, Domain Associates acts as
the U.S. Capital Advisor to Biotechnology Investments Limited ("BIL"). Domain
Associates and its partners have no voting and investment power over BIL's
shares and disclaim beneficial ownership of these shares. Brian H. Dovey, a
Director of the Company, is a general partner of Domain Associates and a general
partner of the general partner of Domain Partners II, L.P. Mr. Dovey disclaims
beneficial ownership of such shares up and to the extent of his pecuniary
interest in such shares. The address of Mr. Dovey is c/o Domain Associates, One
Palmer Square, Suite 515, Princeton, New Jersey 08542.
(8) Includes 22,057 shares issuable upon the exercise of outstanding options
held by Charles M. Hartman exercisable within 60 days of May 31, 1996, at which
date 2,696 shares were fully vested. The address of Mr. Hartman is c/o CW
Ventures, 1041 Third Avenue, New York, New York 10021.
(9) Includes 7,352 shares held directly by Thomas D. Kiley, 14,705 shares held
by the Kiley Family Partnership and 32,473 shares held by the Thomas D. Kiley
and Nancy L.M. Kiley Revocable Trust under Agreement dated August 7, 1981. Also
includes 24,999 shares issuable upon the exercise of outstanding options held by
Mr. Kiley exercisable within 60 days of May 31, 1996, at which date 368 shares
were fully vested.
(10) Includes 7,352 shares held by the Patrick Latterell Living Trust, of which
Patrick F. Latterell is trustee, and 14,705 shares issuable upon the exercise of
outstanding options held directly by Mr. Latterell exercisable within 60 days of
May 31, 1996, at which date no shares were vested. The address of Mr. Latterell
is c/o Venrock Associates, 755 Page Mill Road, Suite A230, Palo Alto, California
94304.
(11) Represents 7,352 shares issuable upon the exercise of outstanding options
held by Robert B. Stein exercisable within 60 days of May 31, 1996, at which
date no shares were vested.
(12) Includes an aggregate of 29,409 shares held by Patricia Eastman, the spouse
of Ronald W. Eastman, as custodian for Mr. Eastman's three minor children. Also
includes 102,941 shares held directly by Mr. Eastman and 256,383 shares issuable
upon the exercise of outstanding options held by Mr. Eastman exercisable within
60 days of May 31, 1996, at which date 56,753 shares were fully vested. The
address of Mr. Eastman is c/o Geron Corporation, 200 Constitution Drive, Menlo
Park, California 94025.
(13) Includes 86,184 shares held directly by Richard T. Haiduck and 25,489
shares issuable upon the exercise of outstanding options held by Mr. Haiduck
exercisable within 60 days of May 31, 1996, at which date 2,549 shares were
fully vested.
(14) Includes 44,117 shares held by the Harley Family Trust and 100,997 shares
issuable upon the exercise of outstanding options held by Calvin B. Harley
exercisable within 60 days of May 31, 1996, at which date 25,906 shares were
fully vested.
(15) Includes 1,470 shares held by Craig Albright as Trustee of the Colin M.
Albright 1991 Trust, 1,470 shares held by Craig Albright as Trustee of the Evan
M. Albright 1991 Trust and 1,470 shares held by Craig Albright as Trustee of the
Caroline V. Albright 1995 Trust. Also includes 7,352 shares held by the
Hilleman/Albright Family Trust. Also includes 27,941 shares held directly by
Jeryl L. Hilleman and 91,832 shares issuable upon the exercise of outstanding
options held by Ms. Hilleman exercisable within 60 days of May 31, 1996, at
which date 25,590 shares were fully vested.
(16) Includes 26,087 shares held directly by Daniel J. Levitt and 85,191 shares
issuable upon the exercise of outstanding options held by Dr. Levitt exercisable
within 60 days of May 31, 1996, at which date 5,953 shares were fully vested.
(17) Includes 194,765 shares held directly by Michael D. West as of June 7,
1996. Subsequent to May 31, 1996, Dr. West disposed of 88,235 shares. Also
includes 76,644 shares issuable upon the exercise of outstanding options held by
Dr. West exercisable within 60 days of May 31, 1996, at which date 21,814 shares
were fully vested. Additionally, Dr. West has agreed to transfer 8,823 shares to
a charitable trust. After the transfer of such 8,823 shares, Dr. West will have
no voting or investment power over such shares. Effective as of the date of such
transfer, Dr. West disclaims beneficial ownership of such shares.
46
<PAGE> 49
(18) Includes 21,329 shares held directly by Kevin R. Kaster, an executive
officer of the Company. Also includes 74,992 shares and 116,011 shares issuable
upon the exercise of outstanding options held by Mr. Kaster and David L.
Greenwood, an executive officer of the Company, respectively, exercisable within
60 days of May 31, 1996, at which date 4,820 shares and 18,954 shares,
respectively, were fully vested.
DESCRIPTION OF CAPITAL STOCK
Upon completion of the Offering, the authorized capital stock of the Company
will consist of 25,000,000 shares of Common Stock, $0.001 par value, and
3,000,000 shares of Preferred Stock, $0.001 par value. The price and per share
information presented herein give effect to the 1-for-3.4 reverse stock split
with respect to the Common Stock to be effected prior to the closing of the
Offering, and the conversion of all outstanding shares of Preferred Stock into
shares of Common Stock upon the closing of the Offering.
COMMON STOCK
As of May 31, 1996, there were 7,475,767 shares of Common Stock outstanding that
were held of record by approximately 122 stockholders, after giving effect to
the conversion of all outstanding shares of the Company's Series A, Series B,
Series C and Series D Preferred Stock into shares of Common Stock at a
one-to-one ratio. There will be 10,191,905 shares of Common Stock outstanding
(assuming no exercise of the Underwriters' over-allotment option) following the
sale of the shares of Common Stock offered hereby. See "Management -- Stock
Plans."
The holders of Common Stock are entitled to one vote per share on all matters to
be voted upon by the stockholders. Subject to preferences that may be applicable
to any outstanding shares of Preferred Stock, the holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. See
"Dividend Policy." In the event of a liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to preferences applicable
to shares of Preferred Stock, if any, then outstanding. The Common Stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions available to the Common Stock. All
outstanding shares of Common Stock are, and the shares of Common Stock to be
sold in the Offering will be, fully paid and nonassessable.
PREFERRED STOCK
Effective upon the closing of the Offering, the Company will be authorized to
issue 3,000,000 shares of undesignated Preferred Stock. The Board of Directors
will have the authority to issue the undesignated Preferred Stock in one or more
series, and to designate the powers, preferences and rights, and the
qualifications, limitations and restrictions granted to or imposed upon any
wholly unissued series of undesignated Preferred Stock and to fix the number of
shares constituting any series and the designation of such series without any
further vote or action by the stockholders. The issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders and may adversely affect the
market price and the voting and other rights of the holders of Common Stock. At
present, the Company has no plans to issue any shares of Preferred Stock.
WARRANTS AND OTHER RIGHTS
The Company has granted a right to purchase 9,703 shares of Common Stock at an
exercise price of $3.40 per share and has outstanding a warrant exercisable for
2,352 shares of Common Stock at an exercise price of $7.65 per share, both of
which will expire, if not exercised, upon the closing of the Offering. The
Company expects this right to purchase Common Stock and the outstanding warrant
to be exercised upon the closing of this Offering. The Company also has
outstanding warrants exercisable for 9,190 shares of Common Stock at an exercise
price of $9.38 per share which expire on June 30, 1999, and outstanding a
warrant exercisable for 47,058 shares of Common Stock at an exercise price of
$7.65 per share which will expire on in February 2004.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of 6,880,275 shares of Common Stock, the holders of warrants
exercisable for 56,248 additional shares of Common Stock and the holder of an
option exercisable for 9,703 additional shares of Common Stock (the "Registrable
Securities") or their transferees are entitled to certain rights with respect to
the registration of such shares under the Securities Act. These rights are
provided under the terms of an agreement between the Company and the holders of
Registrable Securities. Subject to certain limitations in the agreement, the
holders of at least 75% of the Registrable Securities may require, on two
occasions at any time after three months from the effective date of the
Offering, that the Company use its best efforts to register the Registrable
Securities for public resale. If the Company registers any of its Common Stock
either for its own account or for the account of other security holders, the
47
<PAGE> 50
holders of Registrable Securities are entitled to include their shares of Common
Stock in the registration. A holder's right to include shares in an underwritten
registration is subject to the ability of the underwriters to limit the number
of shares included in the Offering. Holders of Registrable Securities holding at
least 15% of the Company's outstanding shares of capital stock may also require
the Company to register all or a portion of their Registrable Securities on Form
S-3 when use of such form becomes available to the Company, provided, among
other limitations, that the proposed aggregate selling price, net of
underwriting discounts and commissions, is at least $500,000. All fees, costs
and expenses of such registrations, excluding those incurred with respect to
registrations on Form S-3, must be borne by the Company and all selling expenses
(including underwriting discounts, selling commissions and stock transfer taxes)
relating to Registrable Securities must be borne by the holders of the
securities being registered. All fees, costs, and expenses (excluding selling
expenses) for the first four registrations on Form S-3 shall be borne by the
Company and, thereafter, by the holders of the securities being registered
(including selling expenses).
ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW
The Company is subject to the provisions of Section 203 of the Delaware Law. In
general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder unless (with certain exceptions) the business combination or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale or other transaction resulting in a financial benefit to the
stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years prior, did own) 15% or
more of the corporation's outstanding voting stock. This provision may have the
effect of delaying, deferring or preventing a change in control of the Company
without further action by the stockholders. In addition, upon completion of the
Offering, certain provisions of the Company's charter documents, including a
provision eliminating the ability of stockholders to take actions by written
consent, may have the effect of delaying or preventing changes in control or
management of the Company, which could have an adverse effect on the market
price of the Company's Common Stock. The Company's stock option and purchase
plans generally provide for assumption of such plans or substitution of an
equivalent option of a successor corporation or, alternatively, at the
discretion of the Board of Directors, exercise of some or all of the options
stock, including nonvested shares, or acceleration of vesting of shares issued
pursuant to stock grants, upon a change of control or similar event. The Board
of Directors has authority to issue up to 3,000,000 shares of Preferred Stock
and to fix the rights, preferences, privileges and restrictions, including
voting rights, of these shares without any further vote or action by the
stockholders. The rights of the holders of the Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company, thereby delaying, deferring or preventing a change in control of the
Company. Furthermore, such Preferred Stock may have other rights, including
economic rights senior to the Common Stock, and, as a result, the issuance of
such Preferred Stock could have a material adverse effect on the market value of
the Common Stock. The Company has no present plan to issue shares of Preferred
Stock.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is U.S. Stock Transfer
Corporation.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 10,191,905 shares of
Common Stock outstanding, assuming no exercise of outstanding warrants and
options after May 31, 1996. Of these shares, the 2,500,000 shares sold in the
Offering will be freely transferable without restriction under the Securities
Act unless they are held by "affiliates" of the Company as that term is defined
in Rule 144 under the Securities Act. The remaining 7,691,905 shares of Common
Stock (the "Restricted Shares") held by officers, directors, employees,
consultants and other stockholders of the Company were sold by the Company in
reliance on exemptions from the registration requirements of the Securities Act
and are "restricted securities" within the meaning of Rule 144 under the
Securities Act and may not be sold publicly unless they are registered under the
Securities Act or are sold pursuant to Rule 144 or another exemption from
registration.
The officers, directors, employees and stockholders of the Company, who together
hold the Restricted Shares, have agreed not to sell their shares without the
prior written consent of J.P. Morgan Securities Inc. for a period of 180 days
from the date of this Prospectus. Kyowa Hakko has agreed not to sell the shares
of Common Stock to be issued in the Kyowa Hakko Direct Placement for a period of
two years from the closing of the Offering. Beginning 180 days after
commencement of the Offering, approximately 6,290,045 Restricted Shares that are
subject to lock-up agreements (as described below under "Underwriting") will
become eligible for sale in the public market subject to Rule 144 and Rule 701
under the Securities Act. The remaining approximately 1,401,860 Restricted
48
<PAGE> 51
Shares, which are also subject to such lock-up agreements, will have been held
for less than two years upon the expiration of such lock-up agreements and will
become eligible for sale under Rule 144 at various dates thereafter as the
holding period provisions of Rule 144 are satisfied.
In general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned Restricted Shares for at least
two years, including persons who may be deemed "affiliates" of the Company, is
entitled to sell, within any three month period commencing 90 days after the
Offering, a number of shares that does not exceed the greater of 1% of the
number of shares of Common Stock then outstanding (approximately 101,919 shares
immediately after the Offering, assuming no exercise of the Underwriters'
over-allotment option) or the average weekly trading volume of the Common Stock
as reported through the Nasdaq National Market during the four calendar weeks
preceding the filing of a Form 144 with respect to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about the
Company. In addition, a person who is not deemed to have been an affiliate of
the Company at any time during the 90 days preceding a sale, and who has
beneficially owned for at least three years the shares proposed to be sold,
would be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above.
Under Rule 701 under the Securities Act, any employee, officer or director of or
consultant to the Company, who is not an affiliate of the Company, and who
purchased shares pursuant to a written compensatory plans or contract, including
the Stock Option Plan, is entitled to sell such shares without having to comply
with the public information, holding period, volume limitation or notice
provisions of Rule 144, and affiliates of the Company are permitted to sell such
shares without having to comply with the Rule 144 holding period restrictions,
in each case commencing 90 days after the Offering.
The Company presently intends to file a registration statement under the
Securities Act on Form S-8 to register approximately 2,518,758 shares of Common
Stock subject to outstanding stock options or reserved for issuance under the
Stock Option Plan and the Directors' Plan, as well as shares reserved for
issuance under the Purchase Plan. As of May 31, 1996, 1,437,977 shares were
issuable upon exercise of currently outstanding options and, taking into account
the effect of the lock-up agreements with the holders of options, 501,929 of
these shares were fully vested and eligible for sale in the public markets
beginning 180 days after commencement of the Offering, subject, in the case of
sales by affiliates, to the volume, manner of sale, notice and public
information requirements of Rule 144. See "Management -- Stock Plans."
The holders of 6,880,275 shares of Common Stock, the holders of warrants
exercisable for 56,248 additional shares of Common Stock and the holder of an
option exercisable for 9,703 additional shares of Common Stock (and such
holders' permitted transferees) are entitled to certain rights with respect to
the registration of such shares under the Securities Act. See "Description of
Capital Stock -- Registration Rights of Certain Holders." Registration of such
shares under the Securities Act would result in such shares becoming freely
tradable without restriction under the Securities Act (except for shares
purchased by affiliates of the Company) immediately upon the effectiveness of
such registration. If such holders, by exercising their demand registration
rights, cause a larger number of securities to be registered and sold in the
public market, such sales could have an adverse effect on the market price for
the Common Stock. If the Company were to include in a Company-initiated
registration any Registrable Securities pursuant to the exercise of piggyback
registration rights, such sales may have an adverse effect on the Company's
ability to raise needed capital.
Prior to the Offering, there has been no public market for the Common Stock of
the Company. No predictions can be made of the effect if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of a substantial amount of
such shares by existing stockholders or by stockholders purchasing in the
Offering could have a negative impact on the market price of the Common Stock.
49
<PAGE> 52
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus (the "Underwriting Agreement"), the
Underwriters named below, for whom J.P. Morgan Securities Inc., Montgomery
Securities and Salomon Brothers Inc are acting as representatives (the
"Representatives"), have severally agreed to purchase, and the Company has
agreed to sell to them, the respective numbers of shares of Common Stock set
forth opposite their names below. Under the terms and conditions of the
Underwriting Agreement, the Underwriters are obligated to take and pay for all
such shares of Common Stock, if any are taken. Under certain circumstances, the
commitments of nondefaulting Underwriters may be increased as set forth in the
Underwriting Agreement.
<TABLE>
<CAPTION>
----------------
UNDERWRITERS NUMBER OF SHARES
----------------
<S> <C>
J.P. Morgan Securities Inc. .............................................................
Montgomery Securities....................................................................
Salomon Brothers Inc.....................................................................
---------
Total..................................................................................
=========
</TABLE>
The Underwriters propose initially to offer the Common Stock directly to the
public at the price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to certain other dealers. After the
initial public offering of the Common Stock, the public offering price and such
concession may be changed.
The Company has granted to the Underwriters an option, expiring at the close of
business on the 30th day after the date of this Prospectus, to purchase up to
375,000 additional shares of Common Stock at the initial public offering price,
less the underwriting discount. The Underwriters may exercise such option solely
for the purpose of covering over-allotments, if any. To the extent the
Underwriters exercise the option, each Underwriter will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage of
such additional shares as the number set forth next to such Underwriter's name
in the preceding table bears to the total number of shares of Common Stock
offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company, its officers, directors and stockholders have agreed, subject to
certain exceptions, not to, directly or indirectly, (i) sell, grant any option
to purchase or otherwise transfer or dispose of any shares of Common Stock or
securities convertible into or exchangeable or exercisable for shares of Common
Stock or file a registration statement under the Securities Act with respect to
the foregoing or (ii) enter into any swap or other agreement or transaction that
transfers, in whole or in part, the economic consequence of ownership of the
Common Stock, without the prior written consent of J.P. Morgan Securities Inc.,
for a period of 180 days after the date of this Prospectus. The foregoing does
not prohibit the Company's issuance of shares pursuant to the exercise of the
Underwriters over-allotment option or under the Stock Option Plan, the
Directors' Plan or the Stock Purchase Plan. The Company is not aware that any
party to such agreement has requested a consent from J.P. Morgan Securities
Inc., and J.P. Morgan Securities Inc. has advised the Company that it has no
current intention to give such consent, although there can be no assurance that
it will not do so.
Application has been made to have the Common Stock quoted on the Nasdaq National
Market, under the symbol "GERN".
The Underwriters have advised the Company that they do not expect that sales to
accounts over which they exercise discretionary authority will exceed 5% of the
shares offered hereby.
Prior to the Offering, there has been no public market for the Common Stock. The
initial public offering price for the shares of Common Stock offered hereby will
be determined through negotiations among the Company and the Underwriters. Among
the factors to be considered in making such determination are the history of and
the prospects for the industry in which the Company operates, an assessment of
the Company's management, the present operations of the Company, the historical
results of operations of the Company, the prospects for future earnings of the
Company, the general conditions of the securities markets at the time of the
Offering and the prices of similar securities of generally comparable companies.
There can be no assurance that an active trading market will develop for the
Common Stock or that the Common Stock will trade in the public market subsequent
to the Offering at or above the initial public offering price.
50
<PAGE> 53
From time to time in the ordinary course of their respective businesses, the
Representatives and their respective affiliates may in the future provide
investment banking and other financial services to the Company and its
affiliates.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by its counsel, Venture Law Group, A Professional Corporation, Menlo
Park, California. Joshua L. Green, a director of Venture Law Group, is Assistant
Secretary of the Company. Certain legal matters in connection with the Offering
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California. As of the date of this Prospectus, certain
directors and employees of Venture Law Group beneficially own 2,041 shares of
Common Stock.
EXPERTS
The financial statements of the Company at December 31, 1994 and 1995 and for
the three years in the period ended December 31, 1995 appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The statements in this Prospectus as set forth under the captions "Risk
Factors -- Dependence on Proprietary Technology and Uncertainty of Patent
Protection" and "Business -- Patents, Proprietary Technology and Trade Secrets"
have been passed upon by Townsend and Townsend and Crew LLP, Palo Alto,
California, patent counsel to the Company, as experts on such matters, and are
included herein in reliance upon the review and approval of such firm.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the Common Stock offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and such Common Stock, reference is made to the
Registration Statement and the exhibits and schedules thereto filed as a part
thereof. Statements contained herein as to the contents of any documents are not
necessarily complete. In each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement, and each such
statement is qualified in its entirety by such reference. Copies of the
Registration Statement, including exhibits and schedules filed therewith, may be
inspected without charge at the Commission's principal office in Washington,
D.C. or obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company
intends to distribute to its stockholders annual reports containing audited
financial statements and will make available copies of quarterly reports for the
first three quarters of each fiscal year containing unaudited interim financial
information.
51
<PAGE> 54
GERON CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors................................................. F-2
Balance Sheets.................................................................................... F-3
Statements of Operations.......................................................................... F-4
Statements of Stockholders' Equity................................................................ F-5
Statements of Cash Flows.......................................................................... F-6
Notes to Financial Statements..................................................................... F-7
</TABLE>
F-1
<PAGE> 55
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Geron Corporation
We have audited the accompanying balance sheets of Geron Corporation at December
31, 1994 and 1995, and the related statements of operations, stockholders'
equity, and cash flows for the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Geron Corporation at December
31, 1994 and 1995 and the results of its operations and its cash flows for the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Palo Alto, California
February 9, 1996, except as to
Note 10 as to which the date
is , 1996
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon completion of
certain events as described in Note 10 to the Financial Statements.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Palo Alto, California
June 11, 1996
F-2
<PAGE> 56
GERON CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
-------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31,
--------------------- PRO FORMA
STOCKHOLDERS'
1994 EQUITY AT
--------- MARCH 31, MARCH 31,
(In thousands, except share and per share amounts) 1995 1996 1996
--------- --------- -------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 6,523 $ 12,542 $ 8,404
Short-term investments 7,392 3,011 5,535
Other current assets 231 349 519
--------- --------- ---------
Total current assets 14,146 15,902 14,458
Property and equipment, net 2,382 2,746 2,561
Notes receivable from officers 273 817 799
Deposits and other assets 271 284 283
--------- --------- ---------
$ 17,072 $ 19,749 $ 18,101
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 454 $ 500 $ 342
Accrued compensation 330 445 235
Accrued liabilities 314 513 412
Deferred revenue -- 1,335 --
Current portion of capital lease obligations and equipment
loans 638 994 979
--------- --------- ---------
Total current liabilities 1,736 3,787 1,968
Noncurrent portion of capital lease obligations and equipment
loans 1,647 1,654 1,471
Commitments
Stockholders' equity:
Preferred stock -- Issuable in series, $0.001 par value;
5,438,944, 6,410,759 and 6,410,759 shares authorized at
December 31, 1994 and 1995 and March 31, 1996,
respectively; 5,212,411, 6,071,390 and 6,364,274 shares
issued and outstanding at December 31, 1994, December
31, 1995 and March 31, 1996, respectively (none pro
forma); (liquidation preference of $39,925,862 at
December 31, 1995 and $42,911,861 at March 31, 1996) 5 6 6 $ --
Common stock, $0.001 par value: 8,823,529, 10,294,117 and
10,294,117 shares authorized at December 31, 1994 and
1995 and March 31, 1996, respectively; 642,162, 929,089
and 929,390 shares issued and outstanding at December
31, 1994 and 1995 and March 31, 1996, respectively
(7,293,664 shares pro forma) 1 1 1 7
Additional paid-in capital 31,325 40,205 43,191 43,191
Notes receivable from stockholders (38) (131) (303) (303)
Deferred compensation -- -- (12) (12)
Accumulated deficit (17,604) (25,773) (28,221) (28,221)
--------- --------- --------- -------------
Total stockholders' equity 13,689 14,308 14,662 $ 14,662
===========
--------- --------- ---------
$ 17,072 $ 19,749 $ 18,101
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 57
GERON CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
----------------------------------------
1993 THREE MONTHS ENDED
---------- MARCH 31,
(In thousands, except share and per -------------------------
share amounts) 1994 1995 1996
---------- ---------- 1995 ----------
----------
(UNAUDITED)
Revenues -- contract $ -- $ -- $ 5,490 $ -- $ 1,335
Operating expenses:
Research and development 3,975 8,099 11,321 2,455 3,294
General and administrative 2,220 2,397 2,888 573 681
---------- ---------- ---------- ---------- ----------
Total operating expenses 6,195 10,496 14,209 3,028 3,975
---------- ---------- ---------- ---------- ----------
Loss from operations (6,195) (10,496) (8,719) (3,028) (2,640)
Interest and other income 351 638 919 167 306
Interest and other expense (103) (320) (399) (93) (101)
---------- ---------- ---------- ---------- ----------
Net loss $ (5,947) $ (10,178) $ (8,199) $ (2,954) $ (2,435)
========== ========== ========== ========== ==========
Pro forma net loss per share (Note 1) $ (1.03) $ (0.30)
========== ==========
Shares used in computing pro forma net
loss per share (Note 1) 7,954,863 8,009,240
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE> 58
GERON CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREFERRED STOCK
------------------
NOTES
SHARES RECEIVABLE TOTAL
--------- COMMON STOCK ADDITIONAL FROM DEFERRED ACCUMU- STOCK
(In thousands, except share ----------------- PAID IN STOCK- COMPENSA- LATED HOLDERS'
and per share amounts) AMOUNT AMOUNT CAPITAL HOLDERS TION DEFICIT EQUITY
------ SHARES ------ ---------- ---------- --------- -------- --------
--------
Balances at December 31,
1992 757,353 $1 463,221 $1 $ 2,745 $ -- $ -- $ (1,458) $ 1,289
Issuance of Series A
convertible preferred
stock 1,477,919 1 -- -- 5,024 -- -- -- 5,025
Issuance of common stock
upon exercise of
options -- -- 27,916 -- 9 -- -- -- 9
Issuance of Series B
convertible preferred
stock net of issuance
costs of $40 1,394,947 1 -- -- 10,631 -- -- -- 10,632
Issuance of common stock -- -- 29,409 -- 23 -- -- -- 23
Issuance of Series B
convertible preferred
stock 34,281 -- -- -- 262 -- -- -- 262
Net loss -- -- -- -- -- -- -- (5,947) (5,947)
-- --
--------- -------- ---------- ---------- --------- -------- --------
Balances at December 31,
1993 3,664,500 3 520,546 1 18,694 -- -- (7,405) 11,293
Issuance of Series C
convertible preferred
stock, net of issuance
costs of $64 1,547,911 2 -- -- 12,565 -- -- -- 12,567
Issuance of common stock
upon exercise of
options -- -- 121,616 -- 66 (38) -- -- 28
Net change in unrealized
gain (loss) on
available-for-sale
securities -- -- -- -- -- -- -- (21) (21)
Net loss -- -- -- -- -- -- -- (10,178) (10,178)
-- --
--------- -------- ---------- ---------- --------- -------- --------
Balances at December 31,
1994 5,212,411 5 642,162 1 31,325 (38) -- (17,604) 13,689
Issuance of Series C
convertible preferred
stock 245 -- -- -- 2 -- -- -- 2
Issuance of common stock
to certain research
institutions -- -- 32,352 -- 26 -- -- -- 26
Issuance of Series D
convertible preferred
stock, net of issuance
costs of $28 858,734 1 -- -- 8,730 -- -- -- 8,731
Issuance of common stock
upon exercise of
options -- -- 252,370 -- 120 (97) -- -- 23
Net issuance of common
stock -- -- 2,205 -- 2 4 -- -- 6
Net change in unrealized
gain (loss) on
available-for-sale
securities -- -- -- -- -- -- -- 30 30
Net loss -- -- -- -- -- -- -- (8,199) (8,199)
-- --
--------- -------- ---------- ---------- --------- -------- --------
Balances at December 31,
1995 6,071,390 6 929,089 1 40,205 (131) -- (25,773) 14,308
Issuance of Series D
convertible preferred
stock, net of issuance
costs of $13
(unaudited) 292,149 -- -- -- 2,967 (180) -- -- 2,787
Issuance of Series C
convertible preferred
stock (unaudited) 735 -- -- -- 6 -- -- -- 6
Issuance of common stock
upon exercise of
options, net
(unaudited) -- -- 301 -- 1 8 -- -- 9
Deferred compensation
related to certain
options and stock
purchase rights granted
to employees and
consultants (unaudited) -- -- -- -- 12 -- (12) -- --
Net change in unrealized
gain (loss) on
available-for-sale
securities (unaudited) -- -- -- -- -- -- -- (13) (13)
Net loss (unaudited) -- -- -- -- -- -- -- (2,435) (2,435)
-- --
--------- -------- ---------- ---------- --------- -------- --------
Balances at March 31, 1996
(unaudited) 6,364,274 $6 929,390 $1 $ 43,191 $ (303) $ (12) $(28,221) $ 14,662
========= ======= ======== ======= ========= ========= ========= ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 59
GERON CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
-------------------------------------
THREE MONTHS ENDED
1993 MARCH 31,
---------- -----------------------
(In thousands) 1994 1995 1996
----------- ---------- ----------
1995
----------
(UNAUDITED)
Cash flows from operating activities
Net loss $ (5,947) $ (10,178) $ (8,199) $ (2,954) $ (2,435)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 196 558 780 170 221
Issuance of common and preferred stock in
exchange for in-process technology,
services rendered and research agreements -- -- 82 -- 6
Changes in assets and liabilities:
Other current assets (50) (164) (118) 1 (170)
Notes receivable from officers (155) (18) (544) (93) 18
Deposits and other assets (206) 7 (13) (1) --
Accounts payable 941 (627) 46 (105) (158)
Accrued compensation 120 210 114 (154) (210)
Accrued liabilities 74 148 199 66 (101)
Deferred revenue -- -- 1,335 -- (1,335)
---------- ----------- ---------- ---------- ----------
Net cash used in operating activities (5,027) (10,064) (6,318) (3,070) (4,164)
---------- ----------- ---------- ---------- ----------
Cash flows from investing activities
Capital expenditures (846) (78) (482) (37) (15)
Purchases of short-term investments (66,414) -- -- -- --
Purchases of securities available-for-sale -- (5,975) (7,579) (1,302) (6,037)
Sales of short-term investments 56,531 -- -- -- --
Proceeds from sales of securities
available-for-sale -- 8,645 500 -- --
Proceeds from maturities of securities
available-for-sale -- -- 11,490 6,425 3,500
---------- ----------- ---------- ---------- ----------
Net cash (used in) provided by investing
activities (10,729) 2,592 3,929 5,086 (2,552)
---------- ----------- ---------- ---------- ----------
Cash flows from financing activities
Proceeds from equipment loans 750 35 471 20 15
Payments of obligations under capital leases
and equipment loans (157) (483) (769) (159) (233)
Proceeds from issuance of preferred stock 15,919 12,567 8,681 -- 2,787
Proceeds from issuance of common stock 32 28 25 2 9
---------- ----------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities 16,544 12,147 8,408 (137) 2,578
---------- ----------- ---------- ---------- ----------
Net increase (decrease) in cash and cash and cash
equivalents 788 4,675 6,019 1,879 (4,138)
Cash and cash equivalents at beginning of period 1,060 1,848 6,523 6,523 12,542
---------- ----------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 1,848 $ 6,523 $ 12,542 $ 8,402 $ 8,404
========== =========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE> 60
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Geron Corporation (the "Company") was incorporated in the State of Delaware on
November 28, 1990. Through April 21, 1995, prior to the signing of the Company's
collaborative agreement (see Note 7), the Company was in the development stage.
Geron is a biopharmaceutical company exclusively focused on discovering and
developing therapeutic and diagnostic products based upon common biological
mechanisms underlying cancer and other age-related diseases. Principal
activities to date have included obtaining financing, recruiting management and
technical personnel, securing operating facilities and conducting research and
development. The Company has no therapeutic products currently available for
sale and does not expect to have any therapeutic products commercially available
for sale for several years. These factors indicate that the Company's ability to
continue its research and development activities is dependent upon the ability
of management to obtain additional financing as required.
Interim Financial Information
In the opinion of management, the interim financial statements have been
prepared on the same basis as the annual financial statements and include all
accruals consisting of normal recurring adjustments which the Company considers
necessary for a fair presentation of the financial position at such date and the
operating results and cash flows for those periods. Results for the interim
period are not necessarily indicative of the results to be expected for the
entire year.
Net Loss Per Share
Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from stock options, convertible preferred stock and warrants are excluded from
the computation as their effect is antidilutive, except that, pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins, common and common
share equivalent shares issued during the period beginning 12 months prior to
the proposed initial filing of the Company's Registration Statement at prices
substantially below the assumed public offering price have been included in the
calculation as if they were outstanding for all periods presented (using the
treasury stock method and the assumed public offering price for stock options
and warrants and the if-converted method for convertible preferred stock).
Historical net loss per share information is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- ---------------------
1993 1994 1995 1996
--------- --------- --------- ---------
1995
---------
(UNAUDITED)
Net loss per share $ (2.47) $ (4.13) $ (2.99) $ (1.13) $ (0.87)
========= ========= ========= ========= =========
Shares used in computing historical net loss per
share 2,409,497 2,465,726 2,742,452 2,612,380 2,796,829
========= ========= ========= ========= =========
</TABLE>
Pro forma net loss per share has been computed as described above and also gives
effect to the conversion of convertible preferred shares issued more than 12
months prior to the initial filing of the Registation Statement that will
automatically convert upon completion of the Company's initial public offering
("IPO") (using the if-converted method). Such shares are included from the
original date of issuance.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Revenue Recognition
Contract revenue consists of revenue from one collaboration agreement. The
Company recognizes research and development revenue as the related costs are
incurred. Milestone fees are recognized upon completion of specified milestones
according to contract terms. Deferred revenue represents the portion of research
payments received which have not been earned.
F-7
<PAGE> 61
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
Depreciation and Amortization
The Company records property and equipment at cost and calculates depreciation
using the straight-line method over the estimated useful lives of the assets,
generally five years. Furniture and equipment leased under capital leases is
amortized over the useful lives of the assets.
Future Accounting Changes
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation," that will be effective for the Company's 1996 fiscal
year. SFAS 123 allows companies which have stock-based compensation arrangements
with employees to adopt a new fair-value basis of accounting for stock options
and other equity instruments, or to continue to apply the existing accounting
rules under APB Opinion 25, "Accounting for Stock Issued to Employees," but with
additional financial statement disclosure. The Company has elected to continue
to account for stock-based compensation arrangements under APB Opinion 25 and,
therefore, expects the adoption of SFAS 123 to have no material impact on its
financial position, results of operations or cash flows.
2. FINANCIAL INSTRUMENTS
Cash Equivalents and Short-Term Investments
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. The Company places its
cash and cash equivalents in money market funds, commercial paper, corporate
master notes, and repurchase agreements with United States ("U.S.") financial
institutions. The Company's short-term investments include corporate notes and
U.S. Government bonds with maturities ranging from 3 to 12 months.
The Company classifies its marketable debt securities as available-for-sale.
Available-for-sale securities are recorded at fair value with unrealized gains
and losses reported in the accumulated deficit. Fair values for investment
securities are based on quoted market prices, where available. If quoted market
prices are not available, fair values are based on quoted market prices of
comparable instruments. Realized gains and losses are included in interest and
other income and are derived using the specific identification method for
determining the cost of securities sold and have been immaterial to date.
Declines in market value judged other-than-temporary result in a charge to
interest income. Dividend and interest income are recognized when earned.
The following is a summary of available-for-sale securities at December 31, 1994
and 1995 and March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
---------------------------------
ESTIMATED FAIR VALUE
---------------------------------
DECEMBER 31,
------------------ MARCH 31,
(In thousands) 1994 1995 ----------
------ ------- 1996
----------
(UNAUDITED)
<S> <C> <C> <C>
Cash and cash equivalents:
Money market fund $1,721 $ 9,674 $ 5,370
Commercial paper 990 -- 500
Corporate master notes and repurchase agreements 2,987 2,115 2,140
------ ------- ------
$5,698 $11,789 $ 8,010
====== ======= ======
Short-term investments:
U.S. Government bonds, U.S. Treasury bills, notes and strips $5,585 $ 1,001 $ --
Corporate notes 1,807 2,010 5,535
------ ------- ------
$7,392 $ 3,011 $ 5,535
====== ======= ======
</TABLE>
As of December 31, 1994 and 1995 and March 31, 1996, the difference between the
fair value and the amortized cost of available-for-sale securities was
immaterial. As of December 31, 1994 and 1995 and March 31, 1996, the average
portfolio duration was approximately three months, and the contractual maturity
of any single investment did not exceed one year.
Management of the Company believes it has established guidelines for investment
of its excess cash relative to diversification and maturities that maintain
safety and liquidity.
F-8
<PAGE> 62
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
Notes Receivable from Officers
The Company held notes receivable of $273,000, $817,000 and $799,000 from
officers of the Company at December 31, 1994 and 1995 and March 31, 1996,
respectively. These notes, generally bearing no interest, are collateralized by
certain personal assets of the officers and are generally due upon the earlier
of nine months after the closing of an initial public offering ("IPO") of the
Company's common stock or three years from the date of the notes.
Other Fair Value Disclosures
At March 31, 1996, the fair value of the notes receivable from officers is
$679,000 ($700,000 at December 31, 1995). The fair value was estimated using
discounted cash flow analyses, using interest rates currently being offered for
loans with similar terms of borrowers of similar credit quality.
The fair market value of the equipment loans approximates the carrying value of
$832,000 at March 31, 1996 ($896,000 at December 31, 1995). The fair value was
estimated using discounted cash flow analyses, based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements.
3. PROPERTY AND EQUIPMENT
Property and equipment is comprised of the following:
<TABLE>
<CAPTION>
------------------------------------
<S> <C> <C> <C>
DECEMBER 31,
----------------------- MARCH 31,
1994 ----------
----------
(In thousands) 1995 1996
---------- ----------
(UNAUDITED)
Furniture and equipment $ 567 $ 907 $ 916
Lab equipment 1,668 2,445 2,472
Leasehold improvements 889 915 915
---------- ---------- ----------
3,124 4,267 4,303
Less accumulated depreciation and amortization (742) (1,521) (1,742)
---------- ---------- ----------
$ 2,382 $ 2,746 $ 2,561
========== ========== ==========
</TABLE>
Property and equipment at December 31, 1994 and 1995 and March 31, 1996 includes
assets under capitalized leases of approximately $2,058,000, $2,719,000 and
$2,739,000, respectively. Accumulated amortization related to leased assets was
approximately $443,000, $987,000 and $1,255,000, at December 31, 1994 and 1995
and March 31, 1996, respectively.
4. CAPITAL LEASE OBLIGATIONS AND EQUIPMENT LOANS
At December 31, 1995, the Company has lease and equipment loan credit lines
available of $1,546,000, of which approximately $787,000 was unused and
available. Under the terms of the master lease agreement, ownership of the
leased equipment will transfer to the Company at the end of the lease term.
On May 1, 1996, the Company renewed its existing committed equipment lease and
loan credit facility to provide for an incremental $2,000,000 availability. The
commitment period for additional drawdowns ends on April 30, 1997.
F-9
<PAGE> 63
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
As of December 31, 1995, future minimum lease payments under capital leases and
principal payments on equipment loans are as follows:
<TABLE>
<CAPTION>
---------------------
CAPITAL EQUIPMENT
(In thousands) LEASES LOANS
------- ---------
<S> <C> <C>
Years ending December 31:
1996 $ 904 $ 297
1997 623 386
1998 477 141
1999 123 72
------- ---------
Total minimum lease and principal payments, respectively 2,127 $ 896
========
Amount representing interest (375)
-------
Present value of future lease payments 1,752
Current portion of capital lease obligations (697)
-------
Noncurrent portion of capital lease obligations $ 1,055
======
</TABLE>
The obligations under the equipment loans are secured by the equipment financed,
bear interest at fixed rates of approximately 13% and are due in monthly
installments through December 1999. In December 1993, in conjunction with the
equipment loan agreement, the Company issued a warrant to purchase 2,352 shares
of common stock at $7.65 per share. The warrant is exercisable immediately, may
be exercised on a net exercise basis and expires on the earliest of December 23,
1999, an initial public offering with gross proceeds to the Company in excess of
$18,000,000, a merger or reorganization with or into another corporation or
entity or a sale of all or substantially all of the Company's assets.
5. OPERATING LEASES AND OTHER COMMITMENTS
On February 1, 1994, the Company leased a facility under a five-year
noncancelable operating lease. Future minimum payments as of December 31, 1995
under the noncancelable operating lease are approximately $279,000 in 1996,
$290,000 in 1997 and $24,000 in 1998. Rent expense under operating leases was
approximately $273,000 for each of the years ended December 31, 1994 and 1995
and $68,000 for the three months ended March 31, 1995 and 1996. The Company has
the option to extend the term of the lease for one additional period of five
years.
In March 1996, the Company entered into a lease for additional space of which it
will take possession in November 1996. The term of the lease is five years, with
an option to renew the lease for two consecutive terms of two and one-half years
each. Future minimum lease payments under the new lease are approximately
$51,000 in 1996, $303,000 in 1997, $315,000 in 1998, $327,000 in 1999, $340,000
in 2000 and $296,000 in 2001.
The Company has also entered into a number of collaborations with academic
institutions and others to sponsor research in exchange for commercial rights to
any technology developed as a result of such research. In general, these
agreements provide for research payments over one to three years and can be
renewed at the option of the Company. The Company has made research payments of
$833,000, $930,000, $954,000, and $315,000 in 1993, 1994, 1995 and the three
months ended March 31, 1996, respectively. The Company is currently committed to
make research payments of $1,100,000, $275,000, and $75,000, pursuant to
existing research collaborations in 1996, 1997 and 1998, respectively.
F-10
<PAGE> 64
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
6. STOCKHOLDERS' EQUITY
Convertible Preferred Stock
Preferred stock is issuable in series, with the rights and preferences
designated by series. The shares designated and outstanding are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ISSUANCE
PRICE AND NON-
LIQUIDATION AMOUNT CUMULATIVE
SHARES PREFERENCE PAID IN DIVIDEND
SHARES ISSUED AND (PER (NET OF AMOUNT
DESIGNATED OUTSTANDING SHARE) ISSUANCE PER SHARE
---------- ---------- ---------- COSTS) ----------
-----------
(IN THOUSANDS)
Series A Convertible 2,244,998 2,235,272 $ 3.40 $ 7,600 $ 0.34
Series B Convertible 1,429,240 1,429,228 7.65 10,894 0.77
Series C Convertible 1,764,706 1,547,911 8.16 12,567 0.82
--------- --------- -------
Balances at December 31, 1994 5,438,944 5,212,411 31,061
Series C Convertible (204,656) 245 8.16 2 0.82
Series D Convertible 1,176,471 858,734 10.20 8,731 1.02
--------- --------- -------
Balances at December 31, 1995 6,410,759 6,071,390 39,794
Series C Convertible (unaudited) - 735 8.16 6 0.82
Series D Convertible (unaudited) - 292,149 10.20 2,787 1.02
--------- --------- -------
Balances at March 31, 1996
(unaudited) 6,410,759 6,364,274 $ 42,587
========= ========= =======
</TABLE>
Each share of preferred stock is entitled to voting rights equivalent to the
number of shares of common stock into which such shares can be converted, and is
convertible, at the option of the holder, into one share of common stock,
subject to certain antidilution adjustments. Conversion is automatic upon the
closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933 ("initial
public offering"), which results in a price per share of not less than $17.00
(adjusted for any recapitalizations) and aggregate offering proceeds of not less
than $7,500,000. Conversion is also automatic upon the election of 66% or
greater of the outstanding shares of preferred stock.
Preferred stockholders have certain rights of first refusal which allow them to
participate ratably in any future issuances of stock to maintain their original
ownership percentages. This right terminates upon an initial public offering. No
dividends have been declared through March 31, 1996.
In April 1993, the Company granted an option to purchase 9,703 shares of Series
A convertible preferred stock at $3.40 per share. The option is exercisable
through the earlier of an initial public offering or April 2000, and may be
exercised on a net exercise basis.
In February 1994, in conjunction with a research agreement, the Company issued a
warrant to purchase 47,058 shares of common stock at $7.65 per share. The
warrant is exercisable through February 2004.
In June 1994, in conjunction with the Series C preferred stock financing, the
Company issued warrants to purchase 9,190 shares of Series C preferred stock at
$9.38 per share. These warrants are exercisable through June 1999.
1992 Stock Option Plan
The 1992 Stock Option Plan (the "Stock Option Plan") was adopted in July 1992.
The options granted under the Stock Option Plan may be either incentive stock
options or nonstatutory stock options. As of December 31, 1995 and March 31,
1996, the Company has authorized 1,730,882 shares of common stock for issuance
under the Stock Option Plan. Options granted under the Stock Option Plan expire
no later than ten years from the date of grant. For incentive stock options and
nonqualified stock options, the option price shall be at least 100% and 85%,
respectively, of the fair market value on the date of grant. If, at the time the
Company grants an incentive stock option, and the optionee directly or by
attribution owns stock possessing more than 10% of the total combined voting
F-11
<PAGE> 65
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
power of all classes of stock of the Company, the option price shall be at least
110% of the fair market value and shall not be exercisable more than five years
after the date of grant.
Options under the plan are immediately exercisable; however, the shares issued
are subject to repurchase rights which lapse in a series of installments
measured from the vesting commencement date of the option. Options generally
vest over a period of five years from the date of grant, with one-tenth vesting
after six months and the remainder vesting ratably over the following 54 months.
Options may be granted with different vesting terms from time to time.
Under the Stock Option Plan, employees may exercise options in exchange for a
note payable to the Company. As of December 31, 1995 and March 31, 1996, notes
receivable from stockholders of $131,000 and $123,000, respectively, were
outstanding. These notes generally bear interest at 6% and are due and payable
in one lump sum on the earlier of 30 days after the date the maker transfers for
value any of the shares of the Company's common stock purchased with the note or
three years from the date of the note. Unvested shares are subject to repurchase
by the Company at the original purchase price.
Aggregate option activity is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------
<S> <C> <C> <C> <C>
OUTSTANDING OPTIONS
SHARES -----------------------------------
AVAILABLE PRICE PER
FOR GRANT SHARE AGGREGATE
------------- ----------- ---------
NUMBER OF
SHARES
---------
(IN THOUSANDS)
Balance at December 31, 1993 128,724 475,715 $0.34-$0.78 $ 218
Additional shares authorized 1,098,529 - $ - -
Options granted (519,682) 519,682 $0.78-$0.82 419
Options exercised - (121,616) $0.34-$0.78 (66)
Options canceled 11,184 (11,184) $0.34-$0.78 (4)
------------- --------- ---------
Balance at December 31, 1994 718,755 862,597 $0.34-$0.82 567
Options granted (492,908) 492,908 $0.82 402
Options exercised - (252,370) $0.34-$0.82 (120)
Options canceled 35,486 (35,486) $0.34-$0.82 (25)
------------- --------- ---------
Balance at December 31, 1995 261,333 1,067,649 $0.34-$0.82 824
Options granted (unaudited) (8,271) 8,271 $1.02 8
Options exercised (unaudited) - (2,017) $0.34-$0.82 (2)
Options canceled (unaudited) 18,482 (18,482) $0.78-$0.82 (15)
------------- --------- ---------
Balance at March 31, 1996 (unaudited) 271,544 1,055,421 $0.34-$1.02 $ 815
========== ========= ========
</TABLE>
At December 31, 1995 and March 31, 1996, options to purchase 272,165 shares and
328,432 shares, respectively, were exercisable. At December 31, 1995 and March
31, 1996, there were 138,785 shares and 111,185 shares outstanding,
respectively, subject to repurchase under the Stock Option Plan.
At December 31, 1995 and March 31, 1996, 7,468,675 shares and 7,759,542 shares,
respectively, of common stock are reserved for issuances upon exercise of
options currently outstanding and options available for grant under the Stock
Option Plan, conversion of outstanding convertible preferred stock and exercise
of warrants.
Through March 31, 1996, the Company recorded deferred compensation expense for
the difference between the exercise price and the deemed fair value of the
Company's common stock, related to shares issued pursuant to stock purchase
rights and options granted in 1996. This deferred compensation expense
aggregates approximately $12,000 and will be amortized over the related vesting
period.
7. COLLABORATIVE AGREEMENT
In April 1995, the Company entered into a license and research collaboration
agreement with Kyowa Hakko Kogyo Co., Ltd. ("Kyowa Hakko"). Under the agreement,
the Company granted an exclusive license to Kyowa Hakko to make, use and sell
products based on
F-12
<PAGE> 66
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
telomerase inhibition technology within a specified territory in exchange for
royalty payments, payments for certain research and development activities and
payments due on achieving specified development milestones. Costs associated
with research and development activities attributable to products being
developed under this agreement for the year ended December 31, 1995 and for the
three months ended March 31, 1996 were $6,900,000 and $1,900,000 respectively.
Under this agreement, revenues of approximately $5,500,000 and $1,335,000 were
recognized in the year ended December 31, 1995 and in the three months ended
March 31, 1996. No milestone payments have been received or earned to date.
8. INCOME TAXES
As of December 31, 1995, the Company had federal net operating loss
carryforwards of approximately $24,300,000 and state net operating loss
carryforwards of approximately $4,400,000. The federal net operating loss
carryforwards will expire at various dates beginning in 2006 through 2010, if
not utilized.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets as of December 31
are as follows:
<TABLE>
<CAPTION>
----------------------------
<S> <C> <C> <C>
DECEMBER 31,
----------------------------
1993
-------
(In thousands) 1994 1995
------- --------
Net operating loss carryforward $ 2,500 $ 5,800 $ 8,800
Research credits (expiring 2006-2010) 300 700 1,200
Capitalized research and development 100 400 500
Other -- net 100 100 300
------- ------- --------
Total deferred tax assets 3,000 7,000 10,800
Valuation allowance for deferred tax assets (3,000) (7,000) (10,800)
------- ------- --------
Total $ -- $ -- $ --
======= ======= ========
</TABLE>
Because of the Company's lack of earnings history, the deferred tax assets have
been fully offset by a valuation allowance. The valuation allowance increased by
$2,400,000, $4,000,000 and $3,800,000 during the years ended December 31, 1993,
1994 and 1995, respectively.
Utilization of the net operating loss and credit carryforwards may be subject to
a substantial annual limitation due to the ownership change provisions of the
Internal Revenue Code of 1986. The annual limitation may result in the
expiration of net operating losses and credits before utilization.
9. STATEMENT OF CASH FLOWS DATA
<TABLE>
<CAPTION>
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED THREE MONTHS
DECEMBER 31,
----------------------------- ENDED
1993 MARCH 31,
------- 1994 1995 ----------------
(In thousands) ------ ------ 1996
-----
1995
------
(UNAUDITED)
Supplementary Information
Interest paid $ 76 $ 290 $ 359 $ 80 $ 91
Supplementary Investing and Financing Activities
Equipment acquired under capital leases $ 1,003 $ 988 $ 661 $ 352 $ 20
Notes issued to stockholders $ -- $ 38 $ 93 $ 95 $ 180
Net unrealized gain (loss) on available-for-sale $ -- $ (21) $ 30 $ 16 $ (13)
securities
</TABLE>
F-13
<PAGE> 67
GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
10. SUBSEQUENT EVENTS
The Board of Directors has authorized the Company to proceed with an IPO. In
connection with the IPO, and upon approval by a two-thirds majority of the
holders of the Company's convertible preferred stock, all of the Company's
convertible preferred stock outstanding as of March 31, 1996 will be converted
into 6,364,274 shares of common stock. The pro forma effect of these conversions
has been reflected on the accompanying unaudited pro forma balance sheet
assuming they had occurred at March 31, 1996.
In June 1996, the Board of Directors approved a 1-for-3.4 reverse common stock
split. All share and per share amounts have been adjusted to reflect this stock
split retroactively. This reverse stock split will be submitted to the Company's
stockholders for approval.
In April 1996 the Board of Directors granted options under the Stock Option Plan
to purchase 540,869 shares of common stock at an exercise price of $2.04 per
share. These options were granted to provide additional incentives to retain
management, key employees and consultants and to offset the dilution caused by
the new shares issued in the initial public offering. The deemed fair value of
common stock at this date was $4.42 per share. The Company will record
$1,300,000 of deferred compensation related to these options in the quarter
ended June 30, 1996. This amount will be amortized over the vesting period of
individual options, generally a 60-month period.
On April 30, 1996 the Board of Directors authorized an increase in the number of
shares available for grant under the Stock Option Plan by 823,529 shares.
F-14
<PAGE> 68
[GRAPHICS]
<PAGE> 69
[LOGO]
GERON
CORPORATION
<PAGE> 70
APPENDIX -- DESCRIPTION OF GRAPHIC IMAGES
FRONT COVER: LOGO:
A stylized hourglass wrapped in a three dimensional double helix, with the name
Geron centered at the narrow portion of the hourglass.
INSIDE FRONT:
Graphic entitled "Geron's Therapeutic Approaches." At center of graphic is
picture of Normal Dividing Cell showing telomeres breaking off of chromosomes.
Center graphic has following captions: "Normal Dividing Cells; Telomeres Shorten
with Cell Division; Telomerase Off." Arrows from center graphic point to upper
left ("Cancer") and upper right ("Age-Related Diseases"). At upper left of
graphic is picture of three round cancer cells with following captions: "Cancer
Cells; Telomeres Maintained-Replicative Immortality; Telomerase On." At upper
right is picture of one senescent cell with following captions: "Senescent (Old)
Cells; Altered Gene Expression; Telomerase Off." At bottom of graphic, with
arrow pointing to center picture, is "Cell Transplantation" with picture of
Primordial Stem cell with following captions "Primordial Stem Cells; Telomerase
On;" Four separated captions at bottom reading: Normal Dividing Cells.
Telomeres, the repeated sequences of DNA located at the ends of chromosomes,
shorten throughout a normal cell's replicative lifespan and, thus, the Company
has shown act as a molecular "clock" of cellular aging. Senescent (Old) Cells.
When telomeres reach a certain short length, Geron and its collaborators have
shown cells stop dividing and become senescent. Senescent cells display an
altered gene expression relative to replicatively young cells that leads to an
imbalance in the production of proteins and other cell products. Cancer Cells.
Cancer cells escape senescence by reactivating a germ line enzyme called
telomerase that enables them to maintain telomere length and achieve cellular
(replicative) immortality. Primordial Stem Cells. Telomeres is also found in
Primordial Stem cells. PS cells are germ lines cells unique in that they are
both immortal, consistent with their normal telomerase expression, and capable
of differentiating into any and all cell types and tissues in the body.
FIGURE 1:
Graphic showing a progression of cells with the telomeres shortening with each
cell division.
FIGURE 2:
Graphic showing a normal dividing cell with telomeres breaking off of
chromosomes with an arrow to a cancer cell with short telomeres, but no
telomeres breaking off.
INSIDE BACK COVER:
Two graphics. First graphic has two photographs, one of replicatively young
cells under a microscope and one of senescent cells under a microscope. Second
graphic entitled "Glowing Telomere" has photograph of the chromosomes of a cell
with the telomeres (ends of chromosomes) shining.
OUTSIDE BACK COVER:
Logo: same as front.
<PAGE> 71
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
Common Stock being registered. All amounts are estimates except the registration
fee, the NASD filing fee and the Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Registration Fee $ 12,888
NASD Filing Fee 4,238
Nasdaq National Market Listing Fee 1,000*
Printing and Engraving Expenses 110,000
Legal Fees and Expenses 275,000
Accounting Fees and Expenses 110,000
Blue Sky Qualification Fees and Expenses 20,000
Directors and Officers' Liability Insurance 250,000
Transfer Agent and Registrar Fees 10,000
Miscellaneous Fees and Expenses 6,874
----------
Total $ 800,000
========
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to award,
or a corporation's Board of Directors to grant, indemnity to directors and
officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Article XI of the Registrant's Amended and Restated Certificate of
Incorporation (Exhibit 3.3 hereto) provides for indemnification of its directors
and officers to the maximum extent permitted by the Delaware General Corporation
Law and Article VII, Section 6 of the Registrant's Amended and Restated Bylaws
(Exhibit 3.4 hereto) provides for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements (Exhibit 10.1 hereto) with its directors and officers
containing provisions which are in some respects broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements may require the Company, among other things, to
indemnify its directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of culpable nature), to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified, and
to obtain directors' insurance if available on reasonable terms. Reference is
also made to Section 7 of the Underwriting Agreement contained in Exhibit 1.1
hereto, indemnifying officers and directors of the Company against certain
liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Since May 31, 1993, the Company has sold and issued the following
unregistered securities (without payment of any selling commission to any
person), as adjusted to give effect to the Company's reverse stock split to be
effected prior to the closing of the Offering, pursuant to which one share of
Common Stock will be reissued for each 3.4 shares of Common Stock:
(1) The Company has sold and issued 559,249 shares of its Common Stock to
directors, officers, employees and consultants pursuant to the exercise of
options under the Stock Option Plan;
(2) In June 1993, the Company sold and issued to certain investors
1,394,948 shares of its Series B Preferred Stock for an aggregate of
$10,671,437.25 in cash, and 29,409 shares of its Common Stock for an
aggregate of $23,000.00 in cash. In November 1993, the Company also sold
and issued an additional 34,280 shares of its Series B Preferred Stock for
an aggregate of $262,248.75 in cash;
(3) During the period from June 1994 through July 1994, the Company sold
and issued to certain investors an aggregate of 1,547,911 shares of its
Series C Preferred Stock for an aggregate of $12,631,010.40 in cash. From
October 1995 through
II-1
<PAGE> 72
May 1996, the Company also sold and issued an additional 2,940 shares of
its Series C Preferred Stock for an aggregate of $13,124.25 in payment of
past services rendered by a consultant;
(4) During the period from November 1995 through February 21, 1996, the
Company issued and sold to certain investors an aggregate of 1,150,883
shares of its Series D Preferred Stock for an aggregate of $11,739,165.00
in cash;
(5) In December 1993, the Company issued a warrant to purchase 2,352 shares
of its Common Stock at an exercise price of $7.65 per share in connection
with an equipment financing agreement;
(6) In February 1994, the Company issued a warrant to purchase 47,058
shares of its Common Stock at an exercise price of $7.65 per share in
connection with a research agreement;
(7) In June 1994, the Company issued warrants to purchase an aggregate of
9,190 shares of its Series C Preferred Stock at an exercise price of $9.38
per share in connection with its Series C Preferred Stock financing; and
(8) On June 12, 1996, the Company's Board of Directors approved a 1-for-3.4
reverse stock split of the Common Stock, which will be submitted to the
stockholders for approval.
The sales and issuances of securities in the transactions described in paragraph
(1) were deemed to be exempt from registration under the Securities Act by
virtue of Rule 701 promulgated thereunder in that they were offered and sold
either pursuant to written compensatory benefit plans or pursuant to a written
contract relating to compensation, as provided by Rule 701.
The sales and issuances of securities in the transactions described in
paragraphs (2) through (7) above were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) thereof as transactions by
an issuer not involving any public offering.
The transaction described in paragraph (8) will be deemed exempt under the
Securities Act because no "sale" occurred in connection with such transaction
pursuant to Section 2(3) and Rule 145 thereunder.
Appropriate legends are affixed to the stock certificates issued in the
aforementioned transactions. In all such transactions, all recipients of
securities represented their intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
thereof and all recipients either received adequate information about the
Registrant or had access, through employment or other relationships, to such
information.
(b) There were no underwritten offerings employed in connection with any of the
transactions set forth in Item 15(a).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation of Registrant
3.2 Bylaws of Registrant
3.3 Form of Amended and Restated Certificate of Incorporation to be filed with the Delaware Secretary
of State to effect the Company's 1-for-3.4 reverse stock split
3.4 Form of Amended and Restated Bylaws to be effective upon the closing of the Offering
4.1 Form of Common Stock Certificate
5.1* Opinion of Venture Law Group, A Professional Corporation
10.1 Form of Indemnification Agreement
10.2 1992 Stock Option Plan
10.3 1996 Employee Stock Purchase Plan
10.4 1996 Directors' Stock Option Plan
10.5 Investors' Rights Agreement dated November 10, 1995 among the Registrant and certain security
holders of the Registrant
10.6+ Agreement with Respect to Option dated August 31, 1992 between the Registrant and Cold Spring
Harbor Laboratory and Amendments No. 1 and 2 thereto dated May 3, 1993 and January 1994
10.7+ Patent License Agreement dated September 8, 1992 between the Registrant and University of Texas
Southwestern Medical Center at Dallas
10.8+ Sponsored Research Agreement dated as of September 8, 1992 between the Registrant and University
of Texas Southwestern Medical Center at Dallas
</TABLE>
II-2
<PAGE> 73
<TABLE>
<S> <C>
10.9+ Exclusive License Agreement dated February 2, 1994 between the Registrant and the Regents of the
University of California
10.10+ License and Research Collaboration Agreement dated April 24,1995 between the Registrant and Kyowa
Hakko Kogyo Co., Ltd. and Amendment No. 1 thereto dated July 15, 1995
10.11+ Standard Nonexclusive License Agreement dated January 1, 1996 between the Registrant and
Wisconsin Alumni Research Foundation
10.12 Business Park Lease dated March 25, 1996 between the Registrant and David D. Bohannon
Organization
10.13 Business Park Lease dated January 20, 1993 between the Registrant and David D. Bohannon
Organization and Amendments Nos. 1, 2 and 3 thereto dated July 26, 1993, February 22, 1994 and
March 25, 1996, respectively
10.14 Equipment Financing Agreement dated January 5, 1992 between the Registrant and Lease Management
Services, Inc.
10.15 Master Lease Agreement dated January 5, 1993 between the Registrant and Lease Management
Services, Inc.
10.16 Note Secured by Stock Pledge Agreement dated July 7, 1993 between the Registrant and Michael West
and Amendment thereto dated May 20, 1996
10.17 Employment Letter Agreement dated February 15, 1995 between the Registrant and Daniel Levitt
10.18 Note Secured by Second Deed of Trust dated July 1, 1995 between the Registrant and Daniel Levitt
and Amendment thereto dated May 31, 1996
10.19 Note Secured by Second Deed of Trust dated May 20, 1993 between the Registrant and Jeryl Lynn
Hilleman and Amendment thereto dated May 20, 1996
10.20 Note Secured by Second Deed of Trust dated December 1993 between the Registrant and Calvin B.
Harley
10.21 Note Secured by Second Deed of Trust dated September 30, 1995 between the Registrant and David L.
Greenwood
10.22 Note Secured by Second Deed of Trust dated September 30, 1995 between the Registrant and David L.
Greenwood
10.23 Common Stock Warrant dated May 4, 1994, issued by the Registrant to Cold Spring Harbor Laboratory
10.24* Form of Series C Preferred Stock Purchase Warrant issued to certain investors on June 29, 1994
11.1 Statement of Computation of Net Loss per Share
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-6)
23.2 Consent of Counsel (included in Exhibit 5.1)
23.3 Consent of Townsend and Townsend and Crew LLP
24.1 Power of Attorney (see page II-5)
27.1 Financial Data Schedule
</TABLE>
- ---------------
* To be supplied by amendment.
+ Certain portions of this Exhibit have been omitted for which confidential
treatment has been requested and filed separately with the Securities and
Exchange Commission.
(B) FINANCIAL STATEMENT SCHEDULES
Financial statement schedules are omitted because the information required to be
set forth therein is not applicable or is shown in the financial statements or
notes thereto.
II-3
<PAGE> 74
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters at
the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referenced in Item 14 of this Registration Statement
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered hereunder, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has duly
caused this Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Menlo Park, State of
California, on this 12th day of June, 1996.
GERON CORPORATION
By: /s/ Ronald W. Eastman
---------------------------------------
Ronald W. Eastman
(President and Chief Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Ronald W. Eastman and David L. Greenwood,
and each of them acting individually, as his attorney-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments to this Registration Statement (including post-effective amendments),
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by either of said attorneys to any
and all amendments to said Registration Statement. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by
the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------------------- --------------
<C> <S> <C>
/s/ Ronald W. Eastman President, Chief Executive Officer June 12, 1996
- ------------------------------------------ and Director (Principal Executive Officer)
Ronald W. Eastman
/s/ David L. Greenwood Chief Financial Officer, Treasurer and June 12, 1996
- ------------------------------------------ Secretary (Principal Financial and Accounting
David L. Greenwood Officer)
/s/ Alexander E. Barkas Director June 12, 1996
- ------------------------------------------
Alexander E. Barkas
/s/ Brian H. Dovey Director June 12, 1996
- ------------------------------------------
Brian H. Dovey
/s/ Charles M. Hartman Director June 12, 1996
- ------------------------------------------
Charles M. Hartman
/s/ Thomas D. Kiley Director June 12, 1996
- ------------------------------------------
Thomas D. Kiley
/s/ Patrick F. Latterell Director June 12, 1996
- ------------------------------------------
Patrick F. Latterell
/s/ Robert B. Stein Director June 12, 1996
- ------------------------------------------
Robert B. Stein
/s/ Michael D. West Director June 12, 1996
- ------------------------------------------
Michael D. West
</TABLE>
II-5
<PAGE> 76
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts" and to the use of our report dated February 9, 1996, except
as to Note 10 as to which the date is , 1996, in the Registration
Statement (Form S-1) and the related Prospectus of Geron Corporation for the
registration of 2,875,000 shares of its Common Stock.
ERNST & YOUNG LLP
Palo Alto, California
, 1996
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon completion of
certain events as described in Note 10 to the Financial Statements.
/S/ ERNST & YOUNG LLP
-----------------------------------------
ERNST & YOUNG LLP
Palo Alto, California
June 11, 1996
II-6
<PAGE> 77
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation of Registrant
3.2 Bylaws of Registrant
3.3 Form of Amended and Restated Certificate of Incorporation to be filed with the Delaware
Secretary of State to effect the Company's 1-for-3.4 reverse stock split
3.4 Form of Amended and Restated Bylaws to be effective upon the closing of the Offering
4.1 Form of Common Stock Certificate
5.1* Opinion of Venture Law Group, A Professional Corporation
10.1 Form of Indemnification Agreement
10.2 1992 Stock Option Plan
10.3 1996 Employee Stock Purchase Plan
10.4 1996 Directors' Stock Option Plan
10.5 Investors' Rights Agreement dated November 10, 1995 among the Registrant and certain security
holders of the Registrant
10.6+ Agreement with Respect to Option dated August 31, 1992 between the Registrant and Cold Spring
Harbor Laboratory and Amendments No. 1 and 2 thereto dated May 3, 1993 and January 1994
10.7+ Patent License Agreement dated September 8, 1992 between the Registrant and University of Texas
Southwestern Medical Center at Dallas
10.8+ Sponsored Research Agreement dated as of September 8, 1992 between the Registrant and University
of Texas Southwestern Medical Center at Dallas
10.9+ Exclusive License Agreement dated February 2, 1994 between the Registrant and the Regents of the
University of California
10.10+ License and Research Collaboration Agreement dated April 24,1995 between the Registrant and
Kyowa Hakko Kogyo Co., Ltd. and Amendment No. 1 thereto dated July 15, 1995
10.11+ Standard Nonexclusive License Agreement dated January 1, 1996 between the Registrant and
Wisconsin Alumni Research Foundation
10.12 Business Park Lease dated March 25, 1996 between the Registrant and David D. Bohannon
Organization
10.13 Business Park Lease dated January 20, 1993 between the Registrant and David D. Bohannon
Organization and Amendments No. 1, 2 and 3 thereto dated July 26, 1993, February 22, 1994 and
March 25, 1996, respectively
10.14 Equipment Financing Agreement dated January 5, 1992 between the Registrant and Lease Management
Services, Inc.
10.15 Master Lease Agreement dated January 5, 1993 between the Registrant and Lease Management
Services, Inc.
10.16 Note Secured by Stock Pledge Agreement dated July 7, 1993 between the Registrant and Michael
West and Amendment thereto dated May 20, 1996
10.17 Employment Letter Agreement dated February 15, 1995 between the Registrant and Daniel Levitt
10.18 Note Secured by Second Deed of Trust dated July 1, 1995 between the Registrant and Daniel Levitt
and Amendment thereto dated May 31, 1996
10.19 Note Secured by Second Deed of Trust dated May 20, 1993 between the Registrant and Jeryl Lynn
Hilleman and Amendment thereto dated May 20, 1996
10.20 Note Secured by Second Deed of Trust dated December 1993 between the Registrant and Calvin B.
Harley
10.21 Note Secured by Second Deed of Trust dated September 30, 1995 between the Registrant and David
L. Greenwood
10.22 Note Secured by Second Deed of Trust dated September 30, 1995 between the Registrant and David
L. Greenwood
10.23 Common Stock Warrant dated May 4, 1994 issued by the Registrant to Cold Spring Harbor Laboratory
10.24* Form of Series C Preferred Stock Purchase Warrant issued to certain investors on June 29, 1994
11.1 Statement of Computation of Net Loss per Share
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-6)
23.2 Consent of Counsel (included in Exhibit 5.1)
23.3 Consent of Townsend and Townsend and Crew LLP
24.1 Power of Attorney (see page II-5)
27.1 Financial Data Schedule
</TABLE>
- ---------------
* To be supplied by amendment.
+ Certain portions of this Exhibit have been omitted for which confidential
treatment has been requested and filed separately with the Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT 1.1
GERON CORPORATION
[______] Shares of Common Stock
Underwriting Agreement
_______________, 1996
J.P. Morgan Securities Inc.
Montgomery Securities
Salomon Brothers Inc
As Representatives of the several underwriters
listed in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Geron Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to the several underwriters listed in Schedule I hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), an aggregate of [_______] shares (the "Underwritten Shares")
of common stock, par value $.001 per share, of the Company (the "Common Stock")
and, for the sole purpose of covering over-allotments in connection with the
sale of the Underwritten Shares, at the option of the Underwriters, up to an
additional [_______] shares of Common Stock (the "Option Shares"). The
Underwritten Shares and the Option Shares are herein referred to as the
"Shares". The shares of Common Stock of the Company to be outstanding after
giving effect to the sale of the Shares are herein referred to as the "Stock".
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement, as amended at the time when it shall become effective, including
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act, is referred to
in this Agreement as the "Registration Statement", and the prospectus in the
form first used to confirm sales of Shares is referred to in this Agreement as
the "Prospectus". If the Company has filed an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any
<PAGE> 2
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share (the
"Purchase Price") of $[_____].
In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as hereinafter provided, and the Underwriters on the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company up to an aggregate of [_____] Option Shares at the
Purchase Price, for the sole purpose of covering over-allotments (if any) in the
sale of Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 10 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as to
which the option is being exercised and the date and time when the Option Shares
are to be delivered and paid for, which may be the same date and time as the
Closing Date (as hereinafter defined), but shall not be earlier than the Closing
Date nor later than the tenth full Business Day (as hereinafter defined) after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Any such notice shall be given at
least two Business Days prior to the date and time of delivery specified
therein.
2
<PAGE> 3
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Representatives is advisable, and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives,
no later than noon the Business Day (as defined below) prior to the Closing Date
(as defined below), in the case of the Underwritten Shares, on [_____], 1996, or
at such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing and, in the case of the Option Shares, on the date and at the time
specified by the Representatives in the written notice of the Underwriters'
election to purchase such Option Shares. The time and date of such payment for
the Underwritten Shares are referred to herein as the "Closing Date", and the
time and date for such payment for the Option Shares, if other than the Closing
Date, are herein referred to as the "Additional Closing Date". As used herein,
the term "Business Day" means any day other than a day on which banks are
permitted or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives, for the respective accounts of the several Underwriters, of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares shall be made available for inspection and packaging by the
Representatives at the office of J.P. Morgan Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement as originally filed or as
part of any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with the
3
<PAGE> 4
Securities Act, and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use therein;
(b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, contemplated by the
Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) comply, or will comply, as the case may be, in all material respects
with the Securities Act and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as of the
date of the Prospectus and any amendment or supplement thereto, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented, if applicable, at the Closing
Date or Additional Closing Date, as the case may be, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; except that the foregoing representations and warranties
shall not apply to statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein;
(c) the financial statements, and the related notes thereto,
included in the Registration Statement and the Prospectus present fairly the
financial position of the Company as of the dates indicated and the results of
operations and changes in cash flows for the periods specified; and said
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein; the selected financial data and the summary
financial information included in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of the
financial statements included in the Prospectus;
4
<PAGE> 5
(d) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any change
in the capital stock or long-term debt of the Company, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company otherwise
than as set forth or contemplated in the Prospectus; and, except as set forth or
contemplated in the Prospectus, the Company has not entered into any transaction
or agreement (whether or not in the ordinary course of business) material to the
Company;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, other than where
the failure to be so qualified or in good standing would not have a material
adverse effect on the Company;
(f) this Agreement has been duly authorized, executed and
delivered by the Company;
(g) the Company has authorized capital stock as set forth in
the Prospectus and such authorized capital stock conforms as to legal matters to
the description thereof set forth in the Prospectus; all of the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, are fully-paid and non-assessable and are not subject to any pre-emptive
or similar rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Company, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any such rights,
warrants or options;
(h) the Shares have been duly authorized, and, when issued and
delivered to and paid for by the Underwriters in accordance with the terms of
this Agreement, will be validly issued and will be fully paid and non-assessable
and will conform to the descriptions thereof in the Prospectus; and the issuance
of the Shares is not subject to any preemptive or similar rights;
5
<PAGE> 6
(i) the Company is not, nor with the giving of notice or lapse
of time or both would be, in violation of or in default under, its Certificate
of Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which it or its properties is bound, except for violations and defaults which
individually and in the aggregate are not material to the Company; the issue and
sale of the Shares and the performance by the Company of its obligations under
this Agreement and the consummation of the transactions contemplated herein will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the properties or assets of the
Company is subject, nor will any such action result in any violation of the
provisions of the Certificate of Incorporation or the By-Laws of the Company or
any applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties; and no consent, approval, authorization, order, license,
registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and as may be
required under state securities or Blue Sky Laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(j) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its properties or to which the Company is or may be a party or
to which any property of the Company is or may be subject which, if determined
adversely to the Company, could individually or in the aggregate have, or
reasonably be expected to have, a material adverse effect on the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others; and there are no statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(k) the Company has good and marketable title in fee simple to
all items of real property and good and marketable
6
<PAGE> 7
title to all personal property owned by it, in each case free and clear of all
liens, encumbrances and defects except such as are described or referred to in
the Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made or proposed to be made of such property
by the Company; and any real property and buildings held under lease by the
Company are held under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company;
(l) no relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required by
the Securities Act to be described in the Registration Statement and the
Prospectus which is not so described;
(m) no person has the right to require the Company to register
any securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and sale
of the Shares;
(n) the Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(o) the Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing
business with the Government of Cuba or with any person or affiliate located in
Cuba;
(p) Ernst & Young LLP, who have certified certain financial
statements of the Company, are independent public accountants as required by the
Securities Act;
(q) the Company has filed all federal, state, local and foreign
tax returns which have been required to be filed and have paid all taxes shown
thereon and all assessments received by them or any of them to the extent that
such taxes have become due and are not being contested in good faith; and,
except as disclosed in the Registration Statement and the Prospectus, there is
no tax deficiency which has been or might reasonably be expected to be asserted
or threatened against the Company;
(r) the Company has not taken, nor will it take, directly or
indirectly, any action designed to, or that might be
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<PAGE> 8
reasonably expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(s) the Company owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof, and
the Company has not received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate, consent,
order, approval or other authorization, except as described in the Registration
Statement and the Prospectus; and the Company is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of the date
hereof;
(t) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with any employees of the Company which are
likely to have a material adverse effect on the Company;
(u) the Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company;
(v) each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA") that is maintained, administered or contributed to by the Company for
employees or former employees of the Company has been maintained in compliance
with its terms and the requirements of any applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Internal Revenue
Code of 1986, as amended, (the "Code"). No prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any such plan, excluding transactions effected pursuant to a
statutory or administrative exemption. For each such plan which
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<PAGE> 9
is subject to the funding rules of Section 412 of the Code or Section 302 of
ERISA, no "accumulated funding deficiency" as defined in Section 412 of the Code
has been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeded the present value of all benefits accrued under such
plan determined using reasonable actuarial assumptions;
(w) the Company has no subsidiaries;
(x) the Company owns or possesses adequate patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names and other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business it now operates, and the Company has not received any notice or is not
otherwise aware of any claim, action or demand of any person in the United
States or elsewhere or any proceeding in the United States or elsewhere, pending
or threatened, which (a) challenges the ownership interests of the Company in
any of the Intellectual Property or (b) alleges that any product or service of
the Company infringes or misappropriates the Intellectual Property rights of
others or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company therein,
and which action or proceeding (including without limitation infringement,
misappropriation, and unfair competition), if the subject of any unfavorable
decision, ruling or finding, or invalidity or inadequacy, singly or in the
aggregate, could reasonably be expected to have a material adverse effect on the
Company;
(y) application has been made to list the Shares for quotation
on the Nasdaq National Market; and
(z) the Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, without
limitation, insurance covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all other
material risks customarily insured against, all of which insurance is in full
force and effect. The Company has no reason to believe that it will not be able
to renew existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
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<PAGE> 10
(a) to use its best efforts to cause the Registration Statement
to become effective at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act; and to furnish copies of the
Prospectus to the Underwriters in New York City prior to 10:00 A.M., New York
City time, on the Business Day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the
Representatives four signed copies of the Registration Statement (as originally
filed) and each amendment thereto, in each case including exhibits, and to each
other Underwriter a conformed copy of the Registration Statement (as originally
filed) and each amendment thereto, in each case without exhibits and, during the
period mentioned in paragraph (e) below, to each of the Underwriters as many
copies of the Prospectus (including all amendments and supplements thereto) as
the Representatives may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representatives a
copy of the proposed amendment or supplement for review and not to file any such
proposed amendment or supplement to which the Representatives object;
(d) to advise the Representatives promptly, and to confirm such
advice in writing, (i) when the Registration Statement has become effective,
(ii) when any amendment to the Registration Statement has been filed or becomes
effective, (iii) when any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Representatives with copies thereof, (iv) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for any additional information,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus or the
initiation or threatening of any proceeding for that purpose, (vi) of the
occurrence of any event, within the period referenced in paragraph (e) below, as
a result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
and (vii) of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding
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<PAGE> 11
for such purpose; and to use its best efforts to prevent the issuance of any
such stop order, or of any order preventing or suspending the use of any
preliminary prospectus or the Prospectus, or of any order suspending any such
qualification of the Shares, or notification of any such order thereof and, if
issued, to obtain as soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Shares as in the opinion of counsel for the Underwriters
a prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall occur
as a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriters and to the dealers
(whose names and addresses the Representatives will furnish to the Company) to
which Shares may have been sold by the Representatives on behalf of the
Underwriters and to any other dealers upon request, such amendments or
supplements to the Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Representatives
shall reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; provided that the
Company shall not be required to file a general consent to service of process in
any jurisdiction;
(g) to make generally available to its security holders and to
the Representatives as soon as practicable an earnings statement covering a
period of at least twelve months beginning with the first fiscal quarter of the
Company occurring after the effective date of the Registration Statement, which
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
of the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange;
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<PAGE> 12
(i) for a period of 180 days after the date of the initial
public offering of the Shares not to (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Stock or any securities
convertible into or exercisable or exchangeable for Stock or (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Stock, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Stock or such other
securities, in cash or otherwise, without the prior written consent of J.P.
Morgan Securities Inc., other than the Shares to be sold hereunder and any
shares of Stock of the Company issued upon the exercise of options granted under
existing employee stock option plans;
(j) to use the net proceeds received by the Company from the
sale of the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(k) to use its best efforts to effect the listing for quotation
of the Shares on the Nasdaq National Market;
(l) to file with the Commission such reports on Form SR as may
be required by Rule 463 under the Securities Act; and
(m) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing all costs
and expenses (i) incident to the preparation, issuance, execution and delivery
of the Shares, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or qualification of
the Shares under the laws of such jurisdictions as the Representatives may
designate (including fees of counsel for the Underwriters and its
disbursements), (iv) in connection with the listing of the Shares on the Nasdaq
National Market, (v) related to the filing with, and clearance of the offering
by, the National Association of Securities Dealers, Inc., (vi) in connection
with the printing (including word processing and duplication costs) and delivery
of this Agreement, the Preliminary and Supplemental Blue Sky Memoranda and the
furnishing to the Underwriters and dealers of copies of the Registration
Statement and the Prospectus, including mailing and
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<PAGE> 13
shipping, as herein provided, (vii) any expenses incurred by the Company in
connection with a "road show" presentation to potential investors, (viii) the
cost of preparing stock certificates and (ix) the cost and charges of any
transfer agent and any registrar.
6. The several obligations of the Underwriters hereunder to
purchase the Shares on the Closing Date or the Additional Closing Date, as the
case may be, are subject to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) the Registration Statement shall have become effective (or
if a post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than 5:00
P.M., New York City time, on the date hereof; and no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
shall be in effect, and no proceedings for such purpose shall be pending before
or threatened by the Commission; the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act and in
accordance with Section 5(a) hereof; and all requests for additional information
shall have been complied with to the satisfaction of the Representatives;
(b) the representations and warranties of the Company contained
herein are true and correct on and as of the Closing Date or the Additional
Closing Date, as the case may be, as if made on and as of the Closing Date or
the Additional Closing Date, as the case may be, and the Company shall have
complied with all agreements and all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date or the Additional Closing
Date, as the case may be;
(c) subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Additional Closing Date, as the case may
be, there shall not have occurred any downgrading, nor shall any notice have
been given of (i) any downgrading, (ii) any intended or potential downgrading or
(iii) any review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is given
in the Prospectus, there shall not have been any change in the capital stock or
long-term debt of the Company or any material adverse change, or any development
involving a
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<PAGE> 14
prospective material adverse change, in or affecting the general affairs,
business, prospects, management, financial position, stockholders' equity or
results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus, the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated in
the Prospectus; and the Company shall have not sustained since the date of the
latest audited financial statements included in the Prospectus any material loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus;
(e) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a certificate
of David L. Greenwood, Chief Financial Officer of the Company, satisfactory to
the Representatives to the effect set forth in subsections (a) through (c) (with
respect to the respective representations, warranties, agreements and conditions
of the Company) of this Section 6 and to the further effect that there has not
occurred any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or results of
operations of the Company from that set forth or contemplated in the
Registration Statement;
(f) Venture Law Group, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing Date
or the Additional Closing Date, as the case may be, in form and substance
satisfactory to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company;
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<PAGE> 15
(iii) the Company has no subsidiaries;
(iv) other than as set forth or contemplated in the
Prospectus, there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the best of such counsel's knowledge, threatened
against or affecting the Company or any of its properties or to which the
Company is or may be a party or to which any property of the Company is or may
be subject which, if determined adversely to the Company, could individually or
in the aggregate have, or reasonably be expected to have, a material adverse
effect on the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company; to the
best of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and such
counsel does not know of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement that are not described or
filed as required;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus in the column captioned
"Actual" under "Capitalization" (except for subsequent issuances, if any,
pursuant to this Agreement); the shares of issued and outstanding Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable; no holder of Common Stock is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding shares
of capital stock of the Company was issued in violation of pre-emptive or other
similar rights of any stockholder of the Company arising by operation of law,
under the Certificate of Incorporation or By-Laws of the Company or under any
agreement to which the Company is a party;
(vii) all outstanding shares of preferred stock, par value
$.001 per share, of the Company will be converted into shares of Common Stock on
the Closing Date;
(viii) the Shares have been duly authorized, and when
delivered to and paid for by the Underwriters in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable and the
issuance of the Shares is not subject to any preemptive or similar rights;
(ix) except as disclosed in or specifically contemplated by
the Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other
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<PAGE> 16
rights calling for the issuance of, and no commitments, obligation, plans or
arrangements to issues, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the Company; the
outstanding stock options relating to the Common Stock have been duly authorized
and validly issued and the description thereof contained in the Prospectus is
accurate in all material respects;
(x) the statements in the Prospectus under "Business --
Strategic Collaborations, -- Research Collaborations, -- Government Regulation,
- -- Facilities, -- Legal Proceedings", "Management", "Certain Transactions",
"Description of Capital Stock", "Shares Eligible for Future Sale" and
"Underwriting", and in the Registration Statement in Items 14 and 15, insofar as
such statements constitute a summary of the terms of the Stock, legal matters,
documents or proceedings referred to therein, fairly present the information
called for with respect to such terms, legal matters, documents or proceedings;
(xi) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements thereto (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and believes that (other than the
financial statements and related schedules therein, as to which such counsel
need express no belief) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that the Prospectus, as amended or supplemented, if applicable,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(xii) the Company is not, nor with the giving of notice or
lapse of time or both would be, in violation of or in default under, its
Certificate of Incorporation or By-Laws or any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such counsel to
which the Company is a party or by which it or any of its properties is bound,
except for violations and defaults which individually and in the aggregate are
not material to the Company; the execution and delivery of this Agreement, issue
and sale of the Shares being delivered on the Closing Date or the Additional
Closing Date, as the case may be, and the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated herein will not, with or without the
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<PAGE> 17
giving of notice or lapse of time or both, conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company is a party or by which the
Company is bound or to which any of the properties or assets of the Company is
subject, nor will any such action result in any violation of the provisions of
the Certificate of Incorporation or the By-Laws of the Company or any applicable
law or statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its properties;
(xiii) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental agency or
body is required for the issue and sale of the Shares or the consummation of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or qualifications as
have been obtained under the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters;
(xiv) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or entity "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act;
(xv) the Company owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof, and
the Company has not received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate, consent,
order, approval or other authorization, except as described in the Registration
Statement and the Prospectus; and the Company is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of the date
of the Prospectus;
(xvi) the Company has good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
it, in each case free and clear of all liens, encumbrances and defects except
such as are
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<PAGE> 18
described or referred to in the Prospectus or such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company; and any real property and buildings
held under lease by the Company are held under valid, existing and enforceable
leases with such exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company;
(xvii) the Company owns or possesses the Intellectual Property
necessary to carry on the business it now operates, and, to the best of such
counsel's knowledge, the Company has not received any notice or is not otherwise
aware of any claim, action or demand of any person in the United States or
elsewhere or any proceeding in the United States or elsewhere, pending or
threatened, which (a) challenges the ownership interests of the Company in any
of the Intellectual Property or (b) alleges that any product or service of the
Company infringes or misappropriates the Intellectual Property rights of others
or of any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company therein, and which
action or proceeding (including without limitation infringement,
misappropriation, and unfair competition), if the subject of any unfavorable
decision, ruling or finding, or invalidity or inadequacy, singly or in the
aggregate, could reasonably be expected to have a material adverse effect on the
Company; and
(viii) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the Certificate of Incorporation and By-Laws
of the Company and the requirements of the Nasdaq National Market.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of Delaware and California, to the extent such counsel deems proper
and to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the Underwriters' counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Company and
certificates or other written statements of officials of jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel upon which they relied is in form satisfactory
to such counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered in
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<PAGE> 19
subparagraph (xi) above, counsel may state their opinion and belief is based
upon their participation in the preparation of the Registration Statement and
the Prospectus and any amendment or supplement thereto and review and discussion
of the contents thereof but is without independent check or verification except
as specified.
The opinion of Venture Law Group described above shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
(g) Townsend and Townsend and Crew, special patent counsel for
the Company, shall have furnished to the Representatives their written opinion,
dated the Closing Date or the Additional Closing Date, as the case may be, in
the form of Exhibit A hereto;
(h) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing Date,
as the case may be, Ernst & Young LLP shall have furnished to you letters, dated
the respective dates of delivery thereof, in form and substance satisfactory to
you, containing statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus;
(i) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion of
Skadden, Arps, Slate, Meagher & Flom, counsel to the Underwriters, with respect
to the due authorization and valid issuance of the Shares, the Registration
Statement, the Prospectus and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(j) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved for
quotation on the Nasdaq National Market, subject only to official notice of
issuance;
(k) on or prior to the Closing Date or Additional Closing Date,
as the case may be, the Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request; and
(l) The "lock-up" agreements, each substantially in the form of
Exhibit B hereto, between you and each stockholder of
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<PAGE> 20
the Company relating to sales and certain other dispositions of shares of Stock
or certain other securities, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date or Additional Closing
Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the legal fees and other expenses incurred in connection
with any suit, action or proceeding or any claim asserted) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its
20
<PAGE> 21
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by J.P. Morgan Securities Inc. and any such
separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the Indemnifying Person agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first or second paragraphs
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person there-
21
<PAGE> 22
under, shall contribute to the amount paid or payable by such Indemnified Person
as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting expenses)
received by the Company and the total underwriting discounts and the commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate public offering price of the
Shares. The relative fault of the Company on the one hand and the Underwriters
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as
one entity for such purposes) or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
con-
22
<PAGE> 23
tribute pursuant to this Section 7 are several in proportion to the respective
number of Shares set forth opposite their names in Schedule I hereto, and not
joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange or the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of or
guaranteed by the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State or California authorities, or (iv) there shall have occurred any outbreak
or escalation of hostilities or any change in financial markets or any calamity
or crisis that, in the judgment of the Representatives, is material and adverse
and that, in the judgment of the Representatives, makes it impracticable to
market the Shares being delivered at the Closing Date or the Additional Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any
post-effective amendment) by the Commission.
23
<PAGE> 24
10. If on the Closing Date or the Additional Closing Date, as the case
may be, any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Shares are not made within 36 hours after such
default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Shares, the Additional Closing Date), but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this Section 10 shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of their counsel)
24
<PAGE> 25
reasonably incurred by the Underwriters in connection with this Agreement or the
offering contemplated hereunder.
12. This Agreement shall inure to the benefit of and be binding upon
the Company, the Underwriters, any controlling persons referred to herein and
their respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Shares from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
13. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
J.P. Morgan Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260, (telefax: 212-648- 5705); Attention: Syndicate Department. Notices
to the Company shall be given to it at Geron Corporation, 200 Constitution
Drive, Menlo Park, California 94025, (telefax: 415-473-7750); Attention: Chief
Executive Officer.
14. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
25
<PAGE> 26
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
GERON CORPORATION
By:
-------------------------------
Name:
Title:
Accepted:_________, 1996
J.P. Morgan Securities Inc.
Montgomery Securities
Salomon Brothers Inc
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: J.P. MORGAN SECURITIES INC.
By:
---------------------------
Name:
Title:
26
<PAGE> 27
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares
Underwriter To Be Purchased
- ----------- ----------------
<S> <C>
J.P. Morgan Securities Inc..........................
Montgomery Securities...............................
Salomon Brothers Inc................................
----------
Total ================
</TABLE>
27
<PAGE> 28
EXHIBIT A
[FORM OF OPINION OF SPECIAL PATENT COUNSEL]
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 6(g) of
the Underwriting Agreement dated _____, 1996 (the "Underwriting Agreement")
between you, as Representatives on behalf of the several Underwriters named in
Schedule I thereto (the "Underwriters"), and Geron Corporation, a Delaware
corporation (the "Company").
We have acted as special patent counsel to the Company in
connection with the sale by the Company and the purchase by the Underwriters,
severally and not jointly, of an aggregate of [________] shares of common stock,
par value $.001 per share, of the Company. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Underwriting Agreement.
In connection with our responsibilities as special patent
counsel to the Company, we have filed and prosecuted certain patent applications
that have issued to patents, a listing of which has previously been provided to
counsel for the Underwriters (the "Patents"), and have filed and are prosecuting
certain other patent applications, a listing of which has previously been
delivered to counsel for the Underwriters (with the applications underlying the
Patents, collectively, the "Patent Applications").
Prior to the filing of the Patent Applications, this firm
conducted investigations for the published prior art relating to the inventions
claimed in such applications. Based on the information obtained in these
investigations, we disclosed to the United States Patent and Trademark Office
(the "PTO") in the Patent Applications all pertinent prior art references known
to us and the Company. To our best knowledge, all information submitted to the
PTO in the Patent Applications, and in connection with the prosecution of the
Patent Applications, was complete and accurate. Neither this firm nor, to our
best knowledge, the Company made any misrepresentation or concealed any material
fact from the PTO in any of the Patent Applications, or in connection with the
prosecution of the Patent Applications.
We are of the opinion that:
To our best knowledge, the Company is not subject to any
current claim or notice of infringement or other
28
<PAGE> 29
violation of any patent, trade secret or other intellectual property
rights of others; to our best knowledge and except as set forth in the
Prospectus, (i) there are no legal or governmental proceedings pending
relating to the patent rights or trade secrets owned or used by the
Company, other than a standard review of the pending Patent
Applications, and (ii) no such proceedings, including without
limitation interference proceedings, are currently threatened by
governmental authorities or others; we have no knowledge of any facts
that would preclude the Company from having clear title to the Patents
and Patent Applications; each of the Patents and Patent Applications
has been assigned to the Company by the inventors named therein; each
of the Patent Applications was filed by, or on behalf of, the Company
with the PTO in accordance with the rules and regulations of the PTO,
and substantially all of the pending Patent Applications have been
awarded a filing date by the PTO; we are unaware of any facts which
form a basis for a finding of unenforceability or invalidity of any of
the Patents or Patent Applications that are material to the Company's
business.
We have no reason to believe that the pending Patent
Applications will not eventuate in issued patents or that the Patents or any
patents issued in respect of the pending Patent Applications will not be valid
or will not afford the Company reasonable patent protection relative to the
subject matter thereof.
In addition, nothing has come to our attention that would lead
us to believe that the Registration Statement (insofar as it discusses patents),
at the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
(insofar as it discusses patents), at the time it was first provided to the
Underwriters by the Company for use in connection with the offering of the
Shares or at the date hereof, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact with reference to
patents, trade secrets and other intellectual property necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Very truly yours,
29
<PAGE> 30
EXHIBIT B
_____, 1996
Re: Proposed Public Offering by Geron Corporation
Dear Sirs:
The undersigned, a stockholder of Geron Corporation, a Delaware
corporation (the "Company"), understands that J.P. Morgan Securities Inc. ("J.P.
Morgan"), Montgomery Securities and Salomon Brothers Inc propose to enter into
an Underwriting Agreement (the "Underwriting Agreement") with the Company
providing for the public offering of shares (the "Securities") of the Company's
common stock, par value $.001 per share (the "Common Stock") which will set
forth, among other things, the initial public offering price of the Securities.
In recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Underwriting
Agreement that, during a period of 180 days from the date of thereof, the
undersigned will not, without the prior written consent of J.P. Morgan, directly
or indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of or transfer, whether directly or synthetically, any shares
of Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or request the Company to file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing.
Notwithstanding the foregoing, the undersigned may transfer
shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock without written consent of J.P. Morgan to the
following: (i) if the undersigned is an individual, to his or her immediate
family or to a trust, the beneficiaries of which are exclusively the undersigned
and/or a member or members of his or her immediate family, either during his or
her lifetime or on death by will or intestacy, and (ii) if the undersigned is a
partnership or corporation, to limited partners or shareholders of the
undersigned as a distribution,
30
<PAGE> 31
provided that the transferees described in (i) and (ii) above will have agreed
in writing to be bound by the terms hereof.
Very truly yours,
Signature:
--------------------------------
Print Name:
-------------------------------
31
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF GERON CORPORATION,
a Delaware Corporation
The undersigned, Ronald W. Eastman and David L. Greenwood hereby
certify that:
FIRST: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
SECOND: The Certificate of Incorporation of said corporation was
originally filed with the Secretary of State of Delaware on November 28, 1990.
THIRD: The Certificate of Incorporation of said corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation (herein called the "Corporation") is GERON
CORPORATION.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is Prentice Hall Corporation Systems, Inc., 32 Loockerman Square, Suite
L-100, Dover, Delaware 19901. The name of the registered agent of the
Corporation at such address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
(A) Classes of Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation is authorized to issue
is Fifty-Six Million Seven Hundred Ninety-Six Thousand Five Hundred Seventy-Nine
(56,796,579) shares. Thirty-Five Million (35,000,000) shares shall be Common
Stock, par value $0.001 per share and Twenty-One Million Seven Hundred
Ninety-Six Thousand Five Hundred Seventy-Nine (21,796,579) shares shall be
Preferred Stock, par value $0.001 per share. The Preferred Stock shall be
divided into series, namely, Series A Preferred Stock consisting of Seven
Million Six Hundred Thirty-Two Thousand Nine Hundred Ninety-Two (7,632,992)
shares (the "Series A Preferred Stock"), Series B Preferred Stock consisting of
Four Million Eight Hundred Fifty-Nine Thousand Four Hundred Sixteen (4,859,416)
shares (the "Series B Preferred Stock"), Series C Preferred Stock consisting of
Five Million Three Hundred Four Thousand One Hundred Seventy-One (5,304,171)
shares (the
<PAGE> 2
"Series C Preferred Stock"), and Series D Preferred Stock consisting of Four
Million (4,000,000) shares (the "Series D Preferred Stock").
(B) Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Amended and Restated Certificate of
Incorporation may be issued from time to time in series. The rights,
preferences, privileges, and restrictions granted to and imposed on the
Preferred Stock are as set forth below in this Article IV(B). Subject to the
protective voting rights which have been or may be granted to the Preferred
Stock or series thereof in Certificates of Determination or the Corporation's
Certificate of Incorporation, ("Protective Provisions"), the Board of Directors
is hereby authorized to fix or alter the rights, preferences, privileges and
restrictions granted to or imposed upon additional series of Preferred Stock,
and the number of shares constituting any such series and the designation
thereof, or of any of them. Subject to compliance with applicable Protective
Provisions, but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series, prior or subsequent to the issue of that series, but not
below the number of shares of such series then outstanding or reserved for
future issuance. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.
1. Dividend Provisions. The holders of shares of Series A, Series B,
Series C and Series D Preferred Stock shall be entitled to receive dividends,
out of any assets legally available therefor, prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock or
other securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of the
Corporation) on the Common Stock of the Corporation, at the rate of $.10 per
share for each outstanding share of Series A Preferred Stock, $.225 per share
for each outstanding share of Series B Preferred Stock, $0.24 per share for each
outstanding share of Series C Preferred Stock and $0.30 per share for each
outstanding share of Series D Preferred Stock (the "Original Dividend Rate" with
respect to each such series), on a per annum basis, or if greater than the
applicable Original Dividend Rate (as determined on a per annum basis and on as
converted basis for the Series A, Series B, Series C and Series D Preferred
Stock), an amount equal to that paid on any other outstanding shares of the
Corporation, payable quarterly when, as and if declared by the Board of
Directors. Thereafter, the holders of Preferred Stock and Common Stock shall be
entitled, when, as and if declared by the Board of Directors, to dividends out
of the corporation's assets legally available therefor; provided, however, that
no such dividends may be declared or paid on any shares of Common Stock or
Preferred Stock unless at the same time an equivalent dividend is declared and
paid on all outstanding shares of Common Stock and Preferred Stock; and provided
further that the dividend on any series of any Preferred Stock shall be payable
at the same rate per share as would be payable on the shares of Common Stock or
other securities into which such series of Preferred Stock is convertible
immediately prior to the record date for such dividend. The right
-2-
<PAGE> 3
to such dividends on shares of the Common Stock or Preferred Stock shall not be
cumulative, and no right shall accrue to holders of Common Stock or Preferred
Stock by reason of the fact that dividends on said shares are not declared in
any prior period.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, either voluntary or involuntary, the holders of Series A,
Series B, Series C and Series D Preferred Stock shall be entitled to receive, on
a pari passu basis, prior and in preference to any distribution of any of the
assets of the Corporation to the holders of Common Stock and any such additional
series which may be subordinated to any present class or series of Preferred
Stock with respect to the liquidation preference set forth in this Section 2 by
reason of their ownership thereof, an amount per share (as adjusted for any
stock split, stock division or consolidation) (i) equal to $1.00 for each
outstanding share of Series A Preferred Stock (the "Original Issue Price" with
respect to such series) and (ii) equal to $2.25 for each outstanding share of
Series B Preferred Stock (the "Original Issue Price" with respect to such
series), (iii) equal to $2.40 for each outstanding share of Series C Preferred
Stock (the "Original Issue Price" with respect to such series) and (iv) equal to
$3.00 for each outstanding share of Series D Preferred Stock (the "Original
Issue Price" with respect to such series) plus, for such shares of the Preferred
Stock, an amount equal to declared but unpaid dividends on each such share of
Preferred Stock (such amount of declared but unpaid dividends being referred to
herein as the "Premium" with respect to the Series A, Series B, Series C and
Series D Preferred Stock). If upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series A, Series B, Series C and
Series D Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then the entire assets and
funds of the Corporation legally available for distribution shall be distributed
ratably among the holders of the Series A, Series B, Series C and Series D
Preferred Stock in proportion to the aggregate preferential amount each such
holder would otherwise be entitled to receive.
(b) Upon the completion of the distribution required by subparagraph
(a) of this Section 2, and any other distribution which may be required with
respect to series of Preferred Stock which may from time to time come into
existence, if assets remain in the Corporation, the holders of the Common Stock
and Series A, Series B, Series C and Series D Preferred Stock shall receive all
of the remaining assets of the Corporation pro-rata on an as-converted basis.
(c) A consolidation or merger of the Corporation with or into any
other corporation or corporations, or a sale, conveyance or disposition of all
or substantially all of the assets of the Corporation or the effectuation by the
Corporation or its stockholders of a transaction or series of related
transactions in which more than 50% of the voting power of the Corporation
entitled to vote in an election of the Board of Directors of the Corporation at
a regular or special meeting of the stockholders of the Corporation or by way of
written consent in lieu of such meeting is disposed of, shall not be deemed to
be a liquidation, dissolution or winding up within the meaning of this Section
2, but shall instead be treated pursuant to Section 5 hereof.
3. Redemption. The Preferred Stock is not redeemable.
-3-
<PAGE> 4
4. Conversion. The holders of the Series A, Series B, Series C and
Series D Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert.
(i) Subject to subsection (c) below and Section 8 hereof, each
share of Series A, Series B, Series C and Series D Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the Corporation or any transfer agent
for the Preferred Stock of that series into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Original
Issue Price for each share of that series by the conversion price at the time in
effect for each such share (the "Conversion Price"). The initial Conversion
Price for shares of Series A Preferred Stock shall be the Original Issue Price
for the Series A Preferred Stock; the initial Conversion Price for shares of
Series B Preferred Stock shall be the Original Issue Price for the Series B
Preferred Stock; the initial Conversion Price for shares of Series C Preferred
Stock shall be the Original Issue Price for the Series C Preferred Stock; and
the Initial Conversion Price for shares of Series D Preferred Stock shall be the
Original Issue Price for the Series D Preferred Stock; provided, however, that
the Conversion Price for the Series A, Series B, Series C and Series D Preferred
Stock shall be subject to adjustment as set forth in subsection (c) below.
(ii) Each share of Series A, Series B, Series C and Series D
Preferred Stock shall automatically be converted into shares of Common Stock at
the Conversion Price at the time in effect for such Series A, Series B and
Series C Preferred Stock immediately upon the consummation of the Corporation's
sale of its Common Stock in a bona fide, firm commitment underwriting pursuant
to a registration statement on Form S-1 under the Securities Act of 1933, as
amended, the public offering price of which was not less than $5.00 per share
(adjusted to reflect subsequent stock dividends, stock splits or
recapitalizations) and which resulted in at least $7,500,000 of aggregate
proceeds.
(b) Mechanics of Conversion. Before any holder of Series A, Series
B, Series C or Series D Preferred Stock shall be entitled to convert the same
into shares of Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Preferred Stock of that series, and shall give written notice by
mail, postage prepaid, to the Corporation at its principal corporate office, of
the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable, issue and deliver at such
office to such holder of Preferred Stock or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series A, Series B, Series C or Series D
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date. If the conversion is in connection with an underwritten offer of
securities registered pursuant to the Securities Act of 1933, the conversion
will, unless otherwise notified by the holder tendering Series A, Series B,
Series C or Series D Preferred Stock for conversion, be conditioned
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upon the closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Series A, Series B, Series C or Series D
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(c) Conversion Price Adjustments of Preferred Stock. The Conversion
Price of the Series A, Series B, Series C and Series D Preferred Stock shall be
subject to adjustment from time to time as follows:
(i) (A) If the corporation shall issue any Additional Stock (as
defined below) without consideration or for a consideration per share less than
the Conversion Price for the Series A, Series B, Series C or Series D Preferred
Stock in effect immediately prior to the issuance of such Additional Stock, the
respective Conversion Price for the Series A, Series B, Series C or Series D
Preferred Stock, as applicable, in effect immediately prior to each such
issuance shall forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price equal to the quotient obtained by dividing the total
computed under clause (x) below by the total computed under clause (y) below as
follows:
(x) for each applicable series, an amount equal to the sum of:
(1) the aggregate purchase price of the shares of such Series A,
Series B, Series C and Series D Preferred Stock sold (or deemed to be
sold pursuant to subsection 4(c)(i)(E)) pursuant to the agreement to
which such shares of Series A, Series B, Series C or Series D Preferred
Stock are first issued (the "Series A Stock Purchase Agreement," the
"Series B Purchase Agreement," the "Series C Purchase Agreement" or the
"Series D Purchase Agreement," as applicable), plus
(2) the aggregate consideration, if any, received by the
corporation for all Additional Stock issued on or after the date of
such series' respective Stock Purchase Agreement (the "Purchase Date"
for each such series), other than shares of Common Stock issued or
issuable upon conversion of such series of Preferred Stock;
(y) for each such series, an amount equal to the sum of
(1) the aggregate purchase price of such shares of Series A
Preferred Stock sold pursuant to the Series A Stock Purchase Agreement,
Series B Preferred Stock sold pursuant to the Series B Stock Purchase
Agreement, Series C Preferred Stock sold pursuant to the Series C
Purchase Agreement and Series D Preferred Stock sold pursuant to the
Series D Purchase Agreement divided by the Conversion Price for such
shares of Series A, Series B, Series C and Series D Preferred Stock in
effect at the Purchase Date, as applicable (or such higher or lower
Conversion Price for the Series A, Series B, Series C or Series D
Preferred Stock, as applicable, as results from the application of
subsections 4(c)(iii) and (iv)
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and assuming that this Amended and Restated Certificate was in effect
as of the Purchase Date) plus
(2) the number of shares of Additional Stock issued since the
Purchase Date (increased or decreased to the extent that the number of
such shares of Additional Stock shall have been increased or decreased
as the result of the application of subsections 4(c)(iii) and (iv)).
(B) No adjustment of the Conversion Price for the Series A,
Series B, Series C or Series D Preferred Stock shall be made in an amount less
than one cent per share, provided that any adjustments which are not required to
be made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to 3 years from the
date of the event giving rise to the adjustment being carried forward, or shall
be made at the end of 3 years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections (E)(3) and (E)(4), no adjustment of such Conversion Price pursuant
to this subsection 4(c)(i) shall have the effect of increasing the applicable
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or after
the Purchase Date) of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock or options to purchase or rights to subscribe for such convertible or
exchangeable securities (including, without limitation, the Series A, Series B,
Series C and Series D Preferred Stock), the following provisions shall apply for
all purposes of this subsection 4(c)(i) and 4(c)(ii):
1. The aggregate maximum number of shares of Common
Stock deliverable upon exercise (to the extent exercisable) of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subsections
4(c)(i)(C) and (c)(i)(D)), if any, received by the Corporation upon the issuance
of such options or rights plus the minimum exercise price provided in such
options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
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<PAGE> 7
2. The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (to the extent then
convertible or exchangeable) for any such convertible or exchangeable securities
or upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
the consideration, if any, received by the Corporation for any such securities
and related options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional consideration, if
any, to be received by the Corporation (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in each case to
be determined in the manner provided in subsections 4(c)(i)(C) and (c)(i)(D)).
3. In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the Corporation upon
exercise of such options or rights or upon conversion of or in exchange for such
convertible or exchangeable securities, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion Price of the
Series A, Series B, Series C and/or Series D Preferred Stock, to the extent in
any way affected by or computed using such options, rights or securities, shall
be recomputed to reflect such change, but no further adjustment shall be made
for the actual issuance of Common Stock or any payment of such consideration
upon the exercise of any such options or rights or the conversion or exchange of
such securities.
4. Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A, Series B, Series C and/or Series D
Preferred Stock, to the extent in any way affected by or computed using such
options, rights or securities or options or rights related to such securities,
shall be recomputed to reflect the issuance of only the number of shares of
Common Stock (and convertible or exchangeable securities which remain in effect)
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities.
5. The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to subsections 4(c)(i)(E)(1)
and (2) shall be appropriately adjusted to reflect any change, termination or
expiration of the type described in either subsection 4(c)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 4(c)(i)(E)) by the
Corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a transaction described
in subsection 4(c)(iii) hereof;
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<PAGE> 8
(B) Shares of Common Stock issued or issuable to officers,
employees, consultants and directors of the Corporation directly or pursuant to
a stock benefit plan adopted by the Board of Directors;
(C) Common Stock issued to non-profit institutions primarily
in connection with research or other collaborative arrangements; or
(D) Up to 9,617 shares of Common Stock issuable to
StratiPoint Group, Inc. in connection with consulting services.
(iii) In the event the Corporation should at any time or from time
to time after the Purchase Date for the Series D Preferred Stock fix a record
date for the effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Series A, Series B, Series C and Series D Preferred
Stock shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents
with the number of shares issuable with respect to such Common Stock Equivalents
determined in the manner provided for deemed issuances in subsection 4(c)(i)(E).
(iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date for the Series D Preferred Stock is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series A, Series
B, Series C and Series D Preferred Stock shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be decreased in proportion to such decrease in outstanding
shares.
(d) Other Distributions. In the event the Corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends) or
options or rights not referred to in subsection 4(c)(iii), then, in each such
case for the purpose of this subsection 4(d), the holders of the Series A,
Series B, Series C and Series D Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the Corporation into which their shares
of Series A, Series B, Series C and Series D Preferred Stock are convertible as
of the record date fixed for the determination of the holders of Common Stock of
the Corporation entitled to receive such distribution.
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<PAGE> 9
(e) Recapitalizations. Subject to the Protective Provisions provided
for herein, if at any time or from time to time there shall be a
recapitalization of the Common Stock or merger with the Corporation as the
surviving entity (other than a subdivision, combination or merger or sale of
assets transaction provided for elsewhere in this Section 4 or Section 5)
provision shall be made so that the holders of the Series A, Series B, Series C
and Series D Preferred Stock shall thereafter be entitled to receive upon
conversion of their Series A, Series B, Series C and/or Series D Preferred Stock
the number of shares of stock or other securities or property of the Company or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of the Series A, Series B, Series C
and Series D Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the Conversion Price then
in effect and the number of shares purchasable upon conversion of the Series A,
Series B, Series C and Series D Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable. Notwithstanding anything in
this subsection (e) to the contrary, the provisions of this subsection (e) shall
not apply in the case of a merger which will result in the Corporation's
stockholders immediately prior to such merger not holding at least 50% of the
voting power of the surviving or continuing entity, entitled to vote in an
election of the Board of Directors of such entity at a regular or special
meeting of the stockholders of such entity or by way of written consent on lieu
of such meeting.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights of the
holders of the Series A, Series B, Series C and Series D Preferred Stock against
impairment.
(g) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion of the
Series A, Series B, Series C and Series D Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded down to the nearest whole
share. Whether or not fractional shares are issuable upon such conversion shall
be determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of a series of Preferred Stock pursuant to this Section 4,
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of such series of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate
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<PAGE> 10
setting forth (A) such adjustment and readjustment, (B) the Conversion Price at
the time in effect, and (C) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of a share of Preferred Stock.
(h) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series A, Series B, Series C and Series D Preferred
Stock, at least 20 days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
(i) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of the Series A, Series B, Series C and Series D Preferred Stock such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A, Series B,
Series C and Series D Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series A, Series B, Series
C and Series D Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Preferred Stock, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
(j) Notices. Any notice required by the provisions of this Section 4
to be given to the holders of shares of Series A, Series B, Series C and Series
D Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.
5. Merger, Consolidation.
(a) At any time, in the event of:
(i) any transaction (or series of related transactions
including, without limitation, any reorganization, merger or consolidation)
which will result in the Corporation's stockholders as constituted immediately
prior to such transaction not holding, immediately after such transaction, at
least 50% of the voting power of the surviving or continuing entity, entitled to
vote in an election of the Board of Directors of such entity at a regular or
special meeting of the stockholders of such entity or by way of written consent
in lieu of such meeting; or
(ii) a sale of all or substantially all of the assets of the
Corporation, unless the Corporation's stockholders as constituted immediately
prior to such sale
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will hold, immediately after such transaction, at least 50% of the voting power
entitled to vote in an election of the Board of Directors of the purchasing
entity at a regular or special meeting of the stockholders of such entity or by
way of written consent in lieu of such meeting.
then, holders of the Series A, Series B, Series C and Series D
Preferred Stock shall receive for each share of such stock in cash or in
securities received from the acquiring corporation, or in a combination thereof,
at the closing of any such transaction, an amount equal to the Original Issue
Price for such series, plus an amount equal to the Premium for such series as of
the date of closing of such transaction, and the remaining proceeds of such
transaction shall be distributed as a Shared Allocation (as defined in
subsection 5(b)). Such payments (including the Shared Allocation) shall be made
with respect to the Series A, Series B, Series C and Series D Preferred Stock by
purchase of such shares of the Preferred Stock by the surviving corporation,
entity or person or by the Corporation. In the event the proceeds of the
transaction are not sufficient to make full payment of the aforesaid
preferential amounts to the holders of the Series A, Series B, Series C and
Series D Preferred Stock in accordance herewith, then the entire amount payable
in respect of the proposed transaction shall be distributed among the holders of
the Series A, Series B, Series C and Series D Preferred Stock in proportion to
the aggregate preferential amount each such holder would otherwise be entitled
to receive.
(b) The term "Shared Allocation" shall mean that the holders of
Series A, Series B, Series C and Series D Preferred Stock and Common Stock of
this Corporation shall share the remaining consideration, or all of the
consideration, as the case may be, to be paid by the acquiring corporation in
such transaction in the same proportion as the number of shares of outstanding
Common Stock and Common Stock issuable upon the conversion of outstanding
Preferred Stock then held by each of them bears to the total number of shares of
outstanding Common Stock and Common Stock issuable upon conversion of
outstanding Preferred Stock.
(c) Any securities to be delivered to the holders of the Series A,
Series B, Series C and/or Series D Preferred Stock pursuant to subsection 5(a)
above shall be valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability covered by (ii) below:
(A) If traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the 30-day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever are
applicable) over the 30-day period ending three (3) days prior to the closing;
and
(C) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation and the
holders of Preferred Stock which would be entitled to receive such securities or
the same type of securities
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and which Preferred Stock represents at least a majority of the voting power of
all then outstanding shares of such Preferred Stock.
(ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount from the market value
determined as above in (i) (A), (B) or (C) to reflect the approximate fair
market value thereof, as mutually determined by the Corporation and the holders
of Preferred Stock which would be entitled to receive such securities or the
same type of securities and which represent at least a majority of the voting
power of all then outstanding shares of such Preferred Stock.
(d) In the event the requirements of subsection 5(a) are not
complied with, the Corporation shall forthwith either:
(i) cause such closing to be postponed until such time as the
requirements of this Section 5 have been complied with, or
(ii) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Series A, Series B, Series C
and Series D Preferred Stock shall revert to and be the same as such rights,
preferences and privileges existing immediately prior to the date of the first
notice referred to in subsection 5(e) hereof.
(e) The Corporation shall give each holder of record of Series A,
Series B, Series C and Series D Preferred Stock (or securities exercisable
therefor) written notice of such impending transaction not later than twenty
(20) days prior to the stockholders' meeting called to approve such transaction,
or twenty (20) days prior to the closing of such transaction, whichever is
earlier, and shall also notify such holders in writing of the final approval of
such transaction. The first of such notices shall describe the material terms
and conditions of the impending transaction and the provisions of this Section
5, and the Corporation shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place sooner than
twenty (20) days after the Corporation has given the first notice provided for
herein or sooner than ten (10) days after the Corporation has given notice of
any material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of Preferred Stock
which is entitled to such notice rights or similar notice rights and which
represents at least a majority of the voting power of all then outstanding
shares of such Preferred Stock.
(f) The provisions of this Section 5 are in addition to the
protective provisions of Section 7 hereof.
6. Voting Rights. The holder of each share of Series A, Series B,
Series C and Series D Preferred Stock shall have the right to one vote for each
share of Common Stock into which such Series A, Series B, Series C and Series D
Preferred Stock could then be converted (with any fractional share determined on
an aggregate conversion basis being rounded to the nearest whole share), and
with respect to such vote, such holder shall have full voting rights
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and powers equal to the voting rights and powers of the holders of Common Stock,
and shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the by-laws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
7. Protective Provisions. In addition to any vote required by law, so
long as any shares of Series A, Series B, Series C and/or Series D Preferred
Stock are outstanding, the Corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding Series A, Series B, Series C and Series
D Preferred Stock, voting together as a single class:
(a) sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation or entity or effect any transaction or series of related
transactions in which more than 50% of the voting power entitled to vote in an
election of the Board of Directors of the Corporation at a regular or special
meeting of stockholders or by way of written consent in lieu of such meeting is
disposed of;
(b) adversely alter or change the rights, preferences or privileges
of the shares of Series A, Series B, Series C or Series D Preferred Stock;
(c) create any new class or series of stock or any other securities
convertible into equity securities of the Corporation having a preference over,
or being on a parity with, the Series A, Series B, Series C or Series D
Preferred Stock with respect to dividends, liquidation or redemption;
(d) pay or declare any dividend on its Common Stock or any other
junior equity security other than a dividend in Common Stock of the Corporation;
(e) Redeem, purchase or otherwise acquire (or pay into or set aside
for a sinking fund for such purpose) any of the Common Stock; provided, however,
that this restriction shall not apply to the repurchase of shares of Common
Stock: (i) from employees, officers, directors, consultants or other persons
performing services for the Corporation or any subsidiary pursuant to agreements
under which the Corporation has the option to repurchase such shares at cost or
at cost plus interest upon the occurrence of certain events, such as the
termination of employment, or (ii) in settlement of disputes with third parties
if such redemption, purchase or acquisition or the payment into or setting aside
into a sinking fund is unanimously approved by the Board of Directors;
(f) do any act or thing which would result in taxation of the
holders of Preferred Stock under Section 305 of the Internal Revenue Code;
(g) Increase the number of authorized shares of Series A, Series B,
Series C or Series D Preferred Stock.
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8. Special Mandatory Conversion. On or at any time the holders of a
least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of
Preferred Stock elect to convert their shares of Preferred Stock, all shares of
Preferred Stock including the shares of those holders of Preferred Stock who did
not elect to convert, shall automatically convert into Common Stock. Conversion
pursuant to this Section 8 shall be governed by Section 4.
9. Status of Converted Stock. In the event any shares of Series A,
Series B, Series C or Series D Preferred Stock shall be converted pursuant to
Section 4, the shares so converted shall be canceled and shall not be issuable
by the Corporation, and the Certificate of Incorporation of the Corporation
shall be appropriately amended to effect the corresponding reduction in the
Corporation's authorized capital stock.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up
of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Division (B) of this Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall have
the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the By-laws of the Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE V
Except as otherwise provided in this Amended and Restated Certificate
of Incorporation, in furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE VI
The number of directors of the Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
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<PAGE> 15
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE IX
In the event the Corporation is subject to Section 2115 of the
California Corporations Code, Section A of this Article shall apply. Otherwise,
Section B of this Article shall apply.
(A) California. The liability of each and every director of this
Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law. If California law is hereafter amended to
authorize, with the approval of a Corporation's stockholders, further reductions
in the liability of the Corporation's directors for breach of fiduciary duty,
then a director of the Corporation shall not be liable for any such breach to
the fullest extent permitted by California law, as so amended.
(B) Delaware. To the fullest extent permitted by the General
Corporation Law of Delaware, as the same may be amended from time to time, a
director of the Corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. If the General Corporation Law of Delaware is hereafter amended to
authorize, with the approval of a corporation's stockholders, further reductions
in the liability of the corporation's directors for breach of fiduciary duty,
then a director of the corporation shall not be liable for any such breach to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
(C) Effect of Repeal or Modification. Any repeal or modification of the
foregoing provisions of this Article IX shall not adversely affect any right or
protection of a director of the Corporation with respect to any acts or
omissions of such director occurring prior to such repeal or modification.
ARTICLE X
In the event the Corporation is subject to Section 2115 of the
California Corporations Code, Section A of this Article shall apply. Otherwise,
Section B of this Article shall apply.
(A) California. To the fullest extent permitted by California law, the
Corporation is authorized to provide indemnification of (and advancement of
expenses to) agents (as defined in Section 317 of the California Corporations
Code) through bylaw provision, agreements with agents, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 317 of the California Corporations
Code, subject only to applicable limits set forth in Section 204 of the
California Corporations Code, with respect to actions for breach of duty to a
corporation and its stockholders.
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<PAGE> 16
(B) Delaware. To the fullest extent permitted by applicable law, the
Corporation is also authorized to provide indemnification of (and advancement of
expenses to) such agents (and any other persons to which Delaware law permits
the Corporation to provide indemnification) though bylaw provisions, agreements
with such agents or other persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and advancement
otherwise permitted by Section 145 of the Delaware General Corporation Law,
subject only to limits created by applicable Delaware law (statutory or
non-statutory), with respect to actions for breach of duty to a corporation, its
stockholders, and others.
(C) Effect of Repeal or Modification. Any repeal or modification of any
of the foregoing provisions of this Article X shall not adversely affect any
right or protection of a director, officer, agent or other person existing at
the time of, or increase the liability of any director of the Corporation with
respect to any acts or omissions of such director, officer or agent occurring
prior to such repeal or modification.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE XII
The Corporation shall have perpetual existence.
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<PAGE> 17
FOURTH: The foregoing Amended and Restated Certificate of Incorporation
has been duly adopted by the Corporation's Board of Directors and stockholders
in accordance with the applicable provisions of Section 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
November 9, 1995.
GERON CORPORATION
By: /s/ Ronald W. Eastman
----------------------------
Ronald W. Eastman, President
Attest: /s/ David L. Greenwood
-----------------------------
David L. Greenwood, Secretary
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<PAGE> 1
EXHIBIT 3.2
AS AMENDED ON MARCH 17, 1992,
SEPTEMBER 11, 1992 AND
JUNE 2, 1993
BYLAWS
OF
GERON CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Dover, County
of Kent, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held at such time and place as may be fixed from time to time
by the Board of Directors, and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
<PAGE> 2
Section 2. Annual meetings of stockholders, commencing with the year
1992, shall be held on such date and time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
they shall elect by a plurality vote a board of directors, and transact such
other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole
2.
<PAGE> 3
time thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of
3.
<PAGE> 4
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power
4.
<PAGE> 5
held by such stockholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period.
At all elections of directors of the corporation each stockholder
having voting power shall be entitled to exercise the right of cumulative voting
as provided in the certificate of incorporation.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
5.
<PAGE> 6
Section 1. The number of directors which shall constitute the whole
board shall not be less than three (3) nor more than five (5). The first board
shall consist of three (3) directors. (1)Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
Board of Directors or by the stockholders at any meeting of the stockholders,
except as provided in Section 2 of this Article, and each director elected shall
hold office until his success is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and new created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders
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(1)Current range set at not less than five (5) nor more than eight (8),
with the current number set at eight (8) pursuant to the resolutions adopted by
the Board by unanimous written consent dated June 2, 1993 and as approved by the
requisite stockholders effective as of June 2, 1993.
6.
<PAGE> 7
holding at least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these bylaws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as
7.
<PAGE> 8
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the president
on ten (10) days' notice to each director by mail or forty-eight (48) hours'
notice to each director either personally or by telegram; special meetings shall
be called by the president or secretary in like manner and on like notice on the
written request of two directors unless the board consists of only one director,
in which case special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
8.
<PAGE> 9
Section 9. Unless otherwise restricted by the certificate of
incorporation of these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
9.
<PAGE> 10
In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
10.
<PAGE> 11
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or bylaw, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
11.
<PAGE> 12
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board
of Directors and shall be a president and a secretary. The Board of Directors
may elect from among its members a Chairman of the Board and a Vice Chairman of
the Board. The Board of Directors may also choose one or more vice-presidents,
assistant secretaries and assistant treasurers. Any
12.
<PAGE> 13
number of offices may be held by the same person, unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a president and a secretary and may
choose a vice president and a treasurer.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at all
meetings of the Board of Directors and of the stockholders at which he shall be
present. He shall have and may exercise such powers as are, from time to time,
assigned to him by the Board and as may be provided by law.
13.
<PAGE> 14
Section 7. In the absence of the Chairman of the Board, the Vice
Chairman of the Board, if any, shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present. He shall have
and may exercise such powers as are, from time to time, assigned to him by the
Board and as may be provided by law.
14.
<PAGE> 15
THE PRESIDENT AND VICE-PRESIDENT
Section 8. The president shall be the chief executive officer of the
corporation unless the Board selects the Chairman as chief executive officer, in
which case the chairman shall have all the authority set forth below; and in the
absence of the Chairman and Vice Chairman of the Board he shall preside at all
meetings of the stockholders and the Board of Directors; he shall have general
and active management of the business of the corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
Section 9. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
Section 10. In the absence of the president or in the event of his
inability or refusal to act, the vice-president, if any, (or in the event there
be more than one vice- president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall
15.
<PAGE> 16
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 12. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
16.
<PAGE> 17
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
Section 14. He shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 15. If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and
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<PAGE> 18
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 16. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice- chairman of the Board of Directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
18.
<PAGE> 19
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect
19.
<PAGE> 20
as if he were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
20.
<PAGE> 21
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholder or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in
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<PAGE> 22
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
22.
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Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 6. The corporation shall, to the fullest extent authorized
under the laws of the State of Delaware, as those laws may be amended and
supplemented from time to time, indemnify any director made, or threatened to be
made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of being a director of the
corporation or a predecessor corporation or, at the corporation's request, a
director or officer of another corporation. The indemnification provided for in
this Section 6 shall: (i) not be deemed exclusive of any other rights to which
those indemnified
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may be entitled under any bylaw, agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
continue as to a person who has ceased to be a director, and (iii) inure to the
benefit of the heirs, executors and administrators of such a person. The
corporation's obligation to provide indemnification under this Section 6 shall
be offset to the extent of any other source of indemnification or any otherwise
applicable insurance coverage under a policy maintained by the corporation or
any other person.
Expenses incurred by a director of the corporation in defending a civil
or criminal action, suit or proceeding by reason of the fact that he is or was a
director of the corporation (or was serving at the corporation's request as a
director or officer of another corporation) shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by relevant sections of the General Corporation Law of
Delaware.
The foregoing provisions of this Section 6 shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this bylaw is in effect, and any repeal or modification
thereof shall not affect
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any rights or obligations then existing with respect to any state of facts then
or theretofore existing or any action, suit or proceeding theretofore or
thereafter brought based in whole or in part upon any such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the corporation to indemnify any person, other than a director, made a party to
any action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 6 of all directors,
officers and employees who are determined by the corporation or otherwise to be
or to have been "fiduciaries" of any employee benefit plan of the corporation
which may exist from time to time, Section 145 of the General Corporation Law of
Delaware shall, for the purposes of this Section 6, be interpreted as follows:
an "other enterprise" shall be deemed to include such an employee benefit plan,
including without limitation, any plan of the corporation which is governed by
the Act of Congress entitled "Employee Retirement Income Security Act of 1974,"
as amended from time to time; the corporation shall be deemed to have requested
a person to serve an employee benefit plan where the performance by such person
of his duties to the corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan; excise taxes assessed on a person with
25.
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respect to an employee benefit plan pursuant to such Act of Congress shall be
deemed "fines."
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certificate of
incorporation at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal bylaws is conferred upon the Board of Directors by the
certificate or incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
26.
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EXHIBIT 3.3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF GERON CORPORATION,
A DELAWARE CORPORATION
The undersigned, Ronald W. Eastman and David L. Greenwood hereby
certify that:
FIRST: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
SECOND: The Certificate of Incorporation of said corporation was
originally filed with the Secretary of State of Delaware on November 28, 1990.
THIRD: The Certificate of Incorporation of said corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation (herein called the "Corporation") is GERON
CORPORATION.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is Prentice Hall Corporation Systems, Inc., 1013 Centre Road,
Wilmington, New Castle County, Delaware 19805. The name of the registered agent
of the Corporation at such address is Corporation Service Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
Upon the effective date of the filing of this Amended and Restated
Certificate of Incorporation, each 3.4 shares of this corporation's outstanding
Common Stock and each 3.4 shares of this corporation's outstanding Preferred
Stock shall be converted and reconstituted into one share of the like class and
series of the corporation's capital stock from which such share was converted
(the "Reverse Stock Split"). In lieu of the issuance of fractional shares, the
corporation shall pay to the holder thereof in cash an amount equal to the
fraction of a share to which such holder is entitled multiplied by the fair
market value of such share, as determined by the corporation's Board of
Directors. All share amounts and amounts per share set forth in this Amended and
Restated Certificate of Incorporation have been appropriately adjusted to
reflect the Reverse Stock Split. No further adjustment of any Dividend
Preference, Conversion Price, or Liquidation Preference pursuant to Sections 1,
2, or 4, respectively, of Part B of this Article IV shall be made as a result of
the Reverse Stock Split.
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(A) Classes of Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation is authorized to issue
is Thirty-Four Million Three Hundred Sixty-Six Thousand Two Hundred Thirty-Four
(34,366,234) shares. Twenty-Five Million (25,000,000) shares shall be Common
Stock, par value $0.001 per share and Nine Million Three Hundred Sixty-Six
Thousand Two Hundred Thirty-Four (9,366,234) shares shall be Preferred Stock,
par value $0.001 per share. The Preferred Stock shall be divided into series,
namely, Series A Preferred Stock consisting of Two Million Two Hundred
Thirty-Five Thousand Two Hundred Seventy-Two (2,235,272) shares (the "Series A
Preferred Stock"), Series B Preferred Stock consisting of One Million Four
Hundred Twenty-Nine Thousand Two Hundred Twenty-Eight (1,429,228) shares (the
"Series B Preferred Stock"), Series C Preferred Stock consisting of One Million
Five Hundred Fifty Thousand Eight Hundred Fifty-One (1,550,851) shares (the
"Series C Preferred Stock"), and Series D Preferred Stock consisting of One
Million One Hundred Fifty Thousand Eight Hundred Eighty-Three (1,150,883) shares
(the "Series D Preferred Stock") and such additional number of series as the
Board of Directors may determine.
(B) Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Amended and Restated Certificate of
Incorporation may be issued from time to time in series. The rights,
preferences, privileges, and restrictions granted to and imposed on the
Preferred Stock are as set forth below in this Article IV(B). Subject to the
protective voting rights which have been or may be granted to the Preferred
Stock or series thereof in Certificates of Determination or the Corporation's
Certificate of Incorporation, ("Protective Provisions"), the Board of Directors
is hereby authorized to determine or alter the rights, preferences, privileges
and restrictions granted to or imposed upon any additional series of Preferred
Stock, and the number of shares constituting any such series and the designation
thereof, or of any of them. Subject to compliance with applicable Protective
Provisions, but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series, prior or subsequent to the issue of that series, but not
below the number of shares of such series then outstanding or reserved for
future issuance. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.
1. Dividend Provisions. The holders of shares of Series
A, Series B, Series C and Series D Preferred Stock shall be entitled to receive
dividends, out of any assets legally available therefor, prior and in preference
to any declaration or payment of any dividend (payable other than in Common
Stock or other securities and rights convertible into or entitling the holder
thereof to receive, directly or indirectly, additional shares of Common Stock of
the Corporation) on the Common Stock of the Corporation, at the rate of $.34
per share for each outstanding share of Series A Preferred Stock, $.765 per
share for each outstanding share of Series B
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<PAGE> 3
Preferred Stock, $.816 per share for each outstanding share of Series C
Preferred Stock and $1.02 per share for each outstanding share of Series D
Preferred Stock (the "Original Dividend Rate" with respect to each such series),
on a per annum basis, or if greater than the applicable Original Dividend Rate
(as determined on a per annum basis and on as converted basis for the Series A,
Series B, Series C and Series D Preferred Stock), an amount equal to that paid
on any other outstanding shares of the Corporation, payable quarterly when, as
and if declared by the Board of Directors. Thereafter, the holders of Preferred
Stock and Common Stock shall be entitled, when, as and if declared by the Board
of Directors, to dividends out of the corporation's assets legally available
therefor; provided, however, that no such dividends may be declared or paid on
any shares of Common Stock or Preferred Stock unless at the same time an
equivalent dividend is declared and paid on all outstanding shares of Common
Stock and Preferred Stock; and provided further that the dividend on any series
of any Preferred Stock shall be payable at the same rate per share as would be
payable on the shares of Common Stock or other securities into which such series
of Preferred Stock is convertible immediately prior to the record date for such
dividend. The right to such dividends on shares of the Common Stock or Preferred
Stock shall not be cumulative, and no right shall accrue to holders of Common
Stock or Preferred Stock by reason of the fact that dividends on said shares are
not declared in any prior period.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, the holders
of Series A, Series B, Series C and Series D Preferred Stock shall be entitled
to receive, on a pari passu basis, prior and in preference to any distribution
of any of the assets of the Corporation to the holders of Common Stock and any
such additional series which may be subordinated to any present class or series
of Preferred Stock with respect to the liquidation preference set forth in this
Section 2 by reason of their ownership thereof, an amount per share (as adjusted
for any stock split, stock division or consolidation) (i) equal to $3.40 for
each outstanding share of Series A Preferred Stock (the "Original Issue Price"
with respect to such series) and (ii) equal to $7.65 for each outstanding
share of Series B Preferred Stock (the "Original Issue Price" with respect to
such series), (iii) equal to $8.16 for each outstanding share of Series C
Preferred Stock (the "Original Issue Price" with respect to such series) and
(iv) equal to $10.20 for each outstanding share of Series D Preferred Stock
(the "Original Issue Price" with respect to such series) plus, for such shares
of the Preferred Stock, an amount equal to declared but unpaid dividends on each
such share of Preferred Stock (such amount of declared but unpaid dividends
being referred to herein as the "Premium" with respect to the Series A, Series
B, Series C and Series D Preferred Stock). If upon the occurrence of such event,
the assets and funds thus distributed among the holders of the Series A, Series
B, Series C and Series D Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series A, Series B, Series
C and Series D Preferred Stock in proportion to the aggregate preferential
amount each such holder would otherwise be entitled to receive.
(b) Upon the completion of the distribution
required by subparagraph (a) of this Section 2, and any other distribution which
may be required with respect to series of Preferred Stock which may from time to
time come into existence, if assets remain in the
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Corporation, the holders of the Common Stock and Series A, Series B, Series C
and Series D Preferred Stock shall receive all of the remaining assets of the
Corporation pro-rata on an as-converted basis.
(c) A consolidation or merger of the Corporation
with or into any other corporation or corporations, or a sale, conveyance or
disposition of all or substantially all of the assets of the Corporation or the
effectuation by the Corporation or its stockholders of a transaction or series
of related transactions in which more than 50% of the voting power of the
Corporation entitled to vote in an election of the Board of Directors of the
Corporation at a regular or special meeting of the stockholders of the
Corporation or by way of written consent in lieu of such meeting is disposed of,
shall not be deemed to be a liquidation, dissolution or winding up within the
meaning of this Section 2, but shall instead be treated pursuant to Section 5
hereof.
3. Redemption. The Preferred Stock is not redeemable.
4. Conversion. The holders of the Series A, Series B,
Series C and Series D Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
(a) Right to Convert.
(i) Subject to subsection (c) below and
Section 8 hereof, each share of Series A, Series B, Series C and Series D
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Preferred Stock of that series into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Issue Price for each share of that Series By
the conversion price at the time in effect for each such share (the "Conversion
Price"). The initial Conversion Price for shares of Series A Preferred Stock
shall be the Original Issue Price for the Series A Preferred Stock; the initial
Conversion Price for shares of Series B Preferred Stock shall be the Original
Issue Price for the Series B Preferred Stock; the initial Conversion Price for
shares of Series C Preferred Stock shall be the Original Issue Price for the
Series C Preferred Stock; and the Initial Conversion Price for shares of Series
D Preferred Stock shall be the Original Issue Price for the Series D Preferred
Stock; provided, however, that the Conversion Price for the Series A, Series B,
Series C and Series D Preferred Stock shall be subject to adjustment as set
forth in subsection (c) below.
(ii) Each share of Series A, Series B,
Series C and Series D Preferred Stock shall automatically be converted into
shares of Common Stock at the Conversion Price at the time in effect for such
Series A, Series B and Series C Preferred Stock immediately upon the
consummation of the Corporation's sale of its Common Stock in a bona fide, firm
commitment underwritten public offering pursuant to a registration statement on
Form S-1 under the Securities Act of 1933, as amended, which resulted in at
least $7,500,000 of aggregate proceeds.
(b) Mechanics of Conversion. Before any holder
of Series A, Series B, Series C or Series D Preferred Stock shall be entitled to
convert the same into shares of Common Stock, he shall surrender the certificate
or certificates therefor, duly endorsed, at the office of the
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Corporation or of any transfer agent for the Preferred Stock of that series, and
shall give written notice by mail, postage prepaid, to the Corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Corporation shall, as soon as practicable,
issue and deliver at such office to such holder of Preferred Stock or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A, Series B,
Series C or Series D Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, the conversion will, unless otherwise notified by the holder tendering
Series A, Series B, Series C or Series D Preferred Stock for conversion, be
conditioned upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock issuable upon such conversion of the Series A, Series B, Series C
or Series D Preferred Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to the closing of such sale of securities.
(c) Conversion Price Adjustments of Preferred
Stock. The Conversion Price of the Series A, Series B, Series C and Series D
Preferred Stock shall be subject to adjustment from time to time as follows:
(i) (A) If the corporation shall
issue any Additional Stock (as defined below) without consideration or for a
consideration per share less than the Conversion Price for the Series A, Series
B, Series C or Series D Preferred Stock in effect immediately prior to the
issuance of such Additional Stock, the respective Conversion Price for the
Series A, Series B, Series C or Series D Preferred Stock, as applicable, in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the
quotient obtained by dividing the total computed under clause (x) below by the
total computed under clause (y) below as follows:
(x) for each applicable series, an
amount equal to the sum of:
(1) the aggregate purchase price of the
shares of such Series A, Series B, Series C and Series D
Preferred Stock sold (or deemed to be sold pursuant to
subsection 4(c)(i)(E)) pursuant to the agreement to which such
shares of Series A, Series B, Series C or Series D Preferred
Stock are first issued (the "Series A Stock Purchase
Agreement," the "Series B Purchase Agreement," the "Series C
Purchase Agreement" or the "Series D Purchase Agreement," as
applicable), plus
(2) the aggregate consideration, if any,
received by the corporation for all Additional Stock issued on
or after the date of such series' respective Stock Purchase
Agreement (the "Purchase Date" for each such series),
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other than shares of Common Stock issued or issuable upon
conversion of such series of Preferred Stock;
(y) for each such series, an amount
equal to the sum of
(1) the aggregate purchase price of such
shares of Series A Preferred Stock sold pursuant to the Series
A Stock Purchase Agreement, Series B Preferred Stock sold
pursuant to the Series B Stock Purchase Agreement, Series C
Preferred Stock sold pursuant to the Series C Purchase
Agreement and Series D Preferred Stock sold pursuant to the
Series D Purchase Agreement divided by the Conversion Price
for such shares of Series A, Series B, Series C and Series D
Preferred Stock in effect at the Purchase Date, as applicable
(or such higher or lower Conversion Price for the Series A,
Series B, Series C or Series D Preferred Stock, as applicable,
as results from the application of subsections 4(c)(iii) and
(iv) and assuming that this Amended and Restated Certificate
was in effect as of the Purchase Date) plus
(2) the number of shares of Additional
Stock issued since the Purchase Date (increased or decreased
to the extent that the number of such shares of Additional
Stock shall have been increased or decreased as the result of
the application of subsections 4(c)(iii) and (iv)).
(B) No adjustment of the
Conversion Price for the Series A, Series B, Series C or Series D Preferred
Stock shall be made in an amount less than one cent per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be either taken into account in any subsequent
adjustment made prior to 3 years from the date of the event giving rise to the
adjustment being carried forward, or shall be made at the end of 3 years from
the date of the event giving rise to the adjustment being carried forward.
Except to the limited extent provided for in subsections (E)(3) and (E)(4), no
adjustment of such Conversion Price pursuant to this subsection 4(c)(i) shall
have the effect of increasing the applicable Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance
of Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the Corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance
of the Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined in good faith by the Board of Directors irrespective of any
accounting treatment.
(E) In the case of the issuance
(whether before, on or after the Purchase Date) of options to purchase or rights
to subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or
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<PAGE> 7
rights to subscribe for such convertible or exchangeable securities (including,
without limitation, the Series A, Series B, Series C and Series D Preferred
Stock), the following provisions shall apply for all purposes of this subsection
4(c)(i) and 4(c)(ii):
1. The aggregate
maximum number of shares of Common Stock deliverable upon exercise (to the
extent exercisable) of such options to purchase or rights to subscribe for
Common Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 4(c)(i)(C) and (c)(i)(D)), if
any, received by the Corporation upon the issuance of such options or rights
plus the minimum exercise price provided in such options or rights (without
taking into account potential antidilution adjustments) for the Common Stock
covered thereby.
2. The aggregate
maximum number of shares of Common Stock deliverable upon conversion of or in
exchange (to the extent then convertible or exchangeable) for any such
convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Corporation
(without taking into account potential antidilution adjustments) upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in subsections 4(c)(i)(C) and (c)(i)(D)).
3. In the event of
any change in the number of shares of Common Stock deliverable or in the
consideration payable to the Corporation upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Conversion Price of the Series A, Series B,
Series C and/or Series D Preferred Stock, to the extent in any way affected by
or computed using such options, rights or securities, shall be recomputed to
reflect such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such securities.
4. Upon the
expiration of any such options or rights, the termination of any such rights to
convert or exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the Series A,
Series B, Series C and/or Series D Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities or options or
rights related to such securities, shall be recomputed to reflect the issuance
of only the number of shares of Common Stock (and convertible or exchangeable
securities which remain in effect) actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities.
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5. The number of
shares of Common Stock deemed issued and the consideration deemed paid therefor
pursuant to subsections 4(c)(i)(E)(1) and (2) shall be appropriately adjusted to
reflect any change, termination or expiration of the type described in either
subsection 4(c)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any
shares of Common Stock issued (or deemed to have been issued pursuant to
subsection 4(c)(i)(E)) by the Corporation after the Purchase Date other than:
(A) Common Stock issued
pursuant to a transaction described in subsection 4(c)(iii) hereof;
(B) Shares of Common Stock
issued or issuable to officers, employees, consultants and directors of the
Corporation directly or pursuant to a stock benefit plan adopted by the Board of
Directors;
(C) Common Stock issued to
non-profit institutions primarily in connection with research or other
collaborative arrangements; or
(D) Up to 2,695 shares of
Common Stock issuable to StratiPoint Group, Inc. in connection with consulting
services.
(iii) In the event the Corporation should
at any time or from time to time after the Purchase Date for the Series D
Preferred Stock fix a record date for the effectuation of a split or subdivision
of the outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the Conversion Price of the Series
A, Series B, Series C and Series D Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents with the number of shares issuable with
respect to such Common Stock Equivalents determined in the manner provided for
deemed issuances in subsection 4(c)(i)(E).
(iv) If the number of shares of Common
Stock outstanding at any time after the Purchase Date for the Series D Preferred
Stock is decreased by a combination of the outstanding shares of Common Stock,
then, following the record date of such combination, the Conversion Price for
the Series A, Series B, Series C and Series D Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
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(d) Other Distributions. In the event the
Corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection
4(c)(iii), then, in each such case for the purpose of this subsection 4(d), the
holders of the Series A, Series B, Series C and Series D Preferred Stock shall
be entitled to a proportionate share of any such distribution as though they
were the holders of the number of shares of Common Stock of the Corporation into
which their shares of Series A, Series B, Series C and Series D Preferred Stock
are convertible as of the record date fixed for the determination of the holders
of Common Stock of the Corporation entitled to receive such distribution.
(e) Recapitalizations. Subject to the
Protective Provisions provided for herein, if at any time or from time to time
there shall be a recapitalization of the Common Stock or merger with the
Corporation as the surviving entity (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere in this Section 4 or
Section 5) provision shall be made so that the holders of the Series A, Series
B, Series C and Series D Preferred Stock shall thereafter be entitled to receive
upon conversion of their Series A, Series B, Series C and/or Series D Preferred
Stock the number of shares of stock or other securities or property of the
Company or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4 with respect to the rights of the holders of the Series A, Series
B, Series C and Series D Preferred Stock after the recapitalization to the end
that the provisions of this Section 4 (including adjustment of the Conversion
Price then in effect and the number of shares purchasable upon conversion of the
Series A, Series B, Series C and Series D Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable. Notwithstanding
anything in this subsection (e) to the contrary, the provisions of this
subsection (e) shall not apply in the case of a merger which will result in the
Corporation's stockholders immediately prior to such merger not holding at least
50% of the voting power of the surviving or continuing entity, entitled to vote
in an election of the Board of Directors of such entity at a regular or special
meeting of the stockholders of such entity or by way of written consent on lieu
of such meeting.
(f) No Impairment. The Corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series A, Series B, Series C and Series
D Preferred Stock against impairment.
(g) No Fractional Shares and Certificate as to
Adjustments.
(i) No fractional shares shall be issued
upon conversion of the Series A, Series B, Series C and Series D Preferred
Stock, and the number of shares of Common Stock to be issued shall be rounded
down to the nearest whole share. Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total number of
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shares of Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
(ii) Upon the occurrence of each
adjustment or readjustment of the Conversion Price of a series of Preferred
Stock pursuant to this Section 4, the Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of such series of Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Preferred Stock.
(h) Notices of Record Date. In the event of any
taking by the Corporation of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series A, Series B, Series C and Series D Preferred
Stock, at least 20 days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
(i) Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Series A, Series B, Series C and
Series D Preferred Stock such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares of
the Series A, Series B, Series C and Series D Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
A, Series B, Series C and Series D Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
(j) Notices. Any notice required by the
provisions of this Section 4 to be given to the holders of shares of Series A,
Series B, Series C and Series D Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation.
5. Merger, Consolidation.
(a) At any time, in the event of:
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(i) any transaction (or series of
related transactions including, without limitation, any reorganization, merger
or consolidation) which will result in the Corporation's stockholders as
constituted immediately prior to such transaction not holding, immediately after
such transaction, at least 50% of the voting power of the surviving or
continuing entity, entitled to vote in an election of the Board of Directors of
such entity at a regular or special meeting of the stockholders of such entity
or by way of written consent in lieu of such meeting; or
(ii) a sale of all or substantially all
of the assets of the Corporation, unless the Corporation's stockholders as
constituted immediately prior to such sale will hold, immediately after such
transaction, at least 50% of the voting power entitled to vote in an election of
the Board of Directors of the purchasing entity at a regular or special meeting
of the stockholders of such entity or by way of written consent in lieu of such
meeting.
then, holders of the Series A, Series B,
Series C and Series D Preferred Stock shall receive for each share of such stock
in cash or in securities received from the acquiring corporation, or in a
combination thereof, at the closing of any such transaction, an amount equal to
the Original Issue Price for such series, plus an amount equal to the Premium
for such series as of the date of closing of such transaction, and the remaining
proceeds of such transaction shall be distributed as a Shared Allocation (as
defined in subsection 5(b)). Such payments (including the Shared Allocation)
shall be made with respect to the Series A, Series B, Series C and Series D
Preferred Stock by purchase of such shares of the Preferred Stock by the
surviving corporation, entity or person or by the Corporation. In the event the
proceeds of the transaction are not sufficient to make full payment of the
aforesaid preferential amounts to the holders of the Series A, Series B, Series
C and Series D Preferred Stock in accordance herewith, then the entire amount
payable in respect of the proposed transaction shall be distributed among the
holders of the Series A, Series B, Series C and Series D Preferred Stock in
proportion to the aggregate preferential amount each such holder would otherwise
be entitled to receive.
(b) The term "Shared Allocation" shall mean that
the holders of Series A, Series B, Series C and Series D Preferred Stock and
Common Stock of this Corporation shall share the remaining consideration, or all
of the consideration, as the case may be, to be paid by the acquiring
corporation in such transaction in the same proportion as the number of shares
of outstanding Common Stock and Common Stock issuable upon the conversion of
outstanding Preferred Stock then held by each of them bears to the total number
of shares of outstanding Common Stock and Common Stock issuable upon conversion
of outstanding Preferred Stock.
(c) Any securities to be delivered to the
holders of the Series A, Series B, Series C and/or Series D Preferred Stock
pursuant to subsection 5(a) above shall be valued as follows:
(i) Securities not subject to investment
letter or other similar restrictions on free marketability covered by (ii)
below:
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(A) If traded on a securities
exchange, the value shall be deemed to be the average of the closing prices of
the securities on such exchange over the 30-day period ending three (3) days
prior to the closing;
(B) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever are applicable) over the 30-day period ending three
(3) days prior to the closing; and
(C) If there is no active
public market, the value shall be the fair market value thereof, as mutually
determined by the Corporation and the holders of Preferred Stock which would be
entitled to receive such securities or the same type of securities and which
Preferred Stock represents at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
(ii) The method of valuation of
securities subject to investment letter or other restrictions on free
marketability (other than restrictions arising solely by virtue of a
stockholder's status as an affiliate or former affiliate) shall be to make an
appropriate discount from the market value determined as above in (i) (A), (B)
or (C) to reflect the approximate fair market value thereof, as mutually
determined by the Corporation and the holders of Preferred Stock which would be
entitled to receive such securities or the same type of securities and which
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
(d) In the event the requirements of subsection
5(a) are not complied with, the Corporation shall forthwith either:
(i) cause such closing to be postponed
until such time as the requirements of this Section 5 have been complied with,
or
(ii) cancel such transaction, in which
event the rights, preferences and privileges of the holders of the Series A,
Series B, Series C and Series D Preferred Stock shall revert to and be the same
as such rights, preferences and privileges existing immediately prior to the
date of the first notice referred to in subsection 5(e) hereof.
(e) The Corporation shall give each holder of
record of Series A, Series B, Series C and Series D Preferred Stock (or
securities exercisable therefor) written notice of such impending transaction
not later than twenty (20) days prior to the stockholders' meeting called to
approve such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in writing
of the final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the impending transaction and the
provisions of this Section 5, and the Corporation shall thereafter give such
holders prompt notice of any material changes. The transaction shall in no event
take place sooner than twenty (20) days after the Corporation has given the
first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Preferred Stock which is entitled to such notice rights or
similar notice rights and
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which represents at least a majority of the voting power of all then outstanding
shares of such Preferred Stock.
(f) The provisions of this Section 5 are in
addition to the protective provisions of Section 7 hereof.
6. Voting Rights. The holder of each share of Series A,
Series B, Series C and Series D Preferred Stock shall have the right to one vote
for each share of Common Stock into which such Series A, Series B, Series C and
Series D Preferred Stock could then be converted (with any fractional share
determined on an aggregate conversion basis being rounded to the nearest whole
share), and with respect to such vote, such holder shall have full voting rights
and powers equal to the voting rights and powers of the holders of Common Stock,
and shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the by-laws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
7. Protective Provisions. In addition to any vote
required by law, so long as any shares of Series A, Series B, Series C and/or
Series D Preferred Stock are outstanding, the Corporation shall not without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the then outstanding Series A, Series B,
Series C and Series D Preferred Stock, voting together as a single class:
(a) sell, convey, or otherwise dispose of or
encumber all or substantially all of its property or business or merge into or
consolidate with any other corporation or entity or effect any transaction or
series of related transactions in which more than 50% of the voting power
entitled to vote in an election of the Board of Directors of the Corporation at
a regular or special meeting of stockholders or by way of written consent in
lieu of such meeting is disposed of;
(b) adversely alter or change the rights,
preferences or privileges of the shares of Series A, Series B, Series C or
Series D Preferred Stock;
(c) create any new class or series of stock or
any other securities convertible into equity securities of the Corporation
having a preference over, or being on a parity with, the Series A, Series B,
Series C or Series D Preferred Stock with respect to dividends, liquidation or
redemption;
(d) pay or declare any dividend on its Common
Stock or any other junior equity security other than a dividend in Common Stock
of the Corporation;
(e) Redeem, purchase or otherwise acquire (or
pay into or set aside for a sinking fund for such purpose) any of the Common
Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock: (i) from employees, officers, directors,
consultants or other persons performing services for the Corporation or any
subsidiary pursuant to agreements under which the Corporation has the option to
repurchase such shares at
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cost or at cost plus interest upon the occurrence of certain events, such as the
termination of employment, or (ii) in settlement of disputes with third parties
if such redemption, purchase or acquisition or the payment into or setting aside
into a sinking fund is unanimously approved by the Board of Directors;
(f) do any act or thing which would result in
taxation of the holders of Preferred Stock under Section 305 of the Internal
Revenue Code;
(g) Increase the number of authorized shares of
Series A, Series B, Series C or Series D Preferred Stock.
8. Special Mandatory Conversion. On or at any time the
holders of a least sixty-six and two-thirds percent (66 2/3%) of the outstanding
shares of Preferred Stock elect to convert their shares of Preferred Stock, all
shares of Preferred Stock including the shares of those holders of Preferred
Stock who did not elect to convert, shall automatically convert into Common
Stock. Conversion pursuant to this Section 8 shall be governed by Section 4.
9. Status of Converted Stock. In the event any shares of
Series A, Series B, Series C or Series D Preferred Stock shall be converted
pursuant to Section 4, the shares so converted shall be canceled and shall not
be issuable by the Corporation, and the Certificate of Incorporation of the
Corporation shall be appropriately amended to effect the corresponding reduction
in the Corporation's authorized capital stock.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of
holders of all classes of stock at the time outstanding having prior rights as
to dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation
shall be distributed as provided in Section 2 of Division (B) of this Article IV
hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common
Stock shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the By-laws of the Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
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ARTICLE V
Except as otherwise provided in this Amended and Restated Certificate
of Incorporation, in furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE VI
The number of directors of the Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE IX
Effective upon the consummation of the Corporation's sale of Common
Stock in a bona fide, firm commitment underwritten public offering pursuant to a
registration statement on Form S-1 under the Securities Act of 1933, no action
required to be taken or that may be taken at any annual or special meeting of
the stockholders of this corporation may be taken without a meeting, and the
power of stockholders to consent in writing, without a meeting, to the taking of
any action is specifically denied.
ARTICLE X
In the event the Corporation is subject to Section 2115 of the
California Corporations Code, Section A of this Article shall apply. Otherwise,
Section B of this Article shall apply.
(A) California. The liability of each and every director of this
Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law. If California law is hereafter amended to
authorize, with the approval of a Corporation's stockholders, further reductions
in the liability of the Corporation's directors for breach of fiduciary duty,
then a director of the Corporation shall not be liable for any such breach to
the fullest extent permitted by California law, as so amended.
(B) Delaware. To the fullest extent permitted by the General
Corporation Law of Delaware, as the same may be amended from time to time, a
director of the Corporation shall not
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be personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director. If the General Corporation Law of
Delaware is hereafter amended to authorize, with the approval of a corporation's
stockholders, further reductions in the liability of the corporation's directors
for breach of fiduciary duty, then a director of the corporation shall not be
liable for any such breach to the fullest extent permitted by the General
Corporation Law of Delaware, as so amended.
(C) Effect of Repeal or Modification. Any repeal or modification
of the foregoing provisions of this Article IX shall not adversely affect any
right or protection of a director of the Corporation with respect to any acts or
omissions of such director occurring prior to such repeal or modification.
ARTICLE XI
In the event the Corporation is subject to Section 2115 of the
California Corporations Code, Section A of this Article shall apply. Otherwise,
Section B of this Article shall apply.
(A) California. To the fullest extent permitted by California law,
the Corporation is authorized to provide indemnification of (and advancement of
expenses to) agents (as defined in Section 317 of the California Corporations
Code) through bylaw provision, agreements with agents, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 317 of the California Corporations
Code, subject only to applicable limits set forth in Section 204 of the
California Corporations Code, with respect to actions for breach of duty to a
corporation and its stockholders.
(B) Delaware. To the fullest extent permitted by applicable law,
the Corporation is also authorized to provide indemnification of (and
advancement of expenses to) such agents (and any other persons to which Delaware
law permits the Corporation to provide indemnification) though bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to a
corporation, its stockholders, and others.
(C) Effect of Repeal or Modification. Any repeal or modification
of any of the foregoing provisions of this Article X shall not adversely affect
any right or protection of a director, officer, agent or other person existing
at the time of, or increase the liability of any director of the Corporation
with respect to any acts or omissions of such director, officer or agent
occurring prior to such repeal or modification.
ARTICLE XII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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ARTICLE XIII
The Corporation shall have perpetual existence.
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FOURTH: The foregoing Amended and Restated Certificate of Incorporation
has been duly adopted by the Corporation's Board of Directors and stockholders
in accordance with the applicable provisions of Section 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
June __, 1996.
GERON CORPORATION
By: /s/ Ronald W. Eastman
----------------------------------
Ronald W. Eastman, President
Attest: /s/ David L. Greenwood
----------------------------
David L. Greenwood, Secretary
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EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
GERON CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election
of directors shall be held at such time and place as may be fixed from time to
time by the Board of Directors, and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on
such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting.
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Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten (10) nor more than sixty
(60) days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present
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in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Nominations for election to the Board of Directors
must be made by the Board of Directors or by any stockholder of any outstanding
class of capital stock of the corporation entitled to vote for the election of
directors. Nominations, other than those made by the Board of Directors of the
corporation, must be preceded by notification in writing received by the
Secretary of the corporation not less than ten (10) days nor more than sixty
(60) days prior to any meeting of stockholders called for the election of
directors. Such notification shall contain the written consent of each proposed
nominee to serve as a director if so elected and the following information as to
each proposed nominee and as to each person, acting alone or in conjunction with
one or more other persons as a partnership, limited partnership, syndicate or
other group, who participates or is expected to participate in making such
nomination or in
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organizing, directing or financing such nomination or solicitation of proxies to
vote for the nominee:
(a) the name, age, residence, address, and
business address of each proposed nominee and of each such person;
(b) the principal occupation or employment, the
name, type of business and address of the corporation or other organization in
which such employment is carried on of each proposed nominee and of each such
person;
(c) the amount of stock of the corporation owned
beneficially, either directly or indirectly, by each proposed nominee and each
such person; and
(d) a description of any arrangement or
understanding of each proposed nominee and of each such person with each other
or any other person regarding future employment or any future transaction to
which the corporation will or may be a party.
The presiding officer of the meeting shall have the authority
to determine and declare to the meeting that a nomination not preceded by
notification made in accordance with the foregoing procedure shall be
disregarded.
Section 12. At any meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting (a)
pursuant to the corporation's notice of meeting, (b) by or at the direction of
the Board of Directors or (c) by any stockholder of the corporation who is a
stockholder of record at the time of giving of the notice provided for in this
Bylaw, who shall be entitled to vote at such meeting and who complies with the
notice procedures set forth in this Bylaw.
For business to be properly brought before any meeting by a
stockholder pursuant to clause (c) of the first paragraph of this Section 12,
the stockholder must have given timely notice thereof in writing to the
Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not less than ten (10) days nor more than sixty (60) days prior to
the date of the meeting. A stockholder's notice to the Secretary shall set forth
as to each matter the stockholder proposes to
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bring before the meeting (a) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, and the name and address of the
beneficial owner, if any, on behalf of whom the proposal is made, (c) the class
and number of shares of the corporation which are owned beneficially and of
record by such stockholder of record and by the beneficial owner, if any, on
whose behalf the proposal is made and (d) any material interest of such
stockholder of record and the beneficial owner, if any, on whose behalf the
proposal is made in such business.
Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at a meeting except in accordance with the
procedures set forth in this Section 12. The presiding officer of the meeting
shall, if the facts warrant, determine and declare to the meeting that business
was not properly brought before the meeting and in accordance with the
procedures prescribed by this Section 12, and if such person should so
determine, such person shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Section 12, a stockholder shall also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth
in this Section 12.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the
whole board shall not be less than five (5) nor more than eight (8). Upon
adoption of these Amended and Restated Bylaws, the board shall consist of eight
(8) directors. Thereafter, within the limits above specified, the number of
directors shall be determined by resolution of the Board of Directors or by the
stockholders at any meeting of the stockholders, except as provided in Section 2
of this Article, and each director elected shall hold office until his successor
is elected and qualified or
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until he shall resign, become disqualified or disabled, or be otherwise removed.
Directors need not be stockholders.
Section 2. Classes of Directors. The directors shall be
divided and elected into three classes designated as Class I, Class II and Class
III, respectively. At the first annual meeting of stockholders following the
adoption of this Article III Section 2, the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term of
three years. At the second annual meeting of stockholders following the adoption
of this Article III Section 2, the term of office of the Class II directors
shall expire and Class II directors shall be elected for a full term of three
years. At the third annual meeting of stockholders following the adoption of
this Article III Section 2, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders, directors shall be elected
for a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting.
Section 3. Vacancies and new created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next election of the class for which such directors have been chosen, and until
their successors are duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 4. The business of the corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the corporation and do
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<PAGE> 7
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these bylaws directed or required to be exercised or done by
the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 6. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 7. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
Section 8. Special meetings of the board may be called by the
president on ten (10) days' notice to each director by mail or forty-eight (48)
hours' notice to each director either personally or by telegram; special
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of two directors unless the board consists of
only one director, in which case special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of the sole director.
Section 9. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall
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<PAGE> 8
not be present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of
incorporation of these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 11. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 12. The Board of Directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
In the absence of disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution
of the Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in
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<PAGE> 9
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to amending
the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the bylaws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 13. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 15. Unless otherwise restricted by the certificate of
incorporation or bylaw, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
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<PAGE> 10
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram or facsimile.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the Board of Directors and shall be a president and a secretary. The Board of
Directors may elect from among its members a Chairman of the Board and a Vice
Chairman of the Board. The Board of Directors may also choose one or more
vice-presidents, assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after
each annual meeting of stockholders shall choose a president and a secretary and
may choose a vice president and a treasurer.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
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<PAGE> 11
Section 4. The salaries of all officers of the corporation
shall be fixed by the Board of Directors. The salaries of agents of the
corporation shall, unless fixed by the Board of Directors, be fixed by the
president of the corporation.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the Board of Directors may be removed at any time by the affirmative vote of
a majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors and of the stockholders at which he shall
be present. He shall have and may exercise such powers as are, from time to
time, assigned to him by the Board and as may be provided by law.
Section 7. In the absence of the Chairman of the Board, the
Vice Chairman of the Board, if any, shall preside at all meetings of the Board
of Directors and of the stockholders at which he shall be present. He shall have
and may exercise such powers as are, from time to time, assigned to him by the
Board and as may be provided by law.
THE PRESIDENT AND VICE-PRESIDENT
Section 8. The president shall be the chief executive officer
of the corporation unless the Board selects the Chairman as chief executive
officer, in which case the chairman shall have all the authority set forth
below; and in the absence of the Chairman and Vice Chairman of the Board he
shall preside at all meetings of the stockholders and the Board of Directors; he
shall have general and active management of the business of the corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
Section 9. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise
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<PAGE> 12
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
Section 10. In the absence of the president or in the event of
his inability or refusal to act, the vice-president, if any, (or in the event
there be more than one vice- president, the vice-presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 12. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall
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<PAGE> 13
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors.
Section 14. He shall disburse the funds of the corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 15. If required by the Board of Directors, he shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 16. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
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<PAGE> 14
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman or vice- chairman of the Board of Directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
Certificates may be issued for partly paid shares and in such
case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid therefor,
and the amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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<PAGE> 15
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
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meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purposes as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
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<PAGE> 17
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal
having inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
INDEMNIFICATION
Section 6. The corporation shall, to the fullest extent
authorized under the laws of the State of Delaware, as those laws may be amended
and supplemented from time to time, indemnify any director made, or threatened
to be made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of being a director of the
corporation or a predecessor corporation or, at the corporation's request, a
director or officer of another corporation. The indemnification provided for in
this Section 6 shall: (i) not be deemed exclusive of any other rights to which
those indemnified may be entitled under any bylaw, agreement or vote of
stockholders or disinterested directors or otherwise, both as to action in their
official capacities and as to action in another capacity while holding such
office, (ii) continue as to a person who has ceased to be a director, and (iii)
inure to the benefit of the heirs, executors and administrators of such a
person. The corporation's obligation to provide indemnification under this
Section 6 shall be offset to the extent of any other source of indemnification
or any otherwise applicable insurance coverage under a policy maintained by the
corporation or any other person.
Expenses incurred by a director of the corporation in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is or was a director of the corporation (or was serving at the
corporation's request as a director or officer of another corporation) shall be
paid by the corporation in advance of the final disposition of such action, suit
or proceeding upon
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<PAGE> 18
receipt of an undertaking by or on behalf of such director to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized by relevant sections of the General Corporation
Law of Delaware.
The foregoing provisions of this Section 6 shall be deemed to
be a contract between the corporation and each director who serves in such
capacity at any time while this bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or in part
upon any such state of facts.
The Board of Directors in its discretion shall have power on
behalf of the corporation to indemnify any person, other than a director, made a
party to any action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 6 of all
directors, officers and employees who are determined by the corporation or
otherwise to be or to have been "fiduciaries" of any employee benefit plan of
the corporation which may exist from time to time, Section 145 of the General
Corporation Law of Delaware shall, for the purposes of this Section 6, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including without limitation, any plan of the corporation
which is governed by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time; the corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to such Act of Congress shall be deemed
"fines."
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<PAGE> 19
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the certificate of incorporation at any
regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate or incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
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<PAGE> 20
CERTIFICATE OF ADOPTION BY THE
SECRETARY OF
GERON CORPORATION
The undersigned, David Greenwood, hereby certifies that he is
the duly elected and acting Secretary of Geron Corporation, a Delaware
corporation (the "Corporation"), and that the Bylaws attached hereto constitute
the Bylaws of said Corporation as duly adopted by the Corporation's Board of
Directors on June __, 1996.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his name this ___day of June 1996.
-----------------------------------
David Greenwood
Secretary
<PAGE> 1
EXHIBIT 4.1
<TABLE>
<S> <C> <C>
NUMBER SHARES
GERON
INCORPORATED UNDER THE LAWS OF SEE REVERSE FOR STATEMENTS RELATING
THE STATE OF DELAWARE TO RIGHTS, PREFERENCES,
PRIVILEGES AND RESTRICTIONS, IF ANY
CUSIP 374163 10 3
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE, OF
GERON CORPORATION
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated
GERON CORPORATION
CORPORATE
/s/ David L. Greenwood SEAL /s/ Ronald W. Eastman
NOV. 28,
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 1990 PRESIDENT AND CHIEF EXECUTIVE OFFICER
DELAWARE
COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION
(GLENDALE, CA)
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
</TABLE>
<PAGE> 2
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of determination, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
at the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _______________ Custodian _______________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _____________________________________
in common (State)
UNIF TRF MIN ACT -- ____________ Custodian (until age _______)
(Cust)
________________ under Uniform Transfers
(Minor)
to Minors Act ___________________________
(State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
FOR VALUE RECEIVED, _________________________________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
______________________________________
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ___________________________________
X _______________________________________
X _______________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By _____________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into this ______ of __________,
199__ between Geron Corporation, a Delaware corporation ("Corporation"), and
____________________ ("Indemnitee").
RECITALS:
A. Indemnitee, a member of the Board of Directors or an
officer of Corporation, performs a valuable service in such capacity for
Corporation; and
B. The stockholders of Corporation have adopted By-laws
(the "By-laws") providing for the indemnification of the officers, directors,
agents and employees of Corporation to the maximum extent authorized by Section
145 of the Delaware Corporations Code, as amended ("Code"); and
C. The By-laws and the Code, by their non-exclusive
nature, permit contracts between Corporation and the members of its Board of
Directors or officers with respect to indemnification of such directors and/or
officers; and
D. In accordance with the authorization as provided by
the Code, Corporation has purchased and presently maintains a policy or policies
of Directors and Officers Liability Insurance ("D & O Insurance"), covering
certain liabilities which may be incurred by its directors and officers in the
performance as directors of Corporation; and
E. As a result of developments affecting the terms,
scope and availability of D & O Insurance there exists general uncertainty as to
the extent of protection afforded members of the Board of Directors or officers
by such D & O Insurance and by statutory and by-law indemnification provisions;
and
F. In order to induce Indemnitee to continue to serve as
a member of the Board of Directors and/or an officer of Corporation, Corporation
has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued
service as a director and/or an officer after the date hereof, the parties
hereto agree as follows:
1. INDEMNITY OF INDEMNITEE. Corporation hereby agrees
to hold harmless and indemnify Indemnitee to the fullest extent authorized or
permitted by the provisions of the Code, as may be amended from time to time.
<PAGE> 2
2. ADDITIONAL INDEMNITY. Subject only to the exclusions
set forth in Section 3 hereof, Corporation hereby further agrees to hold
harmless and indemnify Indemnitee:
(a) against any and all expenses (including
attorneys' fees), witness fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of Corporation) to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, officer, employee or agent
of Corporation, or is or was serving or at any time serves at the request of
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise;
and
(b) otherwise to the fullest extent as may be
provided to Indemnitee by Corporation under the non-exclusivity provisions of
Section 6 of Article VII of the Bylaws of Corporation and the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity
pursuant to Section 2 hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses
to be indemnified thereunder exceeds the sum of such losses for which the
Indemnitee is indemnified pursuant to Section 1 hereof or pursuant to any D & O
Insurance purchased and maintained by Corporation;
(b) in respect to remuneration paid to
Indemnitee if it shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of law;
(c) on account of any suit in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;
(d) on account of Indemnitee's conduct which is
finally adjudged to have been knowingly fraudulent or deliberately dishonest, or
to constitute willful misconduct;
(e) on account of Indemnitee's conduct which is
the subject of an action, suit or proceeding described in Section 7(c)(ii)
hereof;
(f) on account of any action, claim or
proceeding (other than a proceeding referred to in Section 8(b) hereof)
initiated by the Indemnitee unless such action, claim or proceeding was
authorized in the specific case by action of the Board of Directors;
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<PAGE> 3
(g) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is not
lawful (and, in this respect, both Corporation and Indemnitee have been advised
that the Securities and Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws is against public policy
and is, therefore, unenforceable and that claims for indemnification should be
submitted to appropriate courts for adjudication).
4. CONTRIBUTION. If the indemnification provided in
Sections 1 and 2 hereof is unavailable by reason of a Court decision described
in Section 3(g) hereof based on grounds other than any of those set forth in
paragraphs (b) through (f) of Section 3 hereof, then in respect of any
threatened, pending or completed action, suit or proceeding in which Corporation
is jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), Corporation shall contribute to the amount of expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by Corporation on the
one hand and Indemnitee on the other hand from the transaction from which such
action, suit or proceeding arose, and (ii) the relative fault of Corporation on
the one hand and of Indemnitee on the other in connection with the events which
resulted in such expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of Corporation
on the one hand and of Indemnitee on the other shall be determined by reference
to, among other things, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent the circumstances resulting in
such expenses, judgments, fines or settlement amounts. Corporation agrees that
it would not be just and equitable if contribution pursuant to this Section 4
were determined by pro rata allocation or any other method of allocation which
does not take account of the foregoing equitable considerations.
5. CONTINUATION OF OBLIGATIONS. All agreements and
obligations of Corporation contained herein shall continue during and pertain to
the period Indemnitee is or was a director, officer, employee or agent of
Corporation (or is or was serving at the request of Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise) and shall continue thereafter
so long as Indemnitee shall be subject to any possible claim or threatened,
pending or completed action, suit or proceeding, whether civil, criminal or
investigative, by reason of the fact that Indemnitee was a director and/or an
officer of Corporation or serving in any other capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Not later than
thirty (30) days after receipt by Indemnitee of notice of the commencement of
any action, suit or proceeding, Indemnitee will, if a claim in respect thereof
is to be made against Corporation under this Agreement, notify Corporation of
the commencement thereof; but the omission so to notify Corporation will not
relieve it from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or proceeding as to
which Indemnitee notifies Corporation of the commencement thereof:
(a) Corporation will be entitled to participate
therein at its own expense;
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<PAGE> 4
(b) except as otherwise provided below, to the
extent that it may wish, Corporation jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from Corporation to
Indemnitee of its election so as to assume the defense thereof, Corporation will
not be liable to Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee in connection with the defense thereof other
than reasonable costs of investigation or as otherwise provided below.
Indemnitee shall have the right to employ its counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after notice from
Corporation of its assumption of the defense thereof shall be at the expense of
Indemnitee unless (i) the employment of counsel by Indemnitee has been
authorized by Corporation, (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between Corporation and Indemnitee in the
conduct of the defense of such action or (iii) Corporation shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of Indemnitee's separate counsel shall be at the
expense of Corporation. Corporation shall not be entitled to assume the defense
of any action, suit or proceeding brought by or on behalf of Corporation or as
to which Indemnitee shall have made the conclusion provided for in (ii) above;
and
(c) Corporation shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. Corporation shall be permitted to
settle any action except that it shall not settle any action or claim in any
manner which would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. Neither Corporation nor Indemnitee will
unreasonably withhold its consent to any proposed settlement.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Indemnitee employs his own
counsel pursuant to Section 6(b)(i) through (iii) above, Corporation shall
advance to Indemnitee, prior to any final disposition of any threatened or
pending action, suit or proceeding, whether civil, criminal, administrative or
investigative, any and all reasonable expenses (including legal fees and
expenses) incurred in investigating or defending any such action, suit or
proceeding within ten (10) days after receiving copies of invoices presented to
Indemnitee for such expenses.
(b) Indemnitee agrees that Indemnitee will
reimburse Corporation for all reasonable expenses paid by Corporation in
defending any civil or criminal action, suit or proceeding against Indemnitee in
the event and only to the extent it shall be ultimately determined by a final
judicial decision (from which there is no right of appeal) that Indemnitee is
not entitled, under the provisions of the Code, the By-laws, this Agreement or
otherwise, to be indemnified by Corporation for such expenses.
(c) Notwithstanding the foregoing, Corporation
shall not be required to advance such expenses to Indemnitee if Indemnitee (i)
commences any action, suit or proceeding as a plaintiff unless such advance is
specifically approved by a majority of the Board of Directors
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<PAGE> 5
or (ii) is a party to an action, suit or proceeding brought by Corporation and
approved by a majority of the Board which alleges willful misappropriation of
corporate assets by Indemnitee, disclosure of confidential information in
violation of Indemnitee's fiduciary or contractual obligations to Corporation,
or any other willful and deliberate breach in bad faith of Indemnitee's duty to
Corporation or its stockholders.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees
that it has entered into this Agreement and assumed the obligations imposed on
Corporation hereby in order to induce Indemnitee to continue as a director
and/or an officer of Corporation, and acknowledges that Indemnitee is relying
upon this Agreement in continuing in such capacity.
(b) In the event Indemnitee is required to bring
any action to enforce rights or to collect moneys due under this Agreement and
is successful in such action, the Corporation shall reimburse Indemnitee for all
Indemnitee's reasonable fees and expenses in bringing and pursuing such action.
9. SUBROGATION. In the event of payment under this
agreement, Corporation shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable Corporation effectively to bring suit to enforce such rights.
10. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
Indemnitee by this Agreement shall not be exclusive of any other right which
Indemnitee may have or hereafter acquire under any statute, provision of
Corporation's Certificate of Incorporation or Bylaws, agreement, vote of
stockholders or directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office.
11. SURVIVAL OF RIGHTS. The rights conferred on
Indemnitee by this Agreement shall continue after Indemnitee has ceased to be a
director, officer, employee or other agent of Corporation and shall inure to the
benefit of Indemnitee's heirs, executors and administrators.
12. SEPARABILITY. Each of the provisions of this
Agreement is a separate and distinct agreement and independent of the others, so
that if any or all of the provisions hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of the other provisions hereof or the
obligation of the Corporation to indemnify the Indemnitee to the full extent
provided by the By-laws or the Code.
13. GOVERNING LAW. This Agreement shall be interpreted
and enforced in accordance with the laws of the State of Delaware.
14. BINDING EFFECT. This Agreement shall be binding upon
Indemnitee and upon Corporation, its successors and assigns, and shall inure to
the benefit of Indemnitee, his
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<PAGE> 6
heirs, personal representatives and assigns and to the benefit of Corporation,
its successors and assigns.
15. AMENDMENT AND TERMINATION. No amendment,
modification, termination or cancellation of this Agreement shall be effective
unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
GERON CORPORATION,
a Delaware corporation
By:
---------------------------
Title:
---------------------------
INDEMNITEE
----------------------------------
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<PAGE> 1
EXHIBIT 10.2
GERON CORPORATION
1992 STOCK OPTION PLAN
(AS AMENDED THROUGH MAY 22, 1996)
I. PURPOSES OF THE PLAN
This 1992 Stock Option Plan (the "Plan") is intended to promote the
interests of Geron Corporation, a Delaware corporation (the "Corporation"), by
providing a method whereby eligible individuals who provide valuable services to
the Corporation (or its parent or subsidiary corporations) may be offered
incentives and rewards which will encourage them to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
and continue to render services to the Corporation (or its parent or subsidiary
corporations).
For purposes of the Plan, the following provisions shall be applicable
in determining the parent and subsidiary corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to be a
parent corporation of the Corporation, provided each such corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(ii) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority to
administer the Plan with respect to Section 16 Insiders. No non-employee Board
member shall be eligible to serve on the Primary Committee if such individual
has, during the twelve (12)-month period immediately preceding the date of his
or her appointment to the Committee or (if shorter) the period commencing with
the date on which the Corporation's outstanding Common Stock is registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Section
12(g) Registration Date") and ending with the date of his or her appointment to
the Primary Committee, received an option grant or direct stock issuance under
the Plan or any stock option, stock appreciation, stock bonus or other stock
plan of the Corporation (or any Parent or Subsidiary), other than pursuant to
the Corporation's 1996 Directors' Stock Option Plan.
B. Administration of the Plan with respect to all other persons
eligible to participate in the Plan may, at the Board's discretion, be vested in
the Primary Committee or a Secondary Committee, or the Board may retain the
power to administer the Plan with respect to all such persons. The members of
the Secondary Committee may be individuals who are Employees
<PAGE> 2
eligible to receive option grants under the Plan or any stock option, stock
appreciation, stock bonus or other stock plan of the Corporation (or any Parent
or Subsidiary).
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the provisions of the
Plan and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Plan under its jurisdiction or any option
thereunder.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any grants under the Plan.
III. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to receive option grants under the Plan are as
follows:
(i) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations);
(ii) those Consultants who provide valuable services to the
Corporation (or its parent or subsidiary corporations), provided, however, that
after the Section 12(g) Registration Date, the term Consultant shall thereafter
not include directors who are not compensated for their services or are paid
only a director's fee by the Corporation.
B. Each Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each such grant, whether the granted option is to be an
incentive stock option ("Incentive Option") which satisfies the requirements of
Section 422 of the Internal Revenue Code or a non-statutory option not intended
to meet such requirements, the time or times at which each such option is to
become exercisable, and the maximum term for which the option is to remain
outstanding.
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<PAGE> 3
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The aggregate
number of shares which may be issued over the term of the Plan shall not exceed
8,685,000 shares. The total number of shares issuable under the Plan shall be
subject to adjustment from time to time in accordance with the provisions of
this Section IV.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of the 1997,
1998, 1999, 2000 and 2001 calendar years by an amount equal to two percent (2%)
of the shares of Common Stock outstanding on December 31 of the immediately
preceding calendar year; but in no event shall any such annual increase exceed
300,000 shares.
C. No one person participating in the Plan may receive options for more
than 500,000 shares of Common Stock per calendar year, beginning with the 1996
calendar year.
D. Shares subject to outstanding options shall be available for
subsequent option grants under the Plan to the extent (i) options expire or
terminate for any reason prior to exercise in full and (ii) options are
cancelled in accordance with the cancellation-regrant provisions of Section VIII
of the Plan. Shares subject to outstanding options shall not be available for
subsequent option grants under the Plan to the extent options are surrendered in
accordance with the limited cash-out rights provisions of Section IX of the
Plan. Shares repurchased by the Corporation pursuant to its repurchase rights
under the Plan shall not be available for subsequent option grants.
E. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without receipt of consideration, appropriate adjustments shall be made to
(i) the aggregate number and/or class of shares issuable under the Plan, (ii)
the number of shares for which any one person may be granted options per
calendar year and (iii) the aggregate number and/or class of shares and the
option price per share in effect under each outstanding option in order to
prevent the dilution or enlargement of benefits thereunder. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.
V. TERMS AND CONDITIONS OF OPTIONS
A. Options granted pursuant to the Plan shall be authorized by action
of the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees (as defined in subsection D.3 below) may only be granted non-statutory
options. Each granted option shall be evidenced by one or more instruments in
the form approved by the Plan Administrator; provided, however, that each such
instrument shall comply with and incorporate the terms and conditions specified
below. Each instrument evidencing an Incentive Option shall, in addition, be
subject to the applicable provisions of Section VI.
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<PAGE> 4
B. Option Price.
1. The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall the option price per share be less
than eighty-five percent (85%) of the Fair Market Value (as defined below) of a
share of Common Stock on the date of the option grant.
2. The option price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section X and the instrument
evidencing the grant, be payable in one or more of the forms specified below:
(i) cash or check drawn to the Corporation's order;
(ii) in shares of Common Stock held by the optionee for the
requisite period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date; or
(iii) to the extent the option in exercised for vested shares,
through a special sale and remittance procedure pursuant to which the optionee
is to provide irrevocable written instructions (I) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the settlement date, an
amount sufficient to cover the aggregate option price payable for the purchased
shares plus all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such purchase and (II)
concurrently to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to effect the sale transaction.
For purposes of this subparagraph 2, the Exercise Date shall be
the first date on which there shall have been delivered to the Corporation both
written notice of the exercise of the option and, except to the extent such sale
and remittance procedure is utilized, payment of the option price for the
purchased shares.
3. The Fair Market Value of a share of Common Stock on any relevant
date under subparagraphs 1 or 2 above (and for all other valuation purposes
under the Plan) shall be determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq National Market, the
Fair Market Value shall be the closing selling price of one share of Common
Stock on the date in question, as such price is reported by the National
Association of Securities Dealers through its Nasdaq system or any successor
system. If there is no closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date for which
such quotation exists shall be determinative of Fair Market Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the stock
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted
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<PAGE> 5
in the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the Fair
Market Value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-the-counter
market, or if the Plan Administrator determines that the value determined
pursuant to subparagraphs (i) and (ii) above does not accurately reflect the
Fair Market Value of the Common Stock, then such Fair Market Value shall be
determined by the Plan Administrator after taking into account such factors as
the Plan Administrator shall deem appropriate, including one or more independent
professional appraisals.
C. Term and Exercise of Options.
Each option granted under the Plan shall be exercisable at such time
or times, during such period, and for such number of shares as shall be
determined by the Plan Administrator and set forth in the instrument evidencing
such option. No such option, however, shall have a maximum term in excess of ten
(10) years from the grant date and no Incentive Option granted to a 10%
Stockholder shall have a maximum term in excess of five (5) years from the grant
date. During the lifetime of the optionee, the option shall be exercisable only
by the optionee and shall not be assignable or transferable by the optionee
otherwise than by will or by the laws of descent and distribution.
D. Effect of Termination of Employment.
1. Except to the extent otherwise provided pursuant to subparagraph
4 below, the following provisions shall govern the exercise period applicable to
any options held by the optionee at the time of cessation of Service or death.
- Should the optionee cease to remain in Service for any reason
other than death or Disability, then the period during which each outstanding
option held by such optionee is to remain exercisable shall be limited to the
three (3)-month period following the date of such cessation of Service.
- Should the optionee's Service terminate by reason of
Disability, then the period during which each outstanding option held by the
optionee is to remain exercisable shall be limited to the six (6)-month period
following the date of such cessation of Service. However, should such Disability
be deemed to constitute Permanent Disability, then the period during which each
outstanding option held by the optionee is to remain exercisable shall be
extended by an additional six (6) months so that the exercise period shall be
limited to the twelve (12)-month period following the date of the optionee's
cessation of Service by reason of such Permanent Disability. For the purposes of
the Plan, Disability shall mean the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute Permanent Disability in
the event that such Disability is
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<PAGE> 6
expected to result in death or has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
- Should the optionee die while holding one or more outstanding
options, then the period during which each such option is to remain exercisable
shall be limited to the twelve (12)-month period following the date of the
optionee's death. During such limited period, the option may be exercised by the
personal representative of the optionee's estate or by the person or persons to
whom the option is transferred pursuant to the optionee's will or in accordance
with the laws of descent and distribution.
- During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be exercisable for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the optionee's cessation
of Service, terminate and cease to be outstanding with respect to any option
shares for which the option is not at that time exercisable or in which the
optionee is not otherwise at that time vested.
2. Under no circumstances shall any option be exercisable after the
specified expiration date of the option term.
3. For all purposes under the Plan, unless specifically provided
otherwise in the option agreement evidencing the option grant and/or the
purchase agreement evidencing the purchased shares, the optionee shall be deemed
to remain in Service for so long as such individual renders services on a
periodic basis to the Corporation or any parent or subsidiary corporation in the
capacity of an Employee, a non-employee member of the Board of Directors or a
consultant. The optionee shall be considered to be an Employee for so long as
such individual remains in the employ of the Corporation or one or more of its
parent or subsidiary corporations, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of
performance.
4. The Board shall have full power and authority to extend the
period of time for which the option is to remain exercisable following the
optionee's termination of Service from the three (3)-month (six (6) months in
the case of Disability or twelve (12) months in the case of death or Permanent
Disability) or shorter period set forth in the option agreement to such greater
period of time as the Board shall deem appropriate; provided, that in no event
shall such option be exercisable after the specified expiration date of the
option term.
E. Stockholder Rights. An optionee shall have none of the rights of a
stockholder with respect to the shares subject to the option until such
individual shall have exercised the option and paid the option price.
F. Repurchase Rights. The shares of Common Stock acquired upon the
exercise of options granted under the Plan may be subject to one or more
repurchase rights of the Corporation in accordance with the following
provisions:
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<PAGE> 7
1. The Plan Administrator may in its discretion determine that it
shall be a term and condition of one or more options exercised under the Plan
that the Corporation (or its assignees) shall have the right, exercisable upon
the optionee's cessation of Service, to repurchase at the option price all or
(at the discretion of the Corporation and with the consent of the optionee) part
of the unvested shares of Common Stock at the time held by the optionee. Any
such repurchase right shall be exercisable by the Corporation (or its assignees)
upon such terms and conditions (including the establishment of the appropriate
vesting schedule and other provision for the expiration of such right in one or
more installments over the optionee's period of Service) as the Plan
Administrator may specify in the instrument evidencing such right.
2. All of the Corporation's outstanding repurchase rights shall
automatically terminate upon the occurrence of any Corporate Transaction under
Section VII, except to the extent the Corporation's outstanding repurchase
rights are to be assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction.
G. Limited Transferability of Options. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Statutory Option may
be assigned in accordance with the terms of a Qualified Domestic Relations
Order. The assigned option may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to such Qualified Domestic
Relations Order. The terms applicable to the assigned option (or portion
thereof) shall be the same as those in effect for the option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate
VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Corporation. Options which are
specifically designated as "non-statutory" options when issued under the Plan
shall not be subject to such terms and conditions.
A. Option Price. The option price per Share of the Common Stock subject
to an Incentive Option shall in no event be less than one hundred percent (100%)
of the Fair Market Value of a share of Common Stock on the date of grant. If the
individual to whom the option is granted is the owner of stock (as determined
under Section 424(d) of the Internal Revenue Code) possessing ten percent (10%)
or more of the total combined voting power of all classes of stock of the
Corporation or any one of its parent or subsidiary corporations (such person to
be herein referred to as a 10% Stockholder), then the option price per share
shall not be less than one hundred and ten percent (110%) of the Fair Market
Value of one share of Common Stock on the grant date.
B. Dollar Limitation. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this Plan (or any other option plan of the
Corporation or its parent or subsidiary corporations) may for the first time
become exercisable as incentive stock options under the Federal tax laws during
any one calendar year shall not exceed the sum of One Hundred
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<PAGE> 8
Thousand Dollars ($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability thereof as incentive stock
options under the Federal tax laws shall be applied on the basis of the order in
which such options are granted.
Except as modified by the preceding provisions of this Section
VI, all the provisions of the Plan shall be applicable to the Incentive Options
granted hereunder.
VII. CORPORATE TRANSACTIONS
A. In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State of the Corporation's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which all of the Corporation's outstanding voting stock
is transferred to the acquiring entity or its wholly-owned subsidiary,
then each option outstanding under the Plan shall automatically accelerate so
that each such option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for all of the shares of Common
Stock at the time subject to such option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock.
B. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor Corporation (or parent thereof).
C. Each outstanding option which is assumed in connection with the
Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would be issuable, in
consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such option immediately prior
to such Corporate Transaction, and appropriate adjustments shall also be made to
the option price payable per share, provided the aggregate option price payable
for such securities shall remain the same. Appropriate adjustments shall also be
made to the class and number of securities available for issuance under the Plan
following the consummation of such Corporate Transaction.
D. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate
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<PAGE> 9
Transaction shall automatically terminate and the shares of Common Stock subject
to those terminated rights shall immediately vest in full) in the event the
Optionee's Service should subsequently terminated by reason of an Involuntary
Termination within eighteen (18) months following the effective date of such
Corporate Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.
E. The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to these rights) upon the occurrence of a Change in Control or (ii)
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent Involuntary Termination of the Optionee's
Service within a specified period following the effective date of such Change in
Control. Any options accelerated in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.
F. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
G. The grant of options under this Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
VIII. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than eighty-five percent (85%) of Fair Market Value of the Common Stock on the
new grant date (or one hundred percent (100%) of such Fair Market Value in the
case of an Incentive Option or, in the case of an Incentive Option granted to a
10% Stockholder, not less than one hundred and ten percent (110%) of such Fair
Market Value).
IX. CASH-OUT OF OPTIONS
A. Once the Corporation's outstanding Common Stock is registered under
Section 12(g) of the 1934 Act, one or more optionees subject to the short-swing
profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be
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<PAGE> 10
granted limited cash-out rights to operate in tandem with their outstanding
options under the Plan. Any option with such a limited right in effect for at
least six (6) months shall automatically be cancelled upon the acquisition of
fifty percent (50%) or more of the Corporation's outstanding Common Stock
(excluding the Common Stock holdings of officers and directors of the
Corporation who participate in this Plan) pursuant to a tender or exchange offer
made by a person or group of related persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by or is under common
control with the Corporation) which the Board does not recommend the
Corporation's stockholders to accept. In return for the cancelled option, the
optionee shall be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Cash-Out Price of the shares of Common
Stock in which the optionee is vested under the cancelled option over (ii) the
aggregate option price payable for such vested shares. The cash distribution
payable upon such cancellation shall be made within five (5) days following the
completion of such tender or exchange offer, and neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such cancellation and distribution.
B. For purposes of calculating the cash distribution, the Cash-Out
Price per share of the vested Common Stock subject to the cancelled option shall
be deemed to be equal to the greater of (i) the Fair Market Value per share on
the date of surrender, as determined in accordance with the valuation provisions
of subsection V.B.3, or (ii) the highest reported price per share paid in
effecting the tender or exchange offer. However, if the cancelled option is an
Incentive Option, then the Cash-Out Price shall not exceed the value per share
determined under clause (i) above.
C. The shares of Common Stock subject to any option cancelled for an
appreciation distribution in accordance with this Section IX shall not be
available for subsequent option grants under the Plan.
X. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or upon the vesting of such shares under the Plan shall
be subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of their
options . Such right may be provided to any such holder in either or both of the
following formats:
(i) Stock Withholding. The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
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<PAGE> 11
(ii) Stock Delivery. The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
XI. LOANS
A. The Plan Administrator may assist any optionee (including an
optionee who is an officer or director of the Corporation) in the exercise of
one or more options granted to such optionee, including the satisfaction of any
Federal, state and local income and employment tax obligations arising
therefrom, by
(i) authorizing the extension of a loan from the Corporation to
such optionee, or
(ii) permitting the optionee to pay the option price for the
purchased Common Stock in installments over a period of years.
B. The terms of any loan or installment method of payment (including
the interest rate and terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Loans or installment payments may be
granted with or without security or collateral. However, any loan made to a
consultant or other non-employee advisor must be secured by property other than
the purchased shares of Common Stock. In all events, the maximum credit
available to each optionee may not exceed the sum of (i) the aggregate option
price payable for the purchased shares plus (ii) any Federal, state and local
income and employment tax liability incurred by the optionee in connection with
such exercise.
C. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under the financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Board in its discretion deems appropriate.
XII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the optionee any right to
continue in the service or employ of the Corporation (or any parent or
subsidiary corporation of the Corporation employing or retaining such optionee)
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any parent or subsidiary corporation
of the Corporation employing or retaining such optionee) or of the optionee,
which rights are hereby expressly reserved by each, to terminate the Service of
the optionee at any time for any reason, with or without cause.
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<PAGE> 12
XIII. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever; provided, however,
that no such amendment or modification shall, without the consent of the
holders, adversely affect the rights and obligations with respect to options at
the time outstanding under the Plan; and provided, further that the Board shall
not, without the approval of the Corporation's stockholders, (i) increase the
maximum number of shares issuable under the Plan or the maximum number of shares
for which any person may be granted options per calendar year, except for
permissible adjustments under Section IV, (ii) materially modify the eligibility
requirements for the grant of options under the Plan or (iii) materially
increase the benefits accruing to Plan participants.
B. Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and within one (1) year thereafter such amendment is approved by
the Corporation's stockholders and (ii) each option granted is not to become
exercisable, in whole or in part, at any time prior to the obtaining of such
stockholder approval.
XIV. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective when adopted by the Board on May 21, 1992
and was approved by the Corporation's stockholders on July 8, 1992. On November
13, 1992 the Board adopted an increase in the maximum aggregate number of shares
issuable over the term of the Plan from 650,000 to 1,650,000 shares. The
increase was approved by the Corporation's stockholders on December 8, 1992. On
August 11, 1993 the Board adopted a further increase in the maximum aggregate
number of shares issuable over the term of the Plan from 1,650,000 to 2,150,000
shares. The increase was approved by the Corporation's stockholders on October
8, 1993. On January 13, 1994, the Board approved a further increase in the
aggregate number of shares issuable over the term of the Plan from 2,150,000 to
2,500,000 shares. The increase was approved by the Corporation's stockholders on
June 28, 1994. On September 14, 1994, the Board approved a further increase of
3,385,000 shares in the aggregate number of shares issuable over the term of the
Plan bringing the new aggregate to 5,885,000 shares. The increase was approved
by the Corporation's stockholders on October 5, 1994. On April 25, 1996, the
Board approved a further increase of 2,800,000 shares in the aggregate number of
shares issuable over the term of the Plan bringing the new aggregate to
8,685,000 shares, subject to stockholder approval of the 2,800,000-share
increase within twelve (12) months of the date of approval by the Board. On May
22, 1996, the Board approved certain amendments to the Plan in connection with
the filing of a Registration Statement for the initial public offering of the
Company's Common Stock, subject to shareholder approval of such changes within
twelve (12) months of the date of approval by the Board. Options may be granted
in reliance on the 2,800,000 share increase prior to approval of such increase
by the Corporation's stockholders but no option granted in reliance on such
increase shall become exercisable, in whole or in part, unless and until the
increase shall have been approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the date of
the Board's adoption of the increase, then all
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<PAGE> 13
options previously granted in reliance on such increase shall terminate and no
further options shall be granted. Subject to such limitation, the Plan
Administrator may grant options under the Plan at any time after the effective
date and before the date fixed herein for termination of the Plan.
B. Unless sooner terminated in accordance with Section VII, the Plan
shall terminate upon the earlier of (i) the expiration of the ten (10) year
period measured from the date of the Board's adoption of the Plan, (ii) the date
on which all shares available for issuance under the Plan shall have been issued
pursuant to the exercise or surrender of options granted hereunder or (iii) the
termination of all outstanding options in connection with a Corporate
Transaction. If the date of termination is determined under clause (i) or (iii)
above, then options outstanding on such date shall thereafter continue to have
force and effect in accordance with the provisions of the instruments evidencing
such options.
XV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
XVI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the procurement by the Corporation of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the stock issued pursuant to it, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
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<PAGE> 14
GERON CORPORATION
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board of Directors of the Corporation has adopted the Geron
Corporation 1992 Stock Option Plan (the "Plan") for the purpose of attracting
and retaining the services of selected key employees (including officers and
directors), non-employee members of the Board of Directors and consultants who
contribute to the financial success of the Corporation or its parent or
subsidiary corporations.
B. Optionee is an individual who is to render valuable services to
the Corporation or its parent or subsidiary corporations, and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
forth in this Agreement, the Corporation hereby grants to Optionee, as of the
grant date (the "Grant Date") specified in the accompanying Notice of Grant of
Stock Option (the "Grant Notice"), a stock option to purchase up to that number
of shares of the Corporation's Common Stock (the "Option Shares") as is
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term at the option price per share (the "Option
Price") specified in the Grant Notice.
2. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the expiration date (the "Expiration Date") specified in the Grant
Notice, unless sooner terminated in accordance with Paragraph 5, 6 or 18.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.
4. DATES OF EXERCISE. This option may not be exercised in whole or
in part at any time prior to the time the 3,385,000-share increase in the
aggregate number of shares issuable over the term of the Plan is approved by the
Corporation's stockholders in accordance with Paragraph 18. Provided such
stockholder approval is obtained, this option shall thereupon become exercisable
for the Option Shares in one or more installments as is specified in the Grant
Notice. As the option becomes exercisable in one or more installments, the
installments shall accumulate and the option shall remain
<PAGE> 15
exercisable for such installments until the Expiration Date or the sooner
termination of the option term under Paragraph 5 or Paragraph 6 of this
Agreement.
5. ACCELERATED TERMINATION OF OPTION TERM. The option term specified
in Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraph (ii) or (iii)
below, should Optionee cease to remain in Service while this option is
outstanding, then the period for exercising this option shall be
reduced to a three (3)-month period commencing with the date of such
cessation of Service, but in no event shall this option be exercisable
at any time after the Expiration Date. Upon the expiration of such
three (3)-month period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the law of descent and distribution shall
have the right to exercise this option. Such right shall lapse and this
option shall cease to be exercisable upon the earlier of (A) the
expiration of the twelve (12) month period measured from the date of
Optionee's death or (B) the Expiration Date. Upon the expiration of
such twelve (12) month period or (if earlier) upon the Expiration Date,
this option shall terminate and cease to be outstanding.
(iii) Should Optionee cease Service by reason of Disability while
this option is outstanding, then Optionee shall have a period of six
(6) months (commencing with the date of such cessation of Service)
during which to exercise this option. However, should such Disability
be deemed to constitute Permanent Disability, then the period during
which this option is to remain exercisable shall be extended by an
additional six (6) months so that the exercise period shall be limited
to the twelve (12)-month period following the date of the Optionee's
cessation of Service by reason of such Permanent Disability. In no
event shall this option be exercisable at any time after the Expiration
Date. Upon the expiration of the applicable six (6) or twelve
(12)-month period or (if earlier) upon the Expiration Date, this option
shall terminate and cease to be outstanding. For the purposes of the
Plan and of this Agreement, DISABILITY shall mean the inability of the
Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be
determined by the Plan Administrator on the basis of such medical
evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT
DISABILITY in the event that such Disability is expected to result in
death or has lasted or can be expected to last for a continuous period
of not less than twelve (12) months.
Note: Exercise of this option on a date later than three (3)
months following cessation of Service due to Disability will
result in loss of
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<PAGE> 16
favorable incentive stock option treatment, unless such Disability
constitutes Permanent Disability. In the event that incentive stock
option treatment is not available, this option will be treated as a
non-statutory stock option.
(iv) During the limited period of exercisability applicable under
subparagraph (i), (ii) or (iii) above, this option may not be exercised
in the aggregate for more than the lesser of (a) the number of Option
Shares for which this option is, at the time of the Optionee's
cessation of Service, exercisable in accordance with the exercise
schedule specified in the Grant Notice or (ii) the number of Option
Shares in which Optionee is, at the time of the Optionee's cessation of
Service, vested in accordance with the vesting schedule specified in
the Grant Notice.
(v) For purposes of this Paragraph 5 and for all other purposes
under this Agreement:
A. The Optionee shall be deemed to remain in SERVICE for so long
as the Optionee continues to render periodic services to the
Corporation or any parent or subsidiary corporation, whether as an
Employee, a non-employee member of the Board of Directors, or a
consultant.
B. The Optionee shall be deemed to be an EMPLOYEE of the
Corporation and to continue in the Corporation's employ for so long as
the Optionee remains in the employ of the Corporation or one or more of
its parent or subsidiary corporations, subject to the control and
direction of the employer entity as to both the work to be performed
and the manner and method of performance.
C. A corporation shall be considered to be a SUBSIDIARY
corporation of the Corporation if it is a member of an unbroken chain
of corporations beginning with the Corporation, provided each such
corporation in the chain (other than the last corporation) owns, at the
time of determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the
other corporations in such chain.
D. A corporation shall be considered to be a PARENT corporation
of the Corporation if it is a member of an unbroken chain ending with
the Corporation, provided each such corporation in the chain (other
than the Corporation) owns, at the time of determination, stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
6. SPECIAL TERMINATION OF OPTION.
A. In the event of one or more of the following stockholder-approved
transactions (a "Corporate Transaction"):
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<PAGE> 17
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Corporation's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation; or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which all of the Corporation's outstanding
voting stock is transferred to the acquiring entity or its wholly-owned
subsidiary,
then this option, to the extent not previously exercised, shall terminate upon
the consummation of the Corporate Transaction and cease to be exercisable,
unless it is expressly assumed by the successor corporation or parent thereof.
B. This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES.
A. In the event any change is made to the Corporation's outstanding
Common Stock by reason of any stock split, stock dividend, combination of
shares, exchange of shares, or other change affecting the outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
shall be made to (i) the total number of Option Shares subject to this option,
(ii) the number of Option Shares for which this option is to be exercisable from
and after each installment date specified in the Grant Notice and (iii) the
Option Price payable per share in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
B. If this option is to be assumed in connection with a Corporate
Transaction described in Paragraph 6 or is otherwise to remain outstanding, then
this option shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issuable to the Optionee in the consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Option Price
payable per share, provided the aggregate Option Price payable hereunder shall
remain the same.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this option shall not
have any of the rights of a stockholder with respect to the Option Shares until
such individual shall have exercised the option and paid the Option Price.
9. MANNER OF EXERCISING OPTION.
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<PAGE> 18
A. In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, the Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of the Corporation a
stock purchase agreement (the "Purchase Agreement") in substantially
the form of Exhibit B to the Grant Notice.
(ii) Pay the aggregate Option Price for the purchased shares in
one or more of the following alternative forms:
1. full payment in cash or check; or
2. any other form which the Plan Administrator may, in its
discretion, approve at the time of exercise in accordance with
the provisions of paragraph 15 of this Agreement.(1)
Should the Corporation's outstanding Common Stock be registered
under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") at the time the option is exercised, then
the Option Price may also be paid as follows:
3. in shares of Common Stock held by the Optionee for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair
Market Value (as defined below) on the Exercise Date; or
4. through a special sale and remittance procedure pursuant
to which the Optionee is to provide irrevocable written
instructions (a) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Option
Price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to
be withheld by the Corporation by reason of such purchase and (b)
to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to effect the
sale transaction.
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(1) Authorization of a loan or installment payment method under such
provisions may, under currently proposed Treasury Regulations, result in the
loss of incentive stock option treatment under the Federal tax laws.
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<PAGE> 19
(iii) Furnish to the Corporation appropriate documentation that
the person or persons exercising the option, if other than Optionee,
have the right to exercise this option.
Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the Option Price must
accompany the Purchase Agreement delivered to the Corporation.
B. For purposes of this Agreement, the Exercise Date shall be the
date on which the executed Purchase Agreement shall have been delivered to the
Corporation, and the Fair Market Value of a share of Common Stock on any
relevant date shall be determined in accordance with subparagraphs (i) through
(iii) below:
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq National
Market, the Fair Market Value shall be the closing selling price of one
share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers through its
Nasdaq system or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such quotation
exists shall be determinative of Fair Market Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question
on the stock exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange. If there is no
reported sale of Common Stock on such exchange on the date in question,
then the Fair Market Value shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the
over-the-counter market, or if the Plan Administrator determines that
the value determined pursuant to subparagraphs (i) and (ii) above does
not accurately reflect the Fair Market Value of the Common Stock, then
such Fair Market Value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator shall
deem appropriate, including one or more independent professional
appraisals.
C. As soon after the Exercise Date as practical, the Corporation
shall mail or deliver to Optionee or to the other person or persons exercising
this option a certificate or certificates representing the shares so purchased
and paid for, with the appropriate legends affixed thereto.
D. In no event may this option be exercised for any fractional
shares.
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10. REPURCHASE RIGHTS. THE OPTIONEE HEREBY AGREES THAT ALL OPTION
SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN
RIGHTS OF THE CORPORATION AND ITS ASSIGNS TO REPURCHASE SUCH SHARES IN
ACCORDANCE WITH THE TERMS AND CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
A. The exercise of this option and the issuance of Option Shares
upon such exercise shall be subject to compliance by the Corporation and the
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the
Corporation's Common Stock may be listed at the time of such exercise and
issuance.
B. In connection with the exercise of this option, Optionee shall
execute and deliver to the Corporation such representations in writing as may be
requested by the Corporation in order for it to comply with the applicable
requirements of Federal and state securities laws.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Corporation.
13. LIABILITY OF CORPORATION.
A. If the Option Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without stockholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares, unless stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section XII of the Plan.
B. The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
14. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated below Optionee's
signature line on the Grant Notice. All notices shall be deemed to have been
given or delivered upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
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15. LOANS. The Plan Administrator may, in its absolute discretion
and without any obligation to do so, assist the Optionee in the exercise of this
option by (i) authorizing the extension of a loan to the Optionee from the
Corporation or (ii) permitting the Optionee to pay the Option Price for the
purchased Common Stock in installments over a period of years. The terms of any
such loan or installment method of payment (including the interest rate, the
requirements for collateral and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion.
16. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
17. GOVERNING LAW. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
18. STOCKHOLDER APPROVAL. The grant of this option is subject to
approval by the Corporation's stockholders of the 3,385,000-share increase in
the aggregate number of shares issuable over the term of the Plan within twelve
(12) months after September 14, 1994, the date of the adoption of the increase
by the Board of Directors. Notwithstanding any provision of this Agreement to
the contrary, this option may not be exercised in whole or in part until such
stockholder approval is obtained. In the event that such stockholder approval is
not obtained, then this option shall thereupon terminate in its entirety and the
Optionee shall have no further rights to acquire any Option Shares hereunder.
19. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK OPTION. In the
event this option is designated an incentive stock option in the Grant Notice,
the following terms and conditions shall also apply to the grant:
A. This option shall cease to qualify for favorable tax treatment as
an incentive stock option under the Federal tax laws if (and to the extent) this
option is exercised for one or more Option Shares: (i) more than three (3)
months after the date the Optionee ceases to be an Employee for any reason other
than death or Permanent Disability or (ii) more than one (1) year after the date
the Optionee ceases to be an Employee by reason of Permanent Disability.
B. Should this option be designated as immediately exercisable in
the Grant Notice, then this option shall not become exercisable in the calendar
year in which granted if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Corporation's Common Stock for which this
option would otherwise first become exercisable in such calendar year would,
when added to the aggregate Fair Market Value (determined as of the respective
date or dates of grant) of the Corporation's Common Stock for which this option
or one or more other incentive stock options granted to the Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the
Corporation or its parent or subsidiary corporations) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. To the
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extent the exercisable of this option is deferred by reason of the foregoing
limitation, the deferred portion will first become exercisable in the first
calendar year or years thereafter in which the One Hundred Thousand Dollar
($100,000) limitation of this Paragraph 19.B would not be contravened, but such
deferral shall in all events end immediately prior to the effective date of a
Corporate Transaction in which this option is not to be assumed, whereupon the
option shall become exercisable as a non-statutory stock option for the balance
of the Option Shares.
C. Should this option be designated as exercisable in installments
in the Grant Notice, then no installment under this option (whether annual or
monthly) shall qualify for favorable tax treatment as an incentive stock option
under the Federal tax laws if (and to the extent) the aggregate Fair Market
Value (determined at the Grant Date) of the Corporation's Common Stock for which
such installment first becomes exercisable hereunder will, when added to the
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Corporation's Common Stock for which one or more other incentive
stock options granted to the Optionee prior to the Grant Date (whether under the
Plan or any other option plan of the Corporation or any parent or subsidiary
corporation) first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred
Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this
option shall nevertheless become exercisable for the option shares in such
calendar year as a non-statutory stock option.
D. Should Optionee hold, in addition to this option, one or more
other options to purchase the Corporation's Common Stock which became
exercisable for the first time in the same calendar year as this option, then
the foregoing limitations on the exercisability of such options as incentive
stock options shall be applied on the basis of the order in which such options
are granted.
20. WITHHOLDING. Optionee hereby agrees to make appropriate
arrangements with the Corporation or parent or subsidiary corporation employing
Optionee for the satisfaction of all Federal, state or local income tax
withholding requirements and Federal social security employee tax requirements
applicable to the exercise of this option.
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EXHIBIT 10.3
GERON CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1996 Employee Stock
Purchase Plan of Geron Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly,
be construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Geron Corporation, a Delaware corporation.
(e) "Compensation" shall mean all regular straight time gross
earnings, overtime and shift premium and shall not include payments for
incentive compensation, incentive payments, bonuses, commissions and other
compensation.
(f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(g) "Contributions" shall mean all amounts credited to the account
of a participant pursuant to the Plan.
(h) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(i) "Employee" shall mean any person, including an Officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
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(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(k) "Purchase Date" shall mean the last day of each Purchase Period
of the Plan.
(l) "Offering Date" shall mean the first business day of each
Offering Period of the Plan.
(m) "Offering Period" shall mean a period of twelve (12) months
commencing on January 1 and July 1 of each year, except for the first Offering
Period as set forth in Section 4(a).
(n) "Officer" shall mean a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(o) "Plan" shall mean this Employee Stock Purchase Plan.
(p) "Purchase Period" shall mean a period of six (6) months within
an Offering Period, except for the first Purchase Period as set forth in Section
4(b).
(q) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
3. Eligibility.
(a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) if such option would permit
his or her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair
market value of such stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
4. Offering Periods and Purchase Periods.
(a) Offering Periods. The Plan shall be implemented by a series of
Offering Periods of twelve (12) months duration, with new Offering Periods
commencing on or about January 1 and July 1 of each year (or at such other time
or times as may be determined by the
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Board of Directors). The first Offering Period shall commence on the beginning
of the effective date of the Registration Statement on Form S-1 for the initial
public offering of the Company's Common Stock (the "IPO Date") and continue
until June 30, 1997. The Plan shall continue until terminated in accordance with
Section 19 hereof. The Board of Directors of the Company shall have the power to
change the duration and/or the frequency of Offering Periods with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected. Eligible employees may not participate in more than one
Offering Period at a time.
(b) Purchase Periods. Each Offering Period shall consist of two (2)
consecutive purchase periods of six (6) months duration. The last day of each
Purchase Period shall be the "Purchase Date" for such Purchase Period. A
Purchase Period commencing on January 1 shall end on the next June 30. A
Purchase Period commencing on July 1 shall end on the next December 31. The
first Purchase Period shall commence on the IPO Date and shall end on December
31, 1996. The Board of Directors of the Company shall have the power to change
the duration and/or frequency of Purchase Periods with respect to future
purchases without shareholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Purchase Period
to be affected.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given offering. The
subscription agreement shall set forth the percentage of the participant's
Compensation (which shall be not less than 1% and not more than 10%) to be paid
as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the last
Purchase Period of the Offering Period to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in Section
10.
6. Method of Payment of Contributions.
(a) The participant shall elect to have payroll deductions made on
each payday during the Offering Period in an amount not less than one percent
(1%) and not more than ten percent (10%) of such participant's Compensation on
each such payday. All payroll deductions made by a participant shall be credited
to his or her account under the Plan. A participant may not make any additional
payments into such account.
(b) A participant may discontinue his or her participation in the
Plan as provided in Section 10, or, on one occasion only during the Offering
Period, may decrease the rate of his or her Contributions during the Offering
Period by completing and filing with the
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<PAGE> 4
Company a new subscription agreement. The change in rate shall be effective as
of the beginning of the next calendar month following the date of filing of the
new subscription agreement, if the agreement is filed at least ten (10) business
days prior to such date and, if not, as of the beginning of the next succeeding
calendar month.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions may be decreased to 0% at such time during any Offering
Period which is scheduled to end during the current calendar year that the
aggregate of all payroll deductions accumulated with respect to such Offering
Period and any other Offering Period ending within the same calendar year equal
$21,250. Payroll deductions shall re-commence at the rate provided in such
participant's subscription Agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.
7. Grant of Option.
(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the lower of (i) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Offering Date, or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Purchase Date; provided however, that the maximum number of shares an
Employee may purchase during each Offering Period shall be determined at the
Offering Date by dividing $25,000 by the fair market value of a share of the
Company's Common Stock on the Offering Date, and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 13.
The fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 7(b).
(b) The option price per share of the shares offered in a given
Offering Period shall be the lower of: (i) 85% of the fair market value of a
share of the Common Stock of the Company on the Offering Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Purchase Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board in its discretion based on the closing
price of the Common Stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), as
reported by the National Association of Securities Dealers Automated Quotation
(Nasdaq) National Market or, if such price is not reported, the mean of the bid
and asked prices per share of the Common Stock as reported by Nasdaq or, in the
event the Common Stock is listed on a stock exchange, the fair market value per
share shall be the closing price on such exchange on such date (or, in the event
that the Common Stock is not traded on such date, on the immediately preceding
trading date), as reported in The Wall Street Journal. For purposes of the
Offering Date under the first Offering Period under the Plan, the fair market
value of a share of the Common Stock of the Company shall be the Price to Public
as set forth in the final prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities Act of 1933, as amended.
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8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full shares subject to the option will be purchased at the
applicable option price with the accumulated Contributions in his or her
account. The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Purchase Date. During his or
her lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Purchase Date of
each Offering Period, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option or the deposit of such number of shares with
the broker selected by the Company for administration of Plan stock purchases,
as determined by the Company. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him or her of shares at
the termination of each Purchase Period, or which is insufficient to purchase a
full share of Common Stock of the Company, shall be carried over to the next
Purchase Period if the Employee continues to participate in the Plan, or if the
Employee does not continue to participate, shall be returned to said
participant.
10. Voluntary Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of shares will be made during the Offering
Period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status
as an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.
11. Automatic Withdrawal. If the fair market value of the shares on the
first Purchase Date of an Offering Period is less than the fair market value of
the shares on the Offering Date for
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such Offering Period, then every participant shall automatically (i) be
withdrawn from such Offering Period at the close of such Purchase Date and after
the acquisition of shares for such Purchase Period, and (ii) be enrolled in the
Offering Period commencing on the first business day subsequent to such Purchase
Period.
12. Interest. No interest shall accrue on the Contributions of a
participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 300,000 shares
(on a post-split basis), subject to adjustment upon changes in capitalization of
the Company as provided in Section 18. If the total number of shares which would
otherwise be subject to options granted pursuant to Section 7(a) on the Offering
Date of an Offering Period exceeds the number of shares then available under the
Plan (after deduction of all shares for which options have been exercised or are
then outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall similarly
reduce the rate of Contributions, if necessary.
(b) The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. Administration. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan. The composition of the committee shall be in accordance with the
requirements to obtain or retain any available exemption from the operation of
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to the end of
a Purchase Period but prior to delivery to him or her of such shares and cash.
In addition, a participant may file a written designation of a beneficiary who
is to receive any cash from the participant's account under the Plan in the
event of such participant's death prior to the Purchase Date of an Offering
Period. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
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<PAGE> 7
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by written notice. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
16. Transferability. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.
17. Use of Funds. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such Contributions.
18. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees promptly following the Purchase Date, which statements will set forth
the amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization; Corporate Transactions.
(a) Adjustment. Subject to any required action by the shareholders
of the Company, the number of shares of Common Stock covered by each option
under the Plan which has not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under the Plan but have not
yet been placed under option (collectively, the "Reserves"), as well as the
price per share of Common Stock covered by each option under the Plan which has
not yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration". Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.
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(b) Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, each option under the Plan shall be assumed or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Offering Period then in progress by setting a new Purchase Date
(the "New Purchase Date"). If the Board shortens the Offering Period then in
progress in lieu of assumption or substitution in the event of a merger or sale
of assets, the Board shall notify each participant in writing, at least ten (10)
days prior to the New Purchase Date, that the Purchase Date for his or her
option has been changed to the New Purchase Date and that his or her option will
be exercised automatically on the New Purchase Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in Section 10. For
purposes of this paragraph, an option granted under the Plan shall be deemed to
be assumed if, following the sale of assets or merger, the option confers the
right to purchase, for each share of option stock subject to the option
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in Section 424(e)
of the Code), the Board may, with the consent of the successor corporation and
the participant, provide for the consideration to be received upon exercise of
the option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time terminate
or amend the Plan. Except as provided in Section 19, no such termination may
affect options previously granted, nor may an amendment make any change in any
option theretofore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Rule 16b-3
under the Exchange Act, or under Section 423 of the Code (or any successor rule
or provision or any applicable law or regulation), the Company shall obtain
shareholder approval in such a manner and to such a degree as so required.
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(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
21. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan; Effective Date. The Plan shall become effective upon
the earlier to occur of its adoption by the Board of Directors or its approval
by the shareholders of the Company. It shall continue in effect for a term of
twenty (20) years unless sooner terminated under Section 20.
24. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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<PAGE> 10
GERON CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
New Election ______
Change of Election ______
1. I, ________________________, hereby elect to participate in the
GERON CORPORATION 1996 Employee Stock Purchase Plan (the "Plan") for the
Offering Period ______________, 19__ to _______________, 19__, and subscribe to
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 10% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan. I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Purchase
Date of each Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the
Purchase Date my participation in the Plan as provided in Section 10 of the
Plan. I also understand that I can decrease the rate of my Contributions to not
less than 1% of my Compensation on one occasion only during any Offering Period
by completing and filing a new Subscription Agreement with such decrease taking
effect as of the beginning of the calendar month following the date of filing of
the new Subscription Agreement, if filed at least ten (10) business days prior
to the beginning of such month. Further, I may change the rate of deductions for
future Offering Periods by filing a new Subscription Agreement, and any such
change will be effective as of the beginning of the next Offering Period. In
addition, I acknowledge that, unless I discontinue my participation in the Plan
as provided in Section 10 of the Plan, my election will continue to be effective
for each successive Offering Period.
<PAGE> 11
5. I have received a copy of the Company's most recent description of
the Plan and a copy of the complete "GERON CORPORATION 1996 Employee Stock
Purchase Plan." I understand that my participation in the Plan is in all
respects subject to the terms of the Plan.
6. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):
_____________________________________
_____________________________________
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:
NAME: (Please print) _____________________________________
(First) (Middle) (Last)
_________________________ _____________________________________
(Relationship) (Address)
_____________________________________
8. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or within 1 year after the
Purchase Date, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares on the
Purchase Date over the price which I paid for the shares, regardless of whether
I disposed of the shares at a price less than their fair market value at the
Purchase Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.
I hereby agree to notify the Company in writing within 30 days after
the date of any such disposition, and I will make adequate provision for
federal, state or other tax withholding obligations, if any, which arise upon
the disposition of the Common Stock. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to the sale or early
disposition of Common Stock by me.
9. If I dispose of such shares at any time after expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received compensation income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (2) 15% of the fair market
value of the
<PAGE> 12
shares on the Offering Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or loss.
I understand that this tax summary is only a summary and is subject to
change. I further understand that I should consult a tax advisor concerning the
tax implications of the purchase and sale of stock under the Plan.
10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SIGNATURE: ______________________
SOCIAL SECURITY #: ______________
DATE: ___________________________
SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):
_________________________________
(Signature)
_________________________________
(Print name)
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<PAGE> 13
GERON CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, __________________________, hereby elect to withdraw my
participation in the GERON CORPORATION 1996 Employee Stock Purchase Plan (the
"Plan") for the Offering Period _________. This withdrawal covers all
Contributions credited to my account and is effective on the date designated
below.
I understand that all Contributions credited to my account will be paid
to me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
If the undersigned is an Officer or Director of GERON CORPORATION or
other person subject to Section 16 of the Securities Exchange Act of 1934, the
undersigned further understands that under rules promulgated by the U.S.
Securities and Exchange Commission he or she may not re-enroll in the Plan for a
period of six (6) months after withdrawal.
Dated:___________________ ______________________________
Signature of Employee
______________________________
Social Security Number
<PAGE> 1
EXHIBIT 10.4
GERON CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Directors' Stock
Option Plan are to attract and retain the best available personnel for service
as Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be "nonstatutory stock
options".
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Common Stock" shall mean the Common Stock of the
Company.
(d) "Company" shall mean Geron Corporation, a Delaware
corporation.
(e) "Continuous Status as a Director" shall mean the
absence of any interruption or termination of service as a Director.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any person, including officers
and directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be sufficient
in and of itself to constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(i) "Option" shall mean a stock option granted pursuant
to the Plan. All options shall be nonstatutory stock options (i.e., options that
are not intended to qualify as incentive stock options under Section 422 of the
Code).
(j) "Optioned Stock" shall mean the Common Stock subject
to an Option.
(k) "Optionee" shall mean an Outside Director who
receives an Option.
(l) "Outside Director" shall mean a Director who is not
an Employee.
(m) "Parent" shall mean a "parent corporation", whether
now or hereafter existing, as defined in Section 424(e) of the Code.
(n) "Plan" shall mean this 1996 Directors' Stock Option
Plan.
<PAGE> 2
(o) "Share" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(p) "Subsidiary" shall mean a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 250,000 Shares (on a post-split basis) (the
"Pool") of Common Stock. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. If Shares which were acquired upon
exercise of an Option are subsequently repurchased by the Company, such Shares
shall not in any event be returned to the Plan and shall not become available
for future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein,
the Plan shall be administered by the Board.
(b) Procedure for Grants. All grants of Options
hereunder shall be automatic and non discretionary and shall be made strictly in
accordance with the following provisions:
(i) No person shall have any discretion to
select which Outside Directors shall be granted Options or to determine the
number of Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase Shares 25,000 Shares (on a post-split basis) (the
"First Option") on the date on which such person first becomes an Outside
Director, whether through election by the shareholders of the Company or
appointment by the Board of Directors to fill a vacancy.
(iii) Each Outside Director shall be automatically
granted an Option to purchase 5,000 Shares (on a post-split basis) (a
"Subsequent Option") on the date of each Annual Meeting of the Company's
shareholders following which such Outside Director is serving on the Board,
provided that, on such date, he or she shall have served on the Board for at
least six (6) months prior to the date of such Annual Meeting.
(iv) Notwithstanding the provisions of
subsections (ii) and (iii) hereof, in the event that a grant would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased upon exercise of Options to exceed the Pool, then each such
automatic grant shall be for that number of Shares determined by dividing the
total number of Shares remaining available for grant by the number of Outside
Directors receiving an Option on such date on the automatic grant date. Any
further grants shall then be deferred until such time, if
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<PAGE> 3
any, as additional Shares become available for grant under the Plan through
action of the shareholders to increase the number of Shares which may be issued
under the Plan or through cancellation or expiration of Options previously
granted hereunder.
(v) Notwithstanding the provisions of
subsections (ii) and (iii) hereof, any grant of an Option made before the
Company has obtained shareholder approval of the Plan in accordance with Section
17 hereof shall be conditioned upon obtaining such shareholder approval of the
Plan in accordance with Section 17 hereof.
(vi) The terms of each First Option granted
hereunder shall be as follows:
(1) the First Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 9 hereof.
(2) the exercise price per Share shall
be 100% of the fair market value per Share on the date of grant of the First
Option, determined in accordance with Section 8 hereof.
(3) the First Option shall become
exercisable in installments cumulatively as to 33 1/3% of the Shares subject to
the First Option on each of the first, second and third anniversaries of the
date of grant of the Option.
(vii) The terms of each Subsequent Option granted
hereunder shall be as follows:
(1) the Subsequent Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 9 hereof.
(2) the exercise price per Share shall
be 100% of the fair market value per Share on the date of grant of the
Subsequent Option, determined in accordance with Section 8 hereof.
(3) the Subsequent Option shall become
exercisable as to one hundred percent 100% of the Shares subject to the
Subsequent Option on the first anniversary of the date of grant of the
Subsequent Option.
(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its discretion:
(i) to determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock; (ii) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 8(a) of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
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<PAGE> 4
(d) Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the President
or his or her designee reasonably believes that an Optionee has committed an act
of misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct). If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the Optionee nor his or her estate shall be
entitled to exercise any option whatsoever. In making such determination, the
Board of Directors (excluding the Outside Director accused of such misconduct)
shall act fairly and shall give the Optionee an opportunity to appear and
present evidence on Optionee's behalf at a hearing before the Board or a
committee of the Board.
5. Eligibility. Options may be granted only to Outside
Directors. All Options shall be automatically granted in accordance with the
terms set forth in Section 4(b) hereof. An Outside Director who has been granted
an Option may, if he or she is otherwise eligible, be granted an additional
Option or Options in accordance with such provisions.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his or her directorship at any time.
6. Term of Plan; Effective Date. The Plan shall become effective
on the effectiveness of the registration statement under the Securities Act of
1933 relating to the Company's initial public offering of securities. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.
7. Term of Options. The term of each Option shall be ten (10)
years from the date of grant thereof.
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<PAGE> 5
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be 100% of the fair
market value per Share on the date of grant of the Option.
(b) Fair Market Value. The fair market value shall be
determined by the Board; provided, however, that where there is a public market
for the Common Stock, the fair market value per Share shall be the mean of the
bid and asked prices of the Common Stock in the over-the-counter market on the
date of grant, as reported in The Wall Street Journal (or, if not so reported,
as otherwise reported by the National Association of Securities Dealers
Automated Quotation ("Nasdaq") System) or, in the event the Common Stock is
traded on the Nasdaq National Market or listed on a stock exchange, the fair
market value per Share shall be the closing price on such system or exchange on
the date of grant of the Option, as reported in The Wall Street Journal. With
respect to any Options granted hereunder concurrently with the initial
effectiveness of the Plan, the fair market value shall be the Price to Public as
set forth in the final prospectus relating to such initial public offering.
(c) Form of Consideration. The consideration to be paid
for the Shares to be issued upon exercise of an Option shall consist entirely of
cash, check, other Shares of Common Stock having a fair market value on the date
of surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised (which, if acquired from the Company, shall have
been held for at least six months), or any combination of such methods of
payment and/or any other consideration or method of payment as shall be
permitted under applicable corporate law.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof; provided, however, that no Options shall be exercisable
prior to shareholder approval of the Plan in accordance with Section 17 hereof
has been obtained.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 8(c) of the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. A share certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 11 of the Plan.
-5-
<PAGE> 6
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Status as a Director. If an Outside
Director ceases to serve as a Director, he or she may, but only within ninety
(90) days after the date he or she ceases to be a Director of the Company,
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination. Notwithstanding the foregoing, in no event
may the Option be exercised after its term set forth in Section 7 has expired.
To the extent that such Outside Director was not entitled to exercise an Option
at the date of such termination, or does not exercise such Option (which he or
she was entitled to exercise) within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding Section 9(b)
above, in the event a Director is unable to continue his or her service as a
Director with the Company as a result of his or her total and permanent
disability (as defined in Section 22(e)(3) of the Internal Revenue Code), he or
she may, but only within six (6) months (or such other period of time not
exceeding twelve (12) months as is determined by the Board) from the date of
such termination, exercise his or her Option to the extent he or she was
entitled to exercise it at the date of such termination. Notwithstanding the
foregoing, in no event may the Option be exercised after its term set forth in
Section 7 has expired. To the extent that he or she was not entitled to exercise
the Option at the date of termination, or if he or she does not exercise such
Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an
Optionee:
(i) During the term of the Option who is, at the
time of his or her death, a Director of the Company and who shall have been in
Continuous Status as a Director since the date of grant of the Option, the
Option may be exercised, at any time within six (6) months following the date of
death, by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had the Optionee continued living and
remained in Continuous Status as Director for twelve (12) months (or such lesser
period of time as is determined by the Board) after the date of death.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired.
(ii) Within three (3) months after the
termination of Continuous Status as a Director, the Option may be exercised, at
any time within six (6) months following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that had accrued
at the date of termination. Notwithstanding the foregoing, in no event may the
option be exercised after its term set forth in Section 7 has expired.
10. Nontransferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution or pursuant to a
qualified domestic relations order (as defined by the Code or the rules
thereunder). The designation of a beneficiary by an Optionee does not constitute
a transfer.
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<PAGE> 7
An Option may be exercised during the lifetime of an Optionee only by the
Optionee or a transferee permitted by this Section.
11. Adjustments Upon Changes in Capitalization; Corporate
Transactions.
(a) Adjustment. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, and the number of shares of Common Stock to be granted under the
provisions set forth in Section 4 of the Plan, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Corporate Transactions. In the event of (i) a
dissolution or liquidation of the Company, (ii) a sale of all or substantially
all of the Company's assets, (iii) a merger or consolidation in which the
Company is not the surviving corporation, or (iv) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, the Company shall give to the Eligible
Director, at the time of adoption of the plan for liquidation, dissolution,
sale, merger, consolidation or reorganization, either a reasonable time
thereafter within which to exercise the Option, including Shares as to which the
Option would not be otherwise exercisable, prior to the effectiveness of such
liquidation, dissolution, sale, merger, consolidation or reorganization, at the
end of which time the Option shall terminate, or the right to exercise the
Option, including Shares as to which the Option would not be otherwise
exercisable (or receive a substitute option with comparable terms), as to an
equivalent number of shares of stock of the corporation succeeding the Company
or acquiring its business by reason of such liquidation, dissolution, sale,
merger, consolidation or reorganization.
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section 4(b)
hereof. Notice of the determination shall be given to each Outside Director to
whom an Option is so granted within a reasonable time after the date of such
grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable; provided that, to the extent necessary and desirable to comply with
Rule 16b-3 under the Exchange Act (or any other
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<PAGE> 8
applicable law or regulation), the Company shall obtain approval of the
shareholders of the Company to Plan amendments to the extent and in the manner
required by such law or regulation. Notwithstanding the foregoing, the
provisions set forth in Section 4 of this Plan (and any other Sections of this
Plan that affect the formula award terms required to be specified in this Plan
by Rule 16b-3) shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
(b) Effect of Amendment or Termination. Any such
amendment or termination of the Plan that would impair the rights of any
Optionee shall not affect Options already granted to such Optionee and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. Inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
16. Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.
17. Shareholder Approval. Continuance of the Plan shall be subject
to approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
If such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. If such shareholder approval is obtained by written consent, it may be
obtained by the written consent of the holders of a majority of the outstanding
shares of the Company. Options may be granted, but not exercised, before such
shareholder approval.
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<PAGE> 1
EXHIBIT 10.5
GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
NOVEMBER 10, 1995
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Request for Registration . . . . . . . . . . . . . . . . 2
1.3 Company Registration . . . . . . . . . . . . . . . . . . 4
1.4 Obligations of the Company . . . . . . . . . . . . . . . 4
1.5 Furnish Information . . . . . . . . . . . . . . . . . . 5
1.6 Expenses of Demand Registration . . . . . . . . . . . . 5
1.7 Expenses of Company Registration . . . . . . . . . . . . 6
1.8 Underwriting Requirements . . . . . . . . . . . . . . . 6
1.9 Delay of Registration . . . . . . . . . . . . . . . . . 7
1.10 Indemnification . . . . . . . . . . . . . . . . . . . . 7
1.11 Reports Under Securities Exchange Act of 1934 . . . . . 9
1.12 Form S-3 Registration . . . . . . . . . . . . . . . . . 10
1.13 Assignment of Registration Rights . . . . . . . . . . . 11
1.14 Limitations on Subsequent Registration Rights . . . . . 11
1.15 "Market Stand-Off" Agreement . . . . . . . . . . . . . . 11
1.16 Termination of Registration Rights . . . . . . . . . . . 12
2. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . 12
2.1 Delivery of Financial Statements . . . . . . . . . . . . 12
2.2 Inspection . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Termination of Information and Inspection Covenants . . 13
2.4 Right of First Offer . . . . . . . . . . . . . . . . . . 13
2.5 Observer Rights . . . . . . . . . . . . . . . . . . . . 15
2.6 Termination of Certain Covenants . . . . . . . . . . . . 15
3. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Successors and Assigns . . . . . . . . . . . . . . . . . 15
3.2 Governing Law . . . . . . . . . . . . . . . . . . . . . 16
3.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Titles and Subtitles . . . . . . . . . . . . . . . . . . 16
3.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Amendments and Waivers . . . . . . . . . . . . . . . . . 16
3.8 Severability . . . . . . . . . . . . . . . . . . . . . . 16
3.9 Termination of Prior Agreement . . . . . . . . . . . . . 17
3.10 Aggregation of Stock . . . . . . . . . . . . . . . . . . 17
3.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . 17
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Schedule A List of Investors
Schedule B List of Founders and Certain Other Holders of Common Stock
Schedule C List of Holders of Series A Preferred Stock
Schedule D List of Holders of Series B Preferred Stock
Schedule E List of Holders of Series C Preferred Stock
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INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the 10th day of November,
1995, by and among Geron Corporation, a Delaware corporation (the "Company"),
the investors listed on Schedule A hereto, each of which is herein referred to
as an "Investor," certain holders of the Company's Common Stock listed on
Schedule B hereto, each of which is herein referred to as a "Founder" or as a
"Common Stockholder" as indicated on Schedule B, the holders of the Company's
Series A Preferred Stock listed on Schedule C hereto, the holders of the
Company's Series B Preferred Stock listed on Schedule D hereto, and the holders
of the Company's Series C Preferred Stock listed on Schedule E hereto. The
holders of the Series A, Series B and Series C Preferred Stock shall hereinafter
be referred to as the "Prior Investors." All terms not otherwise defined herein
shall have the meaning ascribed such terms in the Series D Preferred Stock
Purchase Agreement of even date herewith by and among the Company and the
Investors (the "Series D Agreement").
RECITALS
WHEREAS, the Company and certain of the parties to this Agreement (the
"Prior Holders") are parties to that certain Investors' Rights Agreement dated
as of June 29, 1994 (the "Prior Agreement"), pursuant to which the Company
granted to the Prior Holders certain registration rights, rights of first offer,
and certain other information and inspection rights.
WHEREAS, the Company and the Investors are parties to the Series D
Agreement;
WHEREAS, in order to induce the Investors to enter into the Series D
Agreement, the Company and the Prior Holders have agreed to amend and replace
the Prior Agreement in its entirety as set forth herein, and have further agreed
that this Agreement shall govern the rights set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" shall mean the Securities Act of 1933, as
amended;
(b) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended;
(c) The term "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
<PAGE> 5
(d) The term "Registrable Securities" means (i) the Common Stock
held by the Founders (the "Founders' Stock") and the Common Stockholders in the
amounts set forth opposite their names on Schedule B, (ii) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
of the Company, and (iii) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the securities referred to in subsections (i) and (ii)
above, excluding in all cases, however, any Registrable Securities sold by a
person in a transaction in which his rights under this Section 1 are not
assigned; provided, however, that Common Stock or other securities shall only be
treated as Registrable Securities if and so long as (A) they have not been sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, (B) they have not been sold in a transaction
exempt from the registration and prospectus delivery requirements of the Act
under Section 4(1) thereof so that all transfer restrictions and restrictive
legends with respect thereto are removed upon the consummation of such sale, and
(C) the registration rights associated with such securities have not been
terminated pursuant to Section 1.16 hereof.
(e) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(f) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof; and
(g) The term "Form S-3" means such form under the Act as in effect
on the date hereof or any registration form under the Act subsequently adopted
by the Securities and Exchange Commission ("SEC") which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier of
(i) November 10, 1998, or (ii) three (3) months after the effective date of the
first registration statement for a public offering of securities of the Company
(other than a registration statement relating either to the sale of securities
to employees of the Company pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction), a written request from the Holders
of seventy-five percent (75%) of the Registrable Securities then outstanding
that the Company file a registration statement under the Act covering the
registration of at least twenty percent (20%) of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price,
net of underwriting discounts and commissions, would exceed $5,000,000), then
the Company shall, within ten (10) days of the receipt thereof, give written
notice of such request to all Holders and shall, subject to the limitations of
subsection 1.2(b), use its best efforts to effect as soon as practicable, and in
any event within sixty (60) days of the receipt of such request, the filing of
such registration statement under the Act covering the registration of all
Registrable
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Securities which the Holders request to be registered within twenty (20) days of
the mailing of such notice by the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to this Section 1.2 and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by a majority in interest of the
Initiating Holders and shall be reasonably acceptable to the Company. In such
event, the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting as provided above. Notwithstanding any other
provision of this Section 1.2, if the underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that (i) the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting and (ii) the number of shares of Registrable
Securities held by an Investor or Prior Investor to be included in such
underwriting shall not be reduced unless all the Founders' Stock is first
entirely excluded from the underwriting.
(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 1.2; provided, that the Company shall not
be obligated to effect a registration within ninety (90) days after the
effective date of a registration statement covering stock or securities sold by
the Company other than a registration relating solely to the sale of securities
to participants in a Company stock plan, or a registration on any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities or a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities which are also being
registered.
(d) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than sixty (60) days after receipt of the request of
the Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12) month period.
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1.3 Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of seventy-five percent (75%) of the Registrable Securities registered
thereunder, keep such registration statement effective for at least one hundred
twenty (120) days or until the distribution contemplated by the registration
statement has been completed, but in no event for more than one hundred eighty
(180) days;
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them;
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
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<PAGE> 8
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and
(g) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1, on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
1.5 Furnish Information.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of seventy-five percent (75%) of the Registrable
Securities to be registered (in which case all Participating Holders shall bear
such
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<PAGE> 9
expenses), unless the Holders of seventy-five percent (75%) of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 1.2; provided further, however, that if at the time of such withdrawal,
the Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the time
of their request and have withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall retain their
rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1.3 for each Holder (which right may be assigned as provided in Section 1.13),
including (without limitation) all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
1.8 Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 1.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders,
provided that the number of shares of Registrable Securities to be included in
such underwriting shall not be reduced unless the Founders' Stock is first
entirely excluded from the underwriting) but in no event shall (i) the amount of
securities of the selling stockholders included in the offering be reduced below
thirty percent (30%) of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company's
securities in which case the selling stockholders may be excluded if the
underwriters make the determination described above and no other stockholder's
securities are included or (ii) notwithstanding (i) above, any shares being sold
by a stockholder exercising a demand registration right similar to that granted
in Section 1.2 be excluded from such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder", and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate
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<PAGE> 10
amount of shares carrying registration rights owned by all entities and
individuals included in such "selling stockholder", as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal, state or foreign law or regulation, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state or foreign
securities law or any rule or regulation promulgated under the Act, the 1934 Act
or any state or foreign securities law; and the Company will pay to each such
Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.10(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal, state or
foreign law or regulation, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection
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1.10(b), in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 1.10(b) exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The Company and each of the Holders agrees that it would
not be just and equitable if contributions pursuant to this paragraph were
determined by pro rata allocation (even if all of the Holders of such
Registrable Securities were treated as one entity for such purpose) or by any
other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or action in respect thereof, referred to above in this paragraph, shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in
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connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph, no Holder shall be required to
contribute any amount in excess of the lesser of (i) the proportion that the
public offering price of shares sold by such Holder under such registration
statement bears to the total public offering price of all securities sold
thereunder, but not to exceed the proceeds received by such Holder for the sale
of Registrable Securities covered by such registration statement and (ii) the
amount of any damages which they would have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No person guilty
of fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 and
Rule 144A (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such
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<PAGE> 13
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders of fifteen percent (15%) or more of the Registrable Securities
then outstanding a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this section 1.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than sixty (60) days after
receipt of the request of the Holder or Holders under this Section 1.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period; or (4) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with the first four (4)
registrations requested pursuant to Section 1.12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne by the
Company. Thereafter, such expenses shall be borne pro-rata by the Holder or
Holders participating in the Form S-3 Registration. Registrations effected
pursuant to this Section 1.12 shall not be counted as demands for registration
or registrations effected pursuant to Section 1.2.
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<PAGE> 14
1.13 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 1 may be assigned
(but only with all related obligations) by a Holder to a transferee or assignee
of such securities who, after such assignment or transfer, holds at least
100,000 shares of Registrable Securities (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other recapitalizations),
provided the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; and provided, further, that such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a partnership who are
partners or retired partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 1.
1.14 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 1.2(a) or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.
1.15 "Market Stand-Off" Agreement. Each holder of Registrable Securities
hereby agrees that, during the period of duration specified by the Company or an
underwriter of common stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act,
it shall not, to the extent requested by the Company and such underwriter,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements;
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<PAGE> 15
(c) such period shall not exceed one hundred eighty (180) days
beginning the day after the effective date of such registration statement.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Section 1 after five (5) years following
the consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall deliver to each
Investor and each Prior Investor:
(a) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, an income statement for
such fiscal year, a balance sheet of the Company and statement of stockholder's
equity as of the end of such year, and a schedule as to the sources and
applications of funds for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted accounting
principles ("GAAP"), and audited and certified by independent public accountants
of nationally recognized standing selected by the Company. If applicable the
Company shall also distribute the management letter delivered by such
accountants;
(b) as soon as practicable, but in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited profit or loss statement, schedule as to the
sources and application of funds for such fiscal quarter, an unaudited balance
sheet, a statement of stockholder's equity as of the end of such fiscal quarter,
and a statement showing the number of shares of each class and series of capital
stock and securities convertible into or exercisable for shares of capital stock
outstanding at the end of the period, the number of common shares issuable upon
conversion or exercise of any outstanding securities convertible or exercisable
for common shares and the exchange ratio or exercise price applicable thereto,
all in sufficient detail as to permit the Investor or Prior Investor to
calculate its percentage equity ownership in the Company;
(c) as soon as practicable, but in any event thirty (30) days prior
to the end of each fiscal year, a budget and business plan for the next fiscal
year, prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other budgets or revised budgets prepared by the Company, all of which will be
updated semi-annually throughout the year and delivered to the Investors and the
Prior Investors within thirty (30) days after the end of each second quarter;
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(d) with respect to the financial statements called for in
subsection (b) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment;
(e) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the Investor or Prior
Investor or any assignee of the Investor or Prior Investor may from time to time
request, provided, however, that the Company shall not be obligated under this
subsection (e) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.2 Inspection. The Company shall permit each Investor and Prior
Investor, at such Investor's or Prior Investor's expense, to visit and inspect
the Company's properties, to examine its books of account and records and to
discuss the Company's affairs, finances and accounts with its officers, all at
such reasonable times as may be requested by the Investor or the Prior Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information.
2.3 Termination of Information and Inspection Covenants. The covenants
set forth in Sections 2.1 (c) and (e) and Section 2.2 shall terminate as to the
Investors and Prior Investors and be of no further force or effect when the sale
of securities pursuant to a registration statement filed by the Company under
the Act in connection with the firm commitment underwritten offering of its
securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions specified
in this paragraph 2.4, the Company hereby grants to each Major Investor (as
hereinafter defined) a right of first offer with respect to future sales by the
Company of its Shares (as hereinafter defined). For purposes of this Section
2.4, a Major Investor shall mean any Investor or Prior Investor who holds at
least 500,000 shares (adjusted for any stock split, stock division or
consolidation) of Common Stock (i) issued pursuant to the Series A Agreement and
Series B Agreement, (ii) issued upon exercise of the warrants to purchase Common
Stock (the "Common Stock Warrants") issued pursuant to the Series A Agreement
(the "Common Warrants"), or (iii) issued or issuable upon conversion of the
Series A, Series B, Series C and/or Series D Preferred Stock. For purposes of
this Section 2.4, Investor includes any general partners and affiliates of an
Investor. An Investor or Prior Investor shall be entitled to apportion the right
of first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Company shall
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<PAGE> 17
first make an offering of such Shares to each Major Investor in accordance with
the following provisions:
(a) The Company shall deliver a notice by certified mail ("Notice")
to the Major Investors stating (i) its bona fide intention to offer such Shares,
(ii) the number of such Shares to be offered, and (iii) the price and terms, if
any, upon which it proposes to offer such Shares.
(b) Within twenty (20) calendar days after receipt of the Notice,
the Major Investor may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to that portion of such Shares which equals
the proportion that the number of shares of Common Stock (i) issued pursuant to
the Series A Agreement and Series B Agreement and held, (ii) issued upon
exercise of Common Stock Warrants and held or (iii) issuable upon conversion of
the Series A, Series B, Series C or Series D Preferred Stock (or securities
exercisable therefor) then held by such Major Investor (including partners and
affiliates) bears to the total number of shares of Common Stock of the Company
then outstanding (assuming full conversion and exercise of all convertible or
exercisable securities). The Company shall promptly, in writing, inform each
Major Investor which purchases all the shares available to it ("Fully-Exercising
Investor") of any other Major Investor's failure to do likewise. During the
ten-day period commencing after receipt of such information, each
Fully-Exercising Investor shall be entitled to obtain that portion of the Shares
for which Major Investors were entitled to subscribe but which were not
subscribed for by the Major Investors which is equal to the proportion that the
number of shares of Common Stock (i) issued pursuant to the Series A Agreement
and Series B Agreement and held, (ii) issued upon the exercise of the Common
Stock Warrants then held, or (iii) issuable upon conversion of Series A, Series
B, Series C or Series D Preferred Stock (or securities exercisable therefor)
then held, by such Fully-Exercising Investor bears to the total number of shares
of Common Stock (i) issued and held, (ii) issued upon exercise of the Common
Stock Warrants then held, and (iii) issuable upon conversion of the Series A,
Series B, Series C or Series D Preferred Stock (or securities exercisable
therefor) then held, by all Fully-Exercising Investors who wish to purchase some
of the unsubscribed shares.
(c) If all Shares referred to in the Notice are not elected to be
obtained as provided in subsection 2.4(b) hereof, the Company may, during the
thirty-day period following the expiration of the period provided in subsection
2.4(b) hereof, offer the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon terms no more favorable to
the offeree than those specified in the Notice. If the Company does not enter
into an agreement for the sale of the Shares within such period, or if such
agreement is not consummated within thirty (30) days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such Shares shall
not be offered unless first reoffered to the Major Investors in accordance
herewith.
(d) The right of first offer in this paragraph 2.4 shall not be
applicable (i) to the issuance or sale of shares of Common Stock (or options
therefor) to officers, employees, consultants and directors of the Company
issued or sold directly or pursuant to a stock benefit plan adopted by the Board
of Directors, (ii) to the issuance or sale of shares of Common Stock to
non-profit institutions issued or sold primarily in connection with research or
other collaborative
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<PAGE> 18
arrangements, (iii) to or after consummation of a bona fide, firmly underwritten
public offering of shares of Common Stock, registered under the Act pursuant to
a registration statement on Form S-1, at an offering price of at least $5.00 per
share (appropriately adjusted for any stock split, dividend, combination or
other recapitalization) and $7,500,000 in the aggregate, (iv) the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities, including the Series A, Series B, Series C and Series D Preferred
Stock and options and warrants to purchase such securities, (v) the issuance of
securities in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange of
stock or otherwise, or (vi) the issuance of warrants to persons or entities with
which the Company has bona fide business relationships which are not primarily
directed to the raising of capital, including, without limitation, corporate
partners.
2.5 Observer Rights. As long as a Prior Investor owns not less than
500,000 shares of the Common stock (i) issued pursuant to the Series A Agreement
or the Series B Agreement or (ii) issued or issuable upon conversion of the
Series A or Series B Preferred Stock, the Company shall invite a representative
of such Prior Investor to attend all meetings of its Board of Directors in a
nonvoting observer capacity and, in this respect, shall give such representative
copies of all notices, minutes, consents, and other materials that it provides
to its directors; provided, however, that such representative shall agree to
hold in confidence and trust and to act in a fiduciary manner with respect to
all information so provided; and, provided further, that the Company reserves
the right to withhold any information and to exclude such representative from
any meeting or portion thereof if access to such information or attendance at
such meeting could adversely affect the attorney-client privilege between the
Company and its counsel. In addition, any Prior Investor which is not
represented on the Board and which is an entity that is intended to qualify as a
"venture capital operating company" within the meaning of Department of Labor
Regulation Section 2510.3-101 shall be entitled to consult with and advise
management of the Company on significant business issues, including management's
proposed operating plans, and management will meet with such Prior Investor
regularly during each year at the Company's facilities at mutually agreeable
times for such consultation and advice and to review progress in achieving said
plans.
2.6 Termination of Certain Covenants. The covenants set forth in
Sections 2.4 and 2.5 shall terminate and be of no further force or effect upon
the consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the firm commitment
underwritten offering of its securities to the general public.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
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<PAGE> 19
3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or five (5) days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
3.6 Expenses. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Common Stock (i) issued pursuant to the Series A Agreement and Series B
Agreement (ii) issued upon conversion of the Common Stock Warrants, and (iii)
issuable upon conversion of the Series A, Series B, Series C or Series D
Preferred Stock then held; provided that if such amendment has the effect of
affecting the Founders' Stock (i) in a manner different than the securities
issued to the Investors pursuant to the Series A Agreement, Series B Agreement,
Series C Agreement and/or Series D Agreement and (ii) in a manner adverse to the
interests of the holders of the Founders' Stock, then such amendment shall
require the consent of the holder or holders of a majority of the Founders'
Stock; and provided further that Section 1.12 herein shall not be amended
without the consent of the holders of eighty percent (80%) of the outstanding
Registrable Securities (including securities exercisable therefor). Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any of such securities (including the securities into which
such securities are convertible or exercisable) then outstanding, each future
holder of all such Registrable Securities, and the Company.
3.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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<PAGE> 20
3.9 Amendment and Termination of Prior Agreement.
(a) The Company and the Prior Holders, (i) as holders of a majority
of the "Registrable Securities" (as defined in the Prior Agreement) and (ii)
holders of a majority of the Common Stock (A) issued pursuant to the Series A
Agreement, (B) issued pursuant to the Series B Agreement, (C) issued or issuable
upon conversion of the Common Stock Warrants, and (D) issuable upon conversion
of the Series A, Series B and Series C Preferred Stock hereby agree that all
rights granted and covenants made under the Prior Agreement are hereby waived,
released and terminated in their entirety and shall have no further force or
effect whatsoever and shall be replaced by the terms and conditions provided
herein. Without limiting the foregoing, the Prior Holders hereby waive the right
of first offer granted pursuant to Section 2.4 of the Prior Agreement to the
extent such right of first offer applies to the transactions contemplated by the
Series D Agreement. The rights and covenants provided herein set forth the sole
and entire agreement between the Company and the Investors, the Prior Investors
and the Founders with respect to the subject matter hereof.
(b) The Company and certain of the parties to this Agreement, as
the holders of a majority of the Common Stock issuable upon conversion of the
Series C Preferred Stock hereby agree that Section 1.3 of the Series C Agreement
shall terminate as of the date of this Agreement and be of no further force or
effect.
3.10 Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
3.11 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
GERON CORPORATION
By: /s/ Ronald W. Eastman
---------------------
Ronald W. Eastman
Its: President
Address: 200 Constitution Drive
Menlo Park, CA 94025
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
KLEINER PERKINS CAUFIELD & BYERS VI
By: /s/ Kleiner Perkins Caufield & Byers VI
---------------------------------------
Its:
---------------------------------------
KPCB VI FOUNDERS' FUND
By: /s/ KPCB VI Founders' Fund
--------------------------------------
Its:
--------------------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
GIMV
By: /s/ GIMV
-------------------------
Its:
-------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
LEHMAN BROTHERS INC.
By: /s/ Lehman Brothers, Inc.
-------------------------
Its:
------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
ALEX. BROWN & SONS EMPLOYEES'
VENTURE FUND PARTNERSHIP
By: /s/ Alex. Brown & Sons Employees'
Venture Fund Partnership
----------------------------------
Its:
---------------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
LOMBARD ODIER ZURICH AG
By: /s/ Lombard Odier Zurich AG
----------------------------
Its:
---------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
CW R&D II (FINANCIAL) FUND,
LIMITED PARTNERSHIP
By: /s/ CW R&D II (Financial) Fund,
Limited Partnership
------------------------------------
Its:
-----------------------------------
CW VENTURES II, L.P.
By: /s/ CW Ventures II, L.P.
------------------------------------
Its:
-----------------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
DOMAIN PARTNERS II, L.P.
By: One Palmer Square Associates II, L.P.,
its General Partner
By: /s/ One Palmer Square Associates II, L.P.
------------------------------------------
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By: /s/ Old Court Limited
------------------------------------------
Attorney-in-Fact
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
OXFORD VENTURE FUND III, LIMITED
PARTNERSHIP
By: Oxford Partners III, Limited Partnership
Its: General Partner
By: /s/ Oxford Partners III, Limited Partnership
---------------------------------------------
Its: General Partner
OXFORD VENTURE FUND III ADJUNCT,
LIMITED PARTNERSHIP
By: Oxford Partners III-A,
Limited Partnership
Its: General Partner
By: /s/ Oxford Partners III-A, Limited Partnership
-----------------------------------------------
Its: General Partner
OXFORD BIOSCIENCE PARTNERS L.P.
By: OBP Management L.P.
Its: General Partner
By: /s/ OBP Management L.P.
-----------------------------------------------
Its: General Partner
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 30
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
OXFORD BIOSCIENCE PARTNERS
(BERMUDA) LIMITED PARTNERSHIP
By: OBP Management L.P.
Its: General Partner
By: /s/ OBP Management L.P.
--------------------------
Its: General Partner
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
VENROCK ASSOCIATES
By: /s/ Venrock Associates
--------------------------
Its:
VENROCK ASSOCIATES II, L.P.
By: /s/ Venrock Associates II, L.P.
-------------------------------
Its:
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
THE KILEY FAMILY PARTNERSHIP
By: /s/ Thomas D. Kiley
---------------------------
Thomas D. Kiley
Its: Managing Partner
KILEY REV TR DTD 8/7/81
By: /s/ Thomas D. Kiley
---------------------------
Thomas D. Kiley
Its: Trustee
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR AND PRIOR INVESTOR:
FRAZIER HEALTHCARE INVESTMENTS, L.P.
By: /s/ Frazier Healthcare Investments, L.P.
----------------------------------------
Its:
----------------------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 34
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR AND PRIOR INVESTOR:
/s/ Michael Fossel
-----------------------------
MICHAEL FOSSEL
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 35
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR AND PRIOR INVESTOR:
GRAND RIVER EMERGENCY MEDICAL
CENTER 401(K) PROFIT SHARING PLAN FBO
MICHAEL FOSSEL
By: /s/ Michael Fossel
---------------------------------
Its:
---------------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 36
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
/s/ Steven J. Tillinger
-----------------------------
STEVEN J. TILLINGER
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
/s/ Walter H. Singer Inc. Profit Sharing Plan
---------------------------------------------
WALTER H. SINGER INC PROFIT SHARING PLAN
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 38
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
/s/ David Carpi
_____________________________
DAVID CARPI
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 39
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written
INVESTOR AND PRIOR INVESTOR:
VULCAN VENTURES, INC.
/s/ Vulcan Ventures, Inc.
By:__________________________
Its:_________________________
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 40
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR AND PRIOR INVESTOR:
/s/ David H. Smith
_____________________________
DAVID H. SMITH, M.D.
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 41
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
CHARTER VENTURES II L.P.
By: /s/ Charter Ventures II L.P.
-----------------------------
Its:
----------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 42
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
THE HEALTH CARE AND BIOTECHNOLOGY
VENTURE FUND
By: /s/ The Health Care and
Biotechnology Venture Fund
-----------------------------
Its:
-----------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 43
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTORS AND PRIOR INVESTORS:
/s/ Sandra Whitmore
------------------------------
SANDRA WHITMORE
/s/ David Whitmore
------------------------------
DAVID WHITMORE
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 44
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
BEAGLE LTD.
By: /s/ Beagle Ltd.
-------------------------
Its:
------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 45
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
NAIMAN 1994 CHARITABLE REMAINDER
UNITRUST
By: /s/ Naiman 1994 Charitable Remainder Unitrust
----------------------------------------------
Its:
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 46
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
MORNINGSIDE GROUP
By: /s/ Morningside Group
--------------------------
Its:
-------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 47
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
FOUR PARTNERS
By: /s/ Four Partners
--------------------------
Its:
-------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 48
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
MC GROUP
By: /s/ MC Group
--------------------------
Its:
-------------------------
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 49
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVESTOR:
/s/ Chester Waxman
-----------------------------
Chester Waxman
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 50
SCHEDULE B
LIST OF FOUNDERS AND CERTAIN OTHER
HOLDERS OF COMMON STOCK
Founders
Name Number of Shares
- ---- ----------------
Altschul Investment Group, L.P. 8,248
Arthur G. Altschul, Jr. 4,124
Rose Marion Day 8,248
Robert W. Peabody 192,440
Miller Quarles 16,495
William A. Ryan, Jr. 8,248
Michael D. West, Ph.D. 962,200
Other Holders of Common Stock
Alexander Barkas 50,000
Cold Spring Harbor Laboratory 160,000
160,000
(shares issuable
upon exercise of
the CSHL Warrants)
<PAGE> 51
Other Holders of Common Stock
Name Number of Shares
- ---- ----------------
Patrick F. Latterell 25,000
Kleiner Perkins Caufield & Byers VI 144,851
KPCB VI Founders' Fund 5,149
McMaster University 25,000
Venrock Associates 51,783
Venrock Associates II, L.P. 23,217
Domain Partners II, L.P. 66,667
Biotechnology Investments Limited, Registered
in the name of Old Court Limited 33,333
SIGNATURE PAGES TO THE GERON CORPORATION
INVESTORS' RIGHTS AGREEMENT
<PAGE> 52
SCHEDULE C
LIST OF HOLDERS OF
SERIES A PREFERRED STOCK
Name Number of Shares
- ---- ----------------
The Aetna Casualty and Surety Company 1,125,000
Arthur G. Altschul, Jr. 12,500
Altschul Investment Group, L.P. 12,500
Chestnut Capital International III, Limited Partnership 147,000
CW R&D II (Financial) Fund, Limited Partnership 882,000
CW Ventures II, L.P. 588,000
Jeryl L. Hilleman and William A. Albright, Jr.
as Trustees of the Hilleman/Albright
Family Trust dated July 24, 1990 25,000
Kiley Rev Tr Dtd 8/7/81 25,000
Kleiner Perkins Caufield & Byers VI 1,637,798
KPCB VI Founders' Fund 229,702
S. Leslie Misrock 25,000
Oxford Venture Fund III, Limited Partnership 1,058,400
Oxford Venture Fund III Adjunct, Limited Partnership 264,600
Venrock Associates 1,082,262
Venrock Associates II, L.P. 485,238
<PAGE> 53
SCHEDULE D
LIST OF HOLDERS OF
SERIES B PREFERRED STOCK
Name Number of Shares
- ---- ----------------
Thomas H. Adams, Ph.D. 10,000
The Aetna Casualty and Surety Company 344,444
Allenwood Ventures Inc. 22,222
Biotechnology Investments Limited, Registered
in the name of Old Court Limited 629,630
Catherine G. Blair 1,000
Dr. David Botstein 4,444
Edgar B. Cale, III 889
Chestnut Capital International III, L.P. 55,960
CW R&D II (Financial) Fund, L.P. 169,148
CW Ventures II, L.P. 390,445
Domain Partners II, L.P. 1,259,259
Joshua L. Green 2,222
Kiley Family Partnership 50,000
Kleiner Perkins Caufield & Byers VI 578,000
KPCB VI Founders' Fund 88,667
<PAGE> 54
LIST OF HOLDERS OF
SERIES B PREFERRED STOCK
Name Number of Shares
- ---- ----------------
Dr. Arnold J. Levine 1,750
Oxford Bioscience Partners (Bermuda) Limited Partnership 61,115
Oxford Bioscience Partners L.P. 220,296
Oxford Venture Fund III Adjunct, Limited Partnership 44,444
Oxford Venture Fund III Limited Partnership 177,778
Timothy Rink, M.D., Ph.D. 3,000
Swanson Family Fund, Ltd. 111,111
United Missouri Bank, n.a., Successor
Trustee for Brobeck, Phleger & Harrison
Retirement Savings Trust FBO Jeffrey Y. Suto 1,333
Venrock Associates 431,703
Venrock Associates II, L.P. 193,556
Richard Warburg 7,000
<PAGE> 55
SCHEDULE E
LIST OF HOLDERS OF
SERIES C PREFERRED STOCK
Name Number of Shares
- ---- ----------------
The Aetna Casualty and Surety Company 41,667
Bayview Investors, Ltd. 118,477
Biotechnology Investments Limited, Registered in
the name of Old Court Limited 375,000
CW Ventures II, L.P. 416,667
Domain Partners II, L.P. 750,000
Michael Fossel 15,000
Frazier Healthcare Investments, L.P. 833,334
Grand River Emergency Medical Center 401(k)
Profit Sharing Plan FBO Michael Fossel 78,750
Donald and Gail Guabello 2,500
Kiley Rev Tr Dtd. 8/7/81 52,084
KPCB VI Founders' Fund 72,042
Kleiner Perkins Caufield & Byers VI 469,625
Oxford Bioscience Partners (Bermuda) 45,244
Limited Partnership
Oxford Bioscience Partners L.P. 163,089
Miller Quarles 72,917
The Robertson Stephens Orphan Fund 194,023
<PAGE> 56
LIST OF HOLDERS OF
SERIES C PREFERRED STOCK
Name Number of Shares
- ---- ----------------
David H. Smith, M.D. 416,667
Oliver Stone 416,667
Venrock Associates 330,835
Venrock Associates II, L.P. 148,332
Vulcan Ventures, Inc. 208,334
Sandra and David Whitmore 41,667
<PAGE> 1
EXHIBIT 10.6
SECTION 1
AMENDMENT NO. 2
TO AGREEMENT IN RESPECT OF OPTION
BETWEEN GERON CORPORATION
AND
COLD SPRING HARBOR LABORATORY
THIS AMENDMENT is made on this ____ day of January, 1994, by and
between COLD SPRING HARBOR LABORATORY ("CSHL"), a New York not-for-profit
corporation, and GERON CORPORATION ("GERON"), a corporation organized and
existing under the laws of the State of Delaware.
WHEREAS, GERON and CSHL entered into a sponsored research agreement
dated August 31, 1992 (the "Sponsored Research Agreement") pursuant to which
Geron agreed to sponsor the research of Dr. Carol Greider in the area of
telomeres and telomerase;
WHEREAS, GERON and CSHL entered into an agreement dated August 31,
1992 (the "Agreement in Respect of Option") whereby CSHL granted GERON an option
to acquire an exclusive license to inventions resulting from the Sponsored
Research Agreement in the form of an agreement appended as Appendix I thereto
(the "Patent License Agreement");
WHEREAS, GERON and CSHL have agreed to expand the scope of the
Sponsored Research Agreement; and
WHEREAS, GERON and CSHL desire to amend the Agreement in Respect of
Option and the Patent License Agreement to reflect the terms and conditions of
the expanded collaboration.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree that effective
February 1, 1994:
1. All terms not otherwise defined herein shall have the meaning
given such terms in the Agreement in Respect of Option.
2. Both parties agree and acknowledge that GERON has performed in
full its obligations to CSHL under the Option Agreement as of January 31, 1993.
3. Section 3.4 shall be added to Article III of the Patent License
Agreement which is appended as Appendix I of the Agreement in Respect of Option
and shall read as follows:
"3.4 Subject to the waiver provisions contained in 37 C.F.R.
Section 401 and only to the extent required by such
<PAGE> 2
regulation, Geron agrees that LICENSED PRODUCT sold in the United
States shall be substantially manufactured in the United States. In
the event that GERON can demonstrate the applicability of one or
more of the waivers contained in 37 C.F.R. Section 401, CSHL agrees
to cooperate with GERON in applying for such a waiver."
4. In partial consideration of this Amendment, GERON agrees to issue
to CSHL promptly after the date of this Agreement warrants to purchase 160,000
shares of the Common Stock of GERON in the form attached hereto as Exhibit A
(the "Warrants"). The Warrants shall have a term of ten years from the date of
this Agreement and shall have an exercise price of $2.25. The Company shall use
commercially reasonable efforts to amend that certain Investors' Rights
Agreement dated June 3, 1993, as amended, to include such shares in the
definition of "Registrable Securities." CSHL agrees to execute the appropriate
documentation for the proper issuance of the Warrants, including, without
limitation, a warrant purchase agreement containing customary investor
representations.
5. In the event that CSHL, GERON or its collaborators are the first
to achieve one or both of the following milestones, and completion by CSHL,
GERON or its collaborators is prior to February 1, 1997, GERON agrees to issue
55,000 shares of the Common Stock of GERON ("Milestone Shares") to CSHL for each
such milestone:
a. purification and cloning of human telomerase RNA, DNA or
protein component;
b. specific manipulation, by inhibition and/or activation, of
telomerase activity in mammalian cells.
CSHL shall not be entitled to Milestone Shares for a particular milestone in the
event such milestone is first achieved by a third party (excluding scientific
collaborators of GERON). GERON shall use commercially reasonable efforts to
amend that certain Investors' Rights Agreement dated June 3, 1993, as amended,
to include such shares in the definition of "Registrable Securities." CSHL
agrees to execute the appropriate documentation for the proper issuance of the
Milestone Shares, including, without limitation, a stock purchase agreement
containing customary investor representations.
6. Except as otherwise provided for herein, the Agreement in Respect
of Option shall remain in full force and effect.
2.
<PAGE> 3
7. This Amendment may be executed in one or more counterparts each
of which shall be deemed an original, but all of which together shall constitute
one and the same.
3.
<PAGE> 4
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers and representatives have set their hands hereunder effective
upon the date referenced above.
GERON CORPORATION
By: /s/ Ronald Eastman
-----------------------------------
Ronald Eastman
President and Chief
Executive Officer
COLD SPRING HARBOR LABORATORY
By: /s/ John Maroney
-----------------------------------
Name: John Maroney
Title: Assistant Administrative Officer
4.
<PAGE> 5
SECTION 2
AMENDMENT NO. 1
TO AGREEMENT IN RESPECT OF OPTION
BETWEEN GERON CORPORATION
AND
COLD SPRING HARBOR LABORATORY
THIS AMENDMENT is made and is effective as of May 3, 1993, by and
between COLD SPRING HARBOR LABORATORY (CSHL), a New York not-for-profit
corporation, and GERON CORPORATION (GERON), a corporation organized and existing
under the laws of the State of Delaware.
WHEREAS, CSHL and GERON have entered into that certain Sponsored
Research Agreement effective August 31, 1992 (the "Sponsored Research
Agreement") and that certain Agreement with Respect of Option also effective
August 31, 1992 ("Option");
WHEREAS, CSHL and GERON desire to amend the Patent License Agreement
attached as Appendix I to the Option (the "Patent License Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Paragraph 5.2 of the Patent License Agreement is amended to add
the following subparagraphs (d) and (e):
"5.2(d) Up to [ * ] of NET SALES of products, which are not LICENSED
PRODUCTS, which result from GERON's use of a LABORATORY PROCESS. In no
event shall this subparagraph 5.2(d) apply to NET SALES of LICENSED
PRODUCTS. The computation of the royalty shall be negotiated prior to
the first commercial sale of such products, giving weight to prevailing
industry standards with respect to royalties paid for exclusive and
non-exclusive licenses on similar laboratory processes and also
considering such factors as market potential, profit potential,
additional research and development costs required to bring the
products to commercialization, economic value added and the value and
extent of contribution by each party, including the funding of the
Research Program as defined in the SPONSORED RESEARCH AGREEMENT by
GERON. [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 6
"5.2(e) In no event shall a royalty under more than one subparagraph
of this paragraph 5.2 be due to LICENSOR for the SALE of any product by
LICENSEE, whether for LICENSED PRODUCTS or non-LICENSED PRODUCTS."
2. Except as expressly provided for herein, the Option shall remain
in full force and effect.
3. This Amendment may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4. This Amendment shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers and representatives have set their hands hereunder effective
upon the date referenced above.
COLD SPRING HARBOR LABORATORY
By: /s/ John Maroney
------------------------------------
Name: John Maroney
Title: Assistant Administrative Director
GERON CORPORATION
By: /s/ Michael D. West
------------------------------------
Name: Michael D. West
Title: V.P. Business Acc.
<PAGE> 7
SECTION 3
AGREEMENT IN RESPECT OF OPTION
BETWEEN GERON CORPORATION AND COLD SPRING HARBOR LABORATORY
THIS AGREEMENT is made by and between COLD SPRING HARBOR LABORATORY
(CSHL), a New York not-for-profit corporation, and GERON CORPORATION (GERON), a
corporation organized and existing under the laws of the State of Delaware.
WHEREAS, GERON wishes to obtain and CSHL wishes to grant an option
to acquire an exclusive license in the form of the agreement appended hereto as
Appendix I (PATENT LICENSE AGREEMENT);
NOW, THEREFORE, in consideration of the SPONSORED RESEARCH AGREEMENT
and the mutual covenants and premises herein contained, the parties hereto agree
as follows:
I. EFFECTIVE DATE
This Agreement shall be effective August 31, 1992 (the "EFFECTIVE
DATE").
II. DEFINITIONS
As used in this Agreement, terms in capital letters shall have the
meaning assigned them in the PATENT LICENSE AGREEMENT, unless otherwise
indicated.
III. OPTION
3.1 CSHL grants to GERON an option to enter into the PATENT LICENSE
AGREEMENT, exercisable upon written notice to CSHL at any time during the term
of, or within one (1) year after termination of, the SPONSORED RESEARCH
AGREEMENT. In consideration of such option, GERON will enter into the SPONSORED
RESEARCH AGREEMENT. If and when the option is exercised, the PATENT LICENSE
AGREEMENT (and each of the parties' rights and obligations thereunder) will
automatically come into effect, however, the parties will execute copies of the
PATENT LICENSE AGREEMENT within thirty (30) days of the date the option is
exercised.
3.2 From the EFFECTIVE DATE and throughout the option term, GERON
shall reimburse reasonable expenditures incurred during that period by CSHL
according to the terms of the PATENT LICENSE AGREEMENT in respect of preparing,
filing, prosecuting and maintaining PATENT RIGHTS in the U.S. and in preparing,
filing, prosecuting and maintaining corresponding patent applica-
<PAGE> 8
tions and patents outside the United States of America in countries as agreed in
writing by GERON. In any event, if GERON requests that any patent or patent
application that is or would be within PATENT RIGHTS be prepared, filed,
prosecuted or maintained, anywhere in the world, CSHL will diligently undertake
such activity to the extent and for so long as GERON reimburses CSHL'S
reasonable expenditures therefor.
IV. STOCK
In partial consideration of the option granted by CSHL to GERON
herein, GERON agrees to hereby issue to CSHL promptly after the EFFECTIVE DATE
of this Agreement 50,000 shares of GERON'S Common Stock pursuant to the terms of
the Investor Representation Letter attached hereto as Appendix II. Such shares
will be included as part of Registrable Securities under the Investors' Rights
Agreement dated March 20, 1992 between GERON and certain investors.
V. TERM AND TERMINATION
5.1 This Agreement will terminate upon GERON's failure to timely
exercise the option provided in paragraph 3.1 hereof.
5.2 This Agreement will earlier terminate:
(a) automatically if GERON shall enter into a liqui- dating
bankruptcy and/or if the business of GERON shall be placed
in the hands of a receiver, assignee, or trustee, whether
by voluntary act of GERON or otherwise; provided that if it
is involuntary, termination shall not take place unless the
act is not reversed within ninety (90) days;
(b) upon ninety (90) days written notice if GERON shall be
materially in breach or default of any obligation under
this Agreement; provided however, GERON may avoid such
termination if before the end of such period GERON notifies
CSHL that such breach has been cured and states the manner
of such cure.
(c) upon the written agreement of both parties.
(d) at any time upon thirty (30) days written notice given by
GERON, with or without cause.
5.3 Upon termination of this Agreement for any cause, nothing herein
shall be construed to release any party from any
2.
<PAGE> 9
liability or obligation for breach of this Agreement incurred prior to the
EFFECTIVE DATE of such termination.
VI. ASSIGNMENT
This Agreement may be assigned by GERON (i) only in connection with
an acquisition of GERON, by any means, or the sale or merger of substantially
all of its related business to or with another, or (ii) otherwise only with the
consent of CSHL, not to be unreasonably withheld. CSHL may assign its right to
receive money payments hereunder, but may not otherwise assign this Agreement.
VII. USE OF CSHL'S OR COMPONENT'S NAME
GERON shall not, unless as required by any law or governmental
regulation, use the name of CSHL without express written consent.
VIII. CONFIDENTIAL INFORMATION
8.1 The confidentiality obligations of the parties will be as
specified in the SPONSORED RESEARCH AGREEMENT and, when and if it comes into
effect, the LICENSE AGREEMENT.
IX. GENERAL
9.1 This Agreement and the SPONSORED RESEARCH AGREEMENT (and the
PATENT LICENSE AGREEMENT if the option hereunder is exercised) constitute the
entire and only agreement between the parties and all other prior negotiations,
representations, understandings and agreements are superseded hereby. No
agreements altering or supplementing the terms hereof may be made except by
means of a written document signed by the duly authorized representatives of the
parties.
9.2 Any notice required by this License Agreement shall be given by
prepaid, first class, certified mail, return receipt requested, effective upon
receipt addressed in the case of CSHL to:
COLD SPRING HARBOR LABORATORY
1 Bungtown Road
Cold Spring Harbor, NY 11724
Attn: John Maroney
Assistant Administrative Director
3.
<PAGE> 10
or in the case of GERON to:
GERON CORPORATION
21375 Cabot Blvd.
Hayward, CA 94545
Attention: Vice President, Finance and
Administration
or such other address as may be given from time to time under the terms of this
notice provision.
9.3 Each party shall comply with all applicable laws and regulations
in connection with its activities pursuant to this Agreement.
9.4 This Agreement shall be governed by and construed in accordance
with, and any controversy or claim arising out of or relating to this Agreement,
shall be resolved in accordance with, the laws of the State of California,
without regard to the conflicts of laws provisions thereof. If any dispute
arises under this Agreement, the parties will first attempt in good faith to
amicably resolve the issue between themselves. Any dispute that cannot be so
resolved will be submitted to arbitration pursuant to the rules of the American
Arbitration Association. Such arbitration will take place in Chicago, Illinois.
The ruling of the arbitrators will be final and binding on the parties and will
be enforceable by any court of competent jurisdiction.
9.5 Failure of CSHL or GERON to enforce a right under this Agreement
shall not act as a waiver of that right or the ability to assert that right
relative to the particular situation involved.
9.6 Headings included herein are for convenience only and shall not
be used to construe this Agreement.
9.7 If any provision of this Agreement shall be found by a court to
be void, invalid or unenforceable, the same shall be reformed to comply with
applicable law or stricken if not so conformable, so as not to affect the
validity or enforceability of the remainder of this Agreement.
4.
<PAGE> 11
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement.
COLD SPRING HARBOR LABORATORY GERON CORPORATION
By /s/ G. Morgan Browne By /s/ Geron Corporation
------------------------- ------------------------
Name: G. Morgan Browne Name:
Title: Administrative Director Title:
5.
<PAGE> 12
APPENDIX I
PATENT LICENSE AGREEMENT
THIS AGREEMENT is made by and between COLD SPRING HARBOR LABORATORY
(CSHL), a New York not-for-profit corporation, and GERON CORPORATION (GERON), a
corporation organized and existing under the laws of the State of Delaware.
WITNESSETH
WHEREAS, CSHL may now or in the future own certain PATENT RIGHTS and
TECHNOLOGY RIGHTS relating to LICENSED SUBJECT MATTER and developed at CSHL,
including without limitation PATENT RIGHTS and TECHNOLOGY RIGHTS developed
pursuant to a Sponsored Research Agreement (SPONSORED RESEARCH AGREEMENT)
between CSHL and GERON performed under the direction of Professor Grelder and
described in Schedule A hereto, which is incorporated herein;
WHEREAS, CSHL desires to have the LICENSED SUBJECT MATTER developed and
used for the benefit of GERON, the inventor(s), CSHL and the public as outlined
below; and
WHEREAS, GERON wishes to obtain a license from CSHL to practice
LICENSED SUBJECT MATTER;
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
This agreement shall be effective upon written exercise by GERON of the
option provided by that certain "Agreement in Respect of Option" between GERON
and CSHL dated August __, 1992.
II. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated:
2.1 LICENSED SUBJECT MATTER shall mean inventions and discoveries that
are covered by PATENT RIGHTS within the LICENSED FIELD.
2.2 PATENT RIGHTS shall mean any:
(a) domestic and foreign rights under patent applications submitted
or to be submitted based on inventions in whole or in part reduced to practice
under or arising out of the Research Program as defined in the SPONSORED
RESEARCH AGREEMENT;
(b) continuation, continuation-in-part, division or reissue
applications and any applications equivalent to those set forth in (a) herein;
and
(c) patents that issue on the applications set forth in (a) and (b)
herein and all reissues, reexaminations and extensions thereof.
<PAGE> 13
2.3 TECHNOLOGY RIGHTS shall mean CSHL's rights in any KNOW-HOW.
KNOW-HOW shall mean all technical information, know-how, process, procedure,
composition, device, method, formula, protocol, technique, software, design,
drawing or data relating to LICENSED SUBJECT MATTER or LICENSED FIELD which is
not disclosed in a patent, but which is necessary or useful for practicing
LICENSED SUBJECT MATTERS or the LICENSED FIELD.
2.4 LICENSED FIELD shall mean fields relating to cell senescence, cell
immortalization, cellular or molecular bases of aging or age related
degenerative diseases, and shall include, without limitation, telomeres and
telomerase. The LICENSED FIELD also includes any process, machine, manufacture,
composition of matter (including methods of production or use thereof) or other
invention or know-how related to any of the foregoing or to the diagnosis,
prevention, treatment or manipulation of any of the foregoing.
2.5 LICENSED TERRITORY shall mean the world.
2.6 LICENSED PRODUCT shall mean any product, the manufacture, use or
sale of which, in the absence of this Agreement, would infringe upon PATENT
RIGHTS.
2.7 LABORATORY PROCESS shall mean any laboratory process or method (as
opposed to a commercial or production process or method) which would infringe
upon Patent Rights if not licensed.
2.8 COMPOSITE PRODUCTS shall mean any product SOLD by GERON with
active ingredients comprising both LICENSED SUBJECT MATTER within PATENT RIGHTS
and active ingredients other than LICENSED SUBJECT MATTER.
2.9 SALE or SOLD shall mean the transfer or disposition of a LICENSED
PRODUCT for value to a party other than GERON or a SUBSIDIARY.
2.10 SUBSIDIARY shall mean any business entity more than 50% owned by
GERON, any business entity which owns more than 50% of GERON, or any business
entity that is more than 50% owned by a business entity that owns more than 50%
of GERON.
2.11 NET SALES shall mean the gross revenues (whether or not in cash)
actually received by GERON from the SALE of LICENSED PRODUCTS less sales,
V.A.T. and/or use taxes, duties and similar governmental assessments actually
paid, transportation, packing, shipping insurance and amounts allowed or
credited due to returns (not to exceed the original billing or invoice amount).
2.12 OTHER INSTITUTION shall mean McMaster University.
III. WARRANTY; SUPERIOR RIGHTS
3.1 Except for the rights, if any, of the Government of the United
States, as set forth hereinbelow and except for any joint ownership of the
OTHER INSTITUTION that has arisen by law on account of joint invention by Drs.
Harley and Greider, CSHL represents and warrants that to its knowledge it is
the owner of the entire right, title and interest in and to LICENSED PATENTS,
and that it has the sole right to grant licenses thereunder, and that it has
not granted licenses thereunder to any other entity that would restrict rights
granted hereunder except as stated herein and except for the non-exclusive
license originally granted to ICOS Corporation under the first sentence of
Section 3.1(e) of the October 16, 1991
2.
<PAGE> 14
Amended and Restated ICOS Discovery Grants Agreement as partially provided to
GERON. CSHL is not aware that any additional rights or licenses are necessary
for GERON to exercise its license rights.
3.2 GERON understands that the LICENSED SUBJECT MATTER may have been
developed under a funding agreement with the Government of the United States of
America and, if so, that the Government may have certain statutory nonexclusive
rights relative thereto for use for government purposes, as well as statutory
"march-in rights." This Agreement is explicitly made subject to such Government
rights. To the extent there is any conflict between any such rights and this
Agreement, such Government rights shall prevail.
3.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, CSHL
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR VALIDITY OR ENFORCEMENT OF PATENT RIGHTS. EXCEPT
AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY CSHL THAT THE
PRACTICE BY GERON OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE
PATENT RIGHTS OF ANY THIRD PARTY.
IV. LICENSE
4.1 CSHL hereby grants to GERON an exclusive license to manufacture,
have manufactured, use, have used, and/or sell or have sold LICENSED PRODUCTS
and to otherwise exploit the PATENT RIGHTS and TECHNOLOGY RIGHTS within
LICENSED TERRITORY and LICENSED FIELD. This grant shall be subject to the
payment by GERON to CSHL of all consideration as provided by this Agreement,
and shall be further subject to non-exclusive rights retained by CSHL to:
(a) Publish the general scientific findings from research done
by CSHL related to LICENSED SUBJECT MATTER; and
(b) Use any information contained in LICENSED SUBJECT MATTER
and any PATENT RIGHTS for CSHL'S own research, teaching, and other
educationally-related purposes, provided that none of the foregoing is done for
any commercial purpose. CSHL may not extend any such right to any third party
except that it may allow other not-for-profit institutions (i) to practice
LABORATORY PROCESSES and (ii) access to materials created by CSHL pursuant to
the foregoing sentence; provided that in either case such institutions limit
use of such processes and materials to research, teaching and other
educationally-related purposes that do not support any commercial purpose.
4.2 GERON shall have the right to extend the license granted herein to
any SUBSIDIARY provided that such SUBSIDIARY consents to be bound by this
Agreement to the same extent as GERON (provided that the foregoing does not and
is not intended to create redundant or double obligations regarding royalties,
reimbursement, marketing efforts or any other matter).
4.3 GERON shall have the right to grant sublicenses consistent with
this Agreement provided that, with respect to CSHL, GERON shall be responsible
for (and entitled to credit for) the operations of its sublicensees relevant to
this Agreement as if such operations were carried out by GERON provided that
matters dealt with in Section 5 in respect of such sublicenses shall be
governed by the terms of Section 5. GERON further agrees to deliver to CSHL a
true and correct copy of each sublicense granted by GERON, and any modification
or termination thereof, within thirty (30) days after execution, modification
or termination. GERON will have the right to delete portions it considers
confidential. Upon termination of
<PAGE> 15
this Agreement under Section 6.2 any and all existing sublicenses granted by
GERON shall be assigned to CSHL as their terms permit, or shall terminate (if
their terms don't so permit).
4.4 CSHL shall have the right at any time after five (5) years from the
date of this Agreement and as its sole remedy for any alleged want of diligence
to terminate the exclusivity of the license granted herein as to those national
jurisdictions of the LICENSED TERRITORY in which GERON has not commercialized
and is not intending to commercialize an invention hereunder if GERON, within
ninety (90) days after written notice from CSHL as to such intended termination
of exclusivity, fails to provide written evidence of present, attempted or
anticipated commercialization in a manner and on a schedule reasonably
commensurate with the scope of LICENSED TERRITORY and GERON'S resources.
Evidence provided by GERON that it has on ongoing and active or anticipated
research, development, manufacturing, marketing or licensing program as
appropriate, directed toward production and sale of products based on the
invention disclosed and claimed in PATENT RIGHTS shall be deemed satisfactory
evidence. CSHL agrees that in the discretion of GERON commercialization efforts
may be directed first to industrialized nations of the world commencing with the
United States of America, and only subsequently to other regions as reasonably
and commercially practicable for GERON given its strategies and resources; that
particular fields within the LICENSED FIELD and portions of the LICENSED
TERRITORY may in the discretion of GERON best be commercialized by sublicense;
and that GERON may in the exercise of prudent business judgment elect to defer
commercialization efforts in particular fields until the LICENSED SUBJECT MATTER
has undergone substantial and appropriate further development. In the event of
any termination of exclusivity under this Section or Section 7.1, CSHL agrees to
negotiate in good faith with GERON to adjust the terms hereof to reflect GERON'S
diminished rights (including, without limitation, royalty rates), with relation
back to the date of termination of exclusivity; provided, however, that pending
the completion of such negotiation GERON'S obligations shall be as provided
hereunder for the case of exclusivity; and GERON shall have the benefit of any
more favorable terms granted by CSHL to any subsequent non-exclusive licensee of
LICENSED SUBJECT MATTER in those national jurisdictions where exclusivity is
terminated.
V. PAYMENTS AND REPORTS
5.1 Subject to the other terms of this Article V and in consideration of
rights granted by CSHL to GERON under this AGREEMENT, GERON agrees to pay CSHL
the following:
(a) A running royalty as provided in paragraph 5.2 in the case of SALES
by GERON or its SUBSIDIARIES; and
(b) In the case that GERON receives revenues from any sublicensee that
is not a SUBSIDIARY, the lesser of [ * ] of the gross revenues (which may
include but are not limited to royalties on the SALE of LICENSED PRODUCTS by the
sublicensee, provided that in no event will CSHL receive more than [ * ] in
the aggregate of amounts that are not royalties determined by such SALES)
received by GERON from any sublicensee in consideration of sublicense under
PATENT RIGHTS or the royalty that would be due were sublicensee sales made by
GERON; provided that CSHL shall receive hereunder the equivalent of a royalty on
NET SALES at a rate of not less than [ * ] of the applicable rate under
Section 5.2.
5.2 Royalty on NET SALES by GERON and any SUBSIDIARY shall be:
(a) [ * ] of NET SALES in respect of LICENSED PRODUCTS SOLD for use
as a human therapeutic; and
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
4.
<PAGE> 16
(b) [ * ] percent of NET SALES in respect of LICENSED PRODUCTS
SOLD for other applications.
(c) However, within 90 days of the effective date of this
AGREEMENT either party may request that either or both royalty rates specified
above be increased or decreased up to one-half percentage point. The parties
will negotiate in good faith with respect to such possible adjustment taking
into account the past and future contributions of the parties with respect to
research, development and commercialization. The adjustment will be effective
upon mutual agreement, or if the parties cannot agree, upon the decision of
arbitrators pursuant to Section 14.4 (which decision will be in accordance with
above parameters of this clause (c)).
5.3 In the case of COMPOSITE PRODUCTS prior to the calculation of
royalty due thereon NET SALES shall be multiplied by a fraction whose numerator
is the cost of active ingredients within PATENT RIGHTS and whose denominator is
the cost of all active ingredients within such COMPOSITE PRODUCT. The resulting
number shall represent the NET SALES price basis for calculation of royalties
due on COMPOSITE PRODUCTS.
5.4 After five (5) years from the effective date of this Agreement,
only 50% of any royalty or share of sublicense shall be due for manufacture, use
or sale of LICENSED PRODUCTS for consumption in a national jurisdiction of
LICENSED TERRITORY where such manufacture, use and sale could have been
conducted in such national jurisdiction without infringing a valid issued patent
within PATENT RIGHTS in such national jurisdiction.
5.5 Only one royalty shall be payable on each unit of LICENSED PRODUCT
SOLD calculated at the applicable rate specified in this Agreement irrespective
of the number of patents within PATENT RIGHTS whose claims would be infringed
but for this License Agreement.
5.6 During the term of this Agreement and for one (1) year thereafter
GERON shall keep complete and accurate records of its and (as reported to it)
its sublicensee's NET SALES of LICENSED PRODUCTS and COMPOSITE PRODUCTS under
the license granted in this agreement in sufficient detail to enable the
royalties payable hereunder to be determined. GERON shall permit an independent
certified public accountant (hired by CSHL and reasonably acceptable to GERON),
at CSHL's expense, to periodically (but no more than once per year) examine its
books, ledgers, and records during regular business hours for the purpose of
and to the extent necessary to verify any report required under this Agreement;
provided such accountant is bound in confidence and may not disclose any such
information except to CSHL as necessary to show underpayment. In the event that
the amounts due to CSHL have been underpaid, GERON shall pay the cost of such
examination, the due amount, and accrued interest thereon at the prevailing
prime rate for commercial loans.
5.7 Within forty-five (45) days after March 31, June 30, September 30
and December 31, GERON shall deliver to CSHL at the address listed in paragraph
14.2 a true and accurate report, giving such particulars of the business
conducted by GERON during the preceding calendar quarter under this Agreement
as are pertinent to an account for payments hereunder. Such report shall
include at least (a) the quantities of LICENSED PRODUCTS that it has SOLD; (b)
the total SALES; (c) the calculation of royalties thereon; and (d) the total
royalties so computed and due CSHL. Simultaneously with the delivery of each
such report, GERON shall pay to CSHL the amount, if any, due for the period of
such report. If no payments are due, it shall be so reported. GERON shall
impose on sublicensees, mutatis mutandis, similar reporting and payment
obligations and shall provide to CSHL similar reports from sublicensees as they
relate to CSHL's entitlements under paragraph 5.1(b) to the extent received
during such quarter or thereafter up
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
5.
<PAGE> 17
until fifteen (15) business days prior to the due date for the report on
GERON'S SALES. Simultaneously with its report on such sublicensee activity.
GERON shall pay to CSHL amounts due under paragraph 5.1(b).
5.8 Upon the request of CSHL but not more often than once per
calendar year, GERON shall deliver to CSHL a report as to GERON'S efforts and
accomplishments during the preceding year in commercializing LICENSED SUBJECT
MATTER.
5.9 All amounts payable hereunder by GERON shall be payable in
United States funds. Checks shall be made payable to Cold Spring Harbor
Laboratory and mailed to:
Cold Spring Harbor Laboratory
1 Bungtown Road
Cold Spring Harbor, NY 11724
Attn: John Maroney
Assistant Administrative Director
5.10 Notwithstanding anything else in this Agreement, if a LICENSED
PRODUCT infringes any patent covered by a license to GERON from the OTHER
INSTITUTION, the total amount of royalties due to CSHL and OTHER INSTITUTION in
the aggregate shall be the amount calculated as provided above and GERON shall
be entitled to withhold payment of such royalties until CSHL and the OTHER
INSTITUTION have agreed on how the royalty will be allocated between them and
have jointly informed GERON thereof.
VI. TERM AND TERMINATION
6.1 The term of this Agreement shall extend from the EFFECTIVE DATE
set forth hereinabove to the end of term of the last to expire of the patents,
that have been or may be issued within the PATENT RIGHTS. Upon expiration,
GERON will be entitled to fully exploit PATENT RIGHTS and TECHNOLOGY RIGHTS
without restriction or payment of royalties.
6.2 This Agreement will earlier terminate:
(a) automatically if GERON shall enter liquidating
bankruptcy and/or if the business of GERON shall be placed in the hands of a
receiver, assignee, or trustee, whether by voluntary act of GERON or otherwise;
provided that if it is involuntary, termination shall not take place unless the
act is not reversed within ninety (90) days.
(b) upon ninety (90) days written notice if GERON shall be
materially in breach or default of any obligation under this License Agreement;
provided however, GERON may avoid such termination if before the end of such
period GERON notifies CSHL that such breach has been cured and states the
manner of such cure.
(c) upon the mutual written agreement of the parties.
(d) upon thirty (30) days written notice given by GERON
with or without cause.
6.3 Upon any termination of this Agreement, nothing herein shall be
construed to release any party from any liability for any obligation incurred
through the effective date of termination (e.g., confidentiality, payment of
then accrued royalties and reimbursement of patent expenses incurred prior to
such date) or for any breach of this Agreement prior to the effective date of
such termination. GERON may, after the effective date of such termination, sell
all LICENSED PRODUCT and COMPOSITE PRODUCT and
6.
<PAGE> 18
parts therefor that it has on hand at the date of termination, provided that
it pays earned royalty thereon as provided in this Agreement.
VII. INFRINGEMENT BY THIRD PARTIES
7.1 GERON shall have the first right to enforce or have enforced at
no expense to CSHL any PATENT RIGHTS to the extent exclusively licensed
hereunder against infringement by third parties and shall be entitled to retain
recovery from such enforcement. Upon GERON'S undertaking to pay all
expenditures reasonably incurred by CSHL, CSHL shall reasonably cooperate in
any such enforcement and, as necessary, join as a party therein. GERON shall be
entitled to apply up to 50% of any royalty payment otherwise due under this
Agreement to payment of up to 50% of the cost and expenses (including
attorneys' fees) of enforcement activity. After first deducting its costs and
expenses incurred in respect of enforcement (to the extent not otherwise
awarded by settlement or a court), if the recovery is sufficient. GERON will
deduct and pay to CSHL the royalties withheld under the immediately preceding
sentence and then GERON shall pay CSHL royalty (calculated per Section 5.1(b)
on the balance of any monetary recovery to the extent such monetary recovery is
held to be a reasonable royalty or damages in lieu thereof. In the event that
GERON does not file suit against or commence settlement negotiations with a
substantial infringer of CSHL'S PATENT RIGHTS within six (6) months or receipt
of a written demand from CSHL that GERON bring suit, then the parties will
consult with one another in an effort to determine whether a reasonably prudent
licensee would institute litigation to enforce the patent in question in light
of all relevant business and economic factors (including, but not limited to,
the projected cost of such litigation, the likelihood of success on the merits,
the probable amount of any damage award, the prospects for satisfaction of any
judgment against the alleged infringer, the possibility of counterclaims
against GERON and CSHL, the diversion of GERON'S human and economic resources,
the impact of any possible adverse outcome on GERON and the effect any
publicity might have on GERON'S and CSHL's respective reputations and
goodwill). If the parties cannot agree, the determination will be made by a
mutually and reasonably acceptable third party consultant. If after such
process, it is determined that a suit should be filed and GERON does not file
suit or commence settlement negotiations forthwith against the substantial
infringer, then CSHL shall have the right to enforce any patent licensed
hereunder on behalf of itself and GERON (CSHL retaining all recoveries from
such enforcement).
VIII. ASSIGNMENT
This Agreement may be assigned by GERON (i) only in connection with an
acquisition of GERON (by whatever means) or the sale or merger of substantially
all of its related business to or with another, or (ii) otherwise only with the
consent of CSHL not to be unreasonably withheld. CSHL may assign its right to
receive payments hereunder but not otherwise assign this Agreement.
IX. PATENT MARKING
To the extent reasonable and practical regarding products, GERON agrees
to mark permanently and legibly all products and documentation manufactured and
sold by it under this Agreement with such patent notice as is required under
Title 35, United States Code.
X. INDEMNIFICATION; INFRINGEMENT SUIT CREDIT; PRODUCT LIABILITY
10.1 Subject to Section 10.2, GERON shall hold harmless and
indemnify CSHL and its officers, employees and agents from and against any
claims demands, or causes of action whatsoever, including without limitation
those arising on account of any injury or death of persons or damage to property
7.
<PAGE> 19
caused by or arising out of, or resulting from, the exercise or practice of the
license granted hereunder by GERON or its officers, employees, agents or
representatives.
10.2 CSHL shall promptly notify GERON in writing of any claim or suit or
threat thereof brought against CSHL in respect of which indemnification may be
sought and, to the extent allowed by law, shall reasonably cooperate with GERON
in defending or settling any such claim or suit. No settlement of any claim,
suit or threat thereof received by CSHL and for which CSHL will seek
indemnification, shall be made without the prior written approval of GERON. CSHL
will permit GERON to defend CSHL against any such claim, suit or threat thereof
and GERON shall have sole control over the defense, subject to CSHL'S right to
select its own counsel to review the matter for CSHL at CSHL'S sole cost and
expense.
10.3 If infringement is alleged against GERON or any person or entity
entitled to indemnity under Section 10.1 above, and if such claims concern
LICENSED SUBJECT MATTER, GERON may suspend [ * ] of each royalty payment due
CSHL under Section 5 from SALES of LICENSED PRODUCTS in any national
jurisdiction in which suit is brought, and pay such amounts into an escrow
account established by GERON until such situation is resolved. Should a patent
with PATENT RIGHTS under which such royalties are payable be held invalid, the
accrued royalties shall be retained by GERON to offset up to [ * ] of litigation
expenses; and, should litigation or settlement result in the requirement that
GERON pay royalties or other monies to a third party, the Parties hereunder
agree in good faith to renegotiate the royalties due CSHL with the goal of
reducing the royalty paid accordingly. In the event the validity of a Patent
within PATENT RIGHTS is upheld, the accrued royalties shall be paid to CSHL. Any
damages or attorneys' fees awarded or received in settlement of such suit shall
be retained by GERON in satisfaction of its litigation expenses.
10.4 Commencing not later than the date of first commercial sales of a
LICENSED PRODUCT, GERON shall use commercially reasonable efforts to obtain and
carry in full force and effect at a commercially reasonable price product
liability insurance against any claims, judgments, liabilities and expenses for
which it is obligated to indemnify CSHL under Section 10.1 above, in such
amounts and with such deductibles and other limits as are determined reasonably
necessary by mutual agreement of the parties acting in good faith, in light of
the availability of such insurance and the custom at the customary time for
similarly situated companies engaged in similar business.
XI. USE OF CSHL'S OR COMPONENT'S NAME
GERON shall not, unless as required by any law or governmental regulation,
use the name of CSHL without express written consent.
XII. CONFIDENTIAL INFORMATION; KNOW-HOW
12.1 The parties may wish, from time to time, in connection with
performance under this Agreement, to disclose confidential information
(including KNOW-HOW) to each other. Subject to the rights of GERON under this
Agreement, each party agrees not to use (other than for purposes contemplated by
this Agreement) and will use reasonable efforts to prevent the disclosure to
third parties of any of the other party's confidential information that is
identified as confidential at the time of disclosure and is provided in tangible
form marked confidential (or is reduced to such form within 30 days) for a
period of three (3) years from receipt thereof, provided that the recipient
party's obligation hereunder shall not apply to information that the recipient
party can show:
(a) is not disclosed in writing or reduced to writing and so marked
with an appropriate confidentiality legend within thirty (30) days of
disclosure;
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
8.
<PAGE> 20
(b) is already in the recipient party's possession at the time
of disclosure thereof;
(c) is or later becomes part of the public domain through no
fault of the recipient party;
(d) is received from a third party having no obligations of
confidentiality to the disclosing party, provided that the recipient party
complies with any restrictions imposed by the third party;
(e) is independently developed by the recipient party;
(f) is required by law or regulation to be disclosed
(including, without limitation, in connection with FDA filings), provided that
the recipient party uses reasonable efforts to restrict disclosure and to
obtain confidential treatment; or
(g) is made available by the disclosing party to a third party
without similar restrictions.
12.2 The foregoing shall not affect or limit GERON'S right to fully
exercise the licenses granted under this Agreement and GERON and its
sublicensees shall be fully entitled to use KNOW-HOW in support thereof.
XIII. PATENT AND INVENTIONS
Subject to the following terms, GERON shall reimburse CSHL for all
reasonable expenses incurred by CSHL in the future in searching, preparing,
filing, prosecuting and maintaining patent applications and patents relating to
PATENT RIGHTS. If after consultation with CSHL, GERON determines that a patent
application should be filed for LICENSED SUBJECT MATTER, CSHL will prepare and
file appropriate patent applications, and GERON will reimburse the cost of
searching, preparing, filing, prosecuting and maintaining same and any resulting
patent. CSHL will use patent counsel selected by GERON and GERON will supervise
such patent counsel in respect of searching, preparation, filing, prosecution
and maintenance of patent applications and patents subject to reimbursement by
GERON, and will promptly provide to GERON a copy of any applications on which
GERON has paid the costs of filing, as well as copies of any documents received
or filed during the prosecution thereof. GERON may give notice to CSHL of its
election to forego or cease participation in searching, preparing, filing,
prosecution or maintenance of any such patent application or patent, whereupon
GERON shall be freed of its reimbursement obligation in respect of future
activities regarding such application or patent and the application or patent
involved shall thereafter form no part of PATENT RIGHTS; provided that GERON may
reinstate it as part of PATENT RIGHTS by paying [ * ] the costs it failed to
reimburse upon CSHL's written consent. Reimbursements due CSHL hereunder shall
be paid by GERON within thirty (30) days of its receipt of a bill from CSHL.
XIV. GENERAL
14.1 This Agreement and those certain agreements between the parties
entitled "Agreement in respect of Option" and "Sponsored Research Agreement"
constitute the entire and only agreements between the parties relating to
LICENSED SUBJECT MATTER and all other prior negotiations, representations,
understandings and agreements are superseded hereby. No agreements altering or
supplementing the terms hereof may be made except by means of a written
document signed by the duly authorized representatives of the parties.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
9.
<PAGE> 21
14.2 Any notice required by this License Agreement shall be given by
prepaid, first class, certified mail, return receipt requested, effective upon
receipt, addressed in the case of CSHL to:
COLD SPRING HARBOR LABORATORY
1 Bungtown Road
Cold Spring Harbor, NY 11724
Attn: John Maroney
Assistant Administrative Director
or in the case of GERON to:
GERON CORPORATION
21375 Cabot Blvd.
Hayward, CA 94545
Attention: Vice President, Finance and Administration
or such other address as may be given from time to time under the terms of this
notice provision.
14.3 Each party shall comply with all applicable federal, state and
local laws and regulations in connection with its activities pursuant to this
Agreement.
14.4 This Agreement shall be governed by and construed in accordance
with, and any controversy or claim arising out of or relating to this
Agreement, shall be resolved in accordance with, the laws of the State of
California, without regard to the conflicts of laws provisions thereof. If any
dispute arises under this Agreement, the parties will first attempt in good
faith to amicably resolve the issue between themselves. Any dispute that cannot
be so resolved will be submitted to arbitration pursuant to the rules of the
American Arbitration Association. Such arbitration will take place in Chicago,
Illinois. The ruling of the arbitrators will be final and binding on the parties
and will be enforceable by any court of competent jurisdiction.
14.5 Failure of CSHL or GERON to enforce a right under this
agreement shall not act as a waiver of that right or the ability to assert that
right relative to the particular situation involved.
14.6 Headings included herein are for convenience only and shall not
be used to construe this Agreement.
14.7 If any provision of this Agreement shall be found by a court to
be void, invalid or unenforceable, the same shall be reformed to comply with
applicable law or stricken if not so conformable, so as not to affect the
validity or enforceability of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this AGREEMENT.
COLD SPRING HARBOR LABORATORY GERON CORPORATION
By /s/ Cold Spring Harbor Laboratory By /s/ Geron Corporation
--------------------------------- ------------------------------
Name Name
--------------------------------- ------------------------------
Title Title
--------------------------------- ------------------------------
10.
<PAGE> 22
APPENDIX II
RIGHT OF FIRST REFUSAL
RESTRICTED STOCK AGREEMENT
This Agreement is made as of this ____ day of September, 1992, by and
between Geron Corporation, a Delaware corporation ("Corporation") and _______
_____________________________________________ (the "Purchaser").
I. PURCHASE OF SHARES
1.1 Purchase. Purchaser hereby purchases and the Corporation hereby
sells to Purchaser ________ shares of Common Stock of the Corporation
("Purchased Shares") at a purchase price of $0.10 per share (the "Purchase
Price").
1.2 Payment. The consideration for the Purchased Shares shall be the
execution of that certain __________________________________ Agreement dated
___________________.
II. SECURITIES LAW COMPLIANCE
2.1 Exemption from Registration. The Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act") and
are being issued to Purchaser in reliance upon the exemption from such
registration provided by Section 4(2) of the 1933 Act.
2.2 Restricted Securities.
(a) Purchaser hereby confirms that Purchaser has been informed that
the Purchased Shares are restricted securities under the 1933 Act and may not
be resold or transferred unless the Purchased Shares are first registered under
the Federal securities laws or unless an exemption from such registration is
available. Accordingly, Purchaser hereby acknowledges that Purchaser is
prepared to hold the Purchased Shares for an indefinite period and that
Purchaser is aware that Rule 144 of the Securities and Exchange Commission
issued under the 1933 Act is not presently available to exempt the sale of the
Purchased Shares from the registration requirements of the 1933 Act.
(b) Purchaser understands that the Purchased Shares are restricted
securities within the meaning of Rule 144 promulgated under the 1933 Act; that
the exemption from registration under Rule 144 will not be available in any
event for at least two years from the date of purchase and payment of the
Purchased Shares (and that payment by a note is not deemed payment unless it is
secured by assets other than the Purchased Shares, and even then will not be
available unless (i) a public trading market then exists for the Common
Purchased Shares of the Corporation, (ii) adequate
<PAGE> 23
information concerning the Corporation is then available to the public, and
(iii) other terms and conditions of Rule 144 are complied with; and that any
sale of the Purchased Shares may be made only in limited amounts in accordance
with such terms and conditions.
2.3 Disposition of Shares. Purchaser hereby agrees that Purchaser
shall make no disposition of the Purchased Shares (other than a permitted
transfer under paragraph 3.1) unless and until:
(a) Purchaser shall have notified the Corporation of the proposed
disposition and provided a written summary of the terms and conditions of the
proposed disposition;
(b) Purchaser shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares;
(c) Purchaser shall have provided the Corporation with written
assurances, in form and substance satisfactory to the Corporation, that (i) the
proposed disposition does not require registration of the Purchased Shares
under the 1933 Act or (ii) all appropriate action necessary for compliance with
the registration requirements of the 1933 Act or of any exemption from
registration available under the 1933 Act (including Rule 144) has been taken;
and
(d) Purchaser shall have provided the Corporation with written
assurances, in form and substance satisfactory to the Corporation, that the
proposed disposition will not result in the contravention of any transfer
restrictions applicable to the Purchased Shares pursuant to the provisions of
the Commissioner Rules identified in paragraph 2.5.
The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Article II or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
2.4 Restrictive Legend. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with restrictive legend:
(i) "The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have been
acquired for investment and may not be sold or offered for sale in the
absence of (a) an effective registration statement for the shares under
such Act, (b) a
<PAGE> 24
'no action' letter of the Securities and Exchange Commission with
respect to such sale or offer, or (c) satisfactory assurances to the
Corporation that registration under such Act is not required with
respect to such sale or offer."
2.5 Stockholder Rights. Until such time as the Corporation
actually exercises its repurchase rights under this Agreement, Purchaser (or
any successor in interest) shall have all the rights of a stockholder
(including voting and dividend rights) with respect to the Purchased Shares,
subject, however, to the transfer restrictions of Article III.
III. TRANSFER RESTRICTIONS
3.1 Restriction on Transfer. Purchaser shall not transfer, assign,
encumber or otherwise dispose of any of the Purchased Shares in contravention
of the Corporation's First Refusal Right under Article IV. Such restrictions on
transfer, however, shall not be applicable to a transfer of the Purchased
Shares made to an affiliated entity of Purchaser, provided and only if
Purchaser obtains the Corporation's consent to any such transfer.
3.2 Transferee Obligations. Each person or entity (other than the
Corporation) to whom the Purchased Shares are transferred by means of one of
the permitted transfers specified in paragraph 3.1 must, as a condition
precedent to the validity of such transfer, acknowledge in writing to the
Corporation that such person is bound by the provisions of this Agreement and
that the transferred shares are subject to (i) the Corporation's First Refusal
Right granted hereunder, and (ii) the market stand-off provisions of paragraph
4.8, to the same extent such shares would be so subject if retained by the
Purchaser.
3.3 Definition of Owner. For purposes of Article IV of this Agreement,
the term "Owner" shall include the Purchaser and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a permitted
transfer from the Purchaser in accordance with paragraph 3.1.
IV. RIGHT OF FIRST REFUSAL
4.1 Grant. The Corporation is hereby granted the right of first
refusal ("First Refusal Right"), exercisable in connection with any proposed
sale or other transfer of the Purchased Shares. For purposes of this Article
IV, the term "transfer" shall include any assignment, pledge, encumbrance or
other disposition for value of the Purchased Shares intended to be made by the
Owner, but shall not include any of the permitted transfers under paragraph 3.1.
3.
<PAGE> 25
4.2 Notice of Intended Disposition. In the event the Owner desires to
accept a bona fide third-party offer for any or all of the Purchased Shares
(the shares subject to such offer to be hereinafter called, solely for
the purposes of this Article IV, the "Target Shares"), Owner shall promptly (i)
deliver to the Secretary of the Corporation written notice (the "Disposition
Notice") of the offer and the basic terms and conditions thereof, including the
proposed purchase price, and (ii) provide satisfactory proof that the
disposition of the Target Shares to the third-party offeror would not be in
contravention of the provisions set forth in Articles II and IV of this
Agreement.
4.3 Exercise of Right. The Corporation (or its assignees) shall, for
a period of twenty-five (25) days following receipt of the Disposition Notice,
have the right to repurchase any or all of the Target Shares specified in the
Disposition Notice upon substantially the same terms and conditions specified
therein. Such right shall be exercisable by written notice (the "Exercise
Notice") delivered to Owner prior to the expiration of the twenty-five (25) day
exercise period. If such right is exercised with respect to all the Target
Shares specified in the Disposition Notice, then the Corporation (or its
assignees) shall effect the repurchase of the Target Shares, including payment
of the purchase price, not more than five (5) business days after the delivery
of the Exercise Notice; and at such time Owner shall deliver to the Corporation
the certificates representing the Target Shares to be repurchased, each
certificate to be properly endorsed for transfer. The Target Shares so
purchased shall thereupon be cancelled and cease to be issued and outstanding
shares of the Corporation's Common Stock.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation (or its assignees) shall have the right to pay the purchase price
in the form of cash equal in amount to the value of such property. If the Owner
and the Corporation (or its assignees) cannot agree on such cash value within
ten (10) days after the Corporation's receipt of the Disposition Notice, the
valuation shall be made by an appraiser of recognized standing selected by the
Owner and the Corporation (or its assignees) or, if they cannot agree on an
appraiser with twenty (20) days after the Corporation's receipt of the
Disposition Notice, each shall select an appraiser of recognized standing, whose
appraisal shall be determinative of such value. The cost of such appraisal
shall be shared equally by the Owner and the Corporation. The closing shall
then be held on the later of (i) the fifth business day following delivery of
the Exercise Notice or (ii) the fifth business day after such cash valuation
shall have been made.
4.
<PAGE> 26
4.4 Non-Exercise of Right. In the event the Exercise Notice is not
given to Owner within twenty-five (25) days following the date of the
Corporation's receipt of the Disposition Notice, Owner shall have a period of
thirty (30) days thereafter in which to sell or otherwise dispose of the Target
Shares upon terms and conditions (including the purchase price) no more
favorable to the third party purchaser than those specified in the Disposition
Notice; provided, however, that any such sale or disposition must not be
effected in contravention of the provisions of Article II of this Agreement.
The third-party purchaser shall acquire the Target Shares free and clear of all
there terms and provisions of this Agreement (including the Corporation's First
Refusal Right hereunder) but the acquired shares shall remain subject to the
market stand-off provisions of paragraph 4.8. In the event Owner does not sell
or otherwise dispose of the Target Shares within the specified thirty (30) day
period, the Corporation's First Refusal Right shall continue to be applicable
to any subsequent disposition of the Target Shares by Owner until such right
lapses in accordance with paragraph 4.7.
4.5 Partial Exercise of Right. In the event the Corporation (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) sale or other disposition of all the Target Shares to a
third-party purchaser in compliance with the requirements of paragraph
4.4, as if the Corporation did not exercise the First Refusal Right
hereunder; or
(ii) sale to the Corporation (or its assignees) of the portion of the
Target Shares which the Corporation (or its assignees) has elected to
purchase, such sale to be effected in substantial conformity with the
provisions of paragraph 4.3.
Failure of Owner to deliver timely notification to the Corporation
under this paragraph 4.5 shall be deemed to be an election by Owner to sell the
Target Shares pursuant to alternative (i) above.
4.6 Recapitalization/Corporate Transaction.
(a) In the event of any stock dividend, stock split, recapitalization
or other transaction affecting the Corporation's outstanding Common Stock as a
class effected without receipt of consideration, then any new, substituted or
additional securities
5.
<PAGE> 27
or other property which is by reason of such transaction distributed with
respect to the Purchased Shares shall be immediately subject to the
Corporation's First Refusal Right hereunder, but only to the extent the
Purchased Shares are at the time covered by such right.
(b) In the event of any of the following transactions (a "Corporate
Transaction"):
(i) a merger or acquisition in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation or
(iii) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those
who held the stock immediately prior to such merger,
then the Corporation's First Refusal Right shall, to the extent the lapse
provisions of Section 4.7 are not otherwise applicable, remain in full force
and effect and shall apply to the new capital stock or other property received
in exchange for the Purchased Shares in consummation of the Corporate
Transaction, but only to the extent the Purchased Shares are at the time
covered by such right.
4.7 Lapse. the First Refusal Right under this Article IV shall lapse
and cease to have effect upon the earliest to occur of (i) the first date on
which shares of the Corporation's Common stock are held of record by more than
five hundred (500) persons or (ii) a determination is made by the Corporation's
Board of Directors that a public market exists for the outstanding shares of
the Corporation's Common stock. However, the market stand-off provisions of
paragraph 4.8 shall continue to remain in full force and effect following the
lapse of the First Refusal Right hereunder.
4.8 Market Stand-Off.
(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing
6.
<PAGE> 28
transactions with respect to any Purchased Shares without the prior written
consent of the Corporation or its underwriters. Such limitations shall be in
effect for such period of time from and after the effective date of such
registration statement as may be requested by the Corporation or such
underwriters; provided, however, that in no event shall such period exceed one
hundred-eighty (180) days. The limitations of this paragraph 4.8 shall remain
in effect for the two-year period immediately following the effective date of
the Corporation's initial public offering and shall thereafter terminate and
cease to have any force or effect.
(b) Owner shall be subject to the market stand-off provisions of this
paragraph 4.8 provided and only if the officers and directors of the
Corporation are also subject to similar arrangements.
(c) In the event of any stock dividend, stock split, recapitalization
or other change affecting the Corporation's outstanding Common Stock effected
without receipt of consideration, then any new, substituted or additional
securities distributed with respect to the Purchased Shares shall be
immediately subject to the provisions of this paragraph 4.8, to the same
extent the Purchased Shares are at such time covered by such provisions.
(d) In order to enforce the limitations of this paragraph 4.8, the
Corporation may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.
V. GENERAL PROVISIONS.
5.1 Assignment. The Corporation may assign its First Refusal Right under
Article IV to any person or entity selected by the Corporation's Board of
Directors, including (without limitation) one or more shareholders of the
Corporation.
5.2 Definitions. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation shall be considered to be a parent
corporation of the Corporation, provided each such corporation in the unbroken
chain (other than the Corporation) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
(ii) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the
7.
<PAGE> 29
Corporation shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
5.3 Notices. Any notice required in connection with (i) the First
Refusal Right or (ii) the disposition of any Purchased Shares covered thereby
shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States mail, registered or certified, postage
prepaid and addressed to the party entitled to such notice at the address
indicated below such party's signature line on this Agreement or at such other
address as such party may designate by ten (10) days advance written notice
under this paragraph 5.3 to all other parties to this Agreement.
5.4 No Waiver. The failure of the Corporation (or its assignees) in any
instance to exercise the First Refusal Right granted under Article IV, shall not
constitute a waiver of any other rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and Purchaser. No waiver of any breech or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
5.5 Cancellation of Shares. If the Corporation (or its assignees) shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, than from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such share shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
5.6 Legend. All certificates representing the Purchased Shares shall be
endorsed with the following legend:
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT
IN CONFORMITY WITH THE TERMS OF A WRITTEN AGREEMENT, DATED ___________,
1992, BETWEEN THE CORPORATION AND THE REGISTERED
8.
<PAGE> 30
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE
SHARES). SUCH AGREEMENT GRANTS CERTAIN RIGHTS OF FIRST REFUSAL
TO THE CORPORATION (OR ITS ASSIGNEES) UPON THE SALE, ASSIGNMENT,
TRANSFER, ENCUMBRANCE OR OTHER DISPOSITION OF THE CORPORATION'S
SHARES. THE CORPORATION WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
VI. MISCELLANEOUS PROVISIONS.
6.1 Purchaser Undertaking. Purchaser hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may in its judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on either
Purchaser or the Purchased Shares pursuant to the express provisions of this
Agreement.
6.2 Agreement is Entire Contract. This Agreement constitutes
the entire contract between the parties hereto with regard to the subject
matter hereof.
6.3 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State.
6.4 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9.
<PAGE> 31
6.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and Purchaser and Purchaser's legal representatives,
heirs, legatees, distributees, assigns and transferees by operation of law,
whether or not any such person shall have become a party to this Agreement and
have agreed in writing to join herein and be bound by the terms and conditions
hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
GERON CORPORATION
By _____________________________________
Address: 21375 Cabot Boulevard
Hayward, CA 94545
[INSTITUTION]
By _____________________________________
Its ____________________________________
Address: ________________________________________
________________________________________
10.
<PAGE> 1
Exhibit 10.7
PATENT LICENSE AGREEMENT
THIS AGREEMENT is made by and between the BOARD OF REGENTS
(BOARD) OF THE UNIVERSITY OF TEXAS SYSTEM (SYSTEM), an agency of the State of
Texas, whose address is 201 West Seventh Street, Austin, Texas 78701 and GERON
CORPORATION (LICENSEE), a Delaware corporation having a principal place of
business located at 21375 Cabot Boulevard, Hayward, California, 94545.
WITNESSETH
WHEREAS, BOARD owns or in the future may own certain PATENT
RIGHTS and TECHNOLOGY RIGHTS relating to the LICENSED SUBJECT MATTER, which were
developed at The University of Texas Southwestern Medical Center at Dallas (UT
SOUTHWESTERN), whose address is 5323 Harry Hines Boulevard, Dallas, Texas 75235,
a component institution of SYSTEM;
WHEREAS, BOARD desires to have the LICENSED SUBJECT MATTER
developed and used for the benefit of LICENSEE, the inventor(s), BOARD, and the
public as outlined in the Intellectual Property Policy promulgated by the BOARD
(Schedule A hereto); and
WHEREAS, LICENSEE wishes to obtain a license from BOARD to
practice LICENSED SUBJECT MATTER;
NOW, THEREFORE, in consideration of the mutual covenants and
premises herein contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
This Agreement shall be effective on September 8, 1992.
<PAGE> 2
II. DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings indicated:
2.1 LICENSED SUBJECT MATTER shall mean inventions and
discoveries that are covered by PATENT RIGHTS, all of which shall be within the
LICENSED FIELD. In the event that BOARD believes that certain TECHNOLOGY RIGHTS
contribute substantial value to any LICENSED PRODUCT, the BOARD may propose to
LICENSEE at anytime prior to the first SALE of such LICENSED PRODUCT, that such
TECHNOLOGY RIGHTS be included within the definition of LICENSED SUBJECT MATTER.
Upon receipt of such notice, the parties agree to consider in good faith whether
or not the inclusion of such rights is appropriate under the circumstances. If
the parties cannot agree within ninety (90) days after the date that BOARD
notifies LICENSEE as provided above, either party may submit the issue to a
mutually agreeable third party for prompt resolution.
2.2 PATENT RIGHTS shall mean BOARD's rights in information or
discoveries covered by the following patent applications which relate to
LICENSED FIELD, whether domestic or foreign, and all divisions, continuations,
CONTINUATIONS-IN-PART (as hereinafter defined), reissues, reexaminations or
extensions thereof:
(a) U.S. Patent Application 07/882,438, which corresponds
to UT SOUTHWESTERN file UTSD: 91804KLC, entitled "Telomerase Activity Modulation
and Telomere Diagnosis", which
2.
<PAGE> 3
names Michael D. West, Ph.D., Jerry Shay, Ph.D., and Woodring Wright, M.D.,
Ph.D., as joint inventors;
(b) The claims of continuation-in-part applications which
result in whole or in part from research conducted at UT SOUTHWESTERN by or
under the direction of Michael D. West, Ph.D., Jerry Shay, Ph.D., and/or
Woodring Wright, M.D., Ph.D., within the LICENSED FIELD between December 1, 1989
and EFFECTIVE DATE of this Agreement, inclusive (CONTINUATION-IN-PART); and
(c) The claims of patent applications which result in
whole or in part from research conducted at UT SOUTHWESTERN by or under the
direction of Michael D. West, Ph.D., Jerry Shay, Ph.D., and/or Woodring Wright,
M.D., Ph.D., within the LICENSED FIELD between December 1, 1989 and EFFECTIVE
DATE of this Agreement, inclusive.
2.3 TECHNOLOGY RIGHTS shall mean BOARD'S rights in any
KNOW-HOW. KNOW-HOW shall mean all technical information, know-how, process,
procedure, composition, device, method, formula, protocol, technique, software,
design, drawing or data relating to LICENSED SUBJECT MATTER or LICENSED FIELD
which is not disclosed in a patent within the PATENT RIGHTS, but which is
necessary or useful for practicing LICENSED SUBJECT MATTER in the LICENSED
FIELD.
2.4 LICENSED FIELD shall mean product applications relating to
cell senescence, cell immortalization, cellular or molecular bases of aging or
age related degenerative diseases, and shall include, without limitation,
telomeres and telomerase. The LICENSED FIELD also includes any process, machine,
manufacture,
3.
<PAGE> 4
composition of matter (including methods of production or use thereof) or other
invention or know-how related to any of the foregoing or to the diagnosis,
prevention, treatment or manipulation of any of the foregoing.
2.5 LICENSED TERRITORY shall mean the world.
2.6 LICENSED PRODUCT shall mean any product SOLD by LICENSEE,
SUBSIDIARY or sublicensee of LICENSEE comprising LICENSED SUBJECT MATTER
pursuant to this Agreement, including COMPOSITE PRODUCTS.
2.7 COMPOSITE PRODUCTS shall mean any product SOLD by
LICENSEE, SUBSIDIARY or sublicensee of LICENSEE with active ingredients
comprising both LICENSED SUBJECT MATTER and active ingredients other than
LICENSED SUBJECT MATTER.
2.8 SALE or SOLD shall mean the transfer or disposition of a
LICENSED PRODUCT for value to a party other than LICENSEE or a SUBSIDIARY.
2.9 SUBSIDIARY shall mean any business entity more than 50%
owned by LICENSEE, any business entity which owns more than 50% of LICENSEE, or
any business entity that is more than 50% owned by a business entity that owns
more than 50% of LICENSEE.
2.10 NET SALES shall mean the gross revenues (whether or not
in cash) received by LICENSEE, SUBSIDIARY or a sublicensee of LICENSEE from the
SALE of LICENSED PRODUCTS less sales, V.A.T. and/or use taxes, duties and
similar governmental assessments actually paid, transportation, packing,
shipping insurance and
4.
<PAGE> 5
amounts actually allowed or credited due to returns (not to exceed the original
billing or invoice amount).
III. WARRANTY; SUPERIOR RIGHTS
3.1 Except for the rights, if any, of the Government of the
United States, as set forth hereinbelow, BOARD represents and warrants its
belief that it is the owner of the entire right, title and interest in and to
LICENSED SUBJECT MATTER, and that it has the sole right to grant licenses
thereunder, and that it has not knowingly granted licenses thereunder to any
other entity that would restrict rights granted hereunder except as stated
herein. BOARD is not aware that any additional rights or licenses are necessary
for LICENSEE to exercise its license rights.
3.2 LICENSEE understands that the LICENSED SUBJECT MATTER may
have been developed under a funding agreement with the Government of the United
States of America and, if so, that the Government may have certain nonexclusive
rights relative thereto for use for government purposes, as well as statutory
"march-in rights." This Agreement is explicitly made subject to such Government
rights. To the extent there is any conflict between any such rights and this
Agreement, such Government rights shall prevail.
3.3 BOARD MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES OF
ANY KIND, EITHER EXPRESSED OR IMPLIED, AND ASSUMES NO RESPONSIBILITIES
WHATSOEVER WITH RESPECT TO THE USE, SALE OF OTHER DISPOSITION BY LICENSEE OR ANY
OTHER PERSONS OF LICENSED PRODUCTS.
5.
<PAGE> 6
IV. LICENSE
4.1 BOARD hereby grants to LICENSEE an exclusive license to
manufacture, have manufactured, use, have used, and/or sell or have sold
LICENSED PRODUCTS and to use and have used the PATENT RIGHTS and TECHNOLOGY
RIGHTS within LICENSED TERRITORY and LICENSED FIELD. This grant shall be subject
to the payment by LICENSEE to BOARD of all consideration as provided by this
Agreement, and shall be further subject to non-exclusive rights retained by the
BOARD to:
(a) Publish the general scientific findings from research
done by the UT SOUTHWESTERN related to LICENSED SUBJECT MATTER; and
(b) Use any information contained in LICENSED SUBJECT
MATTER for research, teaching, and other educationally- related purposes;
provided that none of the foregoing is done for any commercial purpose.
4.2 LICENSEE shall have the right to extend the license
granted herein to any SUBSIDIARY provided that such SUBSIDIARY consents to be
bound by this Agreement to the same extent as LICENSEE (provided that the
foregoing does not and is not intended to create redundant or double obligations
regarding royalties, reimbursement, marketing efforts or any other matter).
4.3 LICENSEE shall have the right to grant sublicenses
consistent with this Agreement provided that, with respect to BOARD, LICENSEE
shall be responsible for (and entitled to credit for) the operations of its
sublicensees relevant to this Agreement
6.
<PAGE> 7
as if such operations were carried out by LICENSEE provided that matters dealt
with in Section 5 in respect of such sublicenses shall be governed by the terms
of Section 5. LICENSEE further agrees to deliver to BOARD a true and correct
copy of each sublicense granted by LICENSEE, and any modification or termination
thereof, within thirty (30) days after execution, modification or termination;
provided that all such information shall be deemed CONFIDENTIAL INFORMATION (as
hereinafter defined). Upon termination of this Agreement under Section 6.2 any
and all existing sublicenses granted by LICENSEE shall be assigned to BOARD as
their terms permit, or shall terminate (if their terms don't so permit).
4.4 BOARD shall have the right at any time after five (5)
years from the date of this Agreement to terminate the exclusivity of the
license granted herein with respect to PATENT RIGHTS and TECHNOLOGY RIGHTS
licensed hereunder, or after eight (8) years from the date of this Agreement to
terminate this Agreement completely, as to those national jurisdictions of the
LICENSED TERRITORY in which LICENSEE has not commercialized or is not actively
attempting to commercialize an invention hereunder if LICENSEE, within ninety
(90) days after written notice from BOARD as to such intended termination of
exclusivity or this Agreement, fails to provide written evidence of present,
attempted or anticipated commercialization in a manner and on a schedule
reasonably commensurate with the scope of LICENSED TERRITORY and LICENSEE'S
resources. Evidence provided by LICENSEE that it has an
7.
<PAGE> 8
ongoing and active or anticipated research, development, manufacturing,
marketing or licensing program as appropriate, directed toward production and
sale of products based on LICENSED SUBJECT MATTER shall be deemed satisfactory
evidence. BOARD agrees that in the discretion of LICENSEE commercialization
efforts may be directed first to industrialized nations of the world commencing
with the United States of America, and only subsequently to other regions as
reasonably and commercially practicable; that particular fields within the
LICENSED FIELD and portions of the LICENSED TERRITORY may in the discretion of
LICENSEE best be commercialized by sublicense; and that LICENSEE may in the
exercise of prudent business judgment elect to defer commercialization efforts
in particular fields or national jurisdictions in LICENSED TERRITORY until the
LICENSED SUBJECT MATTER has undergone substantial and appropriate further
development. In the event of any termination under this Section or Section 7.1,
BOARD agrees to negotiate in good faith with LICENSEE to adjust the terms hereof
to reflect LICENSEE'S diminished rights (including, without limitation, royalty
rates), with relation back to the date of termination; provided, however, that
pending the completion of such negotiation, LICENSEE'S obligations shall be as
provided hereunder for the case of exclusivity; and, as to any termination of
exclusivity, LICENSEE shall have the benefit of any more favorable terms granted
by BOARD to any subsequent non-exclusive licensee of LICENSED SUBJECT MATTER in
those national jurisdictions where exclusivity is terminated.
8.
<PAGE> 9
V. PAYMENTS AND REPORTS
5.1 In consideration of the rights granted by BOARD to
LICENSEE under this Agreement and subject in all respects to Section 5.2,
LICENSEE agrees to pay BOARD the following:
(a) A license issue fee of [ * ] payable within thirty
(30) days of LICENSEE's receipt of a fully executed
Agreement from BOARD;
(b) License renewal fees payable within thirty (30) days
of the anniversary of the EFFECTIVE DATE of this Agreement
according to the following schedule:
<TABLE>
<CAPTION>
Anniversary Amount Due
----------- ----------
<S> <C>
Effective
Date: Sept 8, 1992
PYMTS Due by Oct 8, 1993...First [ * ] PD Oct 199
1994...Second [ * ]
1995...Third [ * ]
1996...Fourth [ * ]
1997...Fifth [ * ]
</TABLE>
(c) In addition to the license renewal fees shown in
Paragraph 5.1(b), LICENSEE shall pay to BOARD a license
renewal fee of [ * ] within thirty (30) days of the earlier to
occur of (A) the seventh (7th) anniversary of the EFFECTIVE
DATE of this Agreement, or (B) the first SALE of any LICENSED
PRODUCT; provided, however, that if the payment set forth in
this Paragraph 5.1(c) is due on or after the date that
LICENSEE notifies the BOARD in writing that it has offered
LICENSED PRODUCT for SALE, then such amount shall be fully
creditable against any and all running earned royalties due
BOARD under this Agreement;
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
9.
<PAGE> 10
(d) Minimum annual royalties in the amount of [ * ]
commencing on the eighth (8th) anniversary of the EFFECTIVE
DATE of this Agreement and shall extend for the Term of the
Agreement. All minimum annual royalty payments shall be
payable within thirty (30) days following the appropriate
anniversary of the EFFECTIVE DATE of this Agreement. Such
amounts due shall be credited against royalties to become due
under Paragraphs 5.1(e), 5.1(f), 5.1(g), 5.1(h) and 5.1(i).
No portion of the minimum annual royalties paid shall be
refundable should no royalties become due under Paragraphs
5.1(e), 5.1(f), 5.1(g), 5.1(h) and 5.1(i).
(e) A running earned royalty equal to [ * ] of NET SALES
by LICENSEE and any SUBSIDIARY for LICENSED PRODUCTS SOLD for
use as a human therapeutic;
(f) A running earned royalty equal to [ * ] of NET SALES
by LICENSEE and any SUBSIDIARY for LICENSED PRODUCTS SOLD for
any use not described in Paragraph 5.1(e);
(g) In the case of COMPOSITE PRODUCTS, the royalty
percentage payable to BOARD under this Agreement shall be
equal to [ * ] for human therapeutics and [ * ] for other
applications;
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
10.
<PAGE> 11
(h) For all sublicensee(s) of LICENSEE, [ * ] of the gross
revenues received by LICENSEE from such sublicensee(s) not
resulting from NET SALES (as further defined below) and a
running earned royalty equal to [ * ] of NET SALES by
sublicensee for LICENSED PRODUCTS SOLD for use as a human
therapeutic and/or a running earned royalty equal to [ * ] of
NET SALES by sublicensee for LICENSED PRODUCTS SOLD for any
other uses. In the case of COMPOSITE PRODUCTS sold by
sublicensee(s), (i) the percentage of gross revenues received
by LICENSEE from such sublicensee(s) not resulting from NET
SALES shall be [ * ] and (ii) the royalty percentage payable
to BOARD under this Paragraph 5.1(h) be equal to [ * ] for
human therapeutics and [ * ] for other applications. Gross
revenues received by LICENSEE from sublicensee(s) not
resulting from NET SALES shall include, but not be limited to,
payments in lieu of or creditable against royalties received
by LICENSEE from such sublicensee(s), with the exception of:
(1) Revenues received by LICENSEE for performance of
research, or for milestone payments for achievement of
objectives in research and development;
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
11.
<PAGE> 12
(2) investment in LICENSEE by virtue of stock
purchase;
(3) payments to LICENSEE conducting clinical testing
and/or other activities in connection with obtaining
regulatory approval for commercial SALE or use of a
LICENSED PRODUCT;
(4) all reimbursed expenses of LICENSEE.
No amounts shall be paid or payable by LICENSEE to BOARD for
any amounts received pursuant to (1), (2), (3) or (4) above.
If any payments made to LICENSEE by a sublicensee are entitled
to credit against earned royalties due LICENSEE by
sublicensee, then LICENSEE shall have the right in turn to
credit the same amount with respect to running earned
royalties due BOARD from LICENSEE under Paragraph 5.1(e),
5.1(f), 5.1(g), 5.1(h) and 5.1(i). LICENSEE agrees to act in
good faith in negotiating with a sublicensee so as not to
minimize payments to BOARD by using the credit against
royalties procedures;
(i) To the extent that (i) LICENSEE is obligated to pay
BOARD certain royalty percentages on NET SALES of LICENSED
PRODUCT pursuant Paragraphs 5.1(e), 5.1(f), 5.1(g) and 5.1(h)
and (ii) such LICENSED PRODUCT includes TECHNOLOGY RIGHTS but
no PATENT RIGHTS and (iii) such TECHNOLOGY RIGHTS are included
within the definition of LICENSED SUBJECT MATTER, then the
royalty percentage due pursuant to Paragraph 5.1(e) shall be
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
12.
<PAGE> 13
[ * ], the royalty percentage due pursuant to Paragraph 5.1(f)
shall be [ * ], the royalty percentages due pursuant to
Paragraph 5.1(g) shall be [ * ] for human therapeutics and
[ * ] for other applications, the royalty percentages due for
the SALE of LICENSED PRODUCT pursuant to Paragraph 5.1(h)
shall be [ * ] for human therapeutics and [ * ] for other
applications, and the royalty percentages due for the SALE of
COMPOSITE PRODUCTS pursuant to Paragraph 5.1(h) shall be [ * ]
for human therapeutics and [ * ] for other applications.
(j) In the event that either party believes in good
faith that any such amounts due BOARD under Paragraph 5.1(h)
or 5.1(i) are inappropriate under the circumstances, the BOARD
and LICENSEE shall negotiate in good faith the appropriate
amount to be paid. In the event that the parties are unable to
agree on the appropriate amount within ninety (90) days after
the date either party notifies the other that it believes the
amount to be inappropriate or unfair, the parties will submit
the issues to a mutually agreeable third party for prompt
resolution.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
13.
<PAGE> 14
5.2 After seven (7) years from the EFFECTIVE DATE of this
Agreement (ten (10) years in the case where the national jurisdiction is Japan),
any royalties or share of sublicensee payments due for the manufacture, use or
sale of LICENSED PRODUCTS for consumption in a national jurisdiction of LICENSED
TERRITORY where such manufacture, use and sale could have been conducted in such
national jurisdiction without infringing a valid issued patent within PATENT
RIGHTS in such national jurisdiction will be suspended unless and until such a
patent issues at which time all royalties and other payments shall resume and
all royalties and other payments held in suspense shall become due.
5.3 Only one royalty shall be payable on each unit of LICENSED
PRODUCT SOLD calculated at the applicable rate specified in this Agreement
between LICENSEE and BOARD irrespective of (i) the number of patents within
PATENT RIGHTS whose claims would be infringed but for this License Agreement or
(ii) the number of license agreements between LICENSEE and BOARD.
5.4 During the term of this Agreement and for one (1) year
thereafter LICENSEE shall keep complete and accurate records of its and (as
reported to it) its sublicensee's NET SALES of LICENSED PRODUCTS and COMPOSITE
PRODUCTS under the license granted in this Agreement in sufficient detail to
enable the royalties payable hereunder to be determined. LICENSEE shall permit
an independent certified public accountant (hired by the BOARD and reasonably
acceptable to LICENSEE), at BOARD'S expense, to periodically (but no more than
once per year) examine its books,
14.
<PAGE> 15
ledgers, and records during regular business hours for the purpose of and to the
extent necessary to verify any report required under this Agreement; provided
such accountant is bound in confidence and may not disclose any such information
except to the BOARD as necessary to show underpayment. In the event that the
amounts due to BOARD have been underpaid by more than five percent (5%) of the
amount actually due, LICENSEE shall pay the cost of such examination, the due
amount, and accrued interest thereon at the lesser of the prevailing prime rate
plus two percent (2%) per annum for commercial loans or the maximum amount which
may be charged under applicable law.
5.5 Within forty-five (45) days after March 31, June 30,
September 30 and December 31, LICENSEE shall deliver to BOARD at the addresses
listed in paragraph 14.2 a true and accurate report, giving such particulars of
the business conducted by LICENSEE during the preceding calendar quarter under
this Agreement as are pertinent to an account for payments hereunder. Such
report shall include at least (a) the quantities of LICENSED SUBJECT MATTER that
it has SOLD; (b) the total SALES; (c) the calculation of royalties thereon; and
(d) the total royalties so computed and due BOARD. Simultaneously with the
delivery of each such report, LICENSEE shall pay to BOARD the amount, if any,
due for the period of such report. If no payments are due, it shall be so
reported. LICENSEE shall impose on sublicensees, mutatis mutandis, similar
reporting and payment obligations and shall provide to BOARD similar reports
from sublicensees as they relate to BOARD'S entitlements under
15.
<PAGE> 16
paragraph 5.1 to the extent received during such quarter or thereafter up until
fifteen (15) business days prior to the due date for the report on LICENSEE'S
SALES. Simultaneously with its report on such sublicensee activity, LICENSEE
shall pay to BOARD amounts due under paragraph 5.1; provided, however, that if
sublicensee's report is delayed more than one (1) quarter after the quarter
during which it should have been submitted to LICENSEE and BOARD, LICENSEE shall
pay the amounts due on behalf of sublicensee.
5.6 Upon the request of BOARD but not more often than once per
calendar year, LICENSEE shall deliver to BOARD a written report as to LICENSEE'S
efforts and accomplishments during the preceding year in commercializing
LICENSED SUBJECT MATTER in various parts of the LICENSED TERRITORY and its
commercialization plans for the coming year. LICENSEE will provide BOARD with
written notice of impending first SALE of LICENSED PRODUCT at least sixty (60)
days in advance of such first SALE.
5.7 All amounts payable hereunder by LICENSEE shall be payable
in United States funds without deductions for taxes, assessments, fees, or
charges of any kind. Checks shall be made payable to The University of Texas
Southwestern Medical Center at Dallas and mailed to: Associate Vice President
for Legal Affairs and Technology Transfer, The University of Texas Southwestern
Medical Center at Dallas, 5323 Harry Hines Blvd., Dallas, Texas 75235-9008.
16.
<PAGE> 17
VI. TERM AND TERMINATION
6.1 The Term of this Agreement shall extend from the EFFECTIVE
DATE set forth hereinabove to the full end of the term or terms for which PATENT
RIGHTS have not expired, and, if only TECHNOLOGY RIGHTS are licensed and no
PATENT RIGHTS are applicable, for a term of twenty (20) years. Upon expiration,
LICENSEE will be entitled to fully exploit PATENT RIGHTS and TECHNOLOGY RIGHTS
without restriction or payment of royalties.
6.2 This Agreement will earlier terminate:
(a) upon thirty (30) days written notice if LICENSEE shall
fail to pay in a timely manner the amounts due under this License Agreement or
that certain Sponsored Research Agreement dated September 8, 1992; provided,
however, LICENSEE may avoid such termination if before the end of such period
the appropriate amounts have been paid; provided, however, further, that in the
event this Agreement terminates as a result of this provision, LICENSEE may
petition BOARD for reinstatement of this Agreement within ninety (90) days after
this thirty (30) day period has elapsed. Reinstatement of this Agreement shall
be at the sole discretion of BOARD which approval shall not be unreasonably
withheld and is contingent upon payment of all past due royalties or other
amounts due BOARD and accrued interest thereon at the lesser of the prevailing
prime rate plus two percent (2%) per annum for commercial loans or the maximum
amount which may be charged under applicable law.
17.
<PAGE> 18
(b) upon ninety (90) days written notice if LICENSEE shall
be materially in breach or default of any obligation under this License
Agreement; provided however, LICENSEE may avoid such termination if before the
end of such period such breach has been cured and LICENSEE so notifies the
BOARD.
(c) upon the mutual written agreement of the parties.
(d) upon sixty (60) days written notice given by LICENSEE
with or without cause.
6.3 Upon any termination of this Agreement, nothing herein
shall be construed to release any party from any liability for any obligation
incurred through the effective date of termination (e.g., confidentiality,
payment of then accrued royalties and reimbursement of patent expenses incurred
prior to such date) or for any breach of this Agreement prior to the effective
date of such termination. LICENSEE may, after the effective date of such
termination, sell all LICENSED PRODUCT and COMPOSITE PRODUCT and parts therefor
that it has on hand at the date of termination, provided that it pays earned
royalty thereon as provided in this Agreement.
VII. INFRINGEMENT BY THIRD PARTIES
7.1 LICENSEE and BOARD shall each provide the other prompt
written notification of third party alleged infringement of the rights conferred
by this Agreement.
7.2 LICENSEE shall have the first right to enforce or have
enforced at no expense to BOARD any PATENT RIGHTS to the
18.
<PAGE> 19
extent exclusively licensed hereunder against infringement by third parties and
shall be entitled to retain recovery from such enforcement. Upon LICENSEE'S
undertaking to pay all expenditures reasonably incurred by BOARD, to the extent
allowed by law, BOARD shall reasonably cooperate in any such enforcement and, as
necessary, join as a party therein. After first deducting its reasonable costs
and expenses incurred in respect of enforcement (to the extent not otherwise
awarded by settlement or a court), LICENSEE shall pay BOARD royalty (calculated
per Section 5.1) on the balance of any monetary recovery to the extent such
monetary recovery is held to be damages or a reasonable royalty in lieu thereof.
In the event that LICENSEE does not file suit against or commence settlement
negotiations with a substantial infringer of BOARD'S PATENT RIGHTS within six
(6) months of receipt of a written demand from BOARD that LICENSEE bring suit,
then the parties will consult with one another in an effort to determine whether
a reasonably prudent licensee would institute litigation to enforce the patent
in question in light of all relevant business and economic factors (including,
but not limited to, the projected cost of such litigation, the likelihood of
success on the merits, the probable amount of any damage award, the prospects
for satisfaction of any judgment against the alleged infringer, the possibility
of counterclaims against LICENSEE and BOARD, the diversion of LICENSEE'S human
and economic resources, the impact of any possible adverse outcome on LICENSEE
and the effect any publicity might have on LICENSEE'S and BOARD'S respective
reputations and goodwill). To
19.
<PAGE> 20
the extent allowed by the laws and constitution of the State of Texas, if the
parties cannot agree, the determination will be made by a mutually and
reasonably acceptable third party consultant. If after such process, it is
determined that a suit should be filed and LICENSEE does not file suit or
commence settlement negotiations forthwith against the substantial infringer,
then BOARD shall have the right to enforce any patent licensed hereunder on
behalf of itself and LICENSEE (BOARD retaining all recoveries from such
enforcement). If the BOARD institutes suit or commences settlement negotiations
and is successful, it may terminate the exclusivity of the license for the
infringed field of use in the national jurisdiction where the suit was brought.
VIII. ASSIGNMENT
This Agreement may be assigned by LICENSEE only in connection
with an acquisition of LICENSEE (by whatever means) or the sale or merger of
substantially all of its related business to or with another, or otherwise only
with the consent of BOARD, not to be unreasonably withheld. BOARD may assign its
right to receive payments hereunder but not otherwise assign this Agreement.
IX. PATENT MARKING
To the extent reasonable and practical regarding products,
LICENSEE agrees to mark permanently and legibly all products and documentation
manufactured and sold by it under this Agreement with such patent notice as is
required under Title 35, United States Code.
20.
<PAGE> 21
X. INDEMNIFICATION; INFRINGEMENT SUIT CREDIT
10.1 Subject to Section 10.2, LICENSEE shall hold
harmless and indemnify BOARD, SYSTEM, UNIVERSITY, its Regents, officers,
employees and agents from and against any claims demands, or causes of action
whatsoever, including without limitation those arising on account of any injury
or death of persons or damage to property caused by or arising out of, or
resulting from, the exercise or practice of the license granted hereunder by
LICENSEE or of its officers, employees, agents or representatives.
10.2 The BOARD shall promptly notify LICENSEE in writing of
any claim or suit or threat thereof brought against BOARD in respect of which
indemnification may be sought and, subject to the statutory authority of the
Attorney General of the State of Texas, shall reasonably cooperate with LICENSEE
in defending or settling any such claim or suit. To the extent allowed by law,
no settlement of any claim, suit or threat thereof received by BOARD and for
which the BOARD will seek indemnification, shall be made without the prior
written approval of LICENSEE. Subject to the statutory authority of the Attorney
General of the State of Texas, BOARD will permit LICENSEE to defend BOARD
against any such claim, suit or threat thereof and LICENSEE shall have sole
control over the defense, subject to BOARD'S right to select its own counsel to
review the matter for BOARD at BOARD'S sole cost and expense.
10.3 If infringement is alleged against LICENSEE or any person
or entity entitled to indemnity under Section 10.1 above because of its use of
LICENSED SUBJECT MATTER, LICENSEE may suspend
21.
<PAGE> 22
those royalties due BOARD under Section 5 from SALES of LICENSED PRODUCTS in any
national jurisdiction in which suit is brought, and pay such amounts into an
escrow account established by LICENSEE until such situation is resolved. Should
a patent within PATENT RIGHTS under which such royalties are payable be held
invalid, such royalties held in suspense shall be retained by LICENSEE to offset
litigation expenses; and, should litigation or settlement result in the
requirement that LICENSEE pay royalties or other monies to a third party, the
Parties hereunder agree in good faith to renegotiate the royalties due BOARD
with the goal of reducing the royalty paid accordingly. In the event the
validity of a patent within PATENT RIGHTS is upheld, the royalties held in
suspense shall be paid to UT SOUTHWESTERN. Any damages or attorneys' fees
awarded or received at the conclusion of such suit shall be retained by LICENSEE
in satisfaction of its litigation expenses.
XI. USE OF BOARD'S OR COMPONENT'S NAME
LICENSEE shall not, unless as required by any law or
governmental regulation, use the name of UT SOUTHWESTERN, BOARD,
SYSTEM, Regents, Professor W.E. Wright or Professor J.W. Shay
without express written consent of BOARD.
XII. CONFIDENTIAL INFORMATION; KNOW-HOW
12.1 The parties may wish, from time to time, in connection
with performance under this Agreement, to disclose confidential information
(including BOARD'S KNOW-HOW) to each other (CONFIDENTIAL INFORMATION). Subject
to the rights of LICENSEE under this Agreement, each party agrees not to use the
other
22.
<PAGE> 23
party's CONFIDENTIAL INFORMATION (other than for purposes contemplated by this
Agreement) and each will use reasonable efforts to prevent the disclosure to
third parties of any of the other party's CONFIDENTIAL INFORMATION for a period
of the Term of this Agreement or five (5) years from receipt thereof, whichever
is longer, provided that the recipient party's obligation hereunder shall not
apply to information that the recipient party can show:
(a) is not disclosed in writing or reduced to writing
and so marked with an appropriate confidentiality legend within thirty
(30) days of disclosure;
(b) is already in the recipient party's possession
at the time of disclosure thereof;
(c) is or later becomes part of the public domain
through no fault of the recipient party;
(d) is received from a third party having no
obligations of confidentiality to the disclosing party, provided that
the recipient party complies with any restrictions imposed by the third
party;
(e) is independently developed by the recipient
party;
(f) is required by law or regulation to be disclosed
(including, without limitation, in connection with FDA filings),
provided that the recipient party uses reasonable efforts to restrict
disclosure and to obtain confidential treatment; or
23.
<PAGE> 24
(g) is made available by the disclosing party to a
third party without similar restrictions.
12.2 The foregoing shall not affect or limit LICENSEE'S
right to fully exercise the licenses granted under this Agreement and LICENSEE
and its sublicensees shall be fully entitled to use KNOW-HOW in support thereof.
XIII. PATENT AND INVENTIONS
13.1 LICENSEE shall reimburse UT SOUTHWESTERN for all
expenses incurred in searching, preparing, filing, prosecuting and maintaining
patent applications and patents relating to PATENT RIGHTS. If after consultation
with LICENSEE it is agreed by UT SOUTHWESTERN and LICENSEE that a patent
application should be filed for LICENSED SUBJECT MATTER, UT SOUTHWESTERN will
prepare and file appropriate patent applications, and LICENSEE shall pay the
cost of searching, preparing, filing, prosecuting and maintaining same. If
LICENSEE notifies UT SOUTHWESTERN that it does not intend to pay such costs, or
if LICENSEE does not respond or make an effort to reach agreement, then UT
SOUTHWESTERN may file such application at its own expense and LICENSEE shall
have no rights to said patent when issued under this Agreement or otherwise. UT
SOUTHWESTERN shall provide LICENSEE with a copy of the application filed for
which LICENSEE has paid the cost of filing, as well as copies of any documents
received or filed during prosecution thereof. LICENSEE shall have the right to
review and comment upon the wording of the specifications, claims and responses
to Office Actions prior to their submission to the U.S. Patent and Trademark
24.
<PAGE> 25
Office for any patent applications for which the LICENSEE is paying all filing
and prosecution costs.
13.2 LICENSEE may petition BOARD for approval to prepare and
file appropriate United States and foreign applications on LICENSED SUBJECT
MATTER, subject to BOARD's approval of the content of the application(s) and any
amendments thereto. In addition, LICENSEE agrees to:
(a) Notify BOARD of its intent to file for patent(s)
related to LICENSED SUBJECT MATTER at least sixty (60) days prior to applying
for patent(s);
(b) Inform BOARD of LICENSEE's choice of patent counsel
to prepare and prosecute said patent application(s);
(c) Subject to BOARD's approval, prepare, file and
prosecute appropriate patent application(s), and maintain any patent(s) that may
subsequently issue, on the invention(s) and bear all such costs;
(d) Assign such rights in such patent application(s)
invented by BOARD employees to SYSTEM;
(e) Provide BOARD with a copy (or copies) of all patent
applications, as well as copies of any documents received or filed during
prosecution thereof. LICENSEE will provide BOARD with the opportunity to review,
approve and comment thereon prior to their submission to the U.S. Patent and
Trademark Office.
13.3 No later than thirty (30) days prior to the date upon
which a patent will be deemed abandoned by the Patent and Trademark Office,
LICENSEE will give notice to BOARD of its
25.
<PAGE> 26
election to forego or cease participation in searching, preparing, filing,
prosecution or maintenance of any such patent application or patent, whereupon
LICENSEE shall be freed of its reimbursement obligation in respect of future
activities regarding such application or patent and the application or patent
involved shall thereafter form no part of PATENT RIGHTS. If BOARD elects to
continue searching, preparing, filing, prosecuting or maintaining any such
patent application or patent after such notice by LICENSEE, LICENSEE may
reinstate such patent application or patent as part of PATENT RIGHTS by paying
one and one-half (1 1/2) times the costs it failed to reimburse upon BOARD'S
written consent. Reimbursements due BOARD hereunder shall be paid by LICENSEE
within thirty (30) days of its receipt of a bill from BOARD.
XIV. GENERAL
14.1 This Agreement constitutes the entire and only
agreement between the parties relating to LICENSED SUBJECT MATTER and all other
prior negotiations, representations, understandings and agreements are
superseded hereby. No agreements altering or supplementing the terms hereof may
be made except by means of a written document signed by the duly authorized
representatives of the parties.
14.2 Any notice required by this License Agreement shall
be given by prepaid, first class, certified mail, return receipt requested,
effective upon receipt, addressed in the case of BOARD to:
26.
<PAGE> 27
BOARD OF REGENTS
The University of Texas System
210 West 7th Street
Austin, Texas 78701
Attention: Office of General Counsel
with a copy to:
UT SOUTHWESTERN
Peter H. Fitzgerald, Ph.D.
Executive Vice President
for Business Affairs
5323 Harry Hines Boulevard
Dallas, Texas 75235-9013
and UT SOUTHWESTERN
Katherine L. Chapman, J.D.
Associate Vice President for Legal
Affairs and Technology Transfer
5323 Harry Hines Boulevard
Dallas, Texas 75235-9008
or in the case of LICENSEE to:
GERON CORPORATION
21375 Cabot Blvd.
Hayward, CA 94545
Attention: Vice President -
Finance and Administration
or such other address as may be given from time to time under the terms of this
notice provision.
14.3 Each party shall comply with all applicable federal,
state and local laws and regulations in connection with its activities pursuant
to this Agreement.
14.4 This License Agreement shall be construed and
enforced in accordance with the laws of the United States of America and of the
State of Texas.
27.
<PAGE> 28
14.5 Failure of BOARD or LICENSEE to enforce a right under
this agreement shall not act as a waiver of that right or the ability to assert
that right relative to the particular situation involved.
14.6 Headings included herein are for convenience only and
shall not be used to construe this Agreement.
14.7 If any provision of this Agreement shall be found by
a court to be void, invalid or unenforceable, the same shall be reformed to
comply with applicable law or stricken if not so conformable, so as not to
affect the validity or enforceability of the remainder of this Agreement.
28.
<PAGE> 29
IN WITNESS WHEREOF, the parties have caused their duly
authorized representatives to execute this AGREEMENT.
BOARD OF REGENTS OF THE GERON CORPORATION
UNIVERSITY OF TEXAS SYSTEM
By: /s/ Ray Farabee By: /s/ Jeryl Lynn Hilleman
------------------------------- --------------------------
Ray Farabee Jeryl Lynn Hilleman
Vice Chancellor Vice President Finance and
and General Counsel Administration
Date: 10-28-92 Date: 10-23-92
---------------------- ---------------------
APPROVED AS TO FORM:
By: /s/ Dudley R. Dobie, Jr.,
---------------------------------
Dudley R. Dobie, Jr., J.D.
Office of General Counsel
Date: 10-28-92
---------------------------------
APPROVED AS TO CONTENT:
By: /S/ Peter H. Fitzgerald, Ph.D.
---------------------------------
Peter H. Fitzgerald, Ph.D.
Executive Vice President
for Business Affairs
Date: 10-27-92
--------------------------
29.
<PAGE> 1
EXHIBIT 10.8
SPONSORED RESEARCH AGREEMENT
This Sponsored Research Agreement (the "Agreement") is made by and
between The University of Texas Southwestern Medical Center at Dallas
("University"), a component institution of The University of Texas System
("System"), and Geron Corporation, a Delaware corporation with its principal
place of business at 21375 Cabot Blvd., Hayward, California 94545 ("Sponsor").
RECITALS
WHEREAS, Sponsor desires that University perform certain research work
hereinafter described and is willing to advance funds to sponsor such research;
WHEREAS, Sponsor desires to obtain certain rights to patents and
technology developed during the course of such research with a view to
profitable commercialization of such patents and technology for the Sponsor's
benefit; and
WHEREAS, University is willing to perform such research and to grant
such option rights to such patents and technology;
NOW THEREFORE, in consideration of the mutual covenants and promises
herein contained, the University and Sponsor agree as follows:
I. EFFECTIVE DATE
This Agreement shall be effective as of September 8, 1992 (the
"Effective Date").
<PAGE> 2
II. RESEARCH PROGRAM
2.1 University will use its best efforts to conduct the Research
Program described in Attachment A ("Research Program") and will furnish the
facilities necessary to carry out the Research Program. The Research Program
will be under the direction of Professors W.E. Wright and J.W. Shay (the
"Principal Investigators") and will be conducted at the University.
2.2 The Research Program shall be performed during the one year period
commencing on the Effective Date, subject to extension for up to two additional
one-year periods ("Extension Periods") upon Sponsor's written elections given at
least sixty (60) days before the beginning of the applicable one-year Extension
Period. Sponsor shall have the option of further extending the Research Program
under mutually agreeable support terms not less favorable to Sponsor than those
hereof.
2.3 Sponsor understands that University's primary mission is education
and advancement of knowledge, and consequently, the Research Program will be
designed to carry out that mission. The manner of performance of the Research
Program shall be determined solely by the Principal Investigators. University
does not guarantee specific results, and the Research Program will be conducted
only on a best efforts basis.
2.4 University will keep accurate financial and scientific records
relating to the Research Program and will make such records available to Sponsor
or its authorized representa-
2.
<PAGE> 3
tive throughout the Term, as defined herein, of the Agreement during normal
business hours upon reasonable notice.
2.5 Sponsor understands that University may be involved in similar
research through other researchers on behalf of itself and others. University
shall be free to continue such research provided that it is conducted separately
and by different investigators from the Research Program, and Sponsor shall not
gain any rights via this Agreement to such other research.
2.6 University does not guarantee that any patent rights will result
from the Research Program, that the scope of any patent rights obtained will
cover Sponsor's commercial interests, or that any such patent rights will be
free of dominance by other patents, including those based upon inventions made
by other inventors in the System independent of the Research Program (however,
the University is unaware of any such dominant patent).
III. COMPENSATION
3.1 As consideration for the performance by University of its
obligations under this Agreement, Sponsor will pay the University an amount
equal to its expenditures and reasonable overhead (at the rate of [ * ] of such
expenditures) in conducting the Research Program subject to a maximum
expenditure (including overhead) limitation of [ * ] . If Sponsor elects to
extend the Research Program (a) for the first Extension Period, the maximum
expenditure limitation will be [ * ] or (b) for the
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
3.
<PAGE> 4
second Extension Period, the maximum expenditure limitation will be [ * ].
For each one year period of the Research Program, an initial payment of
[ * ] percent of the maximum expenditure limit for that period shall
be made promptly following the beginning of such period and subsequent equal
payments shall be made three, six and nine months thereafter, provided this
Agreement has not been terminated.
3.2 University shall maintain all Research Program funds in a separate
account and shall expend such funds for wages, supplies, equipment, travel, and
other operation expenses in connection with the Research Program and
substantially in accordance with the budget summary attached hereto and
designated Attachment C. It is understood that funds for the Research Program
which are not used in a particular quarter or during the initial one year period
of this Agreement or any applicable Extension Period may be used in subsequent
quarters or periods during the Term of this Agreement.
3.3 University shall retain title to all equipment purchased and/or
fabricated by it with funds provided by Sponsor under this Agreement.
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
4.
<PAGE> 5
IV. CONSULTATION AND REPORTS
4.1 Sponsor's designated representative for consultation and
communications with the Principal Investigators shall be Michael West or such
other person as Sponsor may from time to time designate in writing to University
and the Principal Investigators ("Designated Representative").
4.2 During the Term of the Agreement, Sponsor's representatives may
consult informally with University's representatives regarding the project, both
personally and by telephone. Access to work carried on in University
laboratories in the course of these investigations shall be entirely under the
control of University personnel but shall be made available on a reasonable
basis for observance of the work.
4.3 The Principal Investigators will make up to four oral reports each
year as requested by Sponsor's Designated Representative. At the conclusion of
the Research Project, the Principal Investigators and University's Office of
Accounting shall submit a final technical and financial report, respectively,
summarizing the Research Program within ninety (90) days of termination of the
Agreement which shall contain:
(a) A detailed summary of income and expenses of the Research
Program (Office of Accounting); and
(b) A report of all activities undertaken and accomplishments
achieved through the Research Program during the project (Principal
Investigators).
5.
<PAGE> 6
V. PUBLICITY
Except as required by the Texas Open Records Act or other law or
regulation, no press release or any other written statements in connection with
work performed under this Agreement intended for use in the public media making
any reference to one party hereunder shall be made by the other party.
University, however, shall have the right to acknowledge Sponsor's support of
the investigations under this Agreement in scientific or academic publications
and other scientific or academic communications, without Sponsor's prior
approval. In any such statements, the parties shall describe the scope and
nature of their participation accurately and appropriately.
VI. PUBLICATION AND ACADEMIC RIGHTS
6.1 University and the Principal Investigators have the right to
publish or otherwise publicly disclose information gained as the result of their
research in the course of this Agreement. In order to avoid loss of patent
rights as a result of premature public disclosure of patentable information,
University or the Principal Investigators will submit any prepublication
materials and a summary of any other planned public disclosure to Sponsor for
review and comment at least forty-five (45) days prior to the planned submission
for publication. The Principal Investigators will have all members of their
research groups submit all such prepublication materials and planned public
disclosures to the Principal Investigators for submission to Sponsor as set
forth in the preceding sentence.
6.
<PAGE> 7
Sponsor shall notify University within thirty (30) days of receipt of such
materials whether it desires University to file patent applications on any
inventions contained in the materials; and, if University agrees to do so, it
will promptly proceed to file the patent application(s) in due course pursuant
to the provisions of Attachment B. In such case, University and the Principal
Investigators will delay publication and any other disclosure for up to
forty-five (45) additional days to ensure that such filings are made before
publication or other disclosure. University and the Principal Investigators
shall have final authority to determine the scope and content of any
publications, but University and the Principal Investigators will consider in
good faith suggestions by Sponsor.
6.2 It is understood that, subject to Section 6.1, the Principal
Investigators may discuss the research being performed under this Agreement with
other investigators but shall not reveal information which is Sponsor's
Confidential Information under Article VII hereof. In the event any joint
inventions result, University shall grant to Sponsor the rights outlined in
Attachment B to this Agreement, to the extent these are not in conflict with
obligations to another party as a result of the involvement of the other
investigator(s). In this latter case of a conflict, University shall, in good
faith, exercise reasonable efforts to enable Sponsor to obtain rights to the
joint invention. If Sponsor obtains rights to the portion of the joint invention
not developed by the Principal Investigators, then no
7.
<PAGE> 8
royalty payments shall be due pursuant to this Agreement by Sponsor to
University with respect to such portion.
VII. CONFIDENTIAL INFORMATION
The parties may wish, from time to time, in connection with work
contemplated under this Agreement, to disclose confidential information to each
other ("Confidential Information"). Subject to the rights of Sponsor under the
Patent License Agreement that may come into effect (the "License Agreement"),
each party agrees not to use the other party's Confidential Information (other
than for purposes contemplated by this Agreement or the License Agreement) and
each will use reasonable efforts to prevent the disclosure to third parties of
any of the other party's Confidential Information for a period of three (3)
years from receipt thereof, provided that the recipient party's obligation
hereunder shall not apply to information that the recipient party can show:
(1) is not disclosed in writing or reduced to writing and so marked
with an appropriate confidentiality legend within thirty (30) days of
disclosure;
(2) is already in the recipient party's possession at the time of
disclosure thereof;
(3) is or later becomes part of the public domain through no fault of
the recipient party;
(4) is received from a third party having no obligations of
confidentiality to the disclosing party;
(5) is independently developed by the recipient party;
8.
<PAGE> 9
(6) is required by law or regulation to be disclosed (including,
without limitation, in connection with FDA filings), provided that the
recipient party uses reasonable efforts to restrict disclosure and to
obtain confidential treatment; or
(7) is made available by the disclosing party to a third party without
similar restrictions.
VIII. PATENTS, COPYRIGHTS, AND TECHNOLOGY RIGHTS
As partial consideration for payments made by Sponsor hereunder,
Sponsor and University agree to the terms concerning patents, copyrights, and
technology rights set forth in Attachment B.
IX. LIABILITY
9.1 Subject to Section 9.2, Sponsor agrees to indemnify and hold
harmless System, University, their Regents, officers, agents and employees from
any liability, loss or damage they may suffer as a result of claims, demands,
costs or judgments against them arising out of the Sponsor's activities to be
carried out pursuant to the obligations of this Agreement, and the use by
Sponsor of the results obtained from the activities performed by University
under this Agreement; provided, however, that any such liability, loss or damage
resulting from the following Subsections "a" or "b" is excluded from Sponsor's
obligation to indemnify and hold harmless:
9.
<PAGE> 10
(a) the negligent failure of University to substantially comply
with any applicable FDA or other governmental requirements; or
(b) the negligence or willful malfeasance of any Regent, officer,
agent or employee of University or System.
9.2 Both parties agree that upon receipt of a notice of claim or action
for which indemnity may be claimed (or any threat thereof), the party receiving
such notice will notify the other party promptly. Sponsor agrees, at its own
expense, to provide attorneys to defend against any actions brought or filed
against University, System, their Regents, officers, agents and/or employees
with respect to the subject of the indemnity contained herein, whether such
claims or actions are rightfully brought or filed; and subject to the statutory
duty of the Texas Attorney General, University agrees to cooperate with Sponsor
in the defense of such claim or action, including provision of consent to
settlement of such claims or actions, which consent shall not be unreasonably
withheld.
9.3 To the extent System, University, their Regents, officers, agents
and employees are entitled to indemnification pursuant to any other agreement
including, without limitation, any license agreement between the Sponsor and the
System or the University, the provisions of such other agreement shall govern
and this Section 9 shall not be applicable.
10.
<PAGE> 11
X. INDEPENDENT CONTRACTOR
For the purposes of this Agreement and all services to be provided
hereunder, the parties shall be, and shall be deemed to be, independent
contractors and not agents or employees of the other party. Neither party shall
have authority to make any statements, representations or commitments of any
kind, or to take any action which shall be binding on the other party, except as
may be expressly provided for herein or authorized in writing.
XI. TERM AND TERMINATION
11.1 This Agreement shall commence on the Effective Date and extend
until the end of the Research Program as described hereinabove, unless sooner
terminated in accordance with the provisions of this Section ("Term").
11.2 This Agreement may be terminated by the written agreement of both
parties.
11.3 In the event that either party shall be in default of its material
obligations under this agreement and shall fail to remedy such default within
sixty (60) days after receipt of written notice thereof, this Agreement shall
terminate upon expiration of the sixty (60) day period.
11.4 Termination or cancellation of this Agreement shall not affect the
rights and obligations of the parties accrued prior to termination. As its sole
liability upon termination, Sponsor shall pay University for all reasonable
expenses incurred or committed to be expended as of the effective termination
date, including salaries for appointees for the
11.
<PAGE> 12
remainder of their appointment; provided, however, that Sponsor shall not be
obligated to pay more than the amount remaining unpaid under Section 3.1 (not
including any amounts relating to Research Program extensions not elected by
Sponsor) and that the University shall use its reasonable efforts to cancel
commitments and reallocate supplies, people and other resources to minimize the
payment by Sponsor.
11.5 Any provisions of this Agreement which by their nature extend
beyond termination hereof shall survive such termination.
XII. ATTACHMENTS
Attachments A, B and C are incorporated herein and made a part hereof
for all purposes.
XIII. MATERIALS TRANSFER
13.1 It is contemplated that the University and the Sponsor will,
during the course of the Research Program, exchange various biological
materials, including, without limitation, cell lines, vectors, and associated
know-how and data ("Material") owned by or proprietary to the party providing
such materials (or proprietary to a third party from which such materials were
obtained) ("Disclosing Party") to the other party ("Receiving Party"). The
Disclosing Party shall be free, in its sole discretion, to distribute its
Material provided to the Receiving Party to others and to use it for its own
purposes.
13.2 The Sponsor's Material shall be used by the Principal
Investigators solely in connection with the Research
12.
<PAGE> 13
Program and not for any other purpose without the prior written consent of
Sponsor, which consent shall not be unreasonably withheld. The University shall
not distribute, release, or in any way disclose Sponsor's Material to any person
or entity other than laboratory personnel under the Principal Investigators'
direct supervision.
13.3 The Receiving Party shall ensure that no one will be allowed to
take or send Material to any other location, unless written permission is
obtained from the Disclosing Party. The Material is made available by University
and Sponsor for investigational use only in laboratory animals or in vitro
experiments. Neither the Material nor any biological materials treated therewith
will be used in human beings.
13.4 This Agreement and the resulting transfer of Material constitute a
license to use the Material solely for purposes of the Research Program. Except
as otherwise provided in this Agreement, the Receiving Party agrees that nothing
pursuant to this Section XIII shall be deemed to grant any rights under any
patents. At the request of the Disclosing Party, the Receiving Party will return
all unused Material, whether or not during the Term.
13.5 The Material is experimental in nature and it is provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. THERE IS NO REPRESENTATION OR WARRANTY THAT THE
USE OF THE MATERIAL WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
13.
<PAGE> 14
13.6 In no event shall the Disclosing Party be liable for any use by
the Receiving Party of the Material or any loss, claim, damage or liability, of
whatsoever kind or nature, which may arise from or in connection with this
Agreement or the use, handling or storage of the Material.
13.7 The Receiving Party will use the Material in compliance with all
laws, governmental regulations and guidelines applicable to the Material,
including any specially applicable to research with recombinant DNA.
XIV. GENERAL
14.1 This Agreement may be assigned by Sponsor only in connection with
an acquisition (by whatever means) or the sale or merger of substantially all of
its related business to or with another, and otherwise only with the consent of
University, not to be unreasonably withheld. University may not assign this
Agreement without the consent of Sponsor.
14.2 This Agreement constitutes the entire and only agreement between
the parties relating to the Research Program, and all prior negotiations,
representations, agreements and understandings are superseded hereby. No
agreements altering or supplementing the terms hereof may be made except by
means of a written document signed by the duly authorized representatives of the
parties.
14.3 Any notice required by this Agreement by Articles VIII, IX or XI
shall be given by prepaid, first class, certified
14.
<PAGE> 15
mail, return receipt requested, addressed in the case of University to:
Office of General Counsel
The University of Texas System
201 West Seventh Street
Austin, Texas 78701
ATTN: Intellectual Property Section
FAX: (512) 499-4523
PHONE: (512) 499-4462
The University of Texas Southwestern
Medical Center at Dallas
5323 Harry Hines Boulevard
Dallas, Texas 75235-9013
ATTN: Peter H. Fitzgerald
Executive Vice President for Business Affairs
FAX: (214) 688-3944
PHONE: (214) 688-3572
or in the case of Sponsor to:
Geron Corporation
21375 Cabot Blvd.
Hayward, CA 94545
Attn: Vice President, Finance & Administration
FAX: (510) 670-8960
PHONE: (510) 670-8900
or at such other addresses as may be given from time to time in accordance with
the terms of this notice provision.
Notices and other communications regarding the day-to-day
administration and operation of this Agreement shall be mailed (or otherwise
delivered), and addressed in the case of University to:
The University of Texas Southwestern
Medical Center at Dallas
5323 Harry Hines Blvd.
Dallas, Texas 75235-9062
Attn: Gerald Mussey
FAX: (214) 688-8805
PHONE: (214) 688-8748
15.
<PAGE> 16
or in the case of Sponsor to:
Geron Corporation
21375 Cabot Blvd.
Hayward, CA 94545
Attn: Michael West
FAX: (510) 670-8960
PHONE: (510) 670-8900
14.4 This Agreement shall be governed by, construed, and enforced in
accordance with the internal laws of the State of Texas.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
GERON CORPORATION THE UNIVERSITY OF TEXAS
SOUTHWESTERN MEDICAL CENTER
AT DALLAS
By: /s/ Alexander E. Barkas By: /s/ Peter H. Fitzgerald
-------------------------- --------------------------
Alexander E. Barkas, Ph.D. Peter H. Fitzgerald
Acting Chief Executive Executive Vice President
Officer for Business Affairs
Date: Date: September 24, 1992
------------------------ ------------------------
16.
<PAGE> 17
Attachment A
DESCRIPTION OF RESEARCH PROGRAM
Sponsored Research Proposal to Geron Corporation
The Role of Telomeres in Regulating Gene Expression
August 10, 1992
Submitted by:
Jerry W. Shay, Ph.D. and Woodring E. Wright, M.D., Ph.D.
Co-Principal Investigators
The University of Texas Southwestern Medical Center at Dallas
Department of Cell Biology and Neuroscience
5323 Harry Hines Boulevard
Dallas, Texas 75235-9039
The Research Program will include all work done by or under the
direction of Drs. Shay and Wright investigating the modulation of telomerase
activity, the modulation of telomere length, and genes regulated by telomere
length including, without limitation, the following:
Background:
All normal diploid vertebrate cells have a limited capacity to
proliferate, a phenomenon that has come to be known as the Hayflick limit or
replicative senescence. In human fibroblasts, this limit occurs after 50-80
population doublings, after which the cells remain in a viable but non-dividing
senescent state for many months. This contrasts to the behavior of most cancer
cells, which have escaped from the controls limiting their proliferative
capacity and are effectively immortal.
A variety of hypotheses have been advanced over the years to explain
the causes of cellular senescence. One that has received much recent attention
concerns the role of the distal ends of chromosomes called telomeres. The
hypothesis is that somatic cells lack the ability to replicate the very ends of
DNA molecules. This results in a progressive shortening of the ends of the
chromosomes until some essential gene(s) is eliminated, at which time the cell
loses the capacity to proliferate. The first experimental evidence supporting
this model was the demonstration that the telomeres of the X chromosome are
heterogeneous in size and considerably smaller in somatic than germ cells. In
1990, a progressive shortening of telomeres with age in blood and colonic mucosa
from human donors was found, and it was also shown that the average telomere
length in cultured human fibroblasts decreased as a function of the number of
population doublings in culture.
<PAGE> 18
Replication of the very ends of DNA molecules can be accomplished by
the ribonucleoprotein enzyme telomere terminal transferase (telomerase).
Mutations in the RNA component of telomerase causes telomere shortening and
senescence in tetrahymena, further supporting the role of telomeres in
replicative senescence. Immortal human cancer cells have been shown to have
telomerase activity and are thus able to maintain the length of their telomeres.
Project 1. A simplified diagnostic test for telomere length.
[ * ]
Project 2. An improved telomerase assay.
[ * ]
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
2.
<PAGE> 19
[ * ]
Project 3: A method to retard telomere shortening.
[ * ]
Project 4. Inhibition of telomerase in cancer cells.
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
3.
<PAGE> 20
[ * ]
Project 5. Identification of genes and unique sequences located near telomeres.
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
4.
<PAGE> 21
Attachment B
PATENTS, COPYRIGHTS, AND TECHNOLOGY RIGHTS
1. The following terms shall have the indicated meanings when used in this
Attachment:
a. "Agreement" shall mean that certain Sponsored Research Agreement to
which this Attachment is affixed between The University of Texas
Southwestern Medical Center at Dallas ("University"), and Geron
Corporation ("Sponsor"), of even date herewith.
b. "Invention" shall mean any discovery, concept, or idea, whether or not
patentable, made by the University and/or the Principal Investigators
during the Research Program, and arising directly from the performance
of the Research Program, including but not limited to processes,
methods, software, tangible research products, formulas and techniques,
improvements thereto, and know-how related thereto.
c. "Patent Expenses" shall mean any expenses, including attorney's fees,
incurred in searching prior art, obtaining search opinions, preparing
applications, filing, prosecuting, enforcing or maintaining a patent or
patent application with respect to Patent Rights in any country in which
the patent or patent application is filed.
d. "Patent Rights" shall mean any patent application or patent covering any
Invention made by The University and/or the Principal Investigators
during the course of the Research Program and arising directly from the
performance of the Research Program, including any continuation,
continuations-in-part, divisional applications, substitutions,
extensions or additions thereto, and any corresponding foreign patent
applications or patents based on such applications or patents.
e. "Technology Rights" shall mean University rights under state and federal
laws, including the laws of copyright, trade secret, and unfair
competition, in unpatented Inventions, know-how, software and other
technology developed by The University and/or the Principal
Investigators during the Research Program
<PAGE> 22
and arising directly from the performance of the Research Program.
f. Capitalized terms used in this Attachment that are not defined herein
shall have the meanings ascribed to such terms in the Agreement.
2. Any Patent Rights and Technology Rights, including Inventions or
copyrightable works made during the course of the Research Program, solely by
University personnel shall be the property of University and any Patent Rights
made during the course of the Research Program jointly by University and Sponsor
personnel shall be jointly owned by University and Sponsor. Rights arise during
the Research Program if they are either conceived or reduced to practice during
the Research Program.
3. After consultation with Sponsor, University at its sole election may
prepare and file appropriate United States and foreign patent applications for
Inventions. Sponsor may select counsel to prepare and file such applications
with the consent of University, which consent shall not be unreasonably
withheld. University and Sponsor, on a confidential basis, will exchange a copy
of any such application filed and any documents received or filed during
prosecution thereof and will provide each other with the opportunity to comment
thereon. On any application on which an employee of Sponsor is named as a
co-inventor, Sponsor will cooperate in obtaining execution of any necessary
documents by its employees. In the event that University does not file or
diligently pursue any patent application in a manner which Sponsor reasonably
concludes will materially prejudice the ability to obtain a patent covering
substantially the claims set forth in the application, Sponsor may assume
responsibility for such patent application on behalf of and in the name of
University.
4. As partial consideration for Sponsor's obligation to make the payments
described in Article 3 of the Agreement, University grants to Sponsor an option
to negotiate a worldwide, royalty-bearing exclusive license under Patent Rights
and Technology Rights to practice any Invention and use any technology made in
the course of the Research Program. Such option shall be exercisable in the
following manner: Whenever Sponsor or University, in their good faith judgment,
believes that it has a commercially exploitable item within Patent/Rights and
Technology Rights ("Item"), it shall present the Item to Sponsor or University,
as the case may be, on a confidential basis. Within ninety (90) days after any
presentation by Sponsor to University, Sponsor shall notify University in
writing if it wishes to exercise its option for that Item. In the event that
Sponsor decides to obtain a license, a license agreement shall be negotiated in
good faith and entered into in accordance with the provisions of Section 7 of
this Attachment B. University grants
2.
<PAGE> 23
to Sponsor the exclusive right to negotiate and enter into a license agreement
anytime during the term of, and within six (6) months after termination of, this
Agreement. Within such period, Sponsor may extend for an additional one and
one-half (1 1/2) years after such period its exclusive right by payment of
[ * ].
5. In the event Sponsor elects to exercise its option as to any Item, in
accordance with the procedures detailed above, it shall be obligated to pay all
Patent Expenses for such Item. This shall include but not be limited to the cost
of any prior activities investigating patentability of the Item before exercise
of the option, such as search and opinion for patentability that may have been
performed by University pursuant to its arrival at a judgment of commercially
exploitable status. It is contemplated that, in the majority of instances,
Sponsor will be asked to determine whether it will exercise its option prior to
the filing of the first patent application.
6. Sponsor may exercise its option on Patent Rights and Technology Rights
by informing the University and System as provided for in the Agreement at
Section 14.3 of the identity of the Item within Patent Rights and Technology
Rights and by providing a written statement of its intention to develop the
Item, or cause the Item to be developed, for public use as soon as practicable,
consistent with sound and reasonable business practices and judgment.
7. Any license to Patent Rights and Technology Rights granted to
Sponsor, as provided herein, shall be in the same form and substance of
agreement as the License Agreement (draft dated August 21, 1992 or as
superceded by the form and substance of the License Agreement as modified and
executed by the parties), except as to royalty rate. The royalty rate in any
such license agreement shall be [ * ] of Net Sales in respect of Licensed
Products sold for use as a human therapeutic and [ * ] of Net Sales in respect
of Licensed Products sold for other applications; provided, however, either
party may request that either or both of these royalty rates be increased or
decreased up to [ * ]. The parties will negotiate in good faith with respect to
such possible adjustment taking into account the past and future contributions
of the parties with respect to research, development and commercialization and
whether the existing royalty rate is unreasonable under the circumstances. The
adjustment will be effective upon mutual agreement, or if the parties cannot
agree, upon the decision of an independent arbitrator selected by University
and Sponsor. Any arbitration shall be at the expense of Sponsor. Within the
Licensed Field, as that term is defined in the License Agreement entered into
as of this date, it is agreed that any technology within such Licensed Field
shall be added by amendment to such existing License Agreement. Regardless of
the
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
3.
<PAGE> 24
form of any license agreement, such agreement shall include at least the
following terms and conditions:
(a) a reasonable and customary running royalty on net sales from licensed
products;
(b) the right of Sponsor to grant sublicenses, with payment to the
University of [ * ] of any royalties or other proceeds received by
Sponsor;
(c) a commitment by Sponsor and any sublicensee to diligently develop and
commercialize the licensed invention and technology. In the event
Sponsor does not achieve its commitment, its license shall terminate
upon written notice by University;
(d) a term that does not exceed any limits imposed by law;
(e) retention by the University of the complete royalty-free right to use
any Patent Rights and Technology Rights, including any licensed
Inventions, technology, or software for teaching, research, or other
educational or academic purposes;
(f) reservation of the rights of the Government of the United States of
America, as set forth in Public Law 96- 517, if applicable; and
(g) an indemnification by Sponsor of University, System and their Regents,
officers, employees, and agents from all liability arising from
Sponsor's development, marketing, and use of any Patent Rights or
Technology Rights.
8. Subject to confidential treatment by Sponsor of University Confidential
Information that may be disclosed thereunder, University grants Sponsor a fully
paid-up, nonexclusive license under its copyrights to make a reasonable number
of copies for its internal needs, and to make derivative works, from any written
report prepared and delivered to Sponsor in accordance with this Agreement.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
4.
<PAGE> 25
ATTACHMENT C
BUDGET SUMMARY
FOR September 8, 1992 to September 7, 1993
PERSONNEL
Level (%) Person-months Direct Costs ($)
Graduate Students:
Technicians:
Postdoctorals:
<TABLE>
<S> <C> <C> <C>
Yan Ying, Ph.D. 100% [ * ] [ * ]
Yury Romanchikov, Ph.D. 100% [ * ] [ * ]
Dana Brasiskyte, Ph.D. 100% [ * ] [ * ]
Secretarial:
TOTAL DIRECT PERSONNEL: [ * ]
FRINGE BENEFITS:
(30.9% of direct
personnel costs) [ * ]
TUITION AND FEES
SUPPLIES AND EXPENDABLES [ * ]
TOTAL DIRECT COSTS [ * ]
INDIRECT COSTS
(20% of total
direct costs) [ * ]
TOTAL PROJECT COST [ * ]
--------
</TABLE>
Drs. Jerry W. Shay and Woodring E. Wright will be co-principal investigators on
this three year project and can spend the funds without time restrictions (i.e.
without expiration dates) in any manner that they consider appropriate. This
includes rebudgeting funds for such items as U.T. Southwestern parking fees,
entertainment (including A.W. Harris Faculty club dues, refreshments for
laboratory meetings, recruitment, and actual travel expenses).
Estimate of budget summary of direct costs for future years:
YEAR 2 [ * ]
YEAR 3 [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 1
Exhibit 10.9
EXCLUSIVE LICENSE AGREEMENT
BETWEEN
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
AND
GERON CORPORATION
FOR
NEW STRATEGY FOR KILLING CANCER CELLS AND PATHOGENS
UC CASE NO. 92-337
NEW STRATEGY FOR KILLING FUNGAL PATHOGENS
UC CASE NO. 92-374 AND
TELOMERIC DNA SEQUENCES IN FUNGAL PATHOGENS
UC CASE NO. 92-375
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Title Page
<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. LIFE OF PATENT EXCLUSIVE GRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. SUBLICENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. LICENSE-ISSUE FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7. PROGRESS AND ROYALTY REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9. LIFE OF THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10. TERMINATION BY THE REGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11. TERMINATION BY LICENSEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. DISPOSITION OF LICENSED PRODUCT
ON HAND UPON TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13. USE OF NAMES AND TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. LIMITED WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. PATENT PROSECUTION AND MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16. PATENT MARKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
17. PATENT INFRINGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
18. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
19. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
20. ASSIGNABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
21. LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
22. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
23. FAILURE TO PERFORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
24. GOVERNING LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
25. FOREIGN GOVERNMENT APPROVAL
OR REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
26. EXPORT CONTROL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
27. SECRECY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
28. INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
29. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 3
EXCLUSIVE LICENSE AGREEMENT
for
NEW STRATEGY FOR KILLING CANCER CELLS AND PATHOGENS
NEW STRATEGY FOR KILLING FUNGAL PATHOGENS
TELOMERIC DNA SEQUENCES IN FUNGAL PATHOGENS
THIS LICENSE AGREEMENT (the "Agreement") is made and is effective this
2nd day of February, 1994 by and between THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA, a California corporation having its statewide administrative
offices at 300 Lakeside Drive, 22nd Floor, Oakland, California 94612-3550,
hereinafter referred to as "The Regents", and Geron Corporation, a Delaware
corporation having a principal place of business at 200 Constitution Drive,
Menlo Park, California 94025 hereinafter referred to as the "Licensee".
RECITALS
WHEREAS, certain inventions, generally characterized as UC Case No.
92-337 entitled "New Strategy for Killing Cancer Cells and Pathogens"; UC Case
No. 92-374 entitled "New Strategy for Killing Fungal Pathogens"; and UC Case
No. 92-375 entitled "Telomeric DNA Sequences in Fungal Pathogens", hereinafter
collectively referred to as the "Invention", were made in the course of
research at the University of California, at San Francisco by Dr. Elizabeth
Blackburn and are covered by Regents' Patent Rights as defined below;
<PAGE> 4
WHEREAS, the Licensee has filed a patent application, Serial Number
08/060,952 on May 13, 1993, on behalf of The Regents as a continuation-in-part
of a patent application filed in the name of Michael West, et al., and owned by
The University of Texas.
WHEREAS, the Licensee has licensed all rights under The University of
Texas' patent rights.
WHEREAS, the development of the Invention may be sponsored in part by
Department of Health and Human Services as a consequence this license is
subject to overriding obligations to the Federal Government as set forth in
35 U.S.C 200-212 and applicable governmental implementing regulations;
WHEREAS, the Licensee is a "small business firm" as defined in
15 U.S.C. 632;
WHEREAS, The Regents is desirous that the Invention be developed and
utilized to the fullest extent so that the benefits can be enjoyed by the
general public;
WHEREAS, the Licensee is desirous of obtaining certain rights from The
Regents for the commercial development, use, and sale of the Invention, and The
Regents is willing to grant such rights; and
WHEREAS, both parties recognize and agree that royalties due hereunder
will be paid on both pending patent applications and issued patents;
--oo 0 oo--
the parties agree as follows:
2
<PAGE> 5
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 "Regents' Patent Rights" means patent rights to any subject
matter claimed in or covered by any of the following: Pending U.S. Patent
Application Serial No. 08/060,952 entitled a Therapy And Diagnosis Of
Conditions Related To Telomerase Length And/Or Telomerase Activity filed
May 13, 1993 by Elizabeth Blackburn, and assigned to The Regents under U.C. case
numbers 92-337, 92-374, 92-375; and continuing applications thereof including
divisions, extensions, continuations, substitutions, and continuations-in-part
to the extent that claims are supported by claims in U.S. Patent Application
Serial No. 08/060,952; any patents issuing on said application or continuing
applications including reissues; and any corresponding foreign applications or
patents.
1.2 "Licensed Product" means any material that is produced by the
Licensed Method or the manufacture, use, or sale of which would constitute in a
particular country, but for the license granted to the Licensee pursuant to
this Agreement, an infringement of any pending or issued claim within Regents'
Patent Rights in that country in which such patent has issued or application is
pending.
1.3 "Licensed Method" means any method, where the use or practice
of which would constitute in a particular country, but for the license granted
to the Licensee pursuant to this Agreement, an infringement of any pending or
issued claim within Regents' Patent Rights in that country in which such patent
has issued or application is pending.
1.4 "Net Sales" means the total of the gross invoice prices
received from the sale of Licensed Product to an independent third party less
the sum of the following actual
3
<PAGE> 6
and customary deductions where applicable: cash, trade, or quantity or
government discounts or rebates actually taken; sales, use, tariff,
import/export duties or other excise taxes imposed upon particular sales;
transportation charges, including insurance charges as invoiced by carrier, and
allowances or credits to customers because of rejections or returns.
1.5 "Therapeutic Product" means any Licensed Product made and/or
sold for in vivo human use which is used for the amelioration or treatment of a
disease or condition and which requires an Investigational New Drug application
(IND) approved by the U.S. Food and Drug Administration (FDA) or the equivalent
application in other countries in order to be approved for commercial sales.
1.6 "Affiliate" of a party means any business entity which,
directly or indirectly, controls such party, is controlled by such party or is
under common control with such party.
1.7 "Composite Products" shall mean Licensed Product sold by
Licensee, its Affiliate or its sublicensee whose primary active ingredient
(where primary means the highest pharmaceutical efficacy) is not licensed
hereunder.
1.8 "Field of Use" shall mean all indications.
2. LIFE OF PATENT EXCLUSIVE GRANT
2.1 Subject to the limitations set forth in this Agreement, The
Regents hereby grants to the Licensee a world-wide exclusive license in the
Field of Use under Regents' Patent Rights to make, have made, use, and sell
Licensed Product, to practice the Licensed Method and to otherwise exploit the
Regents' Patent Rights.
4
<PAGE> 7
2.2 Except as otherwise provided herein, the license granted in
section 2.1 shall be exclusive for the life of the Agreement.
2.3 The license granted hereunder shall be subject to all the
applicable provisions of the License to the United States Government executed
by The Regents.
2.4 The license granted hereunder shall be subject to the
overriding obligations to the U.S. Government set forth in 35 U.S.C. 200-212
and applicable governmental implementing regulations.
2.5 Licensee shall have the right to extend the license granted
herein to any Affiliate provided that such Affiliate consents to be bound by
this Agreement to the same extent as Licensee (provided that the foregoing does
not and is not intended to create redundant or double obligations regarding
royalties, reimbursement, marketing efforts or any other matter).
2.6 The Regents expressly reserves the right to use the Invention
solely for non-commercial educational and research purposes.
3. SUBLICENSES
3.1 The Regents also grants to the Licensee the right to issue
sublicenses to third parties to make, have made, use, and sell Licensed Product
and to practice the Licensed Method, provided the Licensee has current
exclusive rights thereto under this Agreement. To the extent applicable, such
sublicenses shall include all of the rights and limitations of and obligations
due to The Regents (and, if applicable, the United States Government) that are
contained in this Agreement.
5
<PAGE> 8
3.2 Licensee shall provide The Regents with a summary of the key
financial terms and conditions of any sublicense agreement provided, however,
that Licensee shall not be required to provide The Regents with any information
that is reasonably determined, in good faith by Licensee, to be confidential
under the sublicense and is not relevant to the terms of this agreement;
collect and guarantee payment of all royalties due The Regents from
sublicensees, as specified in Article 5; and summarize and deliver all reports
due The Regents from sublicensees.
3.3 Upon termination of this Agreement for any reason, The Regents
will accept assignment of any existing sublicenses from the Licensee then in
force, provided that sublicensees agree to make all payments due directly to
The Regents, all diligence requirements hereunder are met or sublicensee agrees
to undertake all such requirements, and all such assigned sublicenses have all
of the rights, obligations and limitations due to The Regents as required by
Paragraph 3.1. and provided that The Regents accept the sublicenses only to
the extent of its duties under this Agreement.
4. LICENSE-ISSUE FEE
4.1 The Licensee agrees to pay to The Regents a license-issue fee of
[ * ] within thirty (30) days after the execution of this Agreement.
4.2 This fee is non-refundable and not an advance against
royalties.
4.3 The Licensee agrees to pay to The Regents a license maintenance
fee of [ * ] within thirty (30) days upon execution of this agreement and
continuing annually each subsequent year. The license maintenance fee shall
not be due
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
6
<PAGE> 9
and payable in any year if the Licensee, its Affiliate or sublicensee is
commercially selling Licensed Product and paying an earned royalty to The
Regents on the sales of Licensed Product prior to the date the license
maintenance fee is due. The license maintenance fee is non- refundable and is
not an advance against royalties.
5. ROYALTIES
5.1 The Licensee shall also pay to The Regents an earned royalty
of [ * ] of the Net Sales of Therapeutic Product(s).
5.2 The Licensee shall pay to The Regents an earned royalty of [ * ]
of the Net Sales of Licensed Product which is not a Therapeutic Product(s).
5.3 The Licensee shall pay to The Regents an earned royalty of
[ * ] of the Net Sales of Composite Products.
5.4 Paragraphs 1.1, 1.2, and 1.3 define Regents' Patent Rights,
Licensed Product and Licensed Method so that royalties shall be payable on
products and methods covered by both pending patent applications and issued
patents. Earned royalties shall accrue in each country for the duration of
Regents' Patent Rights in that country and shall be payable to The Regents when
the proceeds from sale of Licensed Products are received. If the proceeds are
not received within one (1) year of invoice, or if not invoiced, within one (1)
year of date of delivery, earned royalties shall be payable to The Regents at
that time.
5.5 Royalties due to The Regents shall be paid to The Regents
quarterly on or before the following dates of each calendar year:
February 28
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
7
<PAGE> 10
May 31
August 31
November 30
Each such payment will be for royalties which are due within the Licensee's
most recently completed calendar quarter.
5.6 The Licensee shall pay to The Regents a minimum annual royalty
beginning with the date of the first commercial sale, and pro-rated for the
number of months remaining in that calendar year when commercial sales
commence. Minimum annual royalties shall be: [ * ] with the onset of sales,
[ * ] one year from the date of the first sale, [ * ] two years from the date of
the first sale, and shall be fixed at [ * ] thereafter for each year of the
agreement. This minimum annual royalty shall be paid to The Regents by
February 28 of each year and shall be credited against the earned royalty due
and owing for the calendar year in which the minimum payment was made.
5.7 All monies due The Regents shall be payable in United States
funds collectible in San Francisco, California. When Licensed Products are
sold for monies other than United States dollars, the earned royalties will
first be determined in the foreign currency of the country in which such
Licensed Products were sold and then converted into equivalent United States
funds. The exchange rate will be that rate quoted in the Wall Street Journal
on the last business day of the reporting period.
5.8 Royalties earned with respect to sales of Licensed Products
occurring in any country outside the United States shall not be reduced by any
taxes, fees, or other
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
8
<PAGE> 11
charges imposed by the government of such country on the remittance of royalty
income. The Licensee shall also be responsible for all bank transfer charges.
Notwithstanding this, all payments made by the Licensee in fulfillment of The
Regents' tax liability in any particular country shall be credited against
earned royalties, royalties or fees due The Regents for that country.
5.9 If at any time legal restrictions prevent the prompt
remittance of part or all royalties by the Licensee with respect to any country
where a Licensed Product is sold, the Licensee shall have the right and option
to make such payments by depositing the amount thereof in local currency to The
Regents' account in a bank or other depository in such country.
5.10 The Regents will use its best efforts to transfer the monies
held in the account specified in paragraph 5.9 to the United States. If after
one year from the date of the first deposit into that account there are still
legal restrictions that prevent The Regents from transferring the monies, The
Regents shall transfer the impounded funds back to the Licensee, and the
Licensee shall convert the amount owed to The Regents into United States funds
and shall pay The Regents directly from its U.S. source of funds for the amount
impounded. The Licensee shall then pay all future royalties due to The Regents
from its U.S. source of funds so long as the legal restrictions of paragraph
5.9 still apply.
5.11 In the event that any patent or any claim thereof included
within the Regents' Patent Rights shall be held invalid in a final decision by
a court of competent jurisdiction and last resort and from which no appeal has
or can be taken, all obligation to pay royalties based on such patent or claim
or any claim patentably indistinct therefrom shall cease as of the date of such
final decision. The Licensee shall not, however, be relieved
9
<PAGE> 12
from paying any royalties that accrued before such decision or that are based
on another patent or claim not involved in such decision.
5.12 In the event that no patent issues, in a particular country
under Regents' Patent Rights, within seven (7) years from the effective date
recited on page one of this Agreement, then earned royalties due The Regents in
connection with the sale of Licensed Products in such country shall be
suspended from that date. At the time a patent under Regents' Patent Rights
does issue, in a particular country, Licensee's obligations to pay earned
royalties shall resume only in connection with the Licensed Products that
would, but for the licenses granted herein, infringe a valid claim of such
issued, unexpired patent in such country, and shall continue for the life of
this Agreement.
5.13 No royalties shall be collected or paid hereunder on Licensed
Products distributed to or used by the United States Government. Licensee
agrees to reduce the amount charged for Licensed Products distributed to the
United States Government by an amount equal to the royalty for such Licensed
Products otherwise due The Regents and provided herein.
5.14 In the event Licensee is obligated to pay royalties to a third
party for the infringement of such third party's patent rights, which
infringement is necessary in order to practice Regents' Patent Rights
hereunder, Licensee shall be entitled to credit against royalties payable to
The Regents for each reporting period herein:
(5.14a) [ * ] of the royalties payable to such third party if
the third party is (i) a campus under the control of
The Regents or (ii) a licensee of any such campus, up
to a maximum of [ * ] of the royalties due to The
Regents.
(5.14b) [ * ] of the royalties payable to such third party, up
to a maximum of [ * ] of the royalties due to The
Regents.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
10
<PAGE> 13
6. DUE DILIGENCE
6.1 The Licensee, upon execution of this Agreement, shall
diligently proceed with the development, manufacture and sale of Licensed
Products in all Fields of Use and shall earnestly and diligently endeavor to
market the same within a reasonable time after execution of this Agreement and
in quantities sufficient to meet the market demands therefor.
6.2 The Licensee shall be entitled to exercise prudent and
reasonable business judgment in meeting its due diligence obligations
hereunder.
6.3 The Licensee shall use commercially reasonable efforts to
obtain all necessary governmental approvals for the manufacture, use and sale
of Licensed Product.
6.4 If the Licensee does not use commercially reasonable efforts
to perform any of the following:
(6.4a) submit an Investigational New Drug (IND) application
or equivalent thereof covering Licensed Product to
the United States Food and Drug Administration (FDA)
within six (6) years from the effective date of this
Agreement.
(6.4b) submit a New Drug Application (NDA) or Product
License Application (PLA)(or the equivalent thereof)
covering Licensed Product to the United States Food
and Drug Administration (FDA) within ten (10) years
from the effective date of this Agreement; or
(6.4c) market Licensed Product in the United States within
six (6) months of receiving approval of such Licensed
Product's NDA or PLA (or equivalent thereof) from
FDA; or
(6.4d) reasonably fill the market demand for Licensed
Product following commencement of marketing at any
time during the exclusive period of this Agreement;
then The Regents shall have the right and option either to terminate this
Agreement or to reduce the Licensee's exclusive license to a nonexclusive
license. This right, if exercised by The Regents, supersedes the rights
granted in Article 2 (GRANT).
11
<PAGE> 14
6.5 In addition to the obligations set forth above, the Licensee,
sublicensee or Affiliates, shall spend an aggregate of not less than [ * ] for
the development of Licensed Product and the understanding of telomeres and
telormerase inhibitors or activators during the first six (6) years of this
Agreement.
6.6 Either party to this Agreement may refer a dispute arising
under this Article 6, to arbitration in San Francisco, California. Such
referral to arbitration shall be made by so notifying the other party in
writing in accordance with the provisions of Article 19 hereto (NOTICES),
stating the nature of the dispute to be resolved. Any such arbitration shall
be controlled by the rules of the American Arbitration Association.
6.7 The arbitrators shall be paid reasonable fees plus expenses,
which fees and expenses shall be shared equally by the Parties.
6.8 The decision of the arbitrators shall be enforceable, but not
appealable, in any court of competent jurisdiction.
6.9 To exercise either the right to terminate this Agreement or to
reduce the license to a nonexclusive license for lack of diligence, The Regents
must give the Licensee written notice of the deficiency. The Licensee
thereafter has sixty (60) days to cure the deficiency or to request
arbitration. If The Regents has not received a written request for arbitration
or reasonably satisfactory tangible evidence that the deficiency has been cured
by the end of the sixty (60) day period, then The Regents may, at its option,
either terminate this Agreement or reduce the Licensee's exclusive license to a
nonexclusive license by giving written notice to the Licensee. These notices
shall be subject to Article 19 (Notices).
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
12
<PAGE> 15
7. PROGRESS AND ROYALTY REPORTS
7.1 Beginning February 28, 1994 and annually thereafter, the
Licensee shall submit to The Regents a progress report covering the Licensee's
activities related to the development and testing of all Licensed Product and
the obtaining of the governmental approvals necessary for marketing. These
progress reports shall be made for each Licensed Product in the markets of the
United States, Europe and Japan until the first commercial sale of that
Licensed Product occurs anywhere in that market.
7.2 The progress reports submitted under section 7.1 should
include, but not be limited to, the following topics:
- summary of work completed
- key scientific discoveries
- summary of work in progress
- current schedule of anticipated events or milestones
- market plans for introduction of Therapeutic Product and
Licensed Product, and
- a summary of resources (dollar value) spent in the reporting
period
7.3 The Licensee shall have a continuing responsibility to keep
The Regents informed of the large/small entity status (as defined by the United
States Patent and Trademark Office) of itself and its sublicensees and
Affiliates.
7.4 The Licensee also agrees to report to The Regents in its
immediately subsequent progress and royalty report the date of first commercial
sale of a Licensed Product in each country.
7.5 After the first commercial sale of a Licensed Product anywhere
in the world, the Licensee will make quarterly royalty reports to The Regents
on or before each
13
<PAGE> 16
February 28, May 31, August 31 and November 30 of each year. Each such royalty
report will cover the Licensee's most recently completed calendar quarter and
will show:
(a) the gross sales and Net Sales of Licensed Product
sold by the Licensee or its Affiliates and reported
to Licensee as sold by its sublicensees during the
most recently completed calendar quarter;
(b) the number of each type of Licensed Product sold and
reported to Licensee as sold by its sublicensees;
(c) the royalties, in U.S. dollars, payable hereunder
with respect to such sales;
(d) the method used to calculate the royalty; and
(e) the exchange rates used.
7.6 If no sales of Licensed Product has been made during any
reporting period, a statement to this effect shall be required.
8. BOOKS AND RECORDS
8.1 The Licensee shall keep books and records accurately showing
all Licensed Product manufactured, used, and/or sold under the terms of this
Agreement for the purposes of showing the amount of royalties payable to The
Regents and Licensee's compliance with other provisions under this Agreement.
Such books and records shall be preserved for at least five (5) years from the
date of the royalty payment to which they pertain and shall be open to
inspection by representatives or agents of The Regents at reasonable times but
not more than once a year. In the event there is a discrepancy, an audit will
be conducted by an independent certified public accountant retained by The
Regents at The Regents expense at reasonable times during normal business
hours, upon reasonable notice. Such independent certified public accountant
shall be bound to hold all information
14
<PAGE> 17
in confidence except as necessary to communicate Licensee's non-compliance with
this Agreement to The Regents. The purpose of any inspection and audit
pursuant to this Paragraph 8.1 shall be to verify Licensee's royalty statements
or compliance in other respects with this Agreement.
8.2 The fees and expenses of The Regents' representatives and the
outside independent auditor performing such an examination shall be borne by
The Regents. However, if an error in royalties of more than eight percent (8%)
of the total royalties due for any year is discovered, then the fees and
expenses of these representatives and outside independent auditors shall be
borne by the Licensee.
9. LIFE OF THE AGREEMENT
9.1 Unless otherwise terminated by operation of law or by acts of
the parties in accordance with the terms of this Agreement, this Agreement
shall be in force from the effective date recited on page one and shall remain
in effect for the life of the last-to-expire patent licensed under this
Agreement; or for twenty years from the effective date of this Agreement if no
patent issues; or until the last patent application licensed under this
Agreement is abandoned and no patent in Regents' Patent Rights ever issues.
9.2 Any termination of this Agreement shall not affect the rights
and obligations set forth in the following Articles:
Article 3 Sublicenses
Article 8 Books and Records
Article 12 Disposition of Licensed Product on Hand Upon
Termination
Article 13 Use of Names and Trademarks
15
<PAGE> 18
Article 18 Indemnification
Article 23 Failure to Perform
Article 27 Secrecy
10. TERMINATION BY THE REGENTS
10.1 If the Licensee should violate or fail to perform any material
term or covenant of this Agreement, then The Regents may give written notice of
such default (Notice of Default) to the Licensee. If the Licensee should fail
to repair such default within sixty (60) days of the effective date of such
notice, The Regents shall have the right to terminate this Agreement and the
licenses herein by a second written notice (Notice of Termination) to the
Licensee. If a Notice of Termination is sent to the Licensee, this Agreement
shall automatically terminate on the effective date of such notice. Such
termination shall not relieve the Licensee of its obligation to pay any royalty
or license fees owing at the time of such termination and shall not impair any
accrued right of The Regents. These notices shall be subject to Article 19
(Notices).
11. TERMINATION BY LICENSEE
11.1 The Licensee shall have the right at any time to terminate
this Agreement in whole or as to any portion of Regents' Patent Rights by
giving notice in writing to The Regents. Such notice of termination shall be
subject to Article 19 (Notices) and termination of this Agreement shall be
effective ninety (90) days from the effective date of such notice.
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11.2 Any termination pursuant to the above paragraph shall not
relieve the Licensee of any obligation or liability accrued hereunder prior to
such termination or rescind anything done by the Licensee or any payments made
to The Regents hereunder prior to the time such termination becomes effective,
and such termination shall not affect in any manner any rights of The Regents
arising under this Agreement prior to such termination.
12. DISPOSITION OF LICENSED PRODUCTION ON HAND UPON TERMINATION
12.1 Upon termination of this Agreement, the Licensee shall have
the privilege of disposing of all previously made or partially made Licensed
Product, for a period of one hundred and twenty (120) days following the
effective date of termination, provided, however, that the sale of such
Licensed Product shall be subject to the terms of this Agreement including, but
not limited to, the payment of royalties at the rate and at the time provided
herein and the rendering of reports thereon.
13. USE OF NAMES AND TRADEMARKS
13.1 Nothing contained in this Agreement shall be construed as
conferring any right to use in advertising, publicity, or other promotional
activities any name, trade name, trademark, or other designation of either
party hereto (including contraction, abbreviation or simulation of any of the
foregoing). Unless required by law or consented to in writing by The Regents,
the use by Licensee of the name, "The Regents of the University of California"
or the name of any campus of the University of California is expressly
prohibited.
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14. LIMITED WARRANTY
14.1 The Regents warrants to the Licensee that it has the lawful
right to grant this license.
14.2 This license and the associated Invention are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. THE REGENTS MAKES NO REPRESENTATION OR WARRANTY
THAT THE LICENSED PRODUCT OR LICENSED METHOD WILL NOT INFRINGE ANY PATENT OR
OTHER PROPRIETARY RIGHT.
14.3 IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF
THE INVENTION OR LICENSED PRODUCT.
14.4 Nothing in this Agreement shall be construed as:
(14.4a) a warranty or representation by The Regents as to the
validity or scope of any Regents' Patent Rights; or
(14.4b) a warranty or representation that anything made,
used, sold or otherwise disposed of under any license
granted in this Agreement is or will be free from
infringement of patents of third parties; however,
The Regents as represented by the Manager,
Biotechnology Licensing, is not aware, without
search, of any additional rights or licenses that are
necessary for Licensee to be able to exercise any
rights granted under this Agreement; or
(14.4c) an obligation to bring or prosecute actions or suits
against third parties for patent infringement except
as provided in Article 17; or
(14.4d) conferring by implication, estoppel or otherwise any
license or rights under any patents of The Regents
other than
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Regents' Patent Rights as defined herein, regardless
of whether such patents are dominant or subordinate
to Regents' Patent Rights; or
(14.4e) an obligation to furnish any know-how other than what
is provided under the Research Agreement.
15. PATENT PROSECUTION AND MAINTENANCE
15.1 Licensee shall diligently prosecute and maintain the United
States and foreign patents comprising Regents' Patent Rights using counsel of
its choice that is reasonably acceptable to The Regents. In the event that
Licensee changes counsel for any reason, Licensee shall replace such counsel
with new counsel of its choice that is reasonably acceptable to The Regents.
If The Regents objects to Licensee's choice of counsel three times, Licensee
may choose new counsel without regard to The Regents' objections. Licensee
shall provide The Regents with copies of all relevant documentation so that The
Regents may be currently and promptly informed and apprised of the continuing
prosecution. The Regents may comment upon such documentation, provided,
however, that if The Regents has not commented upon such documentation prior to
the initial deadline for filing a response with the relevant government patent
office, Licensee shall be free to respond appropriately without consideration
of The Regents' comments, if any. The Licensee may always take action to
prevent the loss of The Regents' Patent Rights. Licensee agrees to keep this
documentation confidential. The Licensee's counsel will take instructions only
from Licensee.
15.2 Licensee shall use all reasonable efforts to prepare and amend
any patent application to include claims reasonably requested by The Regents to
protect the products contemplated to be sold under this Agreement.
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15.3 The Regents shall cooperate with the Licensee in applying for
an extension of the term of any patent included within Regents' Patent Rights
if appropriate under the Drug Price Competition and Patent Term Restoration Act
of 1984. The Licensee shall prepare all such documents, and The Regents agrees
to execute such documents and to take such additional action as the Licensee
may reasonably request in connection therewith.
15.4 Subject to Paragraph 15.7. the past and future costs of
preparing, filing, prosecuting and maintaining all United States patent
applications contemplated by this Agreement shall be born by Licensee.
15.5 The Licensee shall have the right to obtain patent protection
on the Invention in foreign countries if available and if it so desires. The
Licensee must notify The Regents within seven (7) months of the filing of the
corresponding United States application of its decision to obtain foreign
patents. This notice concerning foreign filing shall be in writing, must
identify the countries desired, and reaffirm Licensee's obligation to underwrite
the costs thereof. The absence of such a notice from the Licensee to The
Regents shall be considered an election not to secure foreign patent rights on
behalf of The Regents. The Regents shall have the right to file patent
applications at its own expense in any country Licensee has not included in the
list of desired countries, and such applications and resultant patents, if any,
shall not be included under this Agreement unless Licensee pays to The Regents
[ * ] and an amount equal to the costs The Regents would otherwise have been
obligated to pay, provided further that such rights have not been exclusively
granted to a third party or not the subject of an exclusive negotiation under a
letter of intent or other signed agreement, the patent application is not
abandoned, or the patent is not abandoned, subsequent to Licensee's decision not
to secure foreign protection.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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15.6 Subject to paragraph 15.5 and 15.7, the preparation, filing
and prosecuting of all foreign patent applications filed at the Licensee's
request, as well as the maintenance of all resulting patents, shall be at the
sole expense of the Licensee. Such patents shall be held in the name of The
Regents and shall be obtained using counsel as provided in paragraph 15. 1.
15.7 The Licensee's obligation to underwrite and to pay patent
prosecution costs shall continue for so long as this Agreement remains in
effect, provided, however, that the Licensee may terminate its obligations with
respect to any given patent application or patent upon three (3) months written
notice to The Regents; provided that any costs incurred by Licensee prior to
such written notice shall be borne by Licensee. If The Regents initiates any
action subsequent to the written notice from The Regents, then The Regents
shall bear all costs associated with such action. The Regents may continue
prosecution and/or maintenance of such application(s) or patent(s) at its sole
discretion and expense; provided, however, that the Licensee shall have no
further right or licenses thereunder unless Licensee pays to The Regents [ * ]
and an amount equal to the costs The Regents would otherwise have been obligated
therefore, and further provided that The Regents has not granted exclusive
rights to a third party in such patent and patent application or not the subject
of an exclusive negotiation under a letter of intent or other signed agreement,
the patent application is not abandoned, or the patent is not abandoned
subsequent to Licensee's written notice.
16. PATENT MARKING
16.1 The Licensee agrees to mark all Licensed Product made, used or
sold
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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under the terms of this Agreement, or their containers, in accordance with the
applicable patent marking laws.
17. PATENT INFRINGEMENT
17.1 In the event that the Licensee shall learn of the substantial
infringement of any patent licensed under this Agreement, the Licensee shall
call The Regents' attention thereto in writing and shall provide The Regents
with reasonable evidence of such infringement. Both parties to this Agreement
agree that during the period and in a jurisdiction where the Licensee has
exclusive rights under this Agreement, neither will notify a third party of the
infringement of any of Regents' Patent Rights without first obtaining consent
of the other party, which consent shall not be unreasonably denied. Both
parties shall use their best efforts in cooperation with each other to
terminate such infringement without litigation, provided, however, that
Licensee shall have no obligation and The Regents no right to grant rights to
such infringing party in derogation of Licensee's exclusive license hereunder.
17.2 The Licensee may request that The Regents take legal action
against the infringement of Regents' Patent Rights. Such request shall be made
in writing and shall include reasonable evidence of such infringement and
damages to the Licensee. If the infringing activity has not been abated within
ninety (90) days following the effective date of such request, The Regents
shall have the right to:
(17.2a) commence suit on its own account; or
(17.2b) refuse to participate in such suit;
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and The Regents shall give notice of its election in writing to the Licensee by
the end of the one-hundredth (100th) day after receiving notice of such request
from the Licensee and absent such refusal commence suit promptly thereafter, in
no event later that thirty (30) days following such notice. Election by The
Regents to commence such suit shall be without prejudice of the right of
Licensee to intervention on its own account under Rule 24 of the Federal Rules
of Civil Procedure, provided that before application to the court therefor
Licensee shall first meet with The Regents and discuss fully with them its
reasons for such intervention. The Licensee may thereafter bring suit for
patent infringement if The Regents elects not to commence suit and if the
infringement occurred during the period and in a jurisdiction where the
Licensee had exclusive rights under this Agreement. However, in the event the
Licensee elects to bring suit in accordance with this paragraph, The Regents
may thereafter join such suit at its own expense. Failing such joinder:
(17.2c) as between Licensee and The Regents, Licensee shall have the
sole right to prosecute such action and recover damages for
infringement, including past infringement; and
(17.2d) The Regents acknowledge they will be bound by the result of
such action, will refrain from duplicative litigation
involving such infringement by the infringing party and those
in privity with it, will cooperate with Licensee at Licensee's
expense in responding to discovery requests by the infringing
party relevant to issues of patent validity and
enforceability; and upon request will submit to the court an
affidavit to the foregoing effects.
17.3 Such legal action as is decided upon shall be at the expense
of the party on account of whom suit is brought and all recoveries recovered
thereby shall belong to such party, provided, however, that legal action
brought jointly by The Regents and the Licensee, or by one such party with
later intervention or joinder by the other, and fully participated in by both
shall be at the joint expense of the parties. All recoveries from any such
joint legal
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action shall be allocated in the following order: (i) to each party as
reimbursement of costs and fees of outside attorneys and other related expenses
to the extent each party paid for such costs, fees, and expenses, and (ii) any
remaining amounts to be divided by the parties [ * ] for Licensee and [ * ] for
The Regents.
17.4 Each party agrees to cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the party on account of
whom suit is brought. Such litigation shall be controlled by the party
bringing the suit, except that The Regents may be represented by counsel of its
choice, at its sole expense, in any suit brought by the Licensee in which The
Regents join and Licensee may be represented by counsel of its choice, at its
sole expense, in any action brought by The Regents in which Licensee
intervenes.
18. INDEMNIFICATION
18.1 The Licensee agrees to indemnify, hold harmless and defend The
Regents, its officers, employees, and agents; the sponsors of the research that
led to the Invention; and the inventors of the patents and patent applications
in Regents' Patent Rights and their employers against any and all claims,
suits, losses, damage, costs, fees, and expenses resulting from or arising out
of exercise of this license or any sublicense. This indemnification will
include, but will not be limited to, any product liability.
18.2 Commencing not later that the date of the first use of any
Invention or Licensed Product in connection with human investigations, the
Licensee, at its sole cost and expense, shall insure its activities in
connection with the work under this Agreement and
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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obtain, keep in force and maintain insurance as follows, or an equivalent
program of self insurance:
Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
(a) Each Occurrence [ * ]
(b) Products/Completed Operations Aggregate [ * ]
(c) Personal and Advertising Injury [ * ]
(d) General Aggregate (commercial form only) [ * ]
It should be expressly understood, however, that the coverage and
limits referred to under the above shall not in any way limit the liability of
Licensee. Licensee shall furnish The Regents with certificates of insurance
evidencing compliance with all requirements. Such certificates shall:
(a) Provide for thirty (30) day advance written notice to The
Regents of any material modification.
(b) Indicate that The Regents has been endorsed as an additional
insured under the coverage referred to under the above.
(c) Include a provision that the coverage will be primary and will
not participate with nor will be excess over any valid and
collectable insurance or program of self-insurance carried or
maintained by The Regents.
18.3 The Regents shall promptly notify Licensee in writing of any
claim or suit brought against The Regents in respect of which The Regents
intends to invoke the provisions of this Article 18. Licensee will keep The
Regents informed on a current basis of its defense of any claims pursuant to
this Article 18. No settlement of any claim or suit received by The Regents
shall be made without the approval of Licensee if indemnification is sought by
The Regents hereunder.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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19. NOTICES
19.1 Any notice or payment required to be given to either party
shall be deemed to have been properly given and to be effective (a) on the date
of delivery if delivered in person or (b) five (5) days after mailing if mailed
by first-class certified mail,postage paid, to the respective addresses given
below, or to such other address as it shall designate by written notice given
to the other party.
In the case of the Licensee: Geron Corporation
200 Constitution Drive
Menlo Park, CA 94025
Attention: President
In the case of The Regents: THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
1320 Harbor Bay Parkway
Suite 150
Alameda, California 94502
Attention: Director;
Office of Technology Transfer
Referring to: UC Case Nos. 92-337;
92-374 and 92-375
20. ASSIGNABILITY
20.1 This Agreement is binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns, but shall be
personal to the Licensee and assignable by the Licensee only with the written
consent of The Regents, which consent shall not be unreasonably withheld,
except that Licensee may freely assign this Agreement to a business entity
which shall acquire all or substantially all of the common stock or assets of
Licensee and which shall expressly assume, in writing, the performance of all
provisions of this Agreement to be performed by Licensee.
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21. LATE PAYMENTS
21.1 In the event royalty payments or fees are not received by The
Regents when due, the Licensee shall pay to The Regents interest charges at a
rate of [ * ] per annum. Such interest shall be calculated from the date
thirty (30) days after payment was due until actually received by The Regents.
22. WAIVER
22.1 It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
23. FAILURE TO PERFORM
23.1 In the event of a failure of performance due under the terms
of this Agreement and if it becomes necessary for either party to undertake
legal action against the other on account thereof, then the prevailing party
shall be entitled to reasonable attorney's fees in addition to costs and
necessary disbursements.
24. GOVERNING LAWS
24.1 THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, but the scope and validity
of any patent or patent application shall be governed by the applicable laws of
the country of such patent or patent application.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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25. FOREIGN GOVERNMENT APPROVAL
OR REGISTRATION
25.1 If this Agreement or any associated transaction is required by
the law of any nation to be either approved or registered with any governmental
agency, the Licensee shall assume all legal obligations to do so. The Regents
shall fully cooperate with Licensee, to the extent it is able to do so within
the law and established Regents' policy, to provide documentation and testimony
to obtain such approval or registration at Licensee's expense.
26. EXPORT CONTROL LAWS
26.1 The Licensee shall observe all applicable United States and
foreign laws with respect to the transfer of Licensed Product and related
technical data to foreign countries, including, without limitation, the
International Traffic in Arms Regulations (ITAR) and the Export Administration
Regulations.
27. SECRECY
27.1 Licensee and The Regents respectively shall hold the other
party's proprietary business, patent prosecution, engineering, process and
technical information, and other proprietary information, including the
Inventions, in confidence using at least the same degree of care as that party
uses to protect it own proprietary information of a like nature for a period
from the date of disclosure until five (5) years after the date of termination
of this Agreement. All proprietary information shall be labeled or marked
confidential or as otherwise appropriate by the disclosing party. All
confidential information orally disclosed shall be reduced to writing or some
other physically tangible form, marked and labeled as set
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forth above, by the disclosing party and delivered to the receiving party
within thirty (30) days of the oral disclosure as a record of the disclosure
and the confidential nature thereof.
(a) Nothing contained herein shall in any way restrict or impair
the right of Licensee or The Regents to use, disclose or
otherwise deal with any information or data which it can
document:
(1) which recipient can demonstrate by written records
was previously known to it;
(2) which is now, or becomes in the future, public
knowledge other than through acts or omissions of
recipient;
(3) which is lawfully obtained without restrictions by
recipient from sources independent of the disclosing
party;
(4) was independently developed by the recipient by
employees without the use of or access to the
disclosing party's similar proprietary information as
shown by written records;
(5) is required to be disclosed to a governmental entity
or agency in connection with seeking any governmental
or regulatory approval, or pursuant to the lawful
requirement or request of a governmental entity or
agency;
(6) is furnished to a third party by the recipient with
similar confidentiality restrictions imposed on such
third party, as evidenced in writing; or
(7) is disclosed under the California Public Records Act
or other requirements of law.
27.2 Upon termination of this Agreement, Licensee and The Regents
agree to destroy or return to the disclosing party proprietary information
received from the other in its possession within thirty (30) days following the
effective date of termination. However, each party may retain one copy of
proprietary confidential information of the other solely for archival purposes
in non-working confidential files for the sole purpose of verifying the
ownership of the proprietary information, provided that such proprietary
information shall be subject to the confidentiality provisions set forth above
in Paragraph 27.1. Licensee and The
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Regents agree to provide each other, within sixty (60) days following
termination, with a written notice that proprietary information has been
returned or destroyed
27.3 The foregoing shall not affect or limit Licensee's right to
fully exercise the licenses granted under this Agreement.
28. INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT
28.1 In the event either party receives notice pertaining to any
patent included within Regents' Patent Rights pursuant to the Drug Price
Competition and Patent Term Restoration Act of 1984, (Public Law 98-417,
hereinafter, "the Act") including but not necessarily limited to notices
pursuant to Sections 101 and 103 of the Act from persons who have filed an
abbreviated NDA ("ANDA") or a "paper" NDA, or in the case of an infringement of
Regents' Patent Rights as defined in Section 271(e) of Title 35 of the United
States Code, such party shall notify the other party promptly but in no event
later than ten (10) days after receipt of such notice.
28.2 The Licensee may request that The Regents take legal action
against the infringement of Regents' Patent Rights. Such request shall be made
in writing and shall include reasonable evidence of such infringement and
damages to the Licensee. If the infringing activity has not been abated within
ninety (90) days following the effective date of such request, The Regents
shall have the right to:
(28.2a) commence suit on its own account; or
(28.2b) refuse to participate in such suit;
and The Regents shall give notice of its election in writing to the Licensee by
the end of the one-hundredth (100th) day after receiving notice of such request
from the Licensee and
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absent such refusal commence suit promptly thereafter, in no event later that
thirty (30) days following such notice. Election by The Regents to commence
such suit shall be without prejudice of the right of Licensee to intervention
on its own account under Rule 24 of the Federal Rules of Civil Procedure,
provided that before application to the court therefor Licensee shall first
meet with The Regents and discuss fully with them its reasons for such
intervention. The Licensee may thereafter bring suit for patent infringement
if The Regents elects not to commence suit and if the infringement occurred
during the period and in a jurisdiction where the Licensee had exclusive rights
under this Agreement. However, in the event the Licensee elects to bring suit
in accordance with this paragraph, The Regents may thereafter join such suit at
its own expense. Failing such joinder:
(28.2c) as between Licensee and The Regents, Licensee shall
have the sole right to prosecute such action and
recover damages for infringement, including past
infringement;
(28.2d) The Regents acknowledge they will be bound by the
result of such action, will refrain from duplicative
litigation involving such infringement by the
infringing party and those in privity with it, will
cooperate with Licensee at Licensee's expense in
responding to discovery requests by the infringing
party relevant to issues of patent validity and
enforceability; and upon request will submit to the
court an affidavit to the foregoing effects.
28.3 The provisions of paragraphs 17.3 and 17.4 shall likewise
apply to any legal action brought under this Article 28.
28.4 The Regents hereby authorizes the Licensee to include in any NDA
for a Licensed Product, a list of patents included within Regents' Patent
Rights identifying The Regents as patent owner.
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29. MISCELLANEOUS
29.1 The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
29.2 This Agreement will not be binding upon the parties until it
has been signed below on behalf of each party, in which event, it shall be
effective as of the date recited on page one.
29.3 No amendment or modification hereof shall be valid or binding
upon the parties unless made in writing and signed on behalf of each party.
29.4 In case any of the provisions contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions hereof, but this Agreement shall be construed as if such invalid or
illegal or unenforceable provisions had never been contained herein.
29.5 This Agreement embodies the entire understanding of the
parties and shall supersede all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.
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IN WITNESS WHEREOF, both The Regents and the Licensee have executed
this Agreement, in duplicate originals, by their respective OFFICERS hereunto
duly authorized, on the day and year hereinafter written.
GERON CORPORATION THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
By: /s/ R. EASTMAN By: /s/ WILLIAM T. DAVIS
-------------------------- -------------------------------
Name: R. Eastman Name: William T. Davis
------------------------
(please print)
Title: CEO Title: Associate Director,
----------------------- Office of Technology Transfer
Date: 1/20/94 Date: 2/2/94
------------------------ -----------------------------
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<PAGE> 1
EXHIBIT 10.10
Amendment No. 1
AMENDMENT NO. 1
TO THE
LICENSE AND RESEARCH COLLABORATION AGREEMENT
This Amendment No. 1 (the "Amendment") to the License and Research
Collaboration Agreement (the "Agreement") is made effective as of the 15th day
of July, 1995 (the "Effective Date") by and between Geron Corporation, a
Delaware corporation having its principal place of business at 200 Constitution
Drive, Menlo Park, CA 94025, USA ("Geron"), and Kyowa Hakko Kogyo Co., Ltd., a
Japan corporation having its principal place of business at 1-6-1 0htemachi,
Chiyoda-ku, Tokyo, Japan ("Kyowa Hakko").
RECITALS
Geron and Kyowa Hakko entered into the Agreement effective 24 April
1995 to discover and develop effective inhibitors of telomerase for the
treatment of cancer for marketing by Kyowa in the Asian Territory and by Geron
in the rest of the world.
Pursuant to Article 3.6 of the Agreement, the Joint Research Committee
(the "JRC") has determined that it is in the best interests of the Research that
the Kyowa Hakko compound library be screened for telomerase inhibitory activity
and inhibitory compounds of sufficient specificity and potency be developed as
effective inhibitors of telomerase for the treatment of cancer.
This Amendment sets forth the terms and conditions of the agreement by
and between Geron and Kyowa Hakko to screen, develop, and commercialize Kyowa
Hakko Compounds as effective inhibitors of telomerase for the treatment of
cancer in the Asian Territory and the rest of the world.
ARTICLE 1
DEFINITIONS
"Kyowa Hakko Compound" shall mean any compound, composition, extract,
or natural product owned or in the possession of Kyowa Hakko during the Term of
the Agreement, with the exception of compounds, compositions, extracts, or
natural products that (i) were owned by or in the possession of Geron as of the
Effective Date of this Amendment; (ii) were commercially available as of the
date on which compounds were screened in accordance with this Amendment; or
(iii) are or comprise one or more obvious structural variants of a compound
known to Geron to inhibit telomerase activity prior to the date of screening of
such compounds in accordance with this Amendment.
Page 1 of 3
<PAGE> 2
Amendment No. 1
Except as otherwise provided herein, definitions of capitalized words
shall be those set forth in the Agreement.
ARTICLE 2
SCREENING
Kyowa Hakko shall during the Term of the Agreement either screen Kyowa
Hakko Compounds for use in the Field or provide Kyowa Hakko Compounds to Geron
for Geron to screen for telomerase inhibitory activity. Screening of Kyowa Hakko
Compounds in accordance with this Amendment and the results thereof shall be
promptly disclosed to the JRC.
ARTICLE 3
LICENSES
The parties shall have the right in accordance with the licenses set
forth in the Agreement to make, have made, use, and sell Kyowa Hakko Compounds
screened in accordance with this Amendment or compounds derived therefrom.
ARTICLE 4
ROYALTIES
The royalty obligations set forth in the Agreement shall apply to the
sale of Products comprising Kyowa Hakko Compounds screened in accordance with
this Amendment or compounds derived therefrom. Notwithstanding the foregoing,
Geron agrees, in the event a Product is predominantly based on a potent,
confidential, and proprietary Kyowa Hakko Compound screened in accordance with
this Amendment or a compound derived therefrom is sold as a Product, that (i)
there shall be a small reduction in the royalty payable by Kyowa Hakko to Geron
for sales of the Product in the Asian Territory; and (ii) Geron shall provide
Kyowa Hakko fair and reasonable compensation for the exclusive right to sell
such Product in the Non-Asian Territory, as set forth in the following
paragraphs.
A. Royalty reductions in the Asian Territory.
The royalty rate paid by Kyowa Hakko for sales in the Asian Territory
shall be reduced by either (1) [ * ] of Actual Net Sales if the Product is a
Kyowa Hakko Compound selected for development by the JRC; or (2) [ * ] of Actual
Net Sales if the Product comprises a compound selected for development by the
JRC and predominantly derived from a Kyowa Hakko Compound screened pursuant to
this Amendment; provided, however, that under no circumstances shall the royalty
due Geron for sales of Product in the Asian Territory be reduced by the action
of this Amendment in conjunction with the other provisions of the Agreement to
below an "effective" royalty rate of [ * ], such "effective" royalty rate to be
determined by first
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 2 of 3
<PAGE> 3
Amendment No. 1
deducting royalties Geron is obligated to make to Third Parties as a result of
the Agreement.
B. Compensation for Sales in the Non-Asian Territory.
For any Product to which royalty reductions pursuant to Article 4,
paragraph A, applies, Geron shall in its sole discretion provide Kyowa Hakko
fair and reasonable compensation for the exclusive right to sell the Product in
the Non-Asian Territory either by (i) making a royalty payment to Kyowa Hakko,
where such royalty paid to Kyowa Hakko shall be that percentage of Actual Net
Sales by which Geron's royalty is reduced under paragraph A; or (ii) by
providing Kyowa Hakko, at no additional cost or increase in royalty payment,
with access to the chemical library of a Third Party with whom Geron has entered
into an agreement for the development and commercialization of telomerase
inhibitors for the treatment of cancer in all or part of the Non-Asian
Territory.
ARTICLE 5
ENTIRE AGREEMENT
Except as provided otherwise herein, all other terms and conditions of
the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed the Amendment in
duplicate original by their proper officers as of the Effective Date above.
GERON CORPORATION KYOWA HAKKO KOGYO, LTD.
By: /s/ Richard T. Haiduck By: /s/ Takashi Nara
-------------------------- --------------------------
Mr. Richard T. Haiduck Mr. Takashi Nara
Vice President, Executive Vice President
Corporate Development
Page 3 of 3
<PAGE> 4
LICENSE AND RESEARCH
COLLABORATION AGREEMENT
BETWEEN
GERON CORPORATION
AND
KYOWA HAKKO KOGYO CO., LTD.
April 24, 1995
<PAGE> 5
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Actual Factory Costs" . . . . . . . . . . . . . 1
1.2 "Actual Cost of Goods Sold" . . . . . . . . . . 2
1.3 "Affiliate" . . . . . . . . . . . . . . . . . . 2
1.4 "Asian Territory" . . . . . . . . . . . . . . . 2
1.5 "Control" . . . . . . . . . . . . . . . . . . . 2
1.6 "Estimated Cost of Goods Sold" . . . . . . . . . 2
1.7 "Estimated Net Sales Price" . . . . . . . . . . 2
1.8 "Geron Knowhow" . . . . . . . . . . . . . . . . 3
1.9 "Geron Patents" . . . . . . . . . . . . . . . . 3
1.10 "Geron Technology" . . . . . . . . . . . . . . . 3
1.11 "Field" . . . . . . . . . . . . . . . . . . . . 3
1.12 "IND" . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Information" . . . . . . . . . . . . . . . . . 3
1.14 "Joint Development Committee" . . . . . . . . . 3
1.15 "Joint Patents" . . . . . . . . . . . . . . . . 3
1.16 "Joint Research Committee" . . . . . . . . . . . 3
1.17 "Kyowa Hakko Knowhow" . . . . . . . . . . . . . 3
1.18 "Kyowa Hakko Patents" . . . . . . . . . . . . . 3
1.19 "Kyowa Hakko Technology" . . . . . . . . . . . . 4
1.20 "Management Board" . . . . . . . . . . . . . . . 4
1.21 "NDA" . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Actual Net Sales" . . . . . . . . . . . . . . . 4
1.23 "Non-Asian Territory" . . . . . . . . . . . . . 4
1.24 "Patent" . . . . . . . . . . . . . . . . . . . . 4
1.25 "Patent Costs" . . . . . . . . . . . . . . . . . 4
1.26 "Product" . . . . . . . . . . . . . . . . . . . 4
1.27 "Product Development Plan" . . . . . . . . . . . 4
1.28 "Research" . . . . . . . . . . . . . . . . . . . 5
1.29 "Research Plan" . . . . . . . . . . . . . . . . 5
1.30 "Research Term" . . . . . . . . . . . . . . . . 5
1.31 "Sales Plan" . . . . . . . . . . . . . . . . . . 5
1.32 "Standard Factory Cost" . . . . . . . . . . . . 5
1.33 "Third Party" . . . . . . . . . . . . . . . . . 5
ARTICLE 2 MANAGEMENT BOARD . . . . . . . . . . . . . . . . . . . 5
i.
<PAGE> 6
ARTICLE 3 RESEARCH . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Collaborative Research . . . . . . . . . . . . . 6
3.2 Research Efforts and Expenses . . . . . . . . . 6
3.3 Formation of Joint Research Committee . . . . . 6
3.4 Responsibilities of JRC . . . . . . . . . . . . 7
3.5 Selection of Compounds for Development . . . . . 7
3.6 Kyowa Hakko Compounds . . . . . . . . . . . . . 7
3.7 Extension By Mutual Consent . . . . . . . . . . 8
ARTICLE 4 DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Joint Development Committee . . . . . . . . . . 8
4.2 Responsibilities of the JDC . . . . . . . . . . 8
4.3 Development in the Asian Territory . . . . . . . 9
4.4 Development in Non-Asian Territory . . . . . . . 9
4.5 Development Collaboration . . . . . . . . . . . 9
4.6 Funding of Phase II/III U.S. Clinical Trials . . 9
ARTICLE 5 LICENSES . . . . . . . . . . . . . . . . . . . . . . . 10
5.1 License to Kyowa Hakko in the Asian Territory . 10
5.2 Licenses to Geron . . . . . . . . . . . . . . . 10
5.3 Sublicensing . . . . . . . . . . . . . . . . . . 10
5.4 Assignment or Sublicense to Affiliates . . . . . 11
5.5 Exclusivity . . . . . . . . . . . . . . . . . . 11
5.6 Existing Third Party Technology . . . . . . . . 11
5.7 New Third Party Technology . . . . . . . . . . . 11
5.8 Territorial Limitations . . . . . . . . . . . . 11
6.1 Commercialization in the Asian Territory . . . . 12
6.2 Advertising and Trademarks . . . . . . . . . . . 12
ARTICLE 7 MANUFACTURING . . . . . . . . . . . . . . . . . . . . . 12
7.1 Manufacturing in the Asian Territory . . . . . . 12
7.2 Stand-by Manufacturing in the Asian Territory. . 13
ARTICLE 8 ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . 13
8.1 Royalties. . . . . . . . . . . . . . . . . . . . 13
8.2 Reporting and Payment of Royalties . . . . . . . 14
8.3 Determination of Estimated Cost of Goods Sold . 14
8.4 Annual Reconciliation of Royalties . . . . . . . 14
8.6 Samples or Donations to Third Parties . . . . . 15
8.7 Minimum Royalty Payments . . . . . . . . . . . . 15
ARTICLE 9 RESEARCH PAYMENTS . . . . . . . . . . . . . . . . . . . 15
9.1 Research Payments . . . . . . . . . . . . . . . 15
9.2 Unexpended Research Payments . . . . . . . . . . 16
ii.
<PAGE> 7
9.3 Withholding Obligations. . . . . . . . . . . . . . . 16
ARTICLE 10 MILESTONES . . . . . . . . . . . . . . . . . . . . . . . . 16
10.1 Milestone Payments . . . . . . . . . . . . . . . . . 16
10.2 Withholding Objections. . . . . . . . . . . . . . . 17
ARTICLE 11 EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 12 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . 18
12.1 Confidentiality; Exceptions . . . . . . . . . . . . 18
12.2 Authorized Disclosure . . . . . . . . . . . . . . . 18
ARTICLE 13 OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS . . . 19
13.1 Patents Resulting from the Research Program . . . . 19
13.2 Kyowa Hakko Responsibility for Patent Filings . . . 20
13.3 Geron Responsibility for Patent Filings . . . . . . 20
13.4 Enforcement and Defense Rights . . . . . . . . . . . 20
13.5 Patent Costs . . . . . . . . . . . . . . . . . . . . 21
13.6 Infringement of Third Party Patents . . . . . . . . 21
13.7 Back-up Rights . . . . . . . . . . . . . . . . . . . 22
13.8 Assignment . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 14 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 22
ARTICLE 15 REPORTS, RECORDS AND PAYMENTS . . . . . . . . . . . . . . 23
15.1 Sharing of Information . . . . . . . . . . . . . . . 23
15.2 Records of Net Sales and Costs of Goods Sold . . . . 23
15.3 Records of Research Expenditures . . . . . . . . . . 24
15.4 Publicity Review . . . . . . . . . . . . . . . . . . 24
15.5 Publications . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 16 TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . 25
16.1 Term . . . . . . . . . . . . . . . . . . . . . . . . 25
16.2 Termination for Breach . . . . . . . . . . . . . . . 25
16.3 Termination for Bankruptcy . . . . . . . . . . . . . 25
16.4 Termination by Kyowa Hakko . . . . . . . . . . . . . 25
16.5 Surviving Rights . . . . . . . . . . . . . . . . . . 26
16.6 Accrued Rights, Surviving Obligations . . . . . . . 26
ARTICLE 17 INDEMNIFICATION, DISCLAIMERS AND LIMITATIONS . . . . . . . 26
17.1 Indemnification in Asian Territory . . . . . . . . . 26
17.2 Indemnification in the Non-Asian Territory . . . . . 26
17.3 LIMITED LIABILITY . . . . . . . . . . . . . . . . . 26
iii.
<PAGE> 8
17.4 WARRANTY DISCLAIMER . . . . . . . . . . . . . . . . 27
ARTICLE 18 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 27
18.1 Reasonable Diligent Effort . . . . . . . . . . . . . 27
18.2 Assignment to Non-Affiliates; Sale or Merger . . . . 27
18.3 Meetings . . . . . . . . . . . . . . . . . . . . . . 27
18.4 Third Party Obligations . . . . . . . . . . . . . . 28
18.5 Retained Rights . . . . . . . . . . . . . . . . . . 28
18.6 Force Majeure . . . . . . . . . . . . . . . . . . . 28
18.7 Further Actions . . . . . . . . . . . . . . . . . . 28
18.8 No Trademark Rights . . . . . . . . . . . . . . . . 28
18.9 Notices . . . . . . . . . . . . . . . . . . . . . . 28
18.10 Governing Law . . . . . . . . . . . . . . . . . . . 29
18.11 Waiver . . . . . . . . . . . . . . . . . . . . . . . 29
18.12 Severability . . . . . . . . . . . . . . . . . . . . 29
18.13 Entire Agreement . . . . . . . . . . . . . . . . . . 30
iv.
<PAGE> 9
LICENSE AND RESEARCH
COLLABORATION AGREEMENT
THIS LICENSE AND RESEARCH COLLABORATION AGREEMENT is made effective as of
the 24th day of April, 1995 (the "Effective Date") by and between Geron
Corporation, a Delaware corporation having its principal place of business at
200 Constitution Drive, Menlo Park, California, U.S.A. 94025 ("Geron") and Kyowa
Hakko Kogyo Co., Ltd., a Japanese corporation having its principal place of
business at 1-6-1 Ohtemachi, Chiyoda-ku, Tokyo, Japan ("Kyowa Hakko").
RECITALS
A. Geron possesses certain rights pertaining to the inhibition of the
enzyme telomerase as it relates to the treatment of cancer.
B. Kyowa Hakko has an active research and development program relating to
human therapeutic products for the treatment of cancer.
C. Geron desires to have a collaboration with Kyowa Hakko to discover and
develop effective inhibitors of telomerase for the treatment of cancer.
D. Kyowa Hakko recognizes Geron's innovativeness and agrees to have such a
collaboration with Geron.
E. The parties desire to engage in a collaboration to research and develop
compounds that inhibit telomerase for the treatment of cancer as set forth
herein.
F. The parties intend that the scope of this Agreement may be expanded as
appropriate opportunities arise.
ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings as used in this
Agreement:
1.1 "Actual Factory Costs" shall be the sum of the following costs to the
extent allocable to Products sold by Kyowa Hakko in the Asian Territory for the
particular period during which any royalty is calculated (net of any
intercompany transfer pricing): Kyowa Hakko's cost of direct materials, direct
labor and manufacturing overhead. Actual Factory Costs shall exclude the
following: Kyowa Hakko's corporate
<PAGE> 10
overhead, unrelated period expenses, including, without limitation, excess
capacity costs and start up costs, and Product royalties payable to Geron
pursuant to this Agreement. Actual Factory Costs shall be calculated in a manner
consistent with Generally Accepted Accounting Principles ("GAAP") used in the
United States consistently applied. The methodology to be used in making the
allocations referred to above shall be consistent with Kyowa Hakko's methodology
for similar products and shall be consistent from year to year.
1.2 "Actual Cost of Goods Sold" means the percentage which results from
dividing the Actual Factory Costs for a given Product by Actual Net Sales of
such Product for any given period.
1.3 "Affiliate" means an entity that, directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common control
with Geron or Kyowa Hakko. For the purposes of this definition, control means
the direct or indirect ownership of (a) at least 50% or, if less than 50%, the
maximum percentage as allowed by applicable law, of the outstanding voting
securities of such entity or (b) at least 50% of the decision making authority
of such entity.
1.4 "Asian Territory" means China, Hong Kong, India, Indonesia, Kampuchea,
Korea, Japan, Laos, Malaysia, Myan Mar (formerly Burma), the Philippines,
Singapore, Taiwan, Thailand and Vietnam.
1.5 "Control" means possession of the ability to grant a license or
sublicense as provided for herein, without the exercise of any option and
without violating the terms of any agreement with any Third Party.
1.6 "Estimated Cost of Goods Sold" means the percentage which results from
dividing the Standard Factory Cost for a Product by the Estimated Net Sales
Price for such Product.
1.7 "Estimated Net Sales Price" means the estimated amount to be billed by
Kyowa Hakko or an Affiliate, assignee or sublicensee of Kyowa Hakko or a
distributor, reseller or other entity in the distribution chain for the sale of
a unit of Product under this Agreement to a Third Party which intends to use and
not resell the Product less: (i) discounts, including cash discounts, or
rebates, retroactive price reductions or allowances reasonably expected to be
allowed or granted from the billed amount, (ii) credits or allowances reasonably
expected to be granted upon claims, rejections or returns of Products, including
recalls, (iii) freight, postage, shipping and insurance charges reasonably
expected to be paid for delivery of Product, and (iv) taxes, duties or other
governmental charges reasonably expected to be levied on or measured by the
billing amount when included in billing, as adjusted for rebates and refunds.
2.
<PAGE> 11
1.8 "Geron Knowhow" means Information which (i) Geron discloses to Kyowa
Hakko under this Agreement for use in the Field and (ii) during the term of this
Agreement is within the Control of Geron.
1.9 "Geron Patents" means a Patent which covers a method, apparatus,
material or article of manufacture useful in the Field, which Patent is
Controlled by Geron or its Affiliates, excluding, however, Joint Patents.
Exhibit A lists all Geron Patents in existence as of the Effective Date.
1.10 "Geron Technology" means the Geron Knowhow and Geron Patents,
collectively.
1.11 "Field" means the inhibition of the enzyme telomerase for the
treatment of cancer in humans.
1.12 "IND" shall mean an Investigational New Drug application filed with
the U.S. Food and Drug Administration or the comparable application in other
countries.
1.13 "Information" shall mean present and future techniques, inventions,
practices, methods, knowledge, knowhow, skill, experience, test data including
pharmacological, toxicological and clinical test data, analytical and quality
control data, marketing, pricing, cost, sales and manufacturing data and
descriptions relating to the Field.
1.14 "Joint Development Committee" means that committee established
pursuant to Section 4.1 below.
1.15 "Joint Patents" mean Patents which cover a method, apparatus, material
or article of manufacture useful in the Field and the subject of which is an
invention jointly invented by the parties in the course of the Research.
Inventorship shall be determined under the laws of the jurisdiction in which the
Patent was filed.
1.16 "Joint Research Committee" means that committee established pursuant
to Section 3.3 below.
1.17 "Kyowa Hakko Knowhow" means Information which (i) Kyowa Hakko
discloses to Geron under this Agreement for use in the Field and (ii) during the
term of this Agreement is within the Control of Kyowa Hakko.
1.18 "Kyowa Hakko Patents" means a Patent which covers a method, apparatus,
material or article of manufacture useful in the Field, which Patent is
Controlled by Kyowa Hakko or its Affiliates, excluding, however, Joint Patents.
Exhibit B lists all Kyowa Hakko Patents in existence as of the Effective Date.
3.
<PAGE> 12
1.19 "Kyowa Hakko Technology" means the Kyowa Hakko Knowhow and Kyowa Hakko
Patents, collectively.
1.20 "Management Board" shall have the meaning assigned in Article 2.
1.21 "NDA" shall mean a New Drug Application filed with the U.S. Food and
Drug Administration or the comparable application in other countries.
1.22 "Actual Net Sales" means the amount billed by Kyowa Hakko or an
Affiliate, assignee or sublicensee of Kyowa Hakko or a distributor, reseller or
other entity in the distribution chain for sales of Products under this
Agreement to a Third Party which intends to use and not resell the Product less:
(i) discounts, including cash discounts, or rebates, retroactive price
reductions or allowances actually allowed or granted from the billed amount,
(ii) credits or allowances actually granted upon claims, rejections or returns
of Products, including recalls, regardless of the party requesting such, (iii)
freight, postage, shipping and insurance charges paid for delivery of Product,
to the extent billed, and (iv) taxes, duties or other governmental charges
levied on or measured by the billing amount when included in billing, as
adjusted for rebates and refunds.
1.23 "Non-Asian Territory" shall mean the entire world other than the Asian
Territory.
1.24 "Patent" means any patent application or issued patent, including any
extension, registration, confirmation, continuation-in-part, reissue,
re-examination or renewal thereof.
1.25 "Patent Costs" means the fees and expenses paid to outside legal
counsel and other third parties, and filing and maintenance expenses, incurred
in connection with the establishment and maintenance of rights under Patents
applicable to Products including costs of patent interference proceedings, but
specifically excluding expenses related to litigation, including, without
limitation, any expenses related to the enforcement or defense of any Patent.
1.26 "Product" means (i) any product for use in the Field that comprises a
compound selected for development pursuant to Section 3.5 herein, and that
utilizes Geron Technology, Kyowa Hakko Technology or Joint Patents, and/or (ii)
any prescription pharmaceutical preparation containing such a product, whether
or not in combination with other components, for use in the Field, including
oral and intravenous preparations.
1.27 "Product Development Plan" shall have the meaning assigned in Section
4.2.
4.
<PAGE> 13
1.28 "Research" means all work performed by or for the parties in the Field
during the Research Term according to the Research Plan.
1.29 "Research Plan" shall have the meaning assigned in Section 3.1.
1.30 "Research Term" means the period commencing on the Effective Date and
ending on the first to occur of (i) termination of this Agreement by either
party under Article 16 or (ii) April 24, 1999 (unless extended by mutual
agreement of the parties).
1.31 "Sales Plan" shall have the meaning assigned in Section 6.1.
1.32 "Standard Factory Cost" means the predetermined cost to manufacture
one unit of Product, which cost shall be equal to the sum of the following costs
to the extent reasonably allocable to the manufacture of one unit of Product to
be sold by Kyowa Hakko in the Asian Territory for the particular period during
which any royalty is calculated (net of any intercompany transfer pricing):
Kyowa Hakko's cost of direct materials, direct labor and manufacturing overhead.
Standard Factory Cost shall exclude the following: Kyowa Hakko's corporate
overhead, unrelated period expenses, including, without limitation, excess
capacity costs and start up costs, and product royalties payable to Geron
pursuant to this Agreement. Standard Factory Cost shall be calculated in a
manner consistent with Generally Accepted Accounting Principles ("GAAP") used in
the United States consistently applied. The methodology to be used in making the
allocations referred to above shall be consistent with Kyowa Hakko's methodology
for similar products and shall be consistent from year to year.
1.33 "Third Party" means any person or entity other than Geron or Kyowa
Hakko or an Affiliate or sublicensee of Geron or Kyowa Hakko.
ARTICLE 2
MANAGEMENT BOARD
Upon the Effective Date of this Agreement, a Management Board shall be
created. The Management Board shall provide the overall direction of the
Research and shall serve in an advisory role in the development of Products
pursuant to this Agreement and shall have the authority to resolve disputes
within the Joint Research Committee (as defined below). In addition, the
Management Board shall periodically review the status of the collaboration to
determine its continued scientific and commercial viability. The Management
Board shall be comprised of five (5) individuals, three (3) individuals being
appointed and replaced by Geron and two (2) individuals being appointed and
replaced by Kyowa Hakko. Any changes to the size of the Management Board shall
be decided by the Management Board. The Management Board shall meet at least
semi-annually to discuss issues relating to the collaboration and
5.
<PAGE> 14
this Agreement. The chairperson of the Management Board shall be a member of the
Management Board and appointed by Geron and replaced by Geron.
ARTICLE 3
RESEARCH
3.1 Collaborative Research. Geron and Kyowa Hakko agree that they will
conduct the Research on a collaborative basis with the goal of identifying
compounds useful in the Field and developing such compounds into commercially
successful Products in the Asian Territory. As part of such collaboration, Geron
shall use reasonable diligent efforts to engage in the Research relating to the
identification of compounds useful in the Field and the development of such
compounds into Products. The Joint Research Committee (as defined below) shall
adopt a research plan (the "Research Plan") that will outline the research
activities of each party, including without limitation, scientific research,
drug discovery, screening and testing of compounds and the determination of
structure/activity relationships. In the course of conducting such Research,
Geron may contract with and make payments to Third Parties for Research in
accordance with the Research Plan. Kyowa Hakko shall use reasonable diligent
efforts to provide research support as generally set for in the Research Plan.
Kyowa Hakko may also provide compounds for Research in accordance with Section
3.6.
3.2 Research Efforts and Expenses. Each of the parties will maintain
scientific staff, laboratories, offices and other facilities necessary to carry
out the Research Plan and otherwise will expend reasonable diligent efforts to
achieve the objectives of the Research Plan. Geron shall keep records of its
Research expenditures in accordance with Section 15.3 herein and shall deliver
to Kyowa Hakko, on a quarterly basis, a report of such expenditures. To further
the purposes of the Research, each party may provide certain of its employees to
work at the other party's facilities, subject to approval by the JRC (as defined
below).
3.3 Formation of Joint Research Committee. The Research will be directed by
a Joint Research Committee ("JRC") comprised of six (6) or eight (8) individuals
with half being appointed and replaced by Geron and the other half being
appointed and replaced by Kyowa Hakko. The JRC shall be formed promptly after
the Effective Date of this Agreement and each party shall promptly notify the
other party of their respective appointments to the JRC. Any changes to the size
of the JRC shall be decided by the JRC. All decisions of the JRC shall require a
majority vote of all of the members of the JRC. Subject to Section 3.5 below,
the Management Board shall have the authority to resolve any disputes or tie
votes of the JRC. The JRC will meet at least quarterly to discuss the progress
of the Research. The chairperson of the JRC shall be selected from among the
members of the JRC alternatively by Geron and Kyowa Hakko to one year terms,
commencing on the Effective Date, with Geron selecting first. The
6.
<PAGE> 15
JRC shall terminate and cease to exist nine (9) months after expiration of the
Research Term (including any extensions thereof).
3.4 Responsibilities of JRC. The purpose of the JRC is to oversee and
coordinate the day-to-day activities of the Research, to identify compounds for
research and development and to expedite the progress of compounds through the
completion of preclinical activities as set forth in the Research Plan. The JRC
shall develop and periodically modify an annual Research Plan for each year of
the Research, commencing with a plan for the first year to be agreed upon within
thirty (30) days after the Effective Date. The Research Plan shall, among other
things, specify scientific direction and research milestones, allocate research
responsibilities, and establish a timeline for entering into clinical trials.
Such Plan shall be updated and approved on at least an annual basis. The JRC
shall also evaluate the results of the Research and discuss information related
to the Research, and will ensure that there is appropriate scientific management
of the collaboration. The JRC shall summarize the progress of the Research in a
report to the Management Board at least twice during each calendar year. Once a
compound has been selected for development pursuant to Section 3.5, the JRC
shall establish the timeline for the clinical development of such compound,
including specific dates for the achievement of the milestones set forth in
Article 10.
3.5 Selection of Compounds for Development. While the JRC is in existence,
the JRC shall select compounds for development in the Asian Territory. The JRC
may select any compound resulting from the Research. The Management Board shall
not have the authority to reject compounds proposed by the JRC. After the JRC
ceases to exist, the Management Board shall have the right to select any
compound resulting from the Research for development in the Asian Territory;
provided, however, that such selection shall be consistent with Geron's current
or proposed development or commercialization activities in the Non-Asian
Territory as determined by Geron. In no event shall this Section 3.5 require
Geron to perform additional work after expiration of the Research Term without
Geron's prior written consent, which consent shall not be unreasonably withheld.
3.6 Kyowa Hakko Compounds. Except as set forth in this Section, Kyowa Hakko
shall not screen any compounds for use in the Field during the term of this
Agreement. During the Research Term, the JRC may determine that it is in the
best interests of the Research for certain compounds of Kyowa Hakko to be
screened and developed as part of the Research. Upon such determination by the
JRC, Kyowa Hakko and Geron shall negotiate the terms and conditions of an
agreement to screen, develop and commercialize such compounds, and only after an
agreement is entered into between the parties may Kyowa Hakko screen compounds
for use in the Field. The agreement shall provide that Kyowa Hakko shall retain
exclusive rights to any such compounds in the Asian Territory. In the event a
Product is predominantly based on a potent, confidential and proprietary Kyowa
Hakko compound, (i) there shall be a small reduction in the royalty payable by
Kyowa Hakko on the Net Sales of such Product in
7.
<PAGE> 16
the Asian Territory, such amount to be agreed upon by the parties and (ii)
notwithstanding Section 5.2(i) hereof, Geron shall provide Kyowa Hakko fair and
reasonable compensation for exclusive rights to such Product in the Non-Asian
Territory based on the Net Sales of such Product in the Non-Asian Territory.
3.7 Extension By Mutual Consent. Although the parties contemplate that
their collaborative Research within the Field will be completed within four (4)
years, they recognize that it may be desirable to extend the duration of this
research collaboration to complete work that was described in the Research Plan
and that was near completion at the end of the Research Term or to commence a
new research program. Each party agrees to discuss in good faith any request by
the other party to extend the Research Term.
ARTICLE 4
DEVELOPMENT
4.1 Joint Development Committee. The parties shall establish a Joint
Development Committee (the "JDC") on or prior to the date on which a compound is
selected for development pursuant to Section 3.5. The JDC shall be comprised of
seven (7) individuals with three (3) being appointed and replaced by Geron and
the other four (4) being appointed and replaced by Kyowa Hakko. Any changes to
the size of the JDC shall be decided by the JDC. All decisions of the JDC shall
require a majority vote of all of the members of the JDC. Once formed, the JDC
will meet at least quarterly to evaluate and discuss the development of
Products. The chairperson of the JDC will be selected from among the members of
the JDC by Kyowa Hakko.
4.2 Responsibilities of the JDC. The purpose of the JDC is to coordinate
and expedite the development of compounds into commercially successful Products
in the Asian Territory. The JDC will oversee and coordinate the development of
compounds into Products in the Asian Territory, will determine the cancer types
for which such Products will be developed in the Asian Territory, will
coordinate development of Products in the Asian Territory, including clinical
trial coordination, and will facilitate the flow of Information with respect to
development work being conducted for each Product. Kyowa Hakko shall develop a
plan (the "Product Development Plan") setting forth the strategy, schedule and
objectives for development of each compound selected for Product development in
the Asian Territory and submit the Plan to the JDC. The JDC shall review and
revise the Product Development Plan to ensure that it is consistent with Geron's
worldwide product development strategy for such Product. Once approved by the
JDC, the Product Development Plan shall be submitted to the Management Board for
review purposes only. The Product Development Plan shall be updated at least
annually. The JDC shall summarize the progress of Kyowa Hakko's development
activities in a report to the Management Board at least twice during each
calendar year.
8.
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4.3 Development in the Asian Territory. Subject to the terms of this
Agreement, Kyowa Hakko shall have the right to manage and control the
development of all Products in the Asian Territory at its own cost. Kyowa Hakko
shall use reasonable diligent efforts, consistent with good pharmaceutical
industry practices, to successfully develop the compounds selected for
development into Products in the Asian Territory in accordance with the Product
Development Plan.
4.4 Development in Non-Asian Territory. Geron shall have the right to
manage and control the development of Products in the Non-Asian Territory at its
own cost. Geron shall keep Kyowa Hakko reasonably informed of the progress of
such development, subject to Geron's obligations to Third Parties, whether now
or hereafter entered into.
4.5 Development Collaboration. The parties agree that it may be beneficial
to both parties to collaborate on preclinical and clinical development,
including, without limitation, toxicology studies, pharmacology studies and
formulation. The parties agree that United States clinical trials performed and
clinical data collected by Geron may be useful in the design and implementation
of clinical trials in the Asian Territory. Therefore, in the event an IND for a
Product is filed in the United States in advance of an IND being filed in Japan
for such Product, Kyowa Hakko shall pay to Geron [ * ], as a non-refundable
advance from the payment specified in Article 10.1(b) herein within thirty (30)
days of notice to Kyowa Hakko of such filing in the United States. Such payment
shall be made in accordance with the provisions of Section 10.2 and shall be in
exchange for pre-clinical data prepared by Geron related to such IND filing.
Once such [ * ] payment is made to Geron, Kyowa Hakko shall be able to use such
data to the extent necessary free of charge.
4.6 Funding of Phase II/III U.S. Clinical Trials. Geron and Kyowa Hakko
agree that it may be beneficial for Kyowa Hakko to fund all or a portion of
Phase II and/or Phase III clinical studies for a Product in the United States in
return for an appropriate level of participation by Kyowa Hakko in the
development and/or commercialization of such Product in the United States. In
the event Geron requests such funding from Kyowa Hakko for a given Product, but
without any obligation to do so, the parties shall negotiate in good faith an
agreement setting forth the terms and conditions of such collaboration with
respect to that Product. The parties agree that examples of ways in which Kyowa
Hakko could participate in the development and/or commercialization of that
Product in the United States and be compensated include, without limitation,
co-marketing or co-promotion rights for such Product in the United States,
participation in Geron's profits from the sales of such Product in the United
States, and reduction of the royalty payable by Kyowa Hakko on such Product in
the Asian Territory.
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
9.
<PAGE> 18
ARTICLE 5
LICENSES
5.1 License to Kyowa Hakko in the Asian Territory. Subject to the terms and
conditions of this Agreement, including, without limitation, the royalty
provisions of Article 8, Geron hereby grants to Kyowa Hakko a royalty-bearing,
exclusive license under Geron Technology and Geron's interest in Joint Patents
to make, have made, use, sell and have sold Products in the Asian Territory with
the right to grant sublicenses as provided in this Agreement; provided, however,
that Geron expressly reserves the right to use such Geron Technology and Joint
Patents for research to be conducted within the Asian Territory and for any
purpose whatsoever outside the Asian Territory. Geron shall promptly report all
of its research activities conducted within the Asian Territory to the JRC.
5.2 Licenses to Geron. Subject to the terms and conditions of this
Agreement, Kyowa Hakko hereby grants to Geron the following licenses, with the
right to grant sublicenses as provided for in this Agreement: (i) an exclusive
royalty-free, fully paid-up license under Kyowa Hakko Technology and Kyowa
Hakko's interest in Joint Patents to make, have made, use, sell and have sold
Products in the Field in the Non-Asian Territory, (ii) an exclusive,
royalty-free, fully paid-up license under Kyowa Hakko Patents filed after the
Effective Date and describing inventions that have utility in the Field to make,
have made, use, sell and have sold Products in the Field in the Non-Asian
Territory, and (iii) an exclusive, worldwide, royalty-free, fully paid-up
license under Kyowa Hakko Patents filed after the Effective Date and describing
inventions that have utility in the Field and Kyowa Hakko's interest in Joint
Patents for any purpose outside the Field.
5.3 Sublicensing. Kyowa Hakko shall have the right to sublicense any of its
marketing and sales rights under Section 5.1 in the Asian Territory to any Third
Party only with the prior written consent of Geron, which consent shall not be
unreasonably withheld. Kyowa Hakko shall have the right to sublicense its
development rights under Section 5.1 only with the prior written consent of
Geron. Kyowa Hakko shall have the right to license its manufacturing rights
under Section 5.1 only in accordance with the provisions of Article 7. Geron
shall have the right to sublicense any and all of its rights under Section 5.2
to any Third Party, including, without limitation, parties who may collaborate
with Geron for the research, development and commercialization of compounds or
products in the Non-Asian Territory, without the prior written consent of Kyowa
Hakko. In the event Geron sublicenses rights solely to Kyowa Hakko Technology,
Geron and Kyowa Hakko shall equally share any and all payments received by Geron
from such Third Party.
10.
<PAGE> 19
5.4 Assignment or Sublicense to Affiliates. Either party may assign or
sublicense any of its rights or obligations under this Agreement to any
Affiliates; provided, however, that such assignment shall not relieve the
assigning party of its responsibilities for performance of its obligations under
this Agreement.
5.5 Exclusivity. Except as otherwise provided for in this Agreement, any
research or development conducted or funded by Kyowa Hakko in the Field during
the Research Term shall be deemed to be Research conducted pursuant to this
Agreement.
5.6 Existing Third Party Technology. The licenses granted herein include
sublicenses under technology related to Products which has been licensed by a
party from any Third Party ("Third Party Licenses"). Exhibit C sets forth the
Third Party Licenses of each party as well as Sponsored Research Agreements and
options for patent license agreements that may be licensed pursuant to Section
5.7. Each party agrees to abide by the terms and conditions of such Third Party
Licenses, including accounting for Net Sales of Products. The party who entered
into the Third Party License shall be responsible for all payments attributable
to this Agreement and the activities contemplated hereby under such Licenses.
5.7 New Third Party Technology. Following the Effective Date, if either
party believes that technology related to Products that is Controlled by a Third
Party would be valuable or necessary to the collaboration hereunder, the parties
will consult regarding the licensing or acquiring of such technology. The
determination of whether such licenses and/or acquisitions shall be sought, the
party that shall approach and negotiate with such Third Parties and the terms of
any agreements with such Third Parties, including, without limitation, payments
for sponsored research, shall be made by the JRC or the JDC and approved by the
Management Board. In general, the cost of obtaining any licenses so approved by
the JRC or JDC and the Management Board and any royalty obligations thereunder
shall be borne by Geron and Kyowa Hakko in an equitable manner according to the
benefit each party receives from the sale of Products covered by such license.
Exhibit C shall be amended to include such agreements and the apportionment
between Geron and Kyowa Hakko of the costs associated with such agreements, and
such amended Exhibit C shall become a part of this Agreement. Notwithstanding
the foregoing, either party shall be permitted to acquire or obtain a license to
any such Third Party technology at its own cost; provided that such party shall
be responsible for all obligations under such license or acquisition.
5.8 Territorial Limitations. To the extent permitted by law, neither Geron
nor Kyowa Hakko shall sell Products to any Third Party that the selling party
believes will resell or use the Products in violation of the commercialization
arrangements set forth in this Agreement. Each party shall use reasonable
efforts to correct such violations and to prevent any future violations by Third
Parties.
11.
<PAGE> 20
ARTICLE 6
COMMERCIALIZATION
6.1 Commercialization in the Asian Territory. Kyowa Hakko shall use
reasonable diligent efforts to market and sell Products successfully in the
Asian Territory. Prior to the end of each year, Kyowa Hakko shall develop and
maintain a plan for the commercialization of each Product in the Asian Territory
for the following year ("Sales Plan"). Each Sales Plan shall include a
comprehensive marketing, sales, pricing, manufacturing, distribution and
licensing strategy for the applicable Product in the Asian Territory, including
projected market share for the Product and projected marketing resource
commitment to the Sales Plan. Kyowa Hakko shall report its progress as measured
against each Sales Plan to Geron at least once each quarter.
6.2 Advertising and Trademarks. Subject to the terms of this Section, Geron
shall have the sole authority to name Products throughout the world for each
Product. Prior to naming a Product for the Asian Territory, Geron shall consult
with Kyowa Hakko regarding such name and shall consider those trademarks that
Kyowa Hakko already has rights to in the Asian Territory (a "Kyowa Hakko
Trademark"). Kyowa Hakko may object to a name determined by Geron for a Product
in the Asian Territory and recommend a different name to Geron. Geron shall
consider such recommendation based on such name's consistency with Geron's
worldwide naming strategy. If Geron chooses a Kyowa Hakko Trademark for a
Product, Kyowa Hakko hereby grants to Geron the exclusive, perpetual,
royalty-free, fully paid-up license to use such trademark for such Product in
the Non-Asian Territory. Geron shall, at its own expense, prosecute and maintain
such Kyowa Hakko Trademark throughout the world. If Geron chooses a trademark
for a Product that is not a Kyowa Hakko Trademark (a "Geron Trademark"), Geron
hereby grants to Kyowa Hakko the exclusive, royalty-free, fully paid-up license
to use such trademark for such Product in the Asian Territory. Geron shall, at
its own expense, prosecute applications for and maintain such Geron Trademark
throughout the world. Each party shall provide reasonable assistance to the
other party in the prosecution and protection of trademarks for Products. To the
extent necessary for Geron to maintain enforceable trademarks, Kyowa Hakko shall
adhere to quality control requirements established by Geron in connection with
the use and appearance of Geron Trademarks.
ARTICLE 7
MANUFACTURING
7.1 Manufacturing in the Asian Territory. Kyowa Hakko shall use reasonable
diligent efforts to manufacture Products for commercial sale in the Asian
Territory. In accordance with Section 8.2, Kyowa Hakko shall report its Standard
Factory Costs and Estimated Net Sales Prices to Geron no later than the
completion of Phase II clinical studies for a Product in Japan (or substantially
comparable studies) and
12.
<PAGE> 21
annually thereafter; provided, however, that such Standard Factory Costs and
Estimated Net Sales Prices may be adjusted at any time upon the mutual agreement
of the parties. The Management Board has the authority to object to Standard
Factory Costs for any given year based on such Standard Factory Costs being
higher than a bona fide written estimate of Standard Factory Costs obtained by
the Management Board from Geron or any other manufacturer ("Other Manufacturer")
that is currently supplying or committed to supply Product for or on behalf of
Geron for commercial sale in the Non-Asian Territory ("Other Estimate"). The
Other Estimate must be calculated using substantially similar accounting methods
as those used by Kyowa Hakko in calculating Kyowa Hakko's Standard Factory
Costs. If Kyowa Hakko cannot demonstrate to the satisfaction of the Management
Board that the Other Estimate is inappropriate, then such Other Estimate shall
be substituted for Standard Factory Costs for royalty calculations. Kyowa Hakko
shall have the right to sublicense its manufacturing rights to Third Parties
only with the prior approval of the Management Board, such approval not to be
unreasonably withheld.
7.2 Stand-by Manufacturing in the Asian Territory. The parties agree that
it is in both parties' best interest to have an adequate supply of Product for
commercial sale in the Asian Territory. In the event that Kyowa Hakko is unable
to provide an adequate supply of Products in the Asian Territory for a period of
three (3) consecutive months as evidenced by the failure to fulfill all orders
received by Kyowa Hakko during such period, Geron shall have the right to
manufacture or have manufactured such Products for the Asian Territory until
such time as Kyowa Hakko demonstrates to Geron that Kyowa Hakko is able to
perform its obligations and for such longer period as Geron is obligated under a
manufacturing agreement with a Third Party manufacturer, not to exceed one year.
Kyowa Hakko agrees to purchase sufficient quantities of Product from Geron or
any other manufacturer supplying Product pursuant to this Section 7.2 in order
to maintain an adequate supply of Product for the Asian Territory. Kyowa Hakko
shall also use reasonable diligent efforts to assist Geron during such periods
as Geron is manufacturing pursuant to this Section 7.2 and to provide any
licenses necessary to enable Geron to fulfill its obligations hereunder.
ARTICLE 8
ROYALTIES
8.1 Royalties. In consideration of the license granted to Kyowa Hakko under
Geron's Technology in existence as of the Effective Date, Kyowa Hakko shall pay
to Geron a royalty on the Net Sales of Products in the Asian Territory as
follows:
13.
<PAGE> 22
(i) Where the Estimated Cost of Goods Sold for the applicable period is
less than [ * ], the royalty shall be that percentage of Net Sales of Products
that is equal to the sum of (x) plus (y), where (x) is equal to [ * ] and (y) is
equal to one-half of the difference between [ * ] and the Estimated Cost of
Goods Sold for such Products.
(ii) Where the Estimated Cost of Good Sold for the applicable period is
equal to [ * ], the royalty shall be [ * ] of the Net Sales of Products.
(iii) Where the Estimated Cost of Goods Sold for the applicable period is
greater than [ * ], the royalty shall be that percentage of Net
Sales of Products that is equal to the difference between (x) minus (y), where
(x) is equal to [ * ] and (y) is equal to one-half the difference
between the Estimated Cost of Goods Sold for such Products and [ * ]; provided,
however, that in no event shall such royalty percentage be less than [ * ].
8.2 Reporting and Payment of Royalties. Kyowa Hakko shall deliver to Geron
within sixty (60) days after the end of each calendar quarter a written account,
including quantities, of Kyowa Hakko's and Kyowa Hakko's Affiliates' and
sublicensees' sales subject to royalty payments and the amount of the royalty
payment due to Geron for such quarter. When Kyowa Hakko delivers the accounting
to Geron, Kyowa Hakko shall also deliver all royalty payments due to Geron for
the preceding calendar quarter. Such royalties shall be calculated on the Net
Sales in the local currency of each country, and converted into U.S. Dollars and
paid in U.S. Dollars on the basis of the currency exchange rate published in the
Wall Street Journal or comparable newspaper of international circulation on the
date such royalty payment is due to be made to Geron. In the event of Net Sales
being made in a currency as to which conversion into U.S. Dollars is then
blocked, Kyowa Hakko shall make payment to Geron in such local currency in a
bank account designated by Geron. Kyowa Hakko shall withhold any taxes on such
royalties required by law. Kyowa Hakko shall use reasonable diligent efforts to
reduce such withholdings to the greatest extent possible. Any refunds or rebates
of taxes paid by Kyowa Hakko on behalf of Geron shall be remitted promptly by
Kyowa Hakko to Geron.
8.3 Determination of Estimated Cost of Goods Sold. For purposes of the
royalty calculations described above, Estimated Cost of Goods Sold and Estimated
Net Sales Price for a given Product shall be calculated by Kyowa Hakko and
reported in its royalty report pursuant to Section 8.2 above, subject to review
by the Management Board as set forth in Section 7.1.
8.4 Annual Reconciliation of Royalties. In the royalty report provided to
Geron for the last quarter of each fiscal year in which Products are sold, Kyowa
Hakko shall, in addition to its other reporting requirements pursuant to Section
8.2
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
14.
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hereof, report its Actual Cost of Goods Sold and Net Sales for Products sold
during the preceding fiscal year and the amount of royalty that would be due to
Geron for that fiscal year based upon such Actual Cost of Goods Sold and Net
Sales (the "Actual Royalty Due"). In the event the Actual Royalty Due is greater
than the royalties paid to Geron for Product sales that were made during the
preceding fiscal year ("Estimated Royalty"), Kyowa Hakko shall include payment
for the difference between the Actual Royalty Due and Estimated Royalty with the
report. In the event the Actual Royalty Due is less than the Estimated Royalty,
Kyowa Hakko shall be entitled to a credit for the difference between the
Estimated Royalty and the Actual Royalty Due on future royalty payments to
Geron, starting with the royalty payment due with this report for the preceding
quarter.
8.5 Sales to Affiliates and Sublicensees. Sales between Kyowa Hakko and its
sublicensees or Affiliates, or among such Affiliates and sublicensees, shall not
be subject to royalty.
8.6 Samples or Donations to Third Parties. No royalties shall accrue on
disposition of reasonable quantities of Products for no charge by Kyowa Hakko as
samples or donations to Third Parties; provided, however, that such quantities
shall not exceed [ * ] of the total number of units of Products dispensed,
whether by sale or otherwise, during any particular quarter.
8.7 Minimum Royalty Payments. No royalty payment when due, regardless of
the number of royalty credits available to Kyowa Hakko in accordance with this
Agreement or other legally binding agreement between the parties, shall be
reduced by more than [ * ]. Unused credits may be carried over into subsequent
royalty periods.
ARTICLE 9
RESEARCH PAYMENTS
9.1 Research Payments. In consideration of the research to be performed by
Geron pursuant to this Agreement, Kyowa Hakko shall pay to Geron the following
amounts as payment for Kyowa Hakko's share of the expenses related to such
research, provided that this Agreement is in full force and effect on dates such
payments are due:
(a) [ * ] in cash due upon execution of this Agreement for research
expenses to be incurred during the Research Term;
(b) [ * ] in cash due thirty (30) days after execution of this
Agreement, the date on which the Management Board and JRC should be formed and
the Research Plan should be completed, for research expenses to be incurred
during the
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
15.
<PAGE> 24
first year of this Agreement in connection with Geron's performance of the
Research Plan;
(c) [ * ] in cash due upon each of the first and second annual
anniversaries of this Agreement, respectively, for research expenses to be
incurred during the second and third years of this Agreement in connection with
Geron's performance of the Research Plan; and
(d) [ * ] in cash due upon the third anniversary of this Agreement
for research expenses to be incurred during the fourth year of this Agreement in
connection with Geron's performance of the Research Plan.
9.2 Unexpended Research Payments. In the event Geron does not expend the
amounts provided by Kyowa Hakko to Geron pursuant to Section 9.1 for the
Research in the applicable year of the Research Term, such amount shall be
retained by Geron for use in the next year of the Research Term. In the event
Geron does not expend all of the amounts provided by Kyowa Hakko pursuant to
Section 9.1 above by the end of the Research Term, the parties agree to discuss
possible extensions of the Research and possible additional research programs to
utilize fully, on Kyowa Hakko's behalf, the amounts provided to Geron in
accordance with this Article 9. In the event the parties do not agree upon an
extension of the Research or additional research programs, the unexpended amount
shall be credited against the milestone payments set forth in Article 10 in
proportion to the amount such milestone payment bears to the total milestone
payments set forth in Article 10; provided, however, that such credits shall
occur only to the extent such milestone payments are paid.
9.3 Withholding Obligations. The amounts specified in Section 9.1 shall be
in U.S. Dollars and shall be "net" of any amounts to be withheld by Kyowa Hakko
in accordance with the applicable withholding provisions of the tax laws of
Japan. Therefore, Geron shall be entitled to receive in cash the exact amount
specified under each subsection of Section 9.1 notwithstanding the effect of any
and all withholding or other payments made by Kyowa Hakko as a result of such
provisions.
ARTICLE 10
MILESTONES
10.1 Milestone Payments. In consideration of the rights granted under this
Agreement, each of the following non-creditable and non-refundable payments will
be made by Kyowa Hakko only once on the earlier of (i) the first achievement of
the following milestones and (ii) the date the JRC projected such milestone
would be achieved in accordance with the timetable prepared by the JRC pursuant
to Section 3.4, regardless of the number of times thereafter that such
milestones are again achieved with respect to the same or different Products,
provided that this Agreement is in full force and effect on the dates such
payments are due:
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
16.
<PAGE> 25
(a) [ * ] in cash due upon the selection of a compound for development
in accordance with Section 3.5, such payment to be in exchange for
chemical data prepared by Geron relating to such compound;
(b) Subject to Section 4.5 hereof, [ * ] in cash due upon the
filing of an IND for a Product in Japan, such payment to be in exchange for
pre-clinical data prepared by Geron for such IND application;
(c) [ * ] in cash due upon the completion of Phase II clinical
studies (or substantially comparable studies) for a Product in Japan, such
payment to be in exchange for clinical data prepared by Geron during such Phase
II clinical studies (or substantially comparable studies);
(d) [ * ] in cash due upon the filing of an NDA for a Product in
Japan, such payment to be in exchange for clinical data prepared by Geron for
such NDA application;
(e) [ * ] in cash due upon the final marketing approval for a
Product in Japan, such payment to be in exchange for clinical data prepared by
Geron in connection with the attainment of such marketing approval.
10.2 Withholding Objections. The amounts specified in Section 10.1 shall be
in U.S. Dollars and shall be "net" of any amounts to be withheld by Kyowa Hakko
in accordance with the applicable withholding provisions of the tax laws of
Japan. Therefore, Geron shall be entitled to receive in cash the exact amount
specified under each subsection of Section 10.1 notwithstanding the effect of
any and all withholding or other payments made by Kyowa Hakko as a result of
such provisions. To the extent Kyowa Hakko is required to pay any amounts to the
tax authorities in Japan as a result of such withholding provisions
("Withholding Amounts"), such Withholding Amounts shall be credited against
future royalties payable by Kyowa Hakko to Geron pursuant to Article 8 of this
Agreement, up to maximum credit of $1.28 million and subject to the provisions
of Section 8.7. To the extent no Withholding Amounts are paid by Kyowa Hakko,
there shall be no credit against future royalties pursuant to this Section 10.2.
ARTICLE 11
EQUITY
Upon the consummation of the sale of the Common Stock of Geron to the public
pursuant to a firm commitment underwriting, Kyowa Hakko agrees to purchase and
Geron agrees to sell that number of shares of its Common Stock that is equal to
$2.5 million divided by the "price to public" of such shares as set forth on the
cover page of the Prospectus for such offering. In connection with such sale and
purchase, the parties agree to enter appropriate agreements to effect such
transaction, including,
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
17.
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without limitation, customary and appropriate investment representations by
Kyowa Hakko.
ARTICLE 12
CONFIDENTIALITY
12.1 Confidentiality; Exceptions. Except to the extent expressly authorized
by this Agreement or otherwise agreed in writing, the parties agree that, for
the term of this Agreement and for ten (10) years thereafter, the receiving
party shall keep confidential and shall not publish or otherwise disclose or use
for any purpose other than as provided for in this Agreement any Information and
other information and materials furnished to it by the other party pursuant to
this Agreement (collectively, "Confidential Information"), except to the extent
that it can be established by the receiving party by competent proof that such
Confidential Information:
a. was already known to the receiving party at the time of disclosure
by the other party;
b. was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party.
c. became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving party in breach of this Agreement; or
d. was disclosed to the receiving party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing party not to disclose such information to others.
12.2 Authorized Disclosure. Each party may disclose the other's
Confidential Information to the extent such disclosure is reasonably necessary
in filing or prosecuting patent applications, prosecuting or defending
litigation, complying with applicable governmental regulations or conducting
preclinical or clinical trials, provided that if a party makes any such
disclosure of the other party's Confidential Information it will give reasonable
advance notice to the other party of such disclosure requirement and, except to
the extent inappropriate in the case of patent applications, will use its best
efforts to secure confidential treatment of such Confidential Information
required to be disclosed. Each party may also disclose Confidential Information
to Third Parties who have agreed to collaborate on the research, development,
marketing and sale of compounds or products, provided that such Third Party
agrees in writing to restrictions substantially similar to the restrictions set
forth in Section 12.1 and that the party making such disclosure shall give
periodic notice to the other party of such disclosures.
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ARTICLE 13
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
13.1 Patents Resulting from the Research Program. During the Research Term,
Geron shall promptly inform Kyowa Hakko of all inventions that relate to the
Field and that are conceived, made or developed by service providers of Geron,
solely or jointly with service providers of Kyowa Hakko. During the Research
Term, Kyowa Hakko shall promptly inform Geron of all inventions that relate to
the Field and that are conceived, made or developed by service providers of
Kyowa Hakko, solely or jointly with service providers of Geron. Inventions
arising out of the Research Program shall be owned as follows:
a. Such inventions shall be owned by Kyowa Hakko if invented solely by
service providers of Kyowa Hakko who have agreed to assign such inventions to
Kyowa Hakko. All patent applications and patents covering such inventions shall
be Kyowa Hakko Patents. In the United States only, to the extent a
continuation-in-part application is filed on a Kyowa Hakko Patent for an
invention described in subsection (c) below, Geron hereby assigns its entire
right, title and interest in any such continuation-in-part application to Kyowa
Hakko and Kyowa Hakko hereby grants to Geron, subject to the terms of this
Agreement, a perpetual, worldwide, non-exclusive, transferable, royalty free,
fully paid-up license to use such Patents for any purpose. Such license shall
continue notwithstanding termination or expiration of this Agreement. Such
patent application and resulting patent, if any, shall be considered a Kyowa
Hakko Patent.
b. Such inventions shall be owned by Geron if invented solely by
service providers of Geron who have agreed to assign such inventions to Geron.
All patent applications and patents covering such inventions shall be Geron
Patents. In the United States only, to the extent a continuation-in-part
application is filed on a Geron Patent for an invention described in subsection
(c) below, Kyowa Hakko hereby assigns its entire right, title and interest in
any such continuation-in-part application to Geron and Geron hereby grants to
Kyowa Hakko, subject to the terms of this Agreement, perpetual, worldwide,
non-exclusive, transferable, royalty free, fully paid-up license to use such
Patents for any purpose. Such license shall continue notwithstanding termination
or expiration of this Agreement. Such patent application and resulting patent,
if any, shall be Geron Patents.
c. Such inventions shall be owned jointly by Kyowa Hakko and Geron if
invented jointly by or on behalf of service providers of Kyowa Hakko and Geron.
Such persons shall agree to assign such inventions to Kyowa Hakko and Geron, as
applicable. Subject to subsections (a) and (b) above, all such patent
applications and patents pertaining to jointly developed inventions shall be
Joint Patents.
19.
<PAGE> 28
13.2 Kyowa Hakko Responsibility for Patent Filings. Kyowa Hakko will
diligently file, prosecute and maintain Kyowa Hakko Patents to effectively cover
discoveries and inventions relating to the Field throughout the world. Kyowa
Hakko will endeavor to ensure whenever possible that claims are filed and are
issued in such Patents relating to the Field and that all such Patents are filed
before any public disclosure to ensure the validity of such Patents. Kyowa Hakko
will endeavor to give Geron immediate notice of any decision to prepare a Patent
relating to the Field. Kyowa Hakko will also endeavor to provide Geron with
draft copies of all such Patents and related Patent prosecution documents and
Geron shall have, to the extent reasonably possible, thirty (30) days from the
receipt of such drafts to comment. Kyowa Hakko will confer with Geron, and make
reasonable effort to adopt Geron's suggestions regarding the prosecution of
Patents relating to the Field. Notwithstanding the foregoing, Kyowa Hakko shall
have the right to take such actions as are reasonably necessary to preserve its
rights under Kyowa Hakko Patents throughout the world. As soon as practical
subsequent to any filing of a Patent or Patent prosecution document relating to
the Field, Kyowa Hakko will provide Geron a copy of any such filing. In
addition, Kyowa Hakko will copy Geron with any official action and Kyowa Hakko
submissions in such Patents, including an English translation thereof.
13.3 Geron Responsibility for Patent Filings. Geron will diligently file,
prosecute and maintain Geron Patents and Joint Patents to effectively cover
discoveries and inventions relating to the Field throughout the world. In
particular, Geron shall be obligated to file, prosecute and maintain Geron
Patents and Joint Patents in the Asian Territory for compounds selected for
development in the Asian Territory in accordance with Section 3.5. Geron will
endeavor to ensure whenever possible that claims are filed and are issued in
such Patents relating to the Field and that all such Patents are filed before
any public disclosure to ensure the validity of such Patents. Geron will
endeavor to give Kyowa Hakko immediate notice of any decision to prepare a
Patent relating to the Field in the Asian Territory. Geron will endeavor to
provide Kyowa Hakko draft copies of all Patents and related Patent prosecution
documents related to the Field in the Asian Territory and Kyowa Hakko will have
thirty (30) days, to the extent reasonably possible, from receipt of such drafts
to comment. Geron will confer with Kyowa Hakko, and make reasonable effort to
adopt Kyowa Hakko's suggestions regarding the prosecution of such Patents in the
Asian Territory. Notwithstanding the foregoing, Geron shall have the right to
take such actions as are reasonably necessary to preserve its rights under Geron
Patents and Joint Patents throughout the world. As soon as practical subsequent
to any filing in the Asian Territory of a Patent or Patent prosecution document
relating to the Field, Geron will provide Kyowa Hakko a copy of any such
filings. In addition, Geron will copy Kyowa Hakko with any official action and
Geron's submission in such Patents. Geron shall keep Kyowa Hakko reasonably
informed of its prosecution activities in the Non-Asian Territory.
13.4 Enforcement and Defense Rights. With respect to infringement or
defense of any of the Geron Patents and Joint Patents, both inside and outside
the Field,
20.
<PAGE> 29
Geron shall have the right to institute, prosecute and control any action or
proceeding with respect to such infringement or defense. Geron shall use
reasonable diligent efforts to protect the exclusivity granted to Kyowa Hakko
pursuant to this Agreement, taking into account the costs and benefits of such
action, including, without limitation, the costs to be incurred in any such
action and the amount and likelihood of the damages that may be awarded in any
such action, and shall take action with respect to any infringement of Geron
Patents or Joint Patents that Geron reasonably determines will reduce Kyowa
Hakko's market share for a Product by more than ten percent (10%). With respect
to infringement or defense in the Field of any Kyowa Hakko Patents, Kyowa Hakko
shall have the right to institute, prosecute and control any action or
proceeding with respect to such infringement or defense. The party not
controlling such enforcement or defense action shall have the right to
participate in such action at its own expense and also agrees to cooperate in
such action as may be reasonably requested by the enforcing party, including,
without limitation, being named as a party in such action. The parties shall
consult regarding the institution, prosecution and control of any action or
proceeding with respect to infringement or defense outside the Field of any of
Kyowa Hakko Patents or Joint Patents. Subject to Section 13.7, in each case
relating to infringement or defense of Kyowa Hakko Patents within the Field,
Kyowa Hakko shall bear the costs of such patent enforcement or defense and,
after payment of the litigation expenses of each party, retain for its own
account any amounts recovered from Third Parties. Subject to Section 13.7, in
each case relating to infringement or defense of Geron Patents and Joint
Patents, Geron shall bear the costs of patent enforcement or defense and, after
payment of the litigation expenses of each party, retain for its own account any
amounts recovered from Third Parties.
13.5 Patent Costs. Patent Costs for Kyowa Hakko Patents shall be borne
solely by Kyowa Hakko. Patent Costs for Geron Patents and Joint Patents shall be
borne by Geron.
13.6 Infringement of Third Party Patents. If any Third Party asserts a
claim of patent infringement against Kyowa Hakko on account of Kyowa Hakko's
use, manufacture or sale of Products in the Asian Territory, Kyowa Hakko shall
promptly notify Geron of the existence and details of such claim. Geron shall at
its election choose and do one of the following: (i) negotiate with said Third
Party for the right to have Kyowa Hakko use, manufacture and/or sell Products in
the Asian Territory; or (ii) defend Kyowa Hakko against such claim; or (iii)
should Geron not elect either (i) or (ii) above, Geron shall reasonably
cooperate with Kyowa Hakko in defending against such claim. In the event Geron
elects (i) or (ii) above, Kyowa Hakko shall reasonably cooperate with Geron. All
costs and expenses related to (i), (ii) or (iii) above, including the costs and
royalty obligations of any license agreement entered into with a Third Party,
shall be shared [ * ] by the parties on a [ * ] basis, up to a maximum of [ * ]
[ * ] of Geron's royalties for that quarter, but in no event shall this Section
13.6 cause Geron's royalties to be reduced below an "effective" royalty rate of
[ * ] for
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
21.
<PAGE> 30
any quarter, such "effective" royalty rate to be determined by first deducting
royalties Geron is obligated to make to Third Parties as a result of this
Agreement.
13.7 Back-up Rights. Should Geron determine not to file, prosecute,
maintain or issue a Geron Patent or Joint Patent or related application for any
invention related to the Field in the Asian Territory, other than for compounds
selected for development in the Asian Territory in accordance with Section 3.5
above for which Geron is obligated to file, prosecute and maintain Patents and
Joint Patents, it will timely grant any necessary authority to Kyowa Hakko to
file, prosecute, maintain and issue such a patent application or maintain such a
Patent in the name of Geron in the Asian Territory, all at the expense of Kyowa
Hakko. Once such authority has been granted, such Patent or Joint Patent shall
be considered a Kyowa Hakko Patent for purposes of this Agreement. Should Kyowa
Hakko determine not to file, prosecute, maintain or issue a Kyowa Hakko Patent
or related application for any invention related to the Field, other than for
compounds invented by service providers of Kyowa Hakko and selected for
development in accordance with Section 3.5 above for which Kyowa Hakko is
obligated to file, prosecute and maintain Patents, it will timely grant any
necessary authority to Geron to file, prosecute, maintain and issue such a
patent application or maintain such a Patent in the name of Geron, all at the
expense of Geron. Once such authority has been granted, such Patent shall be
considered a Geron Patent for purposes of this Agreement. Should Geron not wish
to enforce or defend its rights in the Field under a Patent or Joint Patent in
the Asian Territory, it will timely grant any necessary authority to Kyowa Hakko
to enforce or defend its rights in the Asian Territory, all at Kyowa Hakko's
expense. Should Kyowa Hakko not wish to enforce or defend its rights under a
Kyowa Hakko Patent, it will timely grant any necessary authority to Geron to
enforce or defend Geron's rights under such Patent as provided for in Section
5.1, all at the Geron's expense.
13.8 Assignment. Neither party may assign its rights under any jointly
owned Joint Patent except with the prior written consent of the other party;
provided, however, that either party may assign such rights without consent to
an Affiliate or other permitted assignee of this Agreement.
ARTICLE 14
REPRESENTATIONS AND WARRANTIES
Each of the parties hereby represents and warrants as follows:
(i) This Agreement is a legal and valid obligation binding upon such
party and enforceable in accordance with its terms. The execution, delivery and
performance of the Agreement by such party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by
22.
<PAGE> 31
which it is bound, nor violate any law or regulation of any court, governmental
body or administrative or other agency having jurisdiction over it.
(ii) Such party has not, and during the term of the Agreement will
not, grant any right to any Third Party relating to its respective Technology in
the Field which would abrogate the rights granted to the other party hereunder.
ARTICLE 15
REPORTS, RECORDS AND PAYMENTS
15.1 Sharing of Information. The parties will exchange at least monthly
verbal or written reports in English presenting a meaningful summary of its
activities, including research and development activities under this Agreement.
Each party will make regular presentations to the other of its activities under
this Agreement, and additionally on an informal basis, inform the other party of
the work done under this Agreement. Each party will use reasonable efforts not
to communicate information to the other which has no application to the Field.
Each party will provide the other with raw data in original form or a photocopy
thereof for any and all work carried out in the course of the Research as
reasonably requested by the other party. All Information provided for in this
Section 15.1 will be with respect to Research done through the Research Term,
except that Information with respect to Products shall continue to be exchanged
for the term of this Agreement, subject to any restrictions imposed by Third
Parties. To the extent either party enters into a collaboration with a Third
Party to research, develop and commercialize compounds or products, it is the
parties' intent that Information will be shared with such Third Party, provided
such Third Party agrees to share its Information with the parties hereto.
15.2 Records of Net Sales and Costs of Goods Sold. Kyowa Hakko will
maintain complete and accurate records of Net Sales and Costs of Goods sold
which are relevant to the payments to be made under this Agreement. Such records
shall be open during reasonable business hours for a period of five (5) years
from their creation for examination at Geron's expense and not more often than
once each year by a certified public accountant selected by Geron and reasonably
acceptable to Kyowa Hakko. Such accountant shall review the records for the sole
purpose of verifying the accuracy of the calculations or payments made by Kyowa
Hakko under this Agreement and such information shall be considered confidential
under the terms of this Agreement. In the event the examination shows an
underpayment of more than ten percent (10%) for any calendar quarter examined
due to an error on the part of Kyowa Hakko, Kyowa Hakko shall pay Geron the
amounts underpaid, ten percent (10%) of such amounts, and the cost of such
examination.
23.
<PAGE> 32
15.3 Records of Research Expenditures. Geron will maintain complete and
accurate records of its expenditures for its Research. Such records shall be
open during reasonable business hours for a period of five (5) years from their
creation for examination at Kyowa Hakko's expense and not more often than once a
year by a certified public accountant selected by Kyowa Hakko and reasonably
acceptable to Geron. Such accountant shall review the records for the sole
purpose of verifying the accuracy of expenditures reported by Geron under this
Agreement and such information shall be considered confidential under the terms
of this Agreement.
15.4 Publicity Review. The parties agree that the public announcement of
the execution of this Agreement shall be in the form of a press release to be
agreed upon by the parties. Thereafter, Geron and Kyowa Hakko will jointly
discuss and agree, based on the principles of this Section 15.5, on any
statement to the public regarding this Agreement or any aspect of this Agreement
not covered by Section 15.6 below, subject in each case to disclosure otherwise
required by law or regulation, including, without limitation, disclosure
required by (i) order of a court, (ii) United States or Japan securities law
filings in connection with public offerings or periodic reporting requirements
or (iii) prosecution of patent applications. In such event, the disclosing party
shall promptly notify the non-disclosing party of such non-disclosure as soon as
practical after the disclosure. In the discussion and agreement referred to
above, the principles observed by Geron and Kyowa Hakko will be: accuracy, the
requirements for confidentiality under Article 12, the advantage a competitor of
Geron or Kyowa Hakko may gain from any public statements under this Section
15.4, the requirements of disclosure under any applicable securities laws,
including those associated with public offerings, and the standards and customs
in the pharmaceutical industry for such disclosures by companies comparable to
Geron and Kyowa Hakko. The terms of this Agreement may also be disclosed to
Third Parties with the consent of the other party, which consent shall not be
unreasonably withheld so long as such disclosure is made under an obligation of
confidentiality.
15.5 Publications. Each party agrees that it shall not publish or present
the results of studies carried out as part of the Research without the
opportunity for prior review by the other party. Each party shall provide to the
other the opportunity to review any proposed abstracts, manuscripts or
presentations (including information to be presented verbally) which describe a
Product or a compound that may lead to a Product and not previously disclosed at
least thirty (30) days prior to their intended submission for publication and
such submitting party agrees, upon written request from the other party, not to
submit such abstract or manuscript for publication or to make such presentation
until the other party is given a reasonable period of time to secure patent
protection for any material in such publication or presentation which it
believes is patentable.
24.
<PAGE> 33
ARTICLE 16
TERM AND TERMINATION
16.1 Term. This Agreement shall commence as of the Effective Date and,
unless sooner terminated as provided herein, shall continue in effect until the
later of (i) the last to expire Geron, Kyowa Hakko or Joint Patent or (ii)
fifteen (15) years from the first commercial sale of a Product. Upon termination
of this Agreement pursuant to this Section 16.1, each party shall be free to use
the other party's Knowhow without restriction and without the payment of
royalties.
16.2 Termination for Breach. If either party materially breaches this
Agreement at any time, which breach is not cured within ninety (90) days of
written notice thereof from the non-breaching party, the non-breaching party may
elect to terminate this Agreement. Upon such election to terminate, the
breaching party's license to make, have made, use, sell and have sold Products
under the non-breaching party's Technology and Joint Patents in the breaching
party's Territory shall terminate and the non-breaching party shall have the
exclusive, royalty-free right under the breaching party's Technology and Joint
Patents to make, have made, use, sell and have sold Products in the
non-breaching party's Territory. The breaching party shall further deliver to
the non-breaching party such relevant tangible materials embodying such
Technology and Joint Patents as may be necessary or useful to the exercise of
the non-breaching party of the license or assignment hereunder. In the event
that such termination occurs during the Research Term as a result of breach by
Kyowa Hakko, Kyowa Hakko's obligations under Article 9 herein shall become
immediately due and payable. Within thirty (30) days of such uncured breach,
Kyowa Hakko shall make a one-time lump sum cash payment to Geron equal to the
amounts not previously paid to Geron pursuant to Article 9. In the event that
such termination occurs during the Research Term as a result of breach by Geron,
Kyowa Hakko's obligations under Article 9 herein shall terminate.
16.3 Termination for Bankruptcy. Either party may terminate this Agreement
with notice if the other party makes an assignment for the benefit of creditors,
is the subject of proceedings in voluntary or involuntary bankruptcy instituted
on behalf of or against such party, or has a receiver or trustee appointed for
all or substantially all of its property; provided that in the case of an
involuntary bankruptcy proceeding such right to terminate shall only become
effective if the party consents to the involuntary bankruptcy or such proceeding
is not dismissed within one hundred eighty (180) days after the filing thereof.
Subject to applicable bankruptcy laws, all rights and licenses granted pursuant
to this Agreement shall terminate.
16.4 Termination by Kyowa Hakko. Kyowa Hakko shall have the right to
terminate this Agreement within thirty (30) days after the Management Board
unanimously determines that it is no longer reasonably practical to pursue
further research and development in the Field. Upon such termination, all
licenses granted by
25.
<PAGE> 34
Geron to Kyowa Hakko shall terminate and Kyowa Hakko's payment obligations under
this Agreement, including under Article 9, shall terminate. Kyowa Hakko shall
grant to Geron the exclusive, royalty free, worldwide right under Kyowa Hakko's
Technology created after the Effective Date as a result of the Research and
Kyowa Hakko's interest in Joint Patents for any purpose. Kyowa Hakko shall
further deliver to Geron such relevant tangible materials embodying such
Technology and Joint Patents as may be necessary or useful to the exercise by
Geron of the license or assignment hereof.
16.5 Surviving Rights. The obligations and rights of the parties under
Sections 6.2, Article 12, Section 13.1, Sections 15.2, 15.3 and 15.5, Section
16.1, 16.2, 16.4, 16.5 and 16.6, Article 17 and Section 18.10 of this Agreement
will survive termination.
16.6 Accrued Rights, Surviving Obligations. Termination, relinquishment or
expiration of the Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either party prior to such
termination, relinquishment or expiration, including damages arising from any
breach hereunder. Such termination, relinquishment or expiration shall not
relieve either party from obligations which are expressly indicated to survive
termination or expiration of the Agreement.
ARTICLE 17
INDEMNIFICATION, DISCLAIMERS AND LIMITATIONS
17.1 Indemnification in Asian Territory. Kyowa Hakko shall indemnify and
hold Geron harmless from and against any and all liability, damage, loss, cost
(including reasonable attorneys' fees) and expense resulting from any claim of
bodily injury or property damage (a) relating to the development, manufacture,
use, distribution or sale of any Product in the Asian Territory, or (b) due to
the negligence or willful misconduct of Kyowa Hakko or its employees or agents.
17.2 Indemnification in the Non-Asian Territory. Geron shall indemnify and
hold Kyowa Hakko harmless from and against any and all liability, damage, loss,
cost (including reasonable attorneys' fees) and expense resulting from any claim
of bodily injury or property damage (a) relating to the development,
manufacture, use, distribution or sale of any Product in the Non-Asian
Territory, or (b) due to the negligence or willful misconduct of Geron or its
employees or agents.
17.3 LIMITED LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
OTHERWISE, NEITHER GERON NOR KYOWA HAKKO WILL BE LIABLE WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY EXCEPT WITH RESPECT TO SECTION 12
FOR (i) ANY INCIDENTAL OR CONSEQUENTIAL
26.
<PAGE> 35
DAMAGES OR LOST PROFITS; OR (ii) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY, OR SERVICES. NEITHER GERON NOR KYOWA HAKKO SHALL HAVE ANY LIABILITY
FOR ANY FAILURE OR DELAY DUE TO MATTERS BEYOND THEIR RESPECTIVE REASONABLE
CONTROL.
17.4 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY,
GOODS, SERVICES, RIGHTS, OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY
DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NON-INFRINGEMENT WITH RESPECT TO ALL OF THE FOREGOING.
ARTICLE 18
MISCELLANEOUS
18.1 Reasonable Diligent Effort. As used herein, the term "reasonable
diligent effort" shall mean efforts and resources commonly used in the
research-based pharmaceutical industry for a product at a similar stage in its
product life taking into account the establishment of the product in the
marketplace, the competitiveness of the marketplace, the proprietary position of
the product, the regulatory structure involved, the profitability of the product
and other relevant factors. Such resources and efforts shall be determined for a
particular Product and it is anticipated that the level of effort will change
over time reflecting changes in the status of the Product and the marketplace.
18.2 Assignment to Non-Affiliates; Sale or Merger. Either party may assign
its rights or obligations under this Agreement or its ownership interest in
jointly owned Joint Patents to a Third Party only as provided in Section 13.8 or
in connection with the sale of all or substantially all of the assigning party's
related business. This Agreement shall survive any merger of either party with
or into another party and no consent shall be required hereunder; provided, that
in the event of such merger, no intellectual property rights of the acquiring
corporation shall be included in the Geron Technology or the Kyowa Hakko
Technology, as applicable.
18.3 Meetings. Meetings of the Management Board, the JRC and the JDC may be
called by either party on ten (10) days written notice to the other unless such
notice is waived by the parties in writing or by their attendance of all
representatives. Any of the Committees may be convened, polled or consulted from
time to time by means of telecommunication or correspondence.
27.
<PAGE> 36
18.4 Third Party Obligations. All of the obligations, rights and licenses
granted pursuant to this Agreement are subject to each respective parties'
ability to grant such obligations, rights or licenses under applicable
agreements with third parties.
18.5 Retained Rights. Except as expressly set forth in this Agreement,
nothing in this Agreement shall limit in any respect the right of either party
to conduct research and development with respect to and market products outside
the Field using such party's Technology, and no license to use the other party's
Technology to do so is granted herein expressly or by implication.
18.6 Force Majeure. Neither party shall lose any rights hereunder or be
liable to the other party for damages or losses on account of failure of
performance by the defaulting party if the failure is occasioned by government
action, war, fire, earthquake, explosion, flood, strike, lockout, embargo, act
of God, or any other similar cause beyond the control of the defaulting party,
provided that the party claiming force majeure has exerted all reasonable
efforts to avoid or remedy such force majeure; provided further, however, in no
event shall a party be required to settle any labor dispute or disturbance.
18.7 Further Actions. Each party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.
18.8 No Trademark Rights. Except as otherwise provided herein, no right,
express or implied, is granted by the Agreement to use in any manner the name
"Geron" or "Kyowa Hakko" or any other trade name or trademark of the other party
in connection with the performance of this Agreement.
18.9 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission (receipt verified), telexed, mailed by registered or certified mail
(return receipt requested), postage prepaid, or sent by express courier service,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice; provided, that notices of a change of
address shall be effective only upon receipt thereof):
If to Geron, addressed to:
Geron Corporation
200 Constitution Drive
Menlo Park, CA 94025
Attention: President
Telephone: 415-473-7700
Facsimile: 415-473-7750
28.
<PAGE> 37
With copy to:
Brobeck, Phleger & Harrison
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Joshua L. Green, Esq.
Telephone: 415-496-0120
Facsimile: 415-496-2885
If to Kyowa Hakko, addressed to:
Kyowa Hakko Kogyo Co., Ltd.
1-6-1 Ohtemachi
Chiyoda-ku
Tokyo, Japan
Attention: General Manager, Licensing & International
Development
Telephone: 011-81-3-3282-0037
Telecopy: 011-81-3-3282-0031
18.10 Governing Law. This Agreement shall be governed by the laws of the
State of California, as such laws are applied to contracts entered into and to
be performed within such state notwithstanding the provisions governing conflict
of laws under such laws to the contrary. Any claim or controversy arising out of
or related to this contract or any breach hereof which is not resolved through
negotiation between the parties shall be submitted to the Federal District Court
for the Northern District of California located in San Francisco, California,
and the parties hereby consent to the jurisdiction and venue of such court.
18.11 Waiver. All waivers must be in writing signed by authorized
representatives of both parties. Except as specifically provided for herein, the
waiver from time to time by either of the parties of any of their rights or
their failure to exercise any remedy shall not operate or be construed as a
continuing waiver of same or of any other of such party's rights or remedies
provided in this Agreement.
18.12 Severability. If any term, covenant or condition of this Agreement or
the application thereof to any party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (i) the remainder of this Agreement,
or the application of such term, covenant or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the parties hereto covenant and agree to renegotiate for a period of
ninety (90) days after such provision is held to be invalid or unenforceable,
any
29.
<PAGE> 38
such term, covenant or application thereof in good faith in order to provide a
reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the parties that the basic purposes of this Agreement are to be
effectuated.
18.13 Entire Agreement. This Agreement sets forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the parties hereto and supersedes and terminates all prior agreements
and understandings between the parties. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings, either
oral or written, between the parties other than as set forth herein and therein.
No subsequent alteration, amendment, change or addition to this Agreement shall
be binding upon the parties hereto unless reduced to writing and signed by the
respective authorized officers of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.
GERON CORPORATION
By: /s/ Geron Corporation
----------------------------
Title: President & CEO
-------------------------
KYOWA HAKKO KOGYO, LTD.
By: /s/ Takashi Nara
----------------------------
Takashi Nara
Title: Executive Vice President
-------------------------
30.
<PAGE> 39
EXHIBIT A
GERON PATENT APPLICATIONS
[ * ]
Page 1 of 1
Geron Confidential Information
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 40
EXHIBIT B
Kyowa Hakko is not aware of any Kyowa Hakko Patents in existence as of
the Effective Date.
<PAGE> 41
EXHIBIT C
GERON LICENSES
PATENT LICENSE FROM THE REGENTS OF THE UNIVERSITY OF TEXAS, SOUTHWESTERN
AND THE UNIVERSITY OF CALIFORNIA, SAN FRANCISCO
PATENT APPLICATIONS LICENSED:
[ * ]
SPONSORED RESEARCH (DRS. SHAY & WRIGHT) AGREEMENT (expires 8/95) WITH
THE REGENTS OF THE UNIVERSITY OF TEXAS, SOUTHWESTERN & OPTION FOR PATENT LICENSE
PATENT APPLICATIONS SUBJECT TO OPTION:
[ * ]
LICENSE AGREEMENT WITH COLD SPRING HARBOR LABORATORY FOR UNPATENTED KNOWHOW AND
LABORATORY PROCESSES
SPONSORED RESEARCH (DR. CAROL GREIDER) AGREEMENT WITH THE COLD SPRING HARBOR
LABORATORY & OPTION FOR PATENT LICENSE
PATENT APPLICATIONS SUBJECT TO OPTION:
[ * ]
SPONSORED RESEARCH (DR. SYLVIA BACCHETTI) AGREEMENT WITH McMASTER UNIVERSITY
& OPTION FOR PATENT LICENSE (expires 9/95)
PATENT APPLICATIONS SUBJECT TO OPTION: [ * ]
SPONSORED RESEARCH AGREEMENT WITH THE SCRIPPS INSTITUTE (DR. DALE BOGER)
& OPTION FOR PATENT LICENSE (expires 5/95)
PATENT APPLICATIONS SUBJECT TO OPTION: [ * ]
Page 1 of 2
Geron Confidential Information
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 42
EXHIBIT C (cont.)
GERON LICENSES
COLLABORATION AGREEMENT (DRS. MOORE & SCHERER) WITH THE MEMORIAL SLOAN-KETTERING
INSTITUTE FOR CANCER RESEARCH
PATENT APPLICATIONS SUBJECT TO OPTION: [ * ]
SPONSORED RESEARCH (DR. PETER LANSDORP) AGREEMENT WITH TERRY FOX LABORATORY &
OPTION FOR PATENT LICENSE
PATENT APPLICATIONS SUBJECT TO OPTION: [ * ]
SPONSORED RESEARCH (DR. GINGER ZAKIAN) AGREEMENT WITH THE FRED HUTCHINSON CANCER
RESEARCH CENTER (expires 8/95) & PATENT LICENSE AND OPTION
PATENT APPLICATIONS LICENSED:
[ * ]
SPONSORED RESEARCH AGREEMENT WITH BAYLOR UNIVERSITY (DR. VICKI LUNDBLAD) &
OPTION FOR PATENT LICENSE -- IN NEGOTIATION
SPONSORED RESEARCH AGREEMENT WITH THE UNIVERSITY OF CHICAGO (DR. DAN
GOTTSCHLING) & OPTION FOR PATENT LICENSE -- IN NEGOTIATION
End of Page 2
Geron Confidential Information
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 1
Exhibit 10.11
Agreement No. 95-0208
STANDARD NONEXCLUSIVE LICENSE AGREEMENT
This Agreement is made effective the 1st day of January, 1996, by and
between Wisconsin Alumni Research Foundation (hereinafter called "WARF"), a
nonstock, nonprofit Wisconsin corporation, and Geron Corporation (hereinafter
called "Geron"), a corporation organized and existing under the laws of
Delaware;
WHEREAS, WARF owns certain inventions that are described in the
"Licensed Patents" defined below, and WARF is willing to grant a license to
Geron under any one or all of the Licensed Patents and Geron desires a license
under all of them;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties covenant and agree as follows:
Section 1. Definitions.
For the purpose of this Agreement, the Appendix A definitions shall
apply.
Section 2. Grant.
A. License.
WARF hereby grants to Geron a nonexclusive license, limited to the
Licensed Field and the Licensed Territory, under the Licensed Patents to make,
use and sell Products.
B. Option to Expand the Licensed Field.
WARF hereby grants Geron an option to expand the field of use to
include Products for non-primate, Including non-human, fields of use in the
Licensed Field under this Agreement. To exercise this option, Geron must, prior
to January 1, 1998, notify WARF in writing of the Product for which it is
exercising its option to expand the Licensed Field, provide WARF with an
acceptable written development plan for such Product in the non-primate,
including non-human, field of use, and pay WARF an option fee of [ * ].
C. Period of Exclusivity.
WARF hereby grants Geron a one-year period of exclusivity for which
Geron shall pay a fee of [ * ] by January 15, 1996. During the period of
exclusivity WARF agrees not to grant any other licenses to the Licensed
Patents. The period of exclusivity may be extended by written mutual agreement
of the parties for additional one-year terms. If Geron desires to extend such
period of exclusivity, Geron shall pay to WARF a fee of [ * ] per additional
one-year term.
D. Future Notification and Option to Future
Non-Exclusive License.
(i) WARF shall notify Geron of any invention that
is assigned to WARF after the date of this Agreement by Professor Thomson.
Such disclosure shall consist of sending Geron a copy of the U.S. Patent
Application (without claims) claiming such invention. WARF shall not be
obligated to grant any rights to Geron concerning any inventions, disclosures
or applications provided to Geron pursuant to this Section 2D(i) except as
provided in Section 2D(ii).
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 2
(ii) Geron shall have an option to obtain a
nonexclusive license, limited to the Licensed Territory and the Licensed Field,
under any patents or patent applications other than Licensed Patents or patent
applications owned by WARF that claim an invention which is assigned to WARF by
Professor Thomson after the effective date of this Agreement and such invention
is developed by January 1, 1998. Geron must exercise such option within ninety
(90) days after receiving a copy of U.S. Patent Application (without claims) by
written notification to WARF that it is exercising its option, submitting a
written development plan (Appendix D) and paying WARF a license fee for the new
patents or patent applications. The license fee shall be the sum of [ * ] for
each new U.S. patent application added as well as the fees set forth in Section
3C(ii) for each foreign equivalent patent application.
(iii) If Geron fails to either notify WARF or pay
the applicable license fee to WARF within the ninety-day option period, all of
Geron's rights with respect to the applicable invention and related patents and
patent applications shall automatically expire. If Geron exercises its option
under this Section 2D, the applicable patent(s) and patent application(s) shall
be added hereto as Licensed Patents.
Section 3. Consideration.
A. Development.
(i) Geron agrees to provide funding to the
University of Wisconsin - Madison of at least [ * ] per year in any form
for two years until January 1, 1998 to support further research by Professor
Thomson at the University of Wisconsin - Madison. Within three months of the
effective date of this Agreement, Geron shall provide WARF with a copy of its
Research Agreement with the University of Wisconsin - Madison evidencing its
agreement to provide such research funds. In consideration of Geron's support
of Professor Thomson's research, WARF defers its usual and customary
requirement that Geron submit a development plan (see Appendix D) and periodic
development reports (see Appendix C) until January 1, 1998.
(ii) Beginning on January 1, 1998, Geron must
provide WARF with a development plan and agrees to and warrants that: it has,
or will obtain, the expertise necessary to independently evaluate the
inventions of the Licensed Patents; it will establish and actively and
diligently pursue the development plan (see Appendix D) to the end that the
inventions of the Licensed Patents will be utilized to provide Products for
sale in the retail market; and within one month following the end of each
calendar quarter ending on March 31, June 30, September 30 and December 31 and
until commercial sales of Products begin, it will supply WARF with a written
development report. All development activities and strategies and all aspects
of Products design and decisions to market and the like are entirely at the
discretion of Geron, and Geron shall rely entirely on its own expertise with
respect thereto. WARF's review of Geron's development plan is solely to verify
the existence of Geron's commitment to development activity and to assure
compliance with Geron's obligations to utilize the inventions of the Licensed
Patents for the marketplace, as set forth above.
B. License Fee.
Geron agrees to pay to WARF a license fee of [ * ] by January 15, 1996.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 3
C. Filing of Foreign Applications.
WARF agrees to file a patent application corresponding to the Licensed
Patent pursuant to the Patent Cooperation Treaty ("PCT") on or before December
1, 1995 and will designate all available jurisdictions in such PCT application.
Based on the following procedure, WARF will file, a national application
pursuant to the PCT application in those countries in which Geron indicates it
is interested in obtaining patents.
(i) On or before January 15, 1996, Geron shall
pay to WARF a general filing fee of [ * ].
(ii) WARF shall make a Chapter II filing under the
PCT on or before April 1, 1997. For each country outside the United States in
which Geron requests WARF to maintain patent applications, Geron shall pay to
WARF the following fees:
Japan - [ * ]
European Patent Office (EPO) - [ * ] (for all
designated countries combined)
Any other country - [ * ]
When the patent issues, WARF will notify Geron, Geron will select in which
countries it wants to obtain a translation and Geron agrees to pay one half of
the cost of translation in those countries. WARF retains the right to file or
maintain an application, at its own expense, in any other country WARF desires
to obtain a patent.
(iii) WARF will prosecute all national applications
it files at Geron's request pursuant to this Section 3C until WARF determines
that continued prosecution is unlikely to result in the issuance of a patent in
that country. However, if WARF decides to abandon prosecution of the
application in a particular country in which Geron has expressed, in writing to
WARF, its interest in continuing to pursue prosecution of the application,
Geron shall be given notification that WARF is terminating prosecution in that
Country. If Geron desires to acquire rights IN the application then WARF will
cooperate with Geron as reasonably requested by Geron to facilitate acquisition
of such rights.
D. Royalty.
(i) IN addition to the Section 3B license fee,
Geron agrees to pay to WARF as "earned royalties" a royalty calculated as a
percentage of the Selling Price of Products in accordance with the terms and
conditions of this Agreement. The royalty is deemed earned as of the earlier
of the date the Product is actually sold and paid for, the date an invoice is
sent by Geron, or the date a Product is transferred to a third party for any
promotional reasons. The royalty shall remain fixed while this Agreement is in
effect at a rate of [ * ] of the Selling Price for Therapeutic Products and
[ * ] of the Selling Price for Diagnostic Products.
(ii) If Licensee must make payments to one or more
third parties during any calendar year to obtain a license or similar right in
the absence of which Licensee could not legally make, use or sell the Products,
their Licensee may deduct [ * ] of such third party payments from royalties
payable to WARF with respect to that calendar year, provided that such
deduction does not exceed [ * ] of the royalties payable to WARF under this
Agreement during such calendar year.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 4
E. Minimum Royalty.
Geron further agrees to pay to WARF a minimum royalty of [ * ] per
calendar year or part thereof during which this Agreement is in effect starting
in calendar year 1998, against which any earned royalty paid and any payments
to third parties pursuant to the terms of Section 3D(ii) for the same calendar
year will be credited. The minimum royalty for a given year shall be due at
the time payments are,due for the calendar quarter ending on December 3 1. It
is understood that the minimum royalties will apply on a calendar year basis,
and that sales of Products requiring the payment of earned royalties made
during a prior or subsequent calendar year shall have no effect on the annual
minimum royalty due WARF for any given calendar year.
F. Accounting Payments.
(i) Amounts owing to WARF under Section 3D shall
be paid on a quarterly basis, with such amounts due and received by WARF on or
before the thirtieth day following the end of the calendar quarter ending on
March 31, June 30, September 30 or December 31 in which such amounts were
earned. The balance of any amounts which remain unpaid more than thirty (30)
days after they are due to WARF shall accrue interest until paid at the rate of
the lesser of one percent (1%) per month or the maximum amount allowed under
applicable law. However, in no event shall this interest provision be
construed as a grant of permission for any payment delays.
(ii) Except as otherwise directed, all amounts
owing to WARF under this Agreement shall be paid in U.S. dollars to WARF at the
address provided in Section 14(a). All royalties owing with respect to Selling
Prices stated in currencies other than U.S. dollars shall be converted at the
rate shown in the Federal Reserve Noon Valuation - Value of Foreign Currencies
on the day preceding the payment.
(iii) A full accounting showing how any amounts
owing to WARF under this Section 3D have been calculated shall be submitted to
WARF on the date of each such payment. Such accounting shall be on a
per-country and product line, model or tradename basis and shall be Summarized
on tile form shown in Appendix B of this Agreement. In the event no payment is
owned to WARF, a statement setting forth that fact shall be supplied to WARF.
Section 4. Certain Warranties of WARF.
A. WARF warrants that except as otherwise provided under
Section 12 of this Agreement with respect to U.S. Government interests, it is
the owner of the Licensed Patents or otherwise has the right to grant the
licenses granted to Geron in this Agreement. However, nothing in this
Agreement shall be construed as:
(i) a warranty or representation by WART as to
the validity or scope of any of Licensed Patents;
(ii) a warranty or representation granted in this
Agreement will, or will not, infringe patents of third parties; or
(iii) an obligation to furnish any know-how not
provided in Licensed Patents or any services other than those specified in this
Agreement.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 5
B. WARF MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND ASSUMES NO RESPONSIBILITIES
WHATSOEVER WITH RESPECT TO USE, SALE, OR OTHER DISPOSITION BY GERON OR ITS
VENDEES OR OTHER TRANSFEREES OF PRODUCTS INCORPORATING OR MADE BY USE OF
INVENTIONS LICENSED UNDER THIS AGREEMENT.
Section 5. Recordkeeping.
A. Beginning when the first of the Products is
sold, Geron shall keep books and records sufficient to verify the accuracy and
completeness of Geron's accounting referred to above, including without
limitation inventory, purchase and invoice records relating to the Products or
their manufacture. Such books and records shall be preserved for a period not
less than six years after they are created during AND after the term of this
Agreement.
B. Geron shall take all steps necessary so that
WARY may within thirty days of its request review and copy all the books AND
records at a single U.S. location to verify the accuracy of Geron's accounting.
Such review may be performed by any employee of WARF as well as by any attorney
or registered CPA designated by WARF, upon reasonable notice and during regular
business hours.
C. If a royalty payment deficiency is
determined. Geron shall pay the royalty DEFICIENCY outstanding within thirty
(30) days of receiving written notice thereof. plus interest on outstanding
amounts as described in Section 3F(i).
D. If a royalty payment deficiency for a
calendar year exceeds five percent (5%) of the royalties paid for that year,
then Geron shall be responsible for paving WARF's out-of-pocket expenses
Incurred with respect to such review.
Section 6. Term and Termination.
A. The term of this license shall begin on the
effective date of this Agreement and continue until continue until the earlier
of the date that NO Licensed Patent remains all enforceable patent or the
payment of earned royalties under Section 3D, once begun, ceases for more than
eight (8) consecutive calendar quarters.
B. Geron may terminate this Agreement at any
time by giving at least ninety days' written and unambiguous notice of such
termination to WARF. Such a notice shall be accompanied by a statement of the
reasons for termination.
C. If Geron at any time defaults in the timely
payment of any monies due to WARF or the timely submission to WARF of any
Development Report, falls to actively pursue the development plan, or commits
any breach of any other covenant herein contained, and Geron fails to remedy
any such breach or default within ninety days after written notice thereof by
WARF, WARF may, at its option, terminate this Agreement by giving notice of
termination to Geron.
D. Upon the termination of this Agreement, Geron
shall remain obligated to provide AN accounting for and to pay royalties
carried up to the date of the termination and any minimum royalties shall be
prorated as of the date of termination by the number of days elapsed in the
applicable calendar year.
<PAGE> 6
Section 7. Assignability.
This Agreement may not be transferred or assigned by Geron except to a
subsidiary in which Geron owns at least fifty per cent (50%) of the equity or
with the prior written consent of WARF. Such consent will not be unreasonably
withheld upon the sale or transfer of substantially all of Geron's assets.
Section 8. Contest of Validity.
In the event Geron contests the validity of any Licensed Patent, Geron
shall continue to pay royalties with respect to that patent as if such contest
were not underway until the patent is adjudicated invalid or unenforceable by a
court of last resort.
Section 9. Patent Marking.
Geron shall insure that it applies patent markings that meet all
requirements of U.S. law, 35 U.S.C. 287, with respect to all Products subject
to this Agreement.
Section 10. Product Liability; Conduct of Business.
A. Geron shall, at all times during the term of this Agreement
and thereafter, indemnify, defend and hold WARF and the inventors of the
Licensed Patents harmless against all claims and expenses, including legal
expenses and reasonable attorneys fees, arising out of the death of or injury
to any person or persons or out of any damage to property and against any other
claim, proceeding, demand, expense and liability of any kind whatsoever (other
than patent infringement claims) resulting from the production, manufacture,
sale, use, lease, consumption or advertisement of Products arising from any
right or obligation of Geron hereunder, Notwithstanding the above, WARF at all
times reserves the right to retain counsel of its own to defend WARF's
interests.
B. Geron warrants that it now maintains and will continue to
maintain liability insurance coverage appropriate to the risk involved in
marketing the products subject to this Agreement and that such insurance
coverage lists WARF and the inventors of the Licensed Patents as additional
insureds. Within ninety (90) days after the execution of this Agreement and
thereafter annually between January I and January 31 of each year, Geron will
present evidence to WARF that the coverage is being maintained with WARF and
its inventors listed as additional insureds. In addition, Geron shall provide
WARF with at least 30 days prior written notice of any change in or
cancellation of the insurance coverage.
Section 11. Use of Names.
Geron shall not use WARF's name, the name of any inventor of
inventions governed by this Agreement, or the name of the University of
Wisconsin in sales promotion, advertising, or any other form of publicity
without the prior written approval of the entity or person whose name is being
used. Except that Geron may use the following statement:
Geron has entered into a sponsored research agreement with the
University of Wisconsin-Madison supporting the research of Dr. Thomson
in the promising area of primate embryonic stem cells. Geron has
executed a license agreement with WARF regarding the technology.
<PAGE> 7
Section 12. United States Government Interests.
It is understood that if the United States Government (through any of
its agencies or otherwise) has funded research, during the course of or under
which any of the inventions of the Licensed Patents were conceived or made, the
United States Government is entitled, as a right, under the provisions of 35
U.S.C. Section 200-212 and applicable regulations of Chapter 37 of the Code of
Federal Regulations, to a nonexclusive, nontransferable, irrevocable, paid-up
license to practice or have practiced the invention of such Licensed Patents
for governmental purposes. Any license granted to Geron in this Agreement
shall be subject to such right. In the event there is assertion by the
Government of such rights, Geron may be entitled to modification of the
royalty and license fee provisions of the Agreement.
Section 13. Miscellaneous.
This Agreement shall be construed in accordance with the internal laws
of the State of Wisconsin. If any provisions of this Agreement are or shall
come into conflict with the laws or regulations of any jurisdiction or any
governmental entity having jurisdiction over the parties or this Agreement,
those provisions shall be deemed automatically deleted, if such deletion is
allowed by relevant law, and the remaining terms and conditions of this
Agreement shall remain in full force and effect. If such a deletion is not so
allowed or if such a deletion leaves terms thereby made clearly illogical or
inappropriate in effect, the parties agree to substitute new terms as similar
in effect to the present terms of this Agreement as may be allowed under the
applicable laws and regulations. The parties hereto are independent
contractors and not joint venturers or partners.
Section 14. Notices.
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the time when actually received as a consequence of any effective
method of delivery, including but not limited to hand delivery, transmission by
telecopier, or delivery by a professional courier service or the time when sent
by certified or registered mail addressed to the party for whom intended at the
address below or at such changed address as the party shall have specified by
written notice, provided that any notice of change of address shall be
effective only upon actual receipt.
(a) Wisconsin Alumni Research Foundation
Attn: Managing Director
614 Walnut Street
Madison, Wisconsin 53705
(b) Geron Corporation
Attn: Kevin Kaster
200 Constitution Drive
Menlo Park, CA 94025
Section 15. Integration.
This Agreement constitutes the full understanding between the parties
with reference to the subject matter hereof, and no statements or agreements by
or between the parties, whether orally or in writing, except as provided for
elsewhere in this Section 15, made prior to or at the signing hereof, shall
vary or modify the written terms of this Agreement. Neither party shall claim
any amendment, modification, or
<PAGE> 8
release from any provisions of this Agreement by mutual agreement,
acknowledgement, or otherwise, unless such mutual agreement is in writing,
signed by the other party, and specifically states that it is an amendment to
this Agreement.
Section 16. Contract Formation and Authority.
A. No agreement between the parties shall exist unless the duly
authorized representative of Geron and the managing director of WARF have
signed this document within thirty (30) days of the effective date written on
the first page of this Agreement.
B. The persons signing on behalf of WARF and Geron hereby warrant
and represent that they have authority to execute this Agreement on behalf of
the party for whom they have signed.
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the dates indicated below.
WISCONSIN ALUMNI RESEARCH FOUNDATION
By: Richard H. Leazer Date: Jan 26, 1996
------------------------------------- ------------------,--------
Richard H. Leazer, Managing Director
GERON CORPORATION
By: Ronald W. Eastman Date: 1/19 1996
------------------------------------- ------------------,---------
Name and Office: Ronald W. Eastman
------------------------
President and CEO
- ----------------------------------------
Reviewed by WARF's Attorney: Reviewed by Geron's Attorney:
[SIG] [SIG]
- ----------------------------------- ------------------------------------
Jan. 4, 1996 Jan. 19, 1996
(Neither attorney shall be deemed a signatory to this Agreement.)
WARF Ref: Thomson-P94096US
<PAGE> 10
APPENDIX A
A. "Licensed Patents" shall refer to and mean United States
Patent Application Serial No. 08/376,327 and any foreign equivalents added
pursuant to Section 3C, CIPs until January 1, 1998, and continuations and
reexaminations.
B. "Products" shall refer to and mean Therapeutic Products and
Diagnostic Products collectively.
C. "Therapeutic Products" shall refer to and mean products or
services other than Diagnostic Products that (i) are used in the treatment of
disease in primates, including humans, or in the discovery and commercial
development of the same; and (ii) employ or are in any way produced by the
practice of an invention claimed in the Licensed Patents or that would
otherwise constitute infringement of any claims of the Licensed Patents.
D. "Diagnostic Products" shall refer to and mean products or
services that (i) are used in the diagnosis or prognosis of disease in
primates, including humans, or in the discovery and commercial development of
the same; and (ii) employ or are in any way produced by the practice of an
invention claimed in the Licensed Patents or that would otherwise constitute
infringement of any claims of the Licensed Patents.
E. "Selling Price" shall mean, in the case of Products that are
sold, the invoice price to the retail customer of Products (regardless of
uncollectible accounts) less any shipping costs, allowances because of returned
Products, or sales taxes. The "Selling Price" for a Product that is
transferred to a third party for promotional purposes without charge or at a
discount shall be the average invoice price to the retail customer of that type
of Product during the applicable calendar quarter. WARF is exempt from paying
income taxes under U.S. law. Therefore, all payments due under this Agreement
shall be made without deduction for taxes, assessments, or other charges of any
kind which may be imposed on WARF by any government outside of the United
States or any political subdivision of such government with respect to any
amounts payable to WARF pursuant to this Agreement. All such taxes,
assessments, or other charges shall be assumed by Geron.
F. "Development Report" shall mean a written account of Geron's
progress under the development plan having at least the information specified
on Appendix C to this Agreement, and shall be sent to the address specified on
Appendix C.
G. "Sponsored Research Period" shall mean the period, coinciding
with Geron's sponsored research agreement with the University of Wisconsin -
Madison, commencing on the effective date of this Agreement and ending on
January 1, 1998.
H. "Licensed Field" shall be limited to the field of primate,
including human, diagnostic and therapeutic treatment.
I. "Licensed Territory" shall be worldwide.
<PAGE> 11
APPENDIX B
WARF ROYALTY REPORT
-------------------
AGREEMENT NO: ______________ INVENTOR: ______________ P#: P______________
PERIOD COVERED: From: __/__/199_______ Through: __/__/199_______
PREPARED BY: ________________________ DATE: ________________________
APPROVED BY: ________________________ DATE: ________________________
If license covers several major product lines, please prepare a
separate report for each line. Then combine all
product lines into a summary report.
REPORT TYPE:
[ ] SINGLE PRODUCT LINE REPORT: _________________________
[ ] MULTIPRODUCT SUMMARY REPORT. Page 1 of _____ Pages
[ ] PRODUCT LINE DETAIL. Line: _________ Tradename: ________ Page: ____
REPORT CURRENCY: [ ] U.S. DOLLARS [ ] OTHER _____________________________
==============================================================================
Gross *Less: Net Royalty Period Royalty Amount
---------------------
Country Sales Allowances Sales Rate This Year Last Year
- -------------------------------------------------------------------------------
U.S.A.
- -------------------------------------------------------------------------------
Canada
- -------------------------------------------------------------------------------
Europe:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Japan
- -------------------------------------------------------------------------------
Other:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
TOTAL:
===============================================================================
Total Royalty: ______ Conversion Rate: ______ Royalty in U.S. Dollars: $ ______
The following royalty forecast is non-binding and for WARF's internal planning
purposes only:
Royalty Forecast Under This Agreement:
Next Quarter: __________ Q2: __________ Q3: __________ Q4: __________
- ------------------------------------------------------------------------------
* On a separate page, please indicate the reasons for returns
or other adjustments if significant. Also note any unusual
occurrences that affected royalty amounts during this period.
To assist WARF's forecasting, please comment on any
significant expected trends in sales volume.
- ------------------------------------------------------------------------------
<PAGE> 12
APPENDIX C
DEVELOPMENT REPORT
A. Date development plan initiated and time period covered by this
report.
B. Development Report (4-8 paragraphs).
1. Activities completed since last report including the object
and parameters of the development, when initiated, when
completed and the results.
2. Activities currently under investigation, i.e., ongoing
activities including object and parameters of such activities,
when initiated, and projected date of completion.
C. Future Development Activities (4-8 paragraphs).
1. Activities to be undertaken before next report including, but
not limited to, the type and object of any studies conducted
and their projected starting and completion dates.
2. Estimated total development time remaining before a product
will be commercialized.
D. Changes to initial development plan (2-4 paragraphs).
1. Reasons for change.
2. Variables that may cause additional changes.
E. Items to be provided if applicable:
1. Information relating to Product that has become publicly
available, e.g., published articles, competing products,
patents, etc.
2. Development work being performed by third parties other than
Geron to include name of third party, reasons for use of third
party, planned future uses of third parties including reasons
why and type of work.
3. Update of competitive information trends in industry,
government compliance (if applicable) and market plan.
PLEASE SEND DEVELOPMENT REPORTS TO:
Wisconsin Alumni Research Foundation
Attn.: Contract Coordinator
614 Walnut Street
P.O. Box 7365
Madison, WI 53707-7365
<PAGE> 13
APPENDIX D
DEVELOPMENT PLAN
A development plan of the scope outlined below shall be submitted to
WARF by Geron prior to the execution of this agreement. In general, the plan
should provide WARF with a summary overview of the activities that Geron
believes are necessary to bring Products to the marketplace.
Estimated
Start Date Finish Date
I. Development Program
A. Development Activities to be Undertaken
(Please break activities into subunits with the date of
completion of major milestones)
1.
2.
.
.
B. Estimated Total Development Time
II. Governmental Approval
A. Types of submissions required
B. Government agency e.g. FDA, EPA, etc.
III. Proposed Market Approach
IV. Competitive Information
A. Potential Competitors
B. Potential Competitive Devices/Compositions
C. Known Competitor's plans, developments, technical achievements
D. Anticipated Date of Product Launch
Total Length: approximately 2-3 pages
<PAGE> 1
EXHIBIT 10.12
BUSINESS PARK LEASE
WITNESSETH:
ARTICLE 1 - PREMISES AND TERM
THIS LEASE is made this 25th day of March, 1996, between DAVID D.
BOHANNON ORGANIZATION, a California corporation, herein referred to as
"Landlord," and GERON CORPORATION, a Delaware corporation herein referred to
as "Tenant".
Section 1.1. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the demised premises (as described in Exhibit "A" and located
substantially as shown on Exhibit "B" attached hereto) upon and subject to the
terms and provisions of this Lease for a demised term of approximately five (5)
years (plus any partial period prior to February 1, 1997) commencing on the
earlier to occur of (i) ninety (90) days after Landlord delivers possession of
the demised premises to Tenant (estimated to be November 1, 1996, subject to
vacation of the demised premises by the existing tenant) or (ii) when Tenant
occupies any portion of the demised premises for the purposes of conducting
Tenant's business therein (i.e., but not including Tenant occupancy for purposes
of constructing improvements to the demised), and ending on January 31, 2002.
Landlord acknowledges that Tenant will suffer damages if it is unable to take
possession of the demised premises on or before November 1, 1996. Landlord
shall use its first efforts (including without limitation initiating unlawful
detainer proceedings) to remove the existing tenant from the demised premises if
the existing tenant fails to surrender possession of the demised premises on or
before October 31, 1996. If for any reason, the existing tenant fails to
surrender possession of the demised premises so that Landlord is unable to
deliver possession thereof to Tenant on or before February 1, 1997, Tenant shall
have the right upon ten (10) days' prior notice to Landlord to terminate this
Lease.
Section 1.2. Provided that Tenant is not at the time Landlord receives
Tenant's written notice to exercise the options described in this Section 1.2.,
and has not been, in default under any of the terms and conditions hereof,
which default has not been cured within the applicable cure periods set forth
in Article 13 below, Tenant shall have the option to extend the demised term of
this Lease for two (2) additional periods of two and one half (2-1/2) years
each upon the terms and conditions set forth herein:
A. Tenant shall exercise each option by written notice to
Landlord given at least two hundred seventy (270) days prior to the expiration
of the original demised term or the first option period, as the case may be;
provided that, if during the last two (2) years of the initial demised term, or
the first option period as the case may be, Landlord should receive a bonafide
offer to lease the demised premises at the end of the initial demised term or
first option term from another tenant, which offer Landlord is prepared to
accept, then Tenant shall have ten (10) business days from receipt of notice
from Landlord that Landlord has received such an offer (together with a copy of
such bonafide offer) to exercise its option upon the terms and conditions of
this Section 1.2. Should Tenant fail to exercise its option to extend the lease
within ten (10) business days, then said option shall be null and void.
B. Base rent shall be as set forth in Section 2.2. below.
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<PAGE> 2
C. There shall be no further options to extend.
D. All other terms and conditions shall be as set forth in the
Lease, and all references to the demised term shall mean the extended term.
E. The option to extend may only be exercised by Geron
Corporation provided that, Geron may exercise the option in its behalf if Geron
Corporation has subleased any or all of the demised premises and Landlord has
consented to such sublease. The option cannot be transferred nor can it be
exercised by Geron Corporation if Geron Corporation has assigned its rights
under this Lease to a third party.
F. Exercise of the first option period is an express condition
precedent to exercise of the second option period.
ARTICLE 2 - RENT
Section 2.1. Tenant covenants and agrees to pay to Landlord without
set-off, recoupment, deduction or demand of any nature whatsoever, base rent for
each year during the demised term in the amount of: [Begin Strikeout] for the
period from June 1, 1996 through August 31, 1996 the amount of Twelve Thousand
Six Hundred Forty Two Dollars ($12,642.00) per month; [End Strikeout] for the
period from commencement of the demised term through and including January 31,
1998 [Begin Strikeout] first (1st) full year of the demised term (September 1,
1996 through August 31, 1997) (February 1, 1997 through January 31, 1998) and
including any period prior to February 1, 1997 [End Strikeout] the amount of
Three Hundred Three Thousand Four Hundred Eight Dollars ($303,408.00) per
annum, payable in twelve (12) equal monthly installments of Twenty Five
Thousand Two Hundred Eighty Four Dollars ($25,284.00); for the second (2nd)
full year of the demised term the amount of Three Hundred Fifteen Thousand Five
Hundred Forty Four and 32/100 Dollars ($315,544.32) per annum, payable in
twelve (12) equal monthly installments of Twenty Six Thousand Two Hundred
Ninety Five and 36/100 Dollars ($26,295.36); for the third (3rd) full year of
the demised term the amount of Three Hundred Twenty Eight Thousand One Hundred
Sixty Six and 09/100 Dollars ($328,166.09) per annum, payable in twelve (12)
equal monthly installments of Twenty Seven Thousand Three Hundred Forty Seven
and 17/100 Dollars ($27,347.17); for the fourth (4th) full year of the demised
term the amount of Three Hundred Forty One Thousand Two Hundred Ninety Two and
73/100 Dollars ($341,292.73) per annum, payable in twelve (12) equal monthly
installments of Twenty Eight Thousand Four Hundred Forty One and 06/100 Dollars
($28,441.06); for the fifth (5th) full year of the demised term the amount of
Three Hundred Fifty Four Thousand Nine Hundred Forty Four and 43/100 Dollars
($354,944.43) per annum, payable in twelve (12) equal monthly installments of
Twenty Nine Thousand Five Hundred Seventy Eight and 70/100 Dollars
($29,578.70); for the sixth (6th) full year of the demised term, if any, the
amount of Three Hundred Sixty Nine Thousand One Hundred Forty Two and 22/100
Dollars ($369,142.22) per annum, payable in twelve (1/2) equal monthly
installments of Thirty Thousand Seven Hundred Sixty One and 85/100 Dollars
($30,761.85); for the seventh (7th) full year of the demised term, if any, the
amount of Three Hundred Eighty Three Thousand Nine Hundred Seven and 91/100
Dollars ($383,907.91) per annum, payable in twelve (12) equal monthly
installments of Thirty One Thousand Nine Hundred Ninety Two and 33/100 Dollars
($31,992.33); for the eighth (8th) full year of the demised term, if any, the
amount of Three Hundred Ninety Nine Thousand Two Hundred Sixty Four and 23/100
Dollars ($399,264.23) per annum, payable in twelve (12) equal monthly
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installments of Thirty Three Thousand Two Hundred Seventy Two and 02/100
Dollars ($33,272.02); for the ninth (9th) full year of the demised term, if
any, the amount of Four Hundred Fifteen Thousand Two Hundred Thirty Four and
80/1 00 Dollars ($415,234.80) per annum, payable in twelve (12) equal monthly
installments of Thirty Four Thousand Six Hundred Two and 90/100 Dollars
($34,602.90); and for the tenth (10th) full year of the demised term, if any,
the amount of Four Hundred Thirty One Thousand Eight Hundred Forty Four and
19/100 Dollars ($431,844.19) per annum, payable in twelve (12) equal monthly
installments of Thirty Five Thousand Nine Hundred Eighty Seven and 02/100
Dollars ($35,987.02). Base rent shall be paid monthly in advance on the first
(1st) day of each calendar month.
Section 2.2. For the purpose of determining a Lease year under this
Lease, a year shall be twelve (12) calendar months, commencing February 1, 1997
[Begin Strike-Out]September 1, 1996,[End Strike-Out] and the succeeding
anniversaries thereof. For any period prior to the commencement of the first
year or subsequent to the end of the last year of the demised term, rent shall
be prorated on the basis of the rental rate then payable.
Section 2.3. All sums payable and all statements deliverable to Landlord
by Tenant under this Lease shall be paid and delivered at 60 Hillsdale Mall,
San Mateo, California 94403-3497, or at such other place as Landlord may from
time to time direct by notice to Tenant and all such sums shall be paid in
lawful money of the United States.
Section 2.4. Concurrent with Landlord's delivery of possession of the
demised premises to Tenant, Tenant shall pay to the Landlord the following:
(A) Twelve Thousand Six Hundred Forty Two Dollars ($12,642.00)
which shall be applied by Landlord to the first base rent to become due and
payable under this Lease.
Section 2.5. In addition to base rent under Section 2.1., all other
payments to be made under this Lease by Tenant to Landlord shall be deemed to
be and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the
payment thereof, all rent and additional rent shall be due and payable together
with the next succeeding installment of base rent; and Landlord shall have the
same remedies for failure to pay the same as for a nonpayment of base rent.
Section 2.6. Any amount due from Tenant to Landlord that is not paid
when due shall bear interest at the highest rate then permitted to be charged
on late payments under leases under California law; provided, however, the
payment of any such interest shall not excuse or cure the default upon which
such interest accrued. Tenant acknowledges and agrees that payment of such
interest on late payments is reasonable compensation to Landlord for the
additional costs incurred by Landlord caused by such late payment, including,
but not limited to, collection and administration expenses and the loss of the
use of the money that was late in payment.
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ARTICLE 3 - LANDLORD'S WORK - TENANT'S WORK
Section 3.1. Landlord shall not be required to perform any tenant
improvement work in the demised premises.[Begin Strike-Out]; and Tenant accepts
the demised premises in an "as is" condition, subject only to Landlord's repair
obligations hereunder.[End Strike-Out] Notwithstanding the foregoing, Landlord
shall deliver the demised premises free of the previous occupant's furniture,
fixtures and equipment (excluding that portion of the demised premises, if any,
previously occupied by Tenant pursuant to a sublease with the previous
occupant).
Landlord represents, to the best of Landlord's knowledge, that the
building and the demised premises have been constructed in compliance with all
requirements of municipal, county, state, federal and other applicable
governmental authorities in effect and applicable to the building and the
demised premises as of the date this Lease is executed by Landlord and Tenant.
Landlord further represents that all basic mechanical (including heating,
ventilating and air conditioning), plumbing, sprinkler and electrical systems
shall be in good and operating condition as of the date the Tenant takes
possession of the demised premises. The foregoing representation shall not
apply to any special mechanical equipment, plumbing, sprinkler or electrical
systems installed by the prior tenant.
Except as hereinabove provided, Tenant's possession of the demised
premises shall establish that the demised premises are in satisfactory
condition at the time of Tenant's possession except for latent defects.
Tenant's taking possession of the demised premises and acceptance shall not
constitute a waiver of any representation or requirement set forth in this
Section or any defect in regard to the mechanical, electrical, plumbing,
sprinkler or other building systems.
Section 3.2. Any additional work to be performed other than that
provided for in Section 3.1., and excluding Landlord's repair obligations, or
and designated as Landlord's Work shall be performed at the sole cost of Tenant
in accordance with detailed plans and specifications therefor which must be
approved, in writing, by Landlord or Landlord's architect before work is
commenced. Tenant shall furnish Landlord with a set of "as built" plans after
any such work is completed. Tenant shall have the right to make changes in
the plans and specifications from time to time provided such changes are
approved by Landlord, such approval not to be unreasonably withheld or delayed.
[Begin Strike-Out]Tenant shall be allowed, subject to Landlord's prior
approval of the plans and specifications therefor, to construct leasehold
improvements in the portion of the demised premises subleased by Tenant from the
existing occupant (Ericcson Raynet) prior to the commencement of the demised
term hereof.[End Strike-Out] Landlord acknowledges that the leasehold
improvements in approximately fifty percent (50%) of the building on the demised
premises may, at Tenant's election, be of a biotech, laboratory type nature and
Landlord acknowledges that Tenant shall be requesting an H-7 occupancy
designation from the City of Menlo Park, California for a portion of the demised
premises consisting of an outside storage container and an interior chemistry
area.
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<PAGE> 5
ARTICLE 4 - STREETS
Section 4.1. Tenant will endeavor to cause employees, and to direct
customers and other persons visiting Tenant, to park in the parking area
provided in the Parking and Accommodation Areas (as described in Section 18.4
herein below) and to allow Landlord to post the streets for no parking.
ARTICLE 5 - UTILITY SERVICES
Section 5.1. Landlord has at its own cost and expense secured the
installation of water, gas, sanitary sewers and electrical services to the
demised premises and made all necessary connections thereof to the building so
that the foregoing utility services are provided to the demised premises.
Tenant shall pay all meter or service charges made by public utilities
companies and shall pay for the water, gas and/or electricity used on the
demised premises and sewer use fees and charges whether ad valorum or not and
any so called "sewer connection charges" based on increased wastewater
discharge from the demised premises exclusively. Tenant shall maintain such
connections of utilities to the building.
Section 5.2. Landlord shall not be liable to Tenant for the failure of any
utility services unless caused by Landlord's deliberate act or omission;
provided that, in the event utility services to the demised premises are
interrupted on account of Landlord's negligence, and in the further event
Tenant as a result thereof cannot operate Tenant's business, then the base rent
and additional rent called for under this Lease shall abate until such time as
utility service is restored. Notwithstanding the foregoing, if utility
services to the demised premises are interrupted on account of Landlord's
negligence and such interruption continues for more than ten (10) consecutive
business days, Tenant shall have the right to terminate this Lease, which
termination shall be effective as of the date Tenant's written notice is
delivered to Landlord.
ARTICLE 6 - ASSIGNMENT - CHANGE OF OWNERSHIP
Section 6. 1.
A. Except as otherwise provided herein, Tenant shall not, by
operation of law or otherwise, transfer, assign, sublet, enter into license or
concession agreements, change ownership, mortgage or hypothecate this Lease or
the Tenant's interest in and to the demised premises without first procuring
the written consent of Landlord. Any attempted transfer, assignment,
subletting, license or concession agreement, change of ownership, mortgage or
hypothecation without Landlord's written consent shall be void and confer no
rights upon any third person. Landlord's consent to a proposed assignment or
sublease shall not be unreasonably withheld provided that the proposed assignee
or sublessee shall have: (i) a net worth, at the time of the assignment or
sublease, determined in accordance with good accounting principles, equal to or
in excess of the net worth of Tenant at the date of the Lease; (ii) been active
in its current business for a minimum of three (3) years immediately prior to
the assignment or sublease; and (iii) a good reputation in the business
community; provided further that Tenant shall give Landlord not less than sixty
(60) days notice prior to the effective date of any such assignment or
sublease, and Landlord shall have the option to terminate this Lease with
respect to the space to be assigned or subleased by giving
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<PAGE> 6
written notice (the "Recapture Notice") to Tenant within fifteen (15) days of
Landlord's receipt of Tenant's notice. If Tenant notifies Landlord in writing,
within ten (10) days after the giving of the Recapture Notice, that Tenant
withdraws Tenant's notice, then Tenant shall be deemed to have withdrawn
Tenant's request for Landlord's consent to the proposed transfer, assignment,
sublease, license, concession agreement, mortgage or hypothecation and Landlord
shall have no right to recapture the demised premises and/or terminate this
Lease pursuant to this Section. If Tenant fails to notify Landlord in writing,
within ten (10) days after the giving of the Recapture Notice, that Tenant
withdraws Tenant's notice or if Tenant notifies Landlord, in writing, within
ten (10) days after the giving of the Recapture Notice that Tenant does not
withdraw Tenant's notice, then if and to the extent permitted by applicable
law, this Lease shall automatically be deemed terminated as of the commencement
or effective dates stated in Tenant's notice for the proposed transfer,
assignment, sublease, license, concession agreement, mortgage or hypothecation,
and Tenant shall surrender possession of the demised premises as of such date.
Nothing herein contained shall relieve Tenant and any Guarantor from its
covenants and obligations for the demised term. Tenant agrees to reimburse
Landlord for Landlord's reasonable outside attorneys' fees (not to exceed
$1,000.00) incurred in conjunction with the processing and documentation of any
such requested transfer, assignment, subletting, licensing or concession
agreement, change of ownership, mortgage or hypothecation of this Lease or
Tenant's interest in and to the demised premises. If Landlord consents to any
assignment or sublease pursuant to this Article, Tenant shall pay Landlord, as
additional rent:
(i) in the case of each and every assignment, an amount
equal to ALL monies, property, and other consideration of every kind
whatsoever paid or payable to Tenant by the assignee for such
assignment of the leasehold estate and for all Included Property, if
any, of Tenant transferred to the assignee as part of the transaction,
less the unamortized cost of the Included Property, if any, determined
on a straight-line basis over the period of the remaining demised term
as such unamortized cost is certified to Landlord by Tenant's
independent certified public accountant (at Tenant's expense).
"Included Property" means all property of Tenant transferred to the
assignee as part of the assignment of the leasehold estate (including,
but not limited to, fixtures, leasehold improvements installed at
Tenant's expense, furniture, equipment, and furnishings); and
[Begin Strike-out] (ii) in the case of each and every
sublease, ALL rent, and/or other monies, property, and consideration of
every kind whatsoever paid to Tenant by the subtenant under a sublease,
LESS all Tenant's reasonable costs actually incurred of subleasing such
space, including, without limitation, broker's commissions, and base
rent and additional rent under this Lease accruing during the term of
the sublease in respect of the subleased space as and when such rent,
monies, property and consideration is received by Tenant as sublessor.
[End Strike-out]
(ii) in the case of each and every sublease during the
initial five (5) year demised term Tenant shall not be obligated to pay
Landlord any sublease premium (as defined below) received by or on
behalf or on account of Tenant and
(iii) in the case of each and every sublease entered into
after the initial five (5) year demised term during any option period,
or in the case of any sublease entered into during the initial five (5)
year demised term which extends
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<PAGE> 7
beyond said five (5) years, fifty percent (50%) of any Sublease Premium
derived from that sublease during such option period, "Sublease
Premium" shall mean ALL rent, and/or other monies, property, and
consideration of every kind whatsoever paid to Tenant by the subtenant
under a sublease, LESS all Tenant's reasonable costs actually incurred
of subleasing such space, including, without limitation, broker's
commissions, and base rent and additional rent under this Lease
accruing during the term of the sublease in respect of the subleased
space as and when such rent, monies, property and consideration is
received by Tenant as sublessor.
B. Each transfer, assignment, subletting, license, concession
agreement, mortgage and hypothecation to which there has been consent shall be
by an instrument in writing in form satisfactory to Landlord, and shall be
executed by the transferor, assignor, sublessor, licensor, concessionaire,
hypothecator or mortgagor and the transferee, assignee, sublessee, licensee,
concessionaire or mortgagee in each instance, as the case may be; and each
transferee, assignee, sublessee, licensee, concessionaire or mortgagee shall
agree in writing for the benefit of Landlord herein to assume, to be bound by,
and to perform the terms, covenants and conditions of this Lease to be done,
kept and performed by Tenant, including the payment of all amounts due or to
become due under this Lease directly to Landlord. One (1) executed copy of
such written instrument shall be delivered to Landlord. Failure to first
obtain in writing Landlord's consent or failure to comply with the provisions
of this Article shall operate to prevent any such transfer, assignment,
subletting, license, concession agreement, mortgage, or hypothecation from
becoming effective.
C. If Tenant is a corporation the shares of which are not
actively traded upon a stock exchange or in the over-the-counter market, a
transfer or series of transfers during any consecutive 12-month period during
the demised term of this Lease, whereby fifty percent (50%) or more of the
issued and outstanding shares of such corporation are transferred (but
excepting transfers upon deaths of individual stockholders or transfers to
affiliates or partners of entity stockholders) from a person or persons or
entities who were beneficial owners thereof at the time of the execution of
this Lease to persons or entities who were not beneficial owners of shares of
the corporation at the time of the execution of this Lease shall be deemed an
assignment of this Lease. Notwithstanding anything in this Section 6.1.C. or
this Lease to the contrary, the sale by Tenant of any of the shares of Tenant
through a public offering or private placement shall not be deemed a transfer
or assignment of this Lease or a subletting, license, concession agreement,
mortgage or hypothecation and Landlord's consent shall not be necessary.
Notwithstanding anything in this Article 6 to the contrary,
Tenant shall have the right, without Landlord's consent, to enter into an
assignment of this Lease or a transfer of rights hereunder to any corporation
or entity that (i) controls or is controlled by or is under common control with
Tenant, or (ii) acquires all or substantially all of Tenant's assets, if such
corporation or entity assumes in writing all of Tenant's obligations under this
Lease and shall have a tangible net worth immediately after the assignment or
transfer of rights which equals or exceeds Tenant's tangible net worth
immediately prior thereto; or (b) as a result of a merger or reorganization, as
defined in Section 181 (a) of the California General Corporation Law in which
Tenant is a constituent corporation, if the surviving corporation shall have a
tangible net worth immediately after such merger or reorganization which equals
or exceeds Tenant's tangible net worth immediately prior thereto; or (c) as a
result of an exchange
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<PAGE> 8
reorganization, as defined in Section 181 (b) of the California General
Corporation Law, which shares of Tenant are acquired by another corporation,
the Tenant shall have a tangible net worth immediately after such exchange
reorganization which equals or exceeds Tenant's tangible net worth immediately
prior thereto.
D. Landlord's rights to assign this Lease are and shall remain
unqualified. Upon any sale of the demised premises and provided the purchaser
assumes all obligations under this Lease, Landlord shall thereupon be entirely
released of all obligations of Landlord hereunder and shall not be subject to
any liability resulting from any act or omission or event occurring after such
sale; provided that, if Tenant is not in default, Landlord shall transfer
Tenant's entire Security Deposit for the benefit of such assignee; provided
that, if Tenant is not in default, Landlord shall transfer Tenant's entire
Security Deposit for the benefit of such assignee.
E. The consent of Landlord to any transfer, assignment, sublease,
license or concession agreement, change in ownership, mortgage or hypothecation
of this Lease is not and shall not operate as a consent to any future or
further transfer, assignment, sublease, license or concession agreement, change
in ownership, mortgage or hypothecation, and Landlord specifically reserves the
right to refuse to grant any such consents except as otherwise provided in this
Section 6.1.
ARTICLE 7 - TENANT'S ADDITIONAL AGREEMENTS
Section 7.1. Landlord acknowledges that it is not the intent of this
Article 7 to prohibit Tenant from operating its business as described in
Article 8 of this Lease or to unreasonably interfere with the operation of
Tenant's business and Tenant may operate its business according to the custom
of Tenant's industry provided Tenant complies with the terms of the Lease.
Tenant agrees at all times during the demised term to: (A) Keep the demised
premises in a neat and clean condition. (B) Promptly remove all waste, garbage
or refuse from the demised premises. (C) Promptly comply with all laws and
ordinances and all rules and regulations of duly constituted governmental
authorities affecting the demised premises, and the cleanliness, safety, use
and occupation thereof, but this clause (C) shall not be construed to require
Tenant to comply with any such laws, ordinances, rules or regulations which
require structural changes in the building and/or the demised premises unless
the same are made necessary by act or work performed by Tenant or the nature of
Tenant's business. (D) Prevent the escape from the demised premises of all
fumes, odors and other substances which are offensive or may constitute a
nuisance or interfere with other tenants.
Section 7.2. Tenant agrees that it will not at any time during the
demised term without first obtaining the Landlord's written consent: (A)
Conduct or permit any fire, bankruptcy or auction sale in the demised premises.
(B) Place on the exterior walls (including both interior and exterior surfaces
of windows and doors), the roof of any buildings or any other part of the
demised premises, any sign, symbol, advertisement, neon light, other light or
other object or thing visible to public view outside of the demised premises.
(C) Change the exterior color of the building on the demised premises, or any
part thereof, or the color, size, location or composition of any sign, symbol
or advertisement that may have been approved by Landlord. (D) Park, operate,
load or unload, any truck or other delivery vehicle on any place other than the
loading area designated for Tenant's use. (E) Use the plumbing facilities for
any purpose other
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<PAGE> 9
than that for which they were constructed or dispose of any foreign substance
therein. (F) Install any exterior lighting or plumbing facilities, shades or
awnings, amplifiers or similar devices, or use any advertising medium which may
be heard or experienced outside the demised premises, such as loudspeakers,
phonographs, or radio broadcasts. (G) Deface any portion of the building or
improvements on the demised premises, normal usage excepted. In the event any
portion of the building is defaced or damaged by Tenant (normal wear and tear
excepted given Tenant's permitted usage of the demised Premises), Tenant agrees
to repair such damage. (H) Permit any rubbish or garbage to accumulate on the
demised premises, or any part thereof, unless confined in metal containers so
located as not to be visible to members of the public. (I) Install, maintain or
operate any sign except as approved in writing by Landlord. (J) Store
materials, supplies, equipment, finished products, raw materials or articles of
any nature outside of the demised premises, except for the previously approved
exterior hazardous material storage container which will be relocated from
Tenant's other premises at 200 Constitution Drive. (K) Use the demised premises
for retail, commercial or residential purposes. Tenant shall, at its sole cost
and expense, subject to approval of Landlord (not to be unreasonably withheld
or delayed) and the City of Menlo Park, be entitled to one building sign and to
signage on the existing monument sign for the demised premises.
Section 7.3. Tenant agrees that it will not at any time during the demised
term: (A) Perform any act or carry on any practice which may injure the demised
premises. (B) Burn any trash in or about the demised premises. (C) Keep or
display any merchandise or other object on or otherwise obstruct any sidewalks,
walkways or areaways. (D) Use or permit the use of any portion of the demised
premises as living quarters, sleeping apartments, lodging rooms, or for any
unlawful purpose. (E) Use or permit the demised premises to be used for any
purpose which is or shall not then be allowed under the Zoning Ordinance of the
City of Menlo Park, California, in that area.
Section 7.4. Except as provided in Section 7.1. and subject to Section
3.1., Tenant shall, at its expense, comply with all applicable laws,
regulations, rules and orders, regardless of when they become or became
effective, including, without limitation, those relating to health, safety,
noise, environmental protection, waste disposal, and water and air quality, and
furnish satisfactory evidence of such compliance upon request of Landlord.
Should any discharge, leakage, spillage, emission or pollution of any type
occur upon or from the demised premises due to Tenant's use and occupancy
thereof, Tenant, at its expense, shall, to the extent required by applicable
law, be obligated to remedy the same to the satisfaction of the governmental
body having jurisdiction thereover. Tenant agrees to indemnify, hold harmless,
and defend Landlord against all liability, cost, and expense (including without
limitation any fines, penalties, judgments, litigation costs, and attorneys'
fees) incurred by Landlord as a result of Tenant's breach of this section, or
as a result of any such discharge, leakage, spillage, emission, or pollution,
regardless of whether such liability, cost, or expense arises during or after
the demised term, unless such liability, cost or expense is proximately caused
solely by the active negligence of Landlord.
Tenant shall pay all amounts due Landlord under this section, as
additional rent, within sixty (60) days after any such amounts become due.
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<PAGE> 10
Tenant shall, at least thirty (30) days prior to the termination of the
demised term, or any earlier termination of this Lease, submit a plan to the
Menlo Park Fire Protection District in accordance with applicable provisions of
the Uniform Fire Code, with a copy to Landlord, demonstrating how any hazardous
materials which were are then being stored, dispensed, handled or used in, at or
upon the demised premises will be transported, transferred to a new facility,
disposed of or reused at the expiration or sooner termination of the demised
term of this Lease; and Tenant shall, at the expiration or sooner termination of
the demised term, comply with all applicable laws, regulations, rules and orders
of any governmental body having jurisdiction thereover (including without
limitation the Menlo Park Fire Protection District) regarding the disposal of
any such hazardous materials.
ARTICLE 8 - USE OF PREMISES
Section 8.1. Tenant shall use the demised premises solely for general
office, biomedical research and development, and for no other purposes without
Landlord's prior written consent.
ARTICLE 9 - INDEMNITY AND PUBLIC LIABILITY INSURANCE
Section 9.1.
A. Tenant agrees to indemnify and save harmless Landlord from and against
all claims arising from any act, omission or negligence of Tenant, or its
contractors, licensees, agents, servants, invitees or employees, or arising
from any accident, injury or damage whatsoever caused to any person, or to the
property of any person occurring during the demised term in or about the
demised premises, the sidewalks (if any) adjoining the same arising from
Tenant's use of the demised premises or the conduct of Tenant's business
therefrom and from and against all costs, expenses and liabilities incurred in
or in connection with any such claim or proceeding brought thereon, including,
but not limited to, reasonable attorneys' fees and court costs. except to the
extent such claims result from Landlord's negligent acts or willful misconduct.
B. Landlord agrees to indemnify and save harmless Tenant from and against
all claims arising from any act, omission or negligence of Landlord, or its
contractors, licensees, agents, servants, invitees or employees, and from and
against all costs, expenses and liabilities incurred in or in connection with
any such claim or proceeding brought thereon, including, but not limited to,
reasonable attorneys' fees and court costs, except to the extent such claims
result from Tenant's negligent acts or willful misconduct.
Section 9.2. Tenant agrees to maintain in full force during the demised
term a policy of public liability and property damage insurance under which
Landlord (and such other persons, firms or corporations as are designated by
Landlord and are properly includible as additional insureds under the terms of
any such policies of insurance) and Tenant are named as insureds, and the
insurer agrees to indemnify and hold Landlord and Landlord's said designees
harmless from and against all cost, expense and/or liability arising out of or
based upon any and all claims, accidents, injuries and damage mentioned in
Section 9.1. All public liability and property damage policies shall contain a
provision that Landlord, although named as an insured, shall
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<PAGE> 11
nevertheless be entitled to recovery under said policies for any loss
occasioned to it, its servants, agents and employees, by reason of the
negligence of Tenant. Each such policy shall be issued by an insurance carrier
licensed to do business in the State of California with a Best's rating of "A"
or better and financial category "IX" or better, be noncancelable with respect
to the Landlord and Landlord's said designees without twenty (20) days' written
notice to the Landlord and Landlord's said designees, and a duplicate original
or certificate thereof shall be delivered to Landlord prior to commencement of
the demised term and thereafter thirty (30) days prior to expiration of the
term of each policy. The limits of liability of such comprehensive general
liability insurance shall be Two Million Dollars ($2,000,000.00) for injury or
death to one or more persons and damage to property, combined single limit.
All public liability, property damage and other casualty policies shall be
written as primary policies, not contributing with and not in excess of
coverage which Landlord may carry.
If after applicable periods of notice and cure Tenant shall not comply
with its covenants to maintain insurance made above, or if Tenant fails to
provide duplicate originals or certificates thereof to Landlord as is provided
above, Landlord may, but shall not be required to, obtain any such insurance;
and if Landlord does obtain any such insurance, Tenant shall, on demand,
reimburse Landlord for the premium for any such insurance.
Section 9.3. Except for Landlord's negligence and/or willful
misconduct, Tenant agrees to use and occupy the demised premises, the Parking
and Accommodation Areas and to use all other portions of the Business Park
(which it is herein given the right to use) at its own risk and hereby releases
to the full extent permitted by law the Landlord, and its agents, servants,
contractors, and employees, from all claims and demands of every kind resulting
from any accident, damage or injury occurring therein. Landlord shall have no
responsibility or liability for any loss of or damage to fixtures or other
personal property of Tenant. The provisions of this Section shall apply during
the whole of the demised term.
ARTICLE 10 - FIRE INSURANCE AND CASUALTY
Section 10.1. If the building on the demised premises should be
damaged or destroyed during the demised term by any casualty insurable under
Landlord's standard fire and extended coverage insurance policies, Landlord
shall (except as hereinafter provided and subject to Section 10.11) (a) restore
the portion of the demised premises so damaged or destroyed to the same
condition as it was in immediately before such destruction; (b) Landlord shall
not be required to restore alterations or improvements made by Tenant or
Tenant's personal property unless they are an integral part of the demised
premises and specifically covered by insurance proceeds received by Landlord,
such excluded items being the responsibility of Tenant to restore; and (c) such
damage or destruction shall not terminate this Lease. Landlord's obligation
under this Section shall in no event exceed either (A) the scope of the work
done by Landlord in the original construction of such building (including any
work made necessary on account of changes in applicable building codes), or (B)
the proceeds of the insurance policy Landlord has agreed to keep on the
building and the demised premises insuring against loss or damage by such fire
and extended coverage insurance with full replacement cost endorsement if
reasonably obtainable from responsible insurance companies licensed to do
business in California, unless Landlord nevertheless elects to repair and/or
rebuild the building and the demised
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<PAGE> 12
premises. Landlord may carry any deductible under said insurance Landlord
elects; provided that Landlord's obligation to repair will include the amount
of said deductible and Tenant agrees to reimburse Landlord for any such
deductible used for repair up to the amount of $10,000.00. Tenant shall in the
event of any such damage or destruction, unless this Lease shall be terminated
as hereinafter provided, be responsible for replacing or repairing all exterior
signs, trade fixtures, equipment, display cases, and other installations
originally installed by the Tenant. Tenant shall have no interest in the
proceeds of any insurance carried by Landlord.
Section 10.2.Tenant's base rent shall be abated proportionately during any
period in which, by reason of any such damage or destruction, the building is
rendered partially or totally untenantable. Such abatement shall continue for
the period commencing with such destruction or damage and ending with the
substantial completion by the Landlord of such work or repair and/or
reconstruction as Landlord is obligated to do.
Section 10.3. If the building on the demised premises should be damaged or
destroyed to the extent of 33-1/3% or more of the then monetary value thereof
or if Landlord determines that the cost of restoration exceeds the amount of
insurance proceeds relating to such destruction actually recovered by Landlord
by an event described in Section 10.1., then Landlord may terminate this
Lease by written notice to Tenant given within thirty (30) [BEGIN STRIKOUT]
forty five (45) [END STRIKEOUT] days of such damage or destruction.
If Landlord does not elect to terminate this Lease then Landlord shall
repair and/or rebuild the same as provided in Section 10.1. If such damage or
destruction occurs and this Lease is not so terminated, this Lease shall remain
in full force and effect and the parties waive the provisions of any law to the
contrary. The Landlord's obligation under this Section shall in no event
exceed the scope of the work to be done by the Landlord in the original
construction of said building and the demised premises (including any work made
necessary on account of changes in applicable building codes).
[BEGIN STRIKEOUT] Section 10.4. Tenant agree to comply with all of the
regulations and rules of the Insurance Service Office or any similar body and
will not do, suffer, or permit an act to be done in or about the demised
premises which will increase any insurance rate with respect thereto. [END
STRIKEOUT]
Section 10.5. Landlord shall maintain and Tenant agrees, in addition to
any rent provided for herein, to pay to the Landlord the cost of the fire and
extended coverage insurance policy carried by Landlord on the demised premises
during the entire demised term or any renewal or extension thereof. This
Section expressly permits the Landlord to carry standard fire and extended
coverage policies to the extent of one hundred percent (100%) of the insurable
value and Landlord agrees that said policies will, if available, carry full
replacement cost endorsement.
Section 10.6. During the demised term, Tenant shall carry, at its.
expense, insurance against loss and damage by fire with an "All Risk"
endorsement for the full insurable value of Tenant's trade fixtures,
furnishings, operating equipment and personal property, including wall
coverings, carpeting and drapes, if installed by Tenant. Landlord and
Landlord's mortgagee shall be named as additional insureds under said policy,
which shall be noncancellable with respect to Landlord and Landlord's mortgagee
without twenty (20) days' prior written notice. A certificate
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<PAGE> 13
evidencing such coverage shall be delivered to Landlord on or before the to
commencement of the demised term and thereafter thirty (30) days prior to the
expiration of the term of such policy. Such insurance shall be written as a
primary policy, not contributing with and not in excess of coverage Landlord
may carry. If Tenant shall not comply with its covenants to maintain said
insurance, or if Tenant fails to provide a certificate thereof to Landlord
after the applicable period of notice and cure, Landlord may, but shall not be
required to, obtain any such insurance, and if Landlord does obtain any such
insurance, Tenant shall, on demand, reimburse Landlord for the premium for any
such insurance.
Section 10.7. In the event the building on the demised premises shall
be damaged as a result of any flood, earthquake, act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's fire and extended coverage insurance, to any extent
whatsoever, Landlord may within ninety (90) days following the date of such
damage, commence repair, reconstruction or restoration of the building and
prosecute the same diligently to completion, in which event this Lease shall
continue in full force and effect, or within said ninety (90) day period elect
not to so repair, reconstruct or restore the building, in which event this Lease
shall cease and terminate. In either such event Landlord shall give Tenant
written notice of its intention within thirty (30) [Begin Strikeout] forty five
(45) [End Strikeout] days of any such damage or casualty.
Section 10.8. Upon any termination of this Lease under the provisions
of this Article 10, the rent shall be adjusted and shall terminate as of the
date of such termination and the parties shall be released without further
obligation to the other party upon the surrender of possession of the demised
premises to Landlord, except for items that have been theretofore accrued and
are then unpaid and except for any prepaid rent and security deposits and
except for any prepaid rent and security deposits, and except for obligations
that are designated as surviving such termination.
Section 10.9. Notwithstanding anything in this Article 10 or
elsewhere in this Lease to the contrary, Landlord may maintain any insurance on
the demised premises that Landlord deems necessary or advisable, including, but
not limited to, any rental insurance, owner's protective liability insurance or
any insurance required by any mortgagee of Landlord; and Landlord may include
the amount of the premiums for such insurance in the total of the insurance
premiums which Tenant is required to pay under the terms hereof.
Section 10.10. Notwithstanding anything to the contrary in the Lease,
the parties hereto release each other and their respective agents, employees,
officers, independent contractors, licensees, invitees, customers of, or
retained by, either party, successors, assignees and subtenants from all claims
for damage, loss or injury to the building, the demised premises, and to the
fixtures, alterations and improvements of either Landlord or Tenant in or on
the building to the extent such damage, loss or injury is covered by any
insurance policy carried, or required to be carried, by Landlord and Tenant and
in force at the time of such damage. Landlord and Tenant shall cause each
insurance policy taken by it pursuant to this Lease to provide that the
insurance company waives all right of recovery by way of subrogation against
Landlord or Tenant in connection with any damage, loss or injury covered by
such policy.
Section 10.11. Notwithstanding any other provision of this Lease to
the contrary, in the event of any casualty to the building or the demised
premises (insured or
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<PAGE> 14
uninsured) which Landlord is required, or otherwise elects, hereunder to
repair, which casualty substantially interferes with Tenant's business on the
demised premises and the extent of which casualty is such that it would take,
in Landlord's reasonable opinion, longer than one hundred fifty (150) days to
complete the necessary repairs or reconstruction thereof as indicated in a
notice from Landlord given to Tenant within thirty (30) days of any damage or
destruction, then, in that event, Tenant may terminate this Lease by written
notice to Landlord given within twenty (20) days after the date of Landlord's
notice to Tenant. If Tenant does not elect to terminate the Lease then
Landlord shall commence the necessary repair or reconstruction and diligently
prosecute the same to completion as hereinabove provided.
ARTICLE 11 - REPAIR
Section 11.1. Landlord agrees, at Landlord's sole expense, to repair
structural portions of the building (including, without limitation, the
structural foundation, structural exterior and bearing walls and structural
portions of the roof) on the demised premises throughout the life of the Lease.
Structural defects and maintenance shall not be deemed to include minor cracks
or fissures in walls or floors which do not affect the structural integrity of
such walls or floors, nor the requirement of painting or caulking such cracks
or fissures. Landlord shall also, at Landlord's expense, repair damage to the
building and demised premises (i) caused by the negligence or willful
misconduct of Landlord, its employees, agents, invitees, or contractors to the
extent not covered by insurance (exclusive of any deductibles referenced in
Section 10.1.) carried, or required to be carried, by Landlord or Tenant
hereunder or (ii) resulting from a latent defect in the design or construction
of the building and occurring during the first year of the demised term.
Section 11.2. Tenant agrees during the demised term or any extension
thereof to maintain the interior of the building on the demised premises, and
every part thereof, except as to work to be performed by Landlord under
Sections 11.1. and 11.3. Tenant further agrees to clean, inside and out, all
of the glass on the exterior of the building. If Tenant should fail to
faithfully perform its maintenance obligations hereunder then Landlord shall,
upon having given notice to Tenant of the need for said maintenance, and after
applicable cure periods, have the right to perform, or cause to be performed,
said maintenance and Tenant shall on demand reimburse Landlord for Landlord's
costs of providing such maintenance.
Section 11.3. Subject to Landlord's obligations pursuant to Section
11.1, Landlord shall provide the following services and Tenant shall, in
addition to all other payments required to be made under other provisions of
this Lease written thirty (30) days of receipt of Landlord's notice thereof,
reimburse Landlord for Landlord's gross costs of: (i) maintaining, repairing
and replacing the roof subject to the provisions of Section 11.5);(ii) painting,
maintaining and repairing the exterior of the building; (iii) maintaining,
repairing and replacing the elevator and elevator equipment room (if any); (iv)
maintenance and repair associated with the mechanical and electrical rooms; (v)
maintenance and repair of the trash enclosure utilized in connection with the
building; (vi) maintenance, repair and replacement of the glass on the exterior
of the building and (vii) any other maintenance and repair other than that
which Landlord is required to perform at Landlord's expense per Section 11.1.
Tenant shall also, within thirty (30) days of Tenant's receipt of Landlord's
notice thereof, reimburse Landlord for Landlord's gross costs of maintaining,
repairing and replacing the heating and air conditioning
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<PAGE> 15
equipment serving the demised premises, whether furnished by Landlord or Tenant
(subject to the provisions of Section 11.5:). Landlord's said gross costs as
used in this Section 11.3. shall include all costs and expenses of every kind or
nature incurred by Landlord in the performance of such maintenance, repair or
replacement, which costs and expenses shall be competitive with the cost of
comparable maintenance, repair or replacements performed elsewhere in the City
of Menlo Park for buildings and demised premises comparable to the building and
demised premises leased to Tenant hereunder. Tenant shall have the right to
inspect, make copies of and audit, upon prior written notice and not more than
once during any year, Landlord's books and records with respect to such costs
and expenses.
Section 11.4. If during the term of this Lease Landlord's insurance
carrier requires the installation of an Ansul Fire Control System or its
equivalent, or any fire detection device, because of the nature of the
particular activities being carried on by Tenant in the demised premises, then
said system or device shall be installed at the sole cost of the Tenant within
the time specified in writing by Landlord's insurance carrier.
Section 11.5. Notwithstanding the provisions of Section 11.3. and
Section 18.3. hereof, Tenant's obligation to reimburse Landlord for costs
associated with the replacement of (as opposed to repairs and maintenance) the
roof, the heating, ventilating and air-conditioning units furnished by
Landlord, the paved parking areas or other hardscape areas in the Parking and
Accommodation Areas described in Article 18 or the plumbing and electrical
systems serving the demised premises and located under the slab of the building
or underground, during the demised term, and any option period, shall be
limited to a proportionate share of such replacement costs calculated by
multiplying the cost of any such replacement by a fraction, the numerator of
which is the number of years (both elapsed and not elapsed) in the demised
term, including any option period which has been (or is subsequently) exercised
by Tenant, and the denominator of which is the estimated useful life of the
replacement based on generally accepted accounting principles. The foregoing
limitation shall not apply to any costs for replacements made necessary on
account of: (i) negligent acts or omissions of Tenant or its agents, employees
invitees or contractors; (ii) the particular nature of Tenant's business or
operations; or (iii) equipment furnished by Tenant and maintained by Landlord.
Section 11.6. Tenant shall have the right, but not the obligation,
after applicable periods of notice and cure pursuant to Section 13.2., to cure
Landlord's failure to maintain and repair the demised premises as provided in
Section 11.1. and deduct from rent (not exceeding one month's rent) its
reasonable costs incurred in curing Landlord's failure. If, by reason of
emergency, repairs become necessary which by the terms of this Lease are the
responsibility of Landlord, Tenant may make such repairs which in the
reasonable opinion of Tenant are necessary for the preservation of the demised
premises, or for the safety or health of the occupants of the demised premises;
provided, however, that Tenant shall use its best efforts to inform the
Landlord before proceeding with such repairs.
ARTICLE 12 - FIXTURES & ALTERATIONS
Section 12.1. All trade fixtures owned by Tenant and installed in the
demised premises shall remain the property of Tenant and may be removed from
time to time
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<PAGE> 16
and shall be removed at the expiration of the demised term. Tenant shall
repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the last day of
the demised term, all such fixtures shall become the property of Landlord,
unless Landlord elects to require their removal, which election shall be
contained in a written notice to Tenant given at least thirty (30) days prior
to the expiration of the demised term, in which case Tenant shall promptly
remove them and restore the demised premises to its condition prior to such
removal. If Landlord elects to have Tenant remove such fixtures pursuant to
this Section, and Tenant fails to remove such fixtures, Landlord may at
Landlord's sole discretion, store such fixtures at Tenant's expense.
Section 12.2. Tenant shall not make any alterations, additions or
improvements in or to the demised premises or the building without submitting
plans and specifications therefor for the prior written consent of Landlord,
which consent, shall not be unreasonably withheld or delayed, and if granted,
may be subject to such conditions as Landlord may deem appropriate; provided
that, Landlord's consent shall not be required where the cost of the work is
less than $10,000.00, for non-structural interior alterations, additions or
improvements which do not materially affect the sprinkler system and/or
mechanical/electrical system or require removal or modification of improvements
installed by Landlord, and provided further that Tenant shall notify Landlord
of any such alterations, additions or improvements, and provide plans or other
suitable description thereof. Any such alterations, additions or improvements
consented to by Landlord shall be made at Tenant's sole cost and expense in
accordance with the plans and specifications therefor and Tenant agrees to
provide Landlord with an "as built" set of plans and specifications after any
such work is completed. Tenant shall secure any and all governmental permits,
approvals or authorizations required in connection with any such work, and
shall hold Landlord harmless from any and all liability, costs, damages,
expenses (including attorneys' fees) and any and all liens resulting therefrom.
All alterations, decorations, additions and improvements (and expressly
including all light fixtures and floor coverings installed by Tenant), except
furniture, removable paneling and partitions, wall fixtures, trade fixtures,
security and computer installations, personal property, appliances and
equipment which do not become permanently affixed to the demised premises,
shall be deemed to belong to Tenant, but shall be deemed to have been attached
to the demised premises or the building and to have become the property of
Landlord upon the termination of the demised term. Upon the expiration or
sooner termination of the demised term hereof, Tenant shall, upon written
demand by Landlord, at Tenant's sole cost and expense, forthwith remove any
alterations, decorations, additions or improvements made by Tenant, designated
by Landlord to be removed at the time Landlord gave Tenant written notice of
Landlord's approval of such alterations, additions or improvements, and Tenant
shall forthwith at its sole cost and expense repair any damage to the demised
premises or the building caused by such removal.
ARTICLE 13 - REMEDIES
Section 13. 1. Should Tenant default in the performance of any of its
obligations under this Lease with reference to the payment of rent and such
default continue for five (5) days after the date such payment is due, or
should Tenant default in the performance of any other obligations under this
Lease and such default continue for thirty (30) days after receipt of written
notice from Landlord specifying such default or beyond the time reasonably
necessary to cure if such default is of a nature to require
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<PAGE> 17
more than thirty (30) days to remedy, then, in addition to all other rights
and remedies Landlord may have under this Lease or under applicable law,
Landlord shall have the following rights and remedies:
(1) The Landlord has the remedy described in California Civil Code
Section 1951.4 (Landlord may continue the lease in effect after Tenant's breach
and abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain
liable to perform all of its obligations under this Lease and Landlord may
enforce all of Landlord's rights and remedies, including the right to recover
rent as it falls due. If Tenant abandons the demised premises or fails to
maintain and protect the same as herein provided, Landlord shall have the right
to do all things necessary or appropriate to maintain, preserve and protect the
demised premises, including the reasonable provision of security, and may do
all things appropriate to a re-letting of the demised premises, and none of
said acts shall be deemed to terminate Tenant's right of possession, unless
Landlord elects to terminate the same by written notice to Tenant. Tenant
agrees to reimburse Landlord on demand for all amounts reasonably expended by
Landlord in maintaining, preserving and protecting the demised premises,
together with interest on the amounts expended from time to time at the maximum
legal rate. Landlord shall also have the right to repair, remodel and renovate
the demised premises at the expense of Tenant and as deemed necessary by
Landlord.
(2) Landlord shall have the right to terminate Tenant's possession of
the demised premises, and if Tenant's right to possession of the demised
premises is terminated by Landlord, Tenant agrees to pay to Landlord on demand
(i) the worth at the time of award of all unpaid rent earned at the time of
termination (ii) the amounts by which the unpaid rent which would have been
earned [Begin Strikeout] due and payable by Tenant since [End Strikeout] after
the date of termination exceeds the amount of any rental loss that Tenant proves
could have been avoided, (iii) the worth at the time of the award [Begin
Strikeout] demand [End Strikeout] of the amount by which the unpaid rent for the
balance of the demised term of this Lease exceeds the amount of rental loss that
Tenant proves [Begin Strikeout] may [End Strikeout] could be reasonably be
avoided, (iv) all other amounts due Landlord from Tenant under the terms of this
Lease, or necessary to compensate Landlord for all detriment proximately caused
by Tenant's failure to perform its obligations under this Lease. The right to
possession of the demised premises by Tenant should not be deemed terminated
until Landlord gives Tenant written notice of such termination or until Landlord
re-lets all or a portion of the demised premises. The "worth at the time of the
award" of the amounts referred to in clauses (i) and (ii) above is to be
computed by allowing interest at the maximum rate permitted by applicable law.
The worth at the time of the award of the amount referred to in clause (iii)
above is to be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award plus one percent
(1%). In the event that Landlord seeks to recover the amount due, Landlord
shall be entitled to recover the amounts specified in paragraphs (a)(1), (a)(2)
and (a)(4) of Section 1951.2 of the Civil Code of California as such section
reads at the date of this Lease, together with interest on said amounts at the
maximum legal rate from the dates they were due, [Begin Strikeout] . computed as
of the date of the award, together with the worth at the time of the award of
the amount by which the unpaid rent for the balances of the term exceeds the
amount of such rental loss that tenant proves could reasonably have been [End
Strikeout]
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<PAGE> 18
[Begin strikeout]avoided.[End strikeout] Landlord shall be required to mitigate
damages by making a good faith effort to re-let the demised premises.
(3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law,
provided that each shall be cumulative and in addition to every other right or
remedy given herein or now hereafter existing at law or in equity or by
statute.
Section 13.2. Landlord shall in no event be in default in the performance
of any of its obligations hereunder unless and until Landlord shall have failed
to perform such obligations within thirty (30) days or such additional times as
is reasonably required to correct any such default after notice by Tenant to
the Landlord properly specifying wherein the Landlord has failed to perform any
such obligation.
[Begin strikeout]
ARTICLE 14 - Bankruptcy
Section 14.1. Tenant shall give written notice to Landlord of
its intention to commence proceedings under any state or federal insolvency or
bankruptcy law, or any comparable law that is now or hereafter may be in
effect, whereby Tenant seeks to be, or would be, discharged of its debts or the
payment of its debts is sought to be delayed, at least thirty (30) days prior
to the commencement of such proceedings.[End Strikeout]
Section 14.2. If any of the following events occur:
(1) The entry of an order for relief under Title 11 of the United
States Code as to Tenant or its executors, administrators or assigns, if any,
or the adjudication of Tenant or its executors, administrators or assigns, if
any, as insolvent or bankrupt pursuant to the provisions of any state
insolvency or bankruptcy act;
(2) The appointment of a receiver, trustee or other custodian of
the property of Tenant by reason of the insolvency or inability of Tenant to
pay its debts;
(3) The assignment of the property of Tenant for the benefit of
creditors;
(4) The commencement of any proceedings under any state or federal
insolvency or bankruptcy law, or any comparable law that is now or hereafter
may be in effect, whereby Tenant seeks to be, or would be, discharged of its
debts or the payment of its debts is sought to be delayed;
[Begin strikeout]
(5) The failure of Tenant to give written notice to Landlord
provided for in Section 14.1. above;[End Strikeout]
then Landlord may, at any time thereafter, in addition to any and all
other rights or remedies of Landlord under this Lease or under applicable law,
upon written notice to Tenant, terminate this Lease, and upon such notice this
Lease shall cease and terminate with the same force and effect as though the
date set forth in said notice were the date originally set forth herein and
fixed for the expiration of the demised term. Tenant shall thereupon vacate
and surrender the demised premises, but shall remain liable as herein provided.
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<PAGE> 19
ARTICLE 15 - SURRENDER OF PREMISES
Section 15. 1. Tenant shall, upon termination of the demised term, or
any earlier termination of this Lease, surrender to Landlord the demised
premises, including, without limitation, all building equipment and apparatus,
and fixtures (except as provided in Sections 12.1. and 12.2.) then upon the
demised premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as hereinbefore provided, and Tenant shall dispose of any hazardous
materials stored, dispensed, handled or used in, at or upon the demised
premises in accordance with the provisions of Section 7.4. If Tenant elects not
to exercise its first option to extend the demised term of the Lease pursuant
to Section 1.2 hereof, Tenant shall also, upon Landlord's written request,
remove (i) all of the specialized laboratory leasehold improvements made by
Tenant in the demised premises (the "Laboratory Improvements") and (ii) the
covered patio between the current Tenant facility at 200 Constitution Drive and
the demised premises (the "Patio Improvements"), pursuant to this Lease and
return the demised premises to its condition existing immediately prior to
Tenant's occupancy, ordinary wear and tear, acts of God, fire and other perils
to the extent the demised premises are not required to be repaired or restored
as hereinbefore provided, excepted. The work required with respect to the
Laboratory Improvements may include without limitation (i) the removal of:
flooring, all special electrical installations, special process plumbing,
special HVAC and all other equipment so designated by Landlord to be removed,
(ii) the restoration of generic office improvements including, without
limitation, office standard lighting, drop ceiling, electrical and HVAC
distribution (but excluding paint and carpet) and (iii) repair of any damage
to the demised premises (except as provided in the immediately preceding
sentence). The work required for the removal of the Laboratory Improvements and
the Patio Improvements is collectively referred to as the "Restoration Work".
The Laboratory Improvements and the Patio Improvements to be removed shall be
those improvements depicted on the as-built plans to be delivered to Landlord
pursuant to Section 3.2. of this Lease. [Begin strikeout] If Tenant elects not
to exercise its first option to extend the demised term of the Lease pursuant
to Section 1.2. hereof, Tenant shall also, at Landlord's request, remove all
the leasehold improvements made by Tenant in the demised premises pursuant to
this Lease (or prior to this Lease as permitted in Section 3.2. hereof) and
return the demised premises to its condition prior to Tenant's occupancy,
normal wear and tear excepted. [End strikeout] In order to secure Tenant's
performance of the Restoration Work [Begin Strikeout] obligation [End
Strikeout] hereinabove imposed, Tenant shall prior to making any improvements
in the demised premises under this Lease [Begin Strikeout] (or prior to this
Lease as permitted in Section 3.2 hereof) [End Strikeout] furnish to Landlord
certificates of deposit in the aggregate amount of [Begin Strikeout] One
Hundred Twenty Thousand Dollars ($120,000.00 [End Strikeout] One Hundred Forty
Thousand Dollars $140,000.00) in accordance with the following terms and
conditions:
A. Tenant shall deliver to Landlord concurrent with Tenant's
execution hereof a check immediately payable to Landlord in the amount of
$140,000.00 [Begin Strikeout] $120,000.00. [End Strikeout] Landlord shall use
such amount to purchase certificates of deposit issued by Wells Fargo Bank or
such other financial institution selected by Tenant (the "Certificates of
Deposit"). The Certificates of Deposit shall be in amounts and have maturities
acceptable to Tenant and Landlord, and be payable to Landlord. Upon maturity of
each Certificate of Deposit, Landlord will reinvest the principal and interest
earned on each Certificate of Deposit in a new Certificate of Deposit.
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<PAGE> 20
B. If Tenant elects not to exercise its first option to extend the
demised term of the Lease pursuant to Section 1.2. hereof, Landlord shall, on or
before expiration of the demised term (the "Notice Date"), notify Tenant in
writing to remove the Laboratory Improvements and/or the Patio Improvements. If
Landlord notifies Tenant that Tenant need not remove the Laboratory Improvements
and/or the Patio Improvements or if Landlord fails to notify Tenant to remove
the laboratory Improvements and/or Patio Improvements on or before the Notice
Date, then Tenant shall not be required to remove the laboratory Improvements
and/or Patio Improvements and the Certificates of Deposit shall be returned to
Tenant within ten (10) days. If Tenant completes the Restoration Work and gives
notice to Landlord demanding return of the Certificates of Deposit, together
with a certified copy of a certificate of completion issued by the project
architect and such Restoration Work is approved by Landlord, such approval not
be unreasonably withheld or delayed, the Certificates of Deposit shall be
returned to Tenant within ten (10) days. If and when Tenant properly delivers a
notice to Landlord to extend the demised term as provided pursuant to Section
1.2, the Certificates of Deposit shall be returned to Tenant within ten (10)
days of Tenant's notice.
If Tenant fails to perform the restoration work, on or before the later
to occur of (i) forty five (45) days from the Notice Date pursuant to
Landlord's Notice or (ii) the expiration of the demised term (or such other
date as Landlord and Tenant may mutually agree) Landlord shall be entitled to
cash the Certificates of Deposit to accomplish the required Restoration work by
providing written notice to Tenant, together with all information supporting
Landlord's right to payment, including invoices and mechanic's lien releases
conditioned only upon receipt of payment.
Landlord shall only be entitled to use the Certificates of Deposit if
the Restoration work, or portion thereof is completed and, as to the Laboratory
Improvements and the restoration work applicable thereto, the demised premises,
or portion thereof where the Restoration Work was performed is to be used for
purposes other than laboratory use. Landlord shall not apply more than Twenty
Thousand Dollars ($20,000.00) of the Certificates of Deposit (plus accrued
interest and earnings on such $20,000.00 during the demised term) to the
removal of the Patio Improvements and the repair and restoration of the parking
lot occasioned by such removal. If only a portion of the Laboratory
Improvements are removed in order to accommodate the use in the demised
premises for other than laboratory use, then the Certificates of Deposit
applied to such partial removal and restoration shall not exceed Twelve Dollars
($12) per square foot of such space removed and restored.
If after Landlord performs the Restoration Work, or portion thereof,
there remains any excess amount in the Certificates of Deposit, such excess
shall be returned to Tenant within ten (10) days of completion of the
Restoration Work.
[Begin Strikeout] If Tenant fails to perform its restoration
obligations under the Section 15.1 on or before the expiration of the demised
term as requested by Landlord, Landlord shall have the right to cash the
Certificates of Deposit as necessary to allow Landlord to accomplish such
restoration. Any excess amounts available from the Certificates of Deposit in
excess of the cost of restoration shall thereafter be returned to Tenant. If
Landlord does not request Tenant to remove its leasehold improvements and
restore the demised premises, or if Tenant accomplishes such restoration upon
Landlord's request, and provided Tenant is not otherwise in default hereunder,
the Certificate of Deposit will be returned to Tenant within ten (10) days of
Tenant's written request [End Strikeout]
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<PAGE> 21
[Begin Strikeout]
therefor. Landlord's right to apply the Certificates of Deposit to Tenant's
restoration obligations is further conditioned on the following:
(i) Not more than $20,000.00 of said Certificates of Deposit Deposit
(plus interest accrued thereon during the demised term) shall be applied to
removal of the planned covered patio between the current Geron facility at 200
Constitution Drive and the demised premises and repairs and restoration of the
parking lot occasioned by said removal.
(ii) The remaining $120,000.00 of said Certificates of Deposit (plus
interest accrued thereon during the demised term) shall be applied, as
necessary, to remove and restore all or a portion of the laboratory facilities
installed in the demised premises by Tenant; provided that lab area restored
is used for non-lab purposes (i.e., Landlord may not use the money to renovate
or remodel or improve the lab space for continued use as lab space by another
tenant). If only a portion of the lab space is removed and restored for another
use, the amount of the Certificate of Deposit applied to said partial removal
and restoration shall not exceed Twelve Dollars ($12.00) per square foot of
such space removed and restored.
(iii) Landlord will provide Tenant with copies of contracts and/or
purchase orders and invoices to substantiate the costs incurred by Landlord in
undertaking any restoration pursuant to the terms hereof.
[End Strikeout]
ARTICLE 16 - EMINENT DOMAIN
Section 16.1. If during the demised term, or during the period of
time between the execution of this Lease and the commencement date, there is
any taking of all or any part of the demised premises or any interest in this
Lease by the exercise of any governmental power, by any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation (any of the preceding a "Condemnor"), or voluntary sale or
transfer by Landlord to any Condemnor, either under the threat of condemnation
or while legal proceedings from Condemnation are pending (any of the preceding
a "Condemnation"), the rights and obligations of Landlord and Tenant shall be
determined pursuant to this Article. If such condemnation is of the entire
demised premises, then this Lease shall terminate on the date the Condemnor has
the right to possession of the demised premises (the "Date of Condemnation").
If such condemnation is of any portion, but not all, of the demised premises,
then this Lease shall (subject to Section 16.4.) remain in effect, except that,
if the remaining portion of the demised premises is, in Tenant's reasonable
judgment, rendered unsuitable for Tenant's continued use of the demised
premises, then Tenant may elect to terminate this Lease by so notifying
Landlord in writing (the "Termination Notice") within thirty (30) days after
the date that the nature and extent of the Condemnation has been determined.
Such termination shall be effective on the Date of Condemnation. if Tenant does
not give Landlord the Termination Notice within such thirty (30) day period,
then all obligations of Tenant under this Lease shall remain in effect, except
that (unless the demised premises are restored as set forth below) base rent
and additional rent shall be reduced by the ratio of (i) the area of the
demised premises taken to (ii) the area of the demised premises immediately
prior to the Date of Condemnation. Notwithstanding anything to the contrary in
this Section, if, within
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twenty (20) days after Landlord's receipt of-the Termination Notice, Landlord
notifies Tenant that Landlord at its cost will add to the remaining demised
premises so that the area of the demised premises will be substantially the
same after the Condemnation as it was before the Condemnation, and Landlord
commences the restoration promptly and completes it within ninety (90) days
after Landlord so notifies Tenant, then all obligations of Tenant under this
Lease shall remain in effect, except that base rent and additional rent shall
be abated or reduced during the period from the Date of Condemnation until the
completion of such restoration by the ratio of (A) the area of the demised
premises taken to (B) the area of the demised premises immediately prior to the
Date of Condemnation.
Section 16.2. Each party waives the provisions of Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial taking.
Section 16.3. All damages or awards for any taking under the power of
eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
based on the valuation selected by the condemning authority provided that, in
no event shall such award exceed the cost of such leasehold improvements less
depreciation which is to be computed on the basis of completely depreciating
such leasehold improvements during the initial term of this Lease, and any
award made to Tenant in excess of the then depreciated value of leasehold
improvements shall be payable to the Landlord.
Section 16.4. If more than thirty-three percent (33%) of the floor
areas of the building on the demised premises shall be taken under power of
eminent domain, or if any part of the Parking and Accommodation Areas shall be
so taken, Landlord may, by written notice to Tenant delivered on or before the
date of surrendering possession to the public authority pursuant to such
taking, terminate this Lease as of such date.
Section 16.5. If this Lease is terminated as provided in this Article,
the rent shall be paid up to the day that possession is so taken by public
authority and Landlord shall make a prorata refund of any rent and all deposits
paid by Tenant in advance and not yet earned.
ARTICLE 17 - REAL PROPERTY TAXES
Section 17.1. Tenant shall reimburse Landlord for all real property
taxes, assessments and ongoing sewer fees applicable to the demised premises.
Taxes shall be prorated to lease years for purpose of making this computation.
Such payment shall be made by Tenant within thirty (30) days after receipt of
Landlord's written statement setting forth the amount of such computation
thereof. If the demised term of this Lease shall not expire concurrently with
the expiration date of the fiscal tax year, Tenant's liability for taxes for
the last partial lease year shall be prorated on an annual basis.
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<PAGE> 23
Section 17.2. If the demised premises are not separately assessed,
Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.
Section 17.3. Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Landlord.
If any of Tenant's said personal property shall be assessed with
Landlord's real property, Tenant shall pay Landlord the taxes attributable to
Tenant within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Tenant's property.
Section 17.4. In addition to all other payments provided for herein,
the Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid by any instrumentality of local, state or
federal government in connection with parking in the parking area, including
policing; supervising with attendants; other costs in connection with providing
charged parking; repairs, replacements and maintenance not properly chargeable
to capital account under good accounting principles; interest and depreciation
of the actual cost of modification or improvements to the areas, facilities and
improvements maintained in this Article either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord in accordance with applicable governmental requirements to facilitate
payment of a parking charge by the general public for parking in the parking
area, or both, and other similar costs; and there shall be excluded (a) cost of
construction of such improvements which is properly chargeable to capital
account and (b) depreciation of the original cost of construction of all items
not previously mentioned in this sentence. If Landlord shall require the
payment of a parking charge by the general public for parking in the parking
area, then during any period in which such a charge is made the total revenue
(after deducting excise and similar taxes thereon and taxes, fees or surcharges
imposed by any agency or instrumentality of local, state or federal government)
actually received in cash or its equivalent by Landlord for such parking charge
shall be credited against said gross costs.
Section 17.5. Notwithstanding the provisions of Article 17
hereinabove, Tenant shall pay any increase in "real property taxes" resulting
from any and all improvements of any kind whatsoever placed on or in the
demised premises for the benefit of or at the request of Tenant regardless of
whether said improvements were installed or constructed either by Landlord or
Tenant.
Section 17.6. In addition to all other payments provided for herein,
the Tenant shall on demand reimburse Landlord for any tax (excluding income
tax) and/or business license fee or other levy that may be levied, assessed or
imposed upon the rent or other payments provided for herein or on the square
footage of the demised premises, on the act of entering into this Lease, or on
the occupancy of the Tenant however described, as a direct substitution in
whole or in part for, or in addition to, any
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<PAGE> 24
real property taxes, whether pursuant to laws presently existing or enacted in
the future.
Section 17.7. Notwithstanding anything to the contrary in this Lease,
Tenant shall not be responsible for the payment of any municipal, county, state
or federal income, franchise, estate, successor, inheritance or transfer taxes
of Landlord.
Section 17.8. Tenant at its cost, shall have the right, at any time,
to contest any real property and personal property taxes that are to be paid by
Tenant. If Tenant contests the real property and/or personal property taxes,
Tenant shall do so by making payment of such taxes "under protest" and
thereafter proceeding with its contest. Landlord shall not be required to join
in any proceeding or contest brought by Tenant unless the provision of any law
require that the proceeding or contest be brought by or in the name of Landlord
or any other owner of the demised premises. In that case, Landlord shall join
the contest or permit the contest to be brought in Landlord's name so long as
Landlord is not required to bear any cost. Tenant, on final determination of
the contest, shall immediately pay or discharge any decision or judgment
rendered, together with all costs, charges, interest and penalties incidental
to the decision or judgment.
ARTICLE 18 - PARKING AND ACCOMMODATION AREAS
Section 18.1. Landlord grants to Tenant during the demised term the
[Begin Strikeout] non [End Strikeout] exclusive (subject to Landlord's rights
and obligations hereunder) right to use the parking facilities and other areas
provided and designated as "Parking and Accommodation Areas" on Exhibit "B"
hereto for the accommodation and parking of such automobiles of the Tenant, its
officers, agents, employees and its customers while working or visiting Tenant;
provided that Landlord shall have no obligation to police said Parking Areas to
enforce Tenant's right to exclusive use thereof. Tenant will endeavor to cause
its officers, agents and employees will park their automobiles only in the
parking areas provided in the Parking and Accommodation Areas, and Tenant
specifically agrees that such officers, agents and employees will not park on
any public streets in the vicinity of the demised premises. Except as provided
in Section 17.4., Landlord shall not charge parking fees for such right to use
parking facilities.
Section 18.2. All parking areas and facilities furnished by Landlord
including, but not limited to, pedestrian sidewalks, landscaped areas and
parking areas shall at all times be subject to the control and management of
Landlord so that Landlord will be in a position to make available efficient and
convenient use thereof, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
all facilities and areas mentioned in this Article, and Tenant agrees to abide
by and conform therewith. Landlord shall have the right so long as Landlord
does not permanently materially and adversely interfere with Tenant's use and
enjoyment of the Parking and Accommodation Areas to construct, maintain and
operate lighting facilities on all of said areas and improvements, to police
the same, from time to time to change the area, location and arrangement of
parking areas and facilities, to restrict employee parking to employee parking
areas, to construct (at Landlord's sole cost and expense) surface, subterranean
and/or elevated parking areas and facilities, to establish and from time to
time change the level of parking surfaces, to close (if necessary) all or any
portion of said areas or facilities to such extent as may in the opinion of
Landlord's counsel be legally sufficient to prevent a dedication thereof or
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the accrual of any rights of any person or of the public therein, and to do and
perform such other acts in and to said areas and improvements respectively as
in the use of good business judgment the Landlord shall determine to be for the
convenience and use thereof by Tenant, and its respective employees and
visitors. Tenant shall have the right, subject to Landlord's approval of plans
and specifications therefor, to modify a portion of the Parking and
Accommodation Areas to accommodate the installation of a covered patio between
Tenant's existing facility at 200 Constitution Drive and the demised premises.
Section 18.3. Tenant agrees during the demised term to pay to
Landlord an annual charge which shall be Landlord's actual gross costs of
operating, maintaining and/or replacing all of the areas and facilities
mentioned in this Article in the Parking and Accommodation Areas. The annual
charge shall be an estimate computed on the basis of periods of twelve (12)
consecutive calendar months, commencing and ending on such dates as may be
designated by Landlord, and shall be paid in monthly installments on the first
day of each calendar month in the amount estimated by Landlord. Within ninety
(90) days after the end of each such annual period, Landlord will determine
(and furnish to Tenant a statement showing in reasonable detail) the actual
annual costs for such operation, maintenance and replacement for such period
and the amounts so estimated and paid during such period shall be adjusted
within such ninety (90) days (including adjustments on a prorata basis of any
partial such period at either end of the demised term) and one party shall pay
to the other on demand whatever amount is necessary to effectuate such
adjustment.
Landlord's said gross costs shall consist of and include all out of
pocket costs and expenses of every kind or nature incurred by Landlord in the
operation, maintenance and/or replacement of all of the areas, facilities and
improvements in the Parking and Accommodation Areas mentioned in this Article
determined in accordance with good accounting practice by an accountant
employed by Landlord. The determination of such accountant shall be
conclusive. Without otherwise limiting the generality of the foregoing, there
shall (subject to the provisions of Section 11.5) be included in such gross
costs for operation, maintenance, and/or replacement public liability and
property damage insurance, landscape maintenance, maintenance of utilities,
water, cleaning of areas, facilities and improvements, operation of lighting,
common area taxes and assessments determined in the same manner as taxes and
assessments on the demised premises, policing and sweeping of parking areas,
supervising with attendants, repairs, replacements and maintenance, and an
amount equal to ten percent (10%) of the total of all of the above for
administration of the Parking and Accommodation Areas.
Section 18.4. The Parking and Accommodation Areas included for the
purpose of this Article are those shown on Exhibit "B" outside of the building
area.
ARTICLE 19 - MISCELLANEOUS
Section 19.1. Landlord and its designee shall have the right, upon 24
hours notice (except for emergencies), during reasonable business hours to
enter the demised premises except restricted areas as established by or on
behalf of the Federal Government for security purposes (and in emergencies at
all times), (i) to inspect the same, (ii) for any purpose connected with
Landlord's rights or obligations under this Lease and, (iii) for all other
lawful purposes. All non-escorted visitors and those who
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will be entering restricted areas must be trained in Tenant's then current
laboratory safety procedures.
Section 19.2. Except as provided in Section 11.6, Tenant shall not be
entitled to make repairs at Landlord's expense, and Tenant waives the
provisions of Civil Code Sections 1941 and 1942 with respect to Landlord's
obligations for tenantability of the demised premises and Tenant's right to
make repairs and deduct the expenses of such repairs from rent.
Section 19.3. This Lease shall be governed exclusively by the
provisions hereof and by the laws of the State of California as the same from
time to time exist. This Lease expresses the entire understanding and all
agreements of the parties hereto with each other and neither party hereto has
made or shall be bound by any agreement or any representation to the other
party which is not expressly set forth in this Lease.
Section 19.4. If Tenant should hold over after the demised term and
any extension thereof as herein provided for, then such holding over shall be
construed as a tenancy from month to month at a rent double that provided for
under the monthly rental of the principal term of this Lease.
Section 19.5. Tenant agrees to maintain all toilet and washroom
facilities within the demised premises in a neat, clean and sanitary condition.
Section 19.6. Landlord covenants and agrees that Tenant, subject to
the terms and provisions of this Lease, on paying the rent and observing,
keeping and performing all of the terms and provisions of this Lease on its
part to be observed, kept and performed, shall lawfully, peaceably and quietly
have, hold, occupy and enjoy the demised premises during the demised term
without hindrance or ejection by any person lawfully claiming under or against
the Landlord.
Section 19.7. Subject to Article 6, the terms and provisions hereof
shall be construed as running with the land and shall be binding upon and inure
to the benefit of heirs, executors, administrators, successors and assigns of
Landlord and Tenant.
Section 19.8.
A. Tenant shall promptly pay all sums of money with respect to
any labor, services, materials, supplies or equipment furnished or alleged to
have been furnished to Tenant in, at or about the demised premises, or
furnished to Tenant's agents, employees, contractors or subcontractors, that
may be secured by any mechanic's, materialmen's, supplier's or other liens
against the demised premises or Landlord's interest therein. In the event any
such or similar liens shall be filed, Tenant shall, within three (3) days of
receipt thereof, give notice to Landlord of such lien, and Tenant shall, within
ten (10) days after receiving notice of the filing of the lien, discharge such
lien by payment of the amount due to the lien claimant. However, Tenant may in
good faith contest such lien provided that within such ten (10) day period
Tenant provides Landlord with a surety bond from a company acceptable to
Landlord, protecting against said lien in an amount at least one and one-half
(1-1/2) times the amount claimed or secured as a lien or such greater amount as
may be required by applicable law; and provided further that Tenant, if it
should decide to contest such lien, shall agree to indemnify, defend and save
harmless Landlord from and against all costs arising from or in connection with
any proceeding with respect to such lien. Failure of Tenant to
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discharge the lien, or, if contested, to provide such bond and indemnification,
shall constitute a default under this Lease and in, addition to any other right
or remedy of Landlord, Landlord may, but shall not be obligated, to discharge
or secure the release of any lien by paying the amount claimed to be due, and
the amount so paid by Landlord, and all costs and expenses incurred by Landlord
therewith, including, but not limited to, court costs and reasonable attorneys'
fees, shall be due and payable by Tenant to Landlord forthwith on demand.
B. At least fifteen (15) days before the commencement by Tenant
of any material construction or remodeling work on the demised premises, Tenant
shall give written notice thereof to Landlord. Landlord shall have the right
to post and maintain on the demised premises such Notices of
Non-Responsibility, or similar notices, provided for under applicable laws.
Section 19.9.
A. Tenant shall deposit with Landlord the sum specified in
Section 2.4(B)) hereof as a "Security Deposit". The Security Deposit shall be
held by Landlord as security for the faithful performance of all the terms of
this Lease to be observed and performed by Tenant. The Security Deposit shall
not be mortgaged, assigned, transferred or encumbered by Tenant without the
written consent of Landlord and any such act on the part of Tenant shall be
without force and effect and shall not be binding upon Landlord.
B. If any of the rents herein reserved or any other sum payable
by Tenant to Landlord shall be overdue and unpaid, or should Landlord make
payments on behalf of Tenant, or should Tenant shall fail to perform any of the
terms of this Lease, then Landlord may, at its option and without prejudice to
any other remedy which Landlord may have on account thereof, apply the entire
Security Deposit, or so much thereof as may be necessary, to compensate
Landlord toward the payment of rent or additional rent, loss, or damage
sustained by Landlord due to such breach on the part of Tenant, and Tenant
shall forthwith upon demand restore said Security Deposit to the original sum
deposited. Should Tenant comply with all of said terms and promptly pay all of
the rent and all other sums payable by Tenant to Landlord, said Security
Deposit shall be returned in full to Tenant at the end of the demised term.
C. In the event of bankruptcy or other similar proceedings listed
in Article 14 hereof, the Security Deposit shall be deemed to be applied first
to the payment of rent and other charges due Landlord for all periods prior to
the filing of such proceedings.
D. In the event Landlord delivers the Security Deposit to the
purchaser of Landlord's interest in the demised premises, Landlord, after
written notice to Tenant of said delivery, shall be discharged from any further
liability with respect to the Security Deposit. This provision shall also apply
to any subsequent transferees.
Section 19.10. All notices, statements, demands, requests, consents,
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party or, if sent by overnight
carrier or United States certified mail, return receipt requested, postage
prepaid, and addressed as follows:
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If sent to Tenant, the same shall be addressed to the Tenant at 230
Constitution Drive, Menlo Park, California 94025, or at such other place as
Tenant may from time to time designate by notice to Landlord.
If sent to Landlord, the same shall be addressed to Landlord at 60
Hillsdale Mall, San Mateo, California 94403-3497, or at such other place as
Landlord may from time to time designate by notice to Tenant.
Any such notice when sent by overnight carrier or certified mail as
above provided shall be deemed duly served on the third business day following
the date of such mailing.
Section 19.11. As used in this Lease and when required by the context,
each number (singular or plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.
Section 19.12. In case of litigation with respect to the mutual
rights, obligations, or duties of the parties hereunder, the prevailing party
shall be entitled to reimbursement from the other party of all costs and
reasonable attorneys' fees actually incurred.
Section 19.13. Each term and each provision of this instrument
preferable by Tenant shall be construed to be both a covenant and a condition.
Section 19.14. Except as otherwise expressly stated, each payment
provided herein to be made by Tenant to Landlord shall be in addition to and
not in substitution for the other payments to be made by Tenant to Landlord.
Section 19.15. Time is and shall be of the essence of this Lease and
all of the terms, provisions, covenants and conditions hereof.
Section 19.16. The Tenant warrants that has not had any dealings with
any realtor, broker, or agent in connection with the negotiation of this Lease
excepting only None, whom Landlord agrees to pay whatever commission may be
due. Each party agrees to hold the other harmless from any cost, expense or
liability for any compensation, commissions or charges claimed by any realtor,
broker, or agent with respect to this Lease and/or the negotiation thereof with
whom the other party has or purportedly has dealt.
Section 19.17. This Lease shall be subject and subordinate to any
ground lease, mortgage or deed of trust now or hereafter encumbering all or any
portion of the demised premises. As a condition precedent to the effectiveness
of any such subordination of this Lease to any future ground lease, mortgage or
deed of trust, and with respect to each existing ground lease, mortgage or deed
of trust, Landlord shall provide (or, in the case of a ground lease, mortgage
or deed of trust existing as of the date of this Lease, use its best efforts to
provide) to Tenant a commercially reasonable nondisturbance and attornment
agreement in favor of Tenant executed by the ground lessor, mortgagee or trust
deed beneficiary, as the case may be, which shall provide that Tenant's quiet
possession of the demised premises and Tenant's rights under this Lease shall
not be affected or disturbed so long as Tenant is not in default under the
provisions of this Lease. If any mortgagee, trustee or holder of such security
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<PAGE> 29
instrument elects to have the Tenant's interest in this Lease superior to any
such instrument by notice to Tenant, then this Lease should be deemed superior
to the lien of any such mortgage, deed of trust or security indenture whether
this Lease was executed before or after said mortgage, deed of trust and/or
security indenture.
Section 19.18. Landlord reserves the right during the last six
months of the demised term of this Lease or the last six months of any
extension hereof to enter the property during normal working hours for the
purpose of showing the demised premises (except restricted areas established
by, or on behalf of, the Federal Government for security purposes) to
prospective tenants or purchasers and to place signs (for the last year) on the
demised premises advertising the property for lease or sale.
IN WITNESS WHEREOF, the parties have executed this instrument.
TENANT: LANDLORD:
GERON CORPORATION, DAVID D. BOHANNON ORGANIZATION,
a Delaware corporation a California corporation
By: /s/ Geron Corporation By: /s/ David D. Bohannon Organization
------------------------------ -----------------------------
President Vice President
By: /s/ David L. Greenwood By: /s/ David D. Bohannon Organization
------------------------------ -----------------------------
Secretary Assistant Secretary
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EXHIBIT "A"
BOHANNON PARK
230 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA
DESCRIPTION OF DEMISED PREMISES
FOR
GERON CORPORATION
Commencing at the most easterly corner of Parcel 2, as said parcel is
shown on a map entitled "Parcel Map, being a resubdivision of Lots 36, 37, 38,
39 and 40 of Bohannon Industrial Park Unit No.7 (Vol.60 of Maps, Page 10),
Menlo Park, San Mateo County, California," which map was filed in the office of
the County Recorder of San Mateo County, State of California, on October 2,
1973, in Volume 22 of Parcel Maps at Page 26, more particularly described as
follows:
Thence from said corner of commencement South 67 degrees 17' East
47.00 feet and South 22 degrees 43' West 20.00 feet to the Point of Beginning.
<TABLE>
<S> <C> <C> <C> <C> <C>
THENCE SOUTH 67 degrees 17" EAST 172.00 FEET;
THENCE SOUTH 22 degrees 43' WEST 140.00 FEET;
THENCE NORTH 67 degrees 17' WEST 172.00 FEET;
AND NORTH 22 degrees 43' EAST 140.00 FEET
</TABLE>
to the point of beginning.
Containing 24,080 SQUARE FEET, more or less.
Feb. 14, 1996
<PAGE> 31
PORTION OF PARCEL 2 PARCEL 1
[CONSTITUTION DRIVE FLOOR PLAN]
BOHANNON INDUSTRIAL PARK
230 CONSTITUTION DRIVE, MENLO PARK, CALIF.
EXHIBIT "B"
FEB. 14, 1996
TENANT: GERON CORPORATION
<PAGE> 1
Exhibit 10.13
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE, made this 25th day of March, 1996
between DAVID D. BOHANNON ORGANIZATION, a California corporation, herein
referred to as "Landlord," and GERON CORPORATION, a Delaware corporation herein
referred to as "Tenant."
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease entitled "BUSINESS
PARK LEASE" ("Lease") dated January 20, 1993, for certain demised premises
located at 194 Constitution Drive and 200 Constitution Drive, Menlo Park,
California, as more particularly described in said Lease; and
WHEREAS, said Lease was amended pursuant to a First Amendment to Lease
dated July 26, 1993 and a Second Amendment to Lease dated February 22, 1994; and
WHEREAS, Tenant is expanding its operations by leasing an additional
building from Landlord;
WHEREAS, Landlord and Tenant desire to make certain amendments to the
Lease in order to make the demised term and option periods of the Lease
coterminous with the new lease for the additional building, all as more
particularly set out herein below.
NOW THEREFORE, in consideration of the covenants and conditions
contained herein, Landlord and Tenant agree to amend the Lease as follows:
1. Section 1.1. of the Lease is amended as follows: Notwithstanding
anything to the contrary in this Section 1.1. or the Lease, the demised term of
the lease is extended through and including January 31, 2002.
2. Section 1.3. of the Lease is amended by deleting therefrom the words
and numerals "one (1)" and "five (5)" in the first sentence thereof and
replacing them with, respectively, the words and numerals "two (2)" and "two and
one-half (2.5)" and replacing the term "period" with term "periods." The effect
of the foregoing amendments is that Tenant shall have two (2) two and one-half
(2.5) year options instead of one (1) five (5) year option to extend the demised
term.
3. Section 1.3. of the Lease is further amended by adding the following
subparagraph F. thereto:
"F. Exercise of the first option to extend the demised term is
an express condition precedent to the exercise of the second
option to extend the demised term."
<PAGE> 2
4. Section 2.1. of the Lease is amended by adding the following thereto
immediately prior to the final sentence thereof:
"for the sixth year during the demised term the amount of
Three Hundred Two Thousand Six Hundred Two Dollars ($302,602.00) per annum,
payable in twelve (12) equal monthly installments of Twenty Five Thousand Two
Hundred Sixteen and, 83/100 Dollars ($25,216.83); for the seventh year during
the demised term the amount of Three Hundred Fourteen Thousand Seven Hundred Six
and 06/100 Dollars ($314,706.06) per annum, payable in twelve (12) equal monthly
installments of Twenty Six Thousand Two Hundred Twenty Five and 50/100 Dollars
($26,225.50); for the eighth year during the demised term the amount of Three
Hundred Twenty Seven Thousand Two Hundred Ninety Four and 30/100 Dollars
($327,294.30) per annum, payable in twelve (12) equal monthly installments of
Twenty Seven Thousand Two Hundred Seventy Four and 53/100 Dollars ($27,274.53);
and for the ninth year during the demised term, the amount of Twenty Eight
Thousand Three Hundred Sixty Five and 51/100 Dollars ($28,365.51) per month.
5. Section 2.2. of the Lease is deleted in its entirety and replaced by
the following:
"Section 2.2. Base Rent during the extended term(s) if any,
shall be as follows: for the first year during the first extended term (i.e.,
February 1, 2002 through January 31, 2003) the amount of Three Hundred Fifty
Four Thousand One and 51/100 Dollars ($354,001.51) per annum, payable in twelve
(12) equal monthly installments of Twenty Nine Thousand Five Hundred and 13/100
Dollars ($29,500.13); for the second year of the first extended term (i.e.,
February 1, 2003 through January 31, 2004) the amount of Three Hundred Sixty
Eight Thousand One Hundred Sixty One and 57/100 Dollars ($368,161.57) per annum,
payable in twelve (12) equal monthly installments of Thirty Thousand Six Hundred
Eighty and 13/100 Dollars ($30,680.13); for the next six (6) months during the
first extended term (i.e., February 1, 2004 through July 31, 2004) the amount of
Thirty One Thousand Nine Hundred Seven and 34/100 Dollars ($31,907.34) per
month; for the first six (6) months of the second extended term, if any, (i.e.,
August 1, 2004 through January 31, 2005) the amount of Thirty One Thousand Nine
Hundred Seven and 34/100 Dollars ($31,907.34) per month; for the first full year
of the second extended term, if any, (i.e., February 1, 2005 through January 31,
2006) the amount of Three Hundred Ninety Eight Thousand Two Hundred Three and
60/100 Dollars ($398,203.60) per annum, payable in twelve (12) equal monthly
installments of Thirty Three Thousand One Hundred Eighty Three and 63/100
Dollars ($33,183.63); and for the last year of the second extended term, if any,
(i.e., February 1, 2006 through January 31, 2007) the amount of Four Hundred
Fourteen Thousand One Hundred Thirty One and 73/100 Dollars ($414,131.73) per
annum, payable in twelve (12) equal monthly installments of Thirty Four Thousand
Five Hundred Ten and 98/100 Dollars ($34,510.98)."
2. Except as provided in this Third Amendment to Lease and that certain
Second Amendment to Lease dated February 22, 1994 and that certain First
Amendment to Lease dated July 26, 1993, it is understood and agreed that all
other terms and conditions of the Lease shall be and remain the same.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Third Amendment to Lease
as of the date first hereinabove written.
TENANT: LANDLORD:
GERON CORPORATION, DAVID D. BOHANNON ORGANIZATION,
a Delaware Corporation a California corporation
By: /s/ Geron Corporation By: /s/ David D. Bohannan Organization
------------------------- ----------------------------
Vice President Vice President
By: /s/ David L. Greenwood By: /s/ David D. Bohannan Organization
------------------------- ----------------------------
Secretary Assistant Secretary
-3-
<PAGE> 4
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE, made this 22nd day of February, 1994,
between DAVID D. BOHANNON ORGANIZATION, a California corporation, herein
referred to as "Landlord", and GERON CORPORATION, a Delaware corporation,
herein referred to as "Tenant".
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease entitled "BUSINESS PARK
LEASE" ("Lease") dated January 20, 1993, for certain demised premises located at
194 Constitution Drive and 200 Constitution Drive, Menlo Park, California, as
more particularly described in said Lease; and
WHEREAS, said Lease was amended pursuant to a First Amendment to Lease
dated July 26, 1993; and
WHEREAS, pursuant to the Lease, Tenant improved the demised premises and
has taken possession of the demised premises and the demised term of the Lease
commenced as of February 9, 1993 for the 200 Constitution portion of the demised
premises and on October 1, 1993 for the 194 Constitution portion of the demised
premises; and
WHEREAS, Tenant's financial investment in leasehold and Tenant Improvements
to the demised premises (the "Tenant Improvement Costs") has exceeded Landlord's
and Tenant's initial expectations; and
WHEREAS, Landlord and Tenant desire to make certain amendments to the Lease
in order for Tenant to recapture a portion of the Tenant Improvement Costs, all
as more particularly set out hereinbelow.
NOW, THEREFORE, in consideration of the covenants and conditions contained
herein, Landlord and Tenant agree to amend the Lease as follows:
1. Subparagraph 6.1.A (ii) of Section 6.1 of the Lease is hereby
deleted in its entirety and replaced by the following:
"(ii) in the case of each and every sublease during the initial five (5)
year demised term, Tenant shall not be obligated to pay Landlord any Sublease
Premium (as defined below) received by or on behalf or on account of Tenant; and
(iii) in the case of each and every sublease entered into after the initial
five (5) year demised term during any option period, or in the case of any
sublease entered into during the initial five (5) year demised term which
extends beyond said five (5) years, fifty percent (50%) of any Sublease Premium
derived from that sublease during any such option period. "Sublease Premium"
shall mean ALL rent, and/or other monies, property, and consideration of every
kind whatsoever paid to Tenant by the subtenant under a sublease, LESS all
Tenant's reasonable costs actually incurred of subleasing such space, including,
without limitation, broker's commissions, and base rent and additional rent
under this Lease accruing during the term of the sublease in respect of
- 1 -
<PAGE> 5
the subleased space as and when such rent, monies, property and consideration is
received by Tenant as sublessor."
2. Except as provided in this Second Amendment to Lease and that certain
First Amendment to Lease dated July 26, 1993, it is understood and agreed that
all other terms and conditions of the Lease shall be and remain the same.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Lease as of the date first hereinabove written.
TENANT: LANDLORD:
GERON CORPORATION, DAVID D. BOHANNON ORGANIZATION,
a Delaware Corporation a California corporation
By: /s/ Geron Corporation By: /s/ David D. Bohannon Organization
------------------------- ----------------------------------
Vice President Vice President
By: /s/ Geron Corporation By: /s/ David D. Bohannon Organization
------------------------- ----------------------------------
Secretary Assistant Secretary
- 2 -
<PAGE> 6
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE is made this 25th day of March, 1996,
between DAVID D. BOHANNON ORGANIZATION, a California corporation, herein
referred to as "Landlord", and GERON CORPORATION, a Delaware corporation, herein
referred to as "Tenant".
RECITALS:
1. Landlord and Tenant have previously entered into a lease ("Lease")
dated March 25, 1996, for demised premises ("Premises") located at 230
Constitution Drive, Menlo Park, California, as more particularly described in
said Lease.
2. It was estimated that Landlord would deliver possession of the
Premises to Tenant on or about November 1, 1996, subject to the vacation thereof
by the existing tenant.
3. The existing tenant has agreed to vacate the Premises on or after
July 1, 1996, and the parties wish to amend the Lease to allow for the earlier
commencement of the Lease, as more particularly set forth hereinbelow.
NOW, THEREFORE, in consideration of the covenants and conditions
contained herein, Landlord and Tenant agree as follows:
1. Upon execution and delivery of this First Amendment to Lease,
Section 1.1. of the Lease shall be deleted in its entirety and the following
shall be inserted in-lieu thereof:
"Section 1.1. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the demised premises (as described in
Exhibit "A" and located substantially as shown on Exhibit "B" attached
hereto) upon and subject to the terms and provisions of this Lease for
a demised term of approximately five (5) years (plus any partial period
prior to February 1, 1997) commencing on the date Landlord delivers
possession of the demised premises to Tenant (estimated to be on or
after July 1, 1996), and ending on January 31, 2002. Landlord
acknowledges that Tenant will suffer damages if it is unable to take
possession of the demised premises on or before November 1, 1996.
Landlord shall use its best efforts (including without limitation
initiating unlawful detainer proceedings) to remove the existing tenant
from the demised premises if the existing tenant fails to surrender
possession of the demised premises on or before October 31, 1996. If
for any reason the existing tenant fails to surrender possession of the
demised premises so that Landlord is unable to deliver possession
thereof to Tenant on or before February 1, 1997, Tenant shall have
<PAGE> 7
the right, upon ten (10) days' prior written notice to Landlord, to
terminate this Lease."
2. Upon execution and delivery of this First Amendment to Lease, base
rent payable pursuant to Section 2.1. of the Lease for the period from
commencement of the demised term through January 31, 1998 shall be revised as
follows: for the period from commencement of the demised term to and including
October 31, 1996, Tenant shall pay, as base rent, the amount of Thirteen
Thousand Four Hundred and 52/100 Dollars ($13,400.52) per month (including a
proration for partial months); for the period from November 1, 1996, to and
including January 31, 1997, base rent payable under the Lease shall be abated;
and for the period from February 1, 1997, to and including January 31, 1998,
Tenant shall pay, as base rent, the amount of Three Hundred Three Thousand Four
Hundred Eight Dollars ($303,408.00) per annum, payable in twelve (12) equal
monthly installments of Twenty Five Thousand Two Hundred Eighty Four Dollars
($25,284.00). Base rent for the remainder of the demised term shall be payable
as provided in Section 2.1. of the Lease.
3. Upon execution and delivery of this First Amendment to Lease,
Tenant's obligation to pay additional rent pursuant to the Lease shall be as
follows: for the period from commencement of the demised term to and including
October 31, 1996, Tenant shall pay, as additional rent, an amount equal to fifty
percent (50%) of (i) the real property taxes payable pursuant to Section 17.1,
(ii) the costs and expenses incurred by Landlord in the operation, maintenance
and/or replacement of (x) the Parking and Accommodation Areas payable pursuant
to Article 18, and (y) the demised premises pursuant to Section 11.3; and (iii)
the insurance costs payable pursuant to Sections 10.5 and 10.9; for the period
from November 1, 1996, to and including January 31, 1997, additional rent
(described in (i), (ii) and (iii) above) payable pursuant to the Lease shall be
abated; and for the period from February 1, 1997, through the remainder of the
demised term (including any extensions thereof) all payments to be made by
Tenant to Landlord shall be payable pursuant to the terms of the Lease. The
foregoing limitations on additional rent shall not apply to any costs for
maintenance, repair or replacements made necessary on account of: (i) negligent
acts or omissions of Tenant or its agents, employees, invitees or contractors;
(ii) the particular nature of Tenant's business or operations; or (iii)
equipment furnished by Tenant and maintained by Landlord. Additionally, Tenant
shall, during the entire demised term, pay for all utilities pursuant to Section
5.1; insurance pursuant to Sections 9.2. and 10.6; maintenance and repair
pursuant to Section 11.2; and taxes pursuant to Sections 17.3, 17.4, 17.5 and
17.6; and shall otherwise keep and observe all of the terms and conditions of
the Lease.
4. This First Amendment to Lease is expressly conditioned upon Landlord
entering into an amendment to the lease between Landlord and Ericcson-Raynet
("Raynet") for the Premises with Raynet for the early termination of Raynet's
lease on terms and conditions acceptable to Landlord, in Landlord's sole and
unfettered discretion, and upon Raynet's vacation of the Premises. If Landlord
fails to enter into
<PAGE> 8
such an amendment with Raynet, or if Raynet does not vacate the Premises on or
before August 31, 1996, then this First Amendment to Lease shall, at Landlord's
election, be null and void.
5. Except as herein modified, the terms of the Lease are and shall
remain the same.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Lease as of the date first hereinabove written.
TENANT: LANDLORD:
GERON CORPORATION, DAVID D. BOHANNON ORGANIZATION,
a Delaware corporation a California corporation
By /s/ Geron Corporation By /s/ David D. Bohannon Organization
------------------------ ----------------------------------
President Vice President
By /s/ Geron Corporation By /s/ David D. Bohannon Organization
------------------------ ----------------------------------
Secretary Assistant Secretary
<PAGE> 9
BUSINESS PARK LEASE
THIS LEASE is made this 20th day of January, 1993, between DAVID D.
BOHANNON ORGANIZATION, a California corporation, herein referred to as
"Landlord," and GERON CORPORATION, a Delaware corporation, herein referred to as
"Tenant".
WITNESSETH:
ARTICLE 1 - PREMISES AND TERM
Section 1.1. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the demised premises (as described in Exhibit "A" and located
substantially as shown on Exhibit "A-1" attached hereto) upon and subject to the
terms and provisions of this Lease for a demised term of Five (5) years (plus
any partial period prior to the commencement of the first full calendar month),
commencing on February 1, 1993, with respect to that portion of the demised
premises shown cross-hatched on Exhibit "C" and commonly known as 200
Constitution Drive, and commencing on August 1, 1993 with respect to that
portion of the demised premises shown diagonally lined on Exhibit "C" and
commonly known as 194 Constitution Drive. The end of the initial five (5) year
term for the entire demised premises shall be calculated from February 1, 1993.
Landlord and Tenant acknowledge that the demised premises consists of the
building and improvements together with the parcel of land described in Exhibit
"A" hereto and that Landlord retains custody and control of the surrounding
areas outside of the building (including the Parking and Accommodation Areas
described in Article 18), subject to Tenant's right to use said areas as
described in Article 18 below.
Section 1.2. The demised premises are currently occupied by an existing
tenant pursuant to leases which are currently in full force and effect. This
Lease and the obligations of Tenant and Landlord hereunder are expressly
conditioned upon Landlord obtaining a satisfactory termination agreement from
the existing tenant with respect to the 200 Constitution portion of the demised
premises and, in the case of both 200 Constitution and 194 Constitution, the
vacation of the demised premises by the existing tenant, unless the Tenant
hereunder agrees, in its sole discretion, to allow the existing tenant to remain
in a portion of the demised premises. The existing leases are scheduled to
expire on, respectively, May 31, 1993 for 200 Constitution Drive and July 31,
1993 for 194 Constitution Drive. Notwithstanding anything to the contrary
contained in this Section, if the leases with the existing tenant are not
terminated prior to the respective expiration dates, and subject to Section
3.1., this Lease shall commence on June 1, 1993 with respect to 200 Constitution
and August 1, 1993 with respect to 194 Constitution.
- 1 -
<PAGE> 10
Section 1.3. Provided that Tenant is not at the time Landlord receives
Tenant's written notice to exercise the option described in this Section 1.3.,
and has not been, in default under any of the terms and conditions hereof, which
default has not been cured within the applicable cure periods set forth in
Article 13 below, Tenant shall have the option to extend the demised term of
this Lease for one (1) additional period of five (5) years upon the terms and
conditions set forth herein:
A. Tenant shall exercise the option by written notice to Landlord given at
least two hundred seventy (270) days prior to the expiration of the original
demised term; provided that, if during the last two (2) years of the initial
demised term, Landlord should receive a bonafide offer to lease the demised
premises at the end of the initial demised term from another tenant, which offer
Landlord is prepared to accept, then Tenant shall have ten (10) business days
from receipt of notice from Landlord that Landlord has received such an offer
(together with a copy of such bonafide offer) to exercise its option upon the
terms and conditions of this Section 1.3. Should Tenant fail to exercise its
option to extend the lease within ten (10) business days, then said option shall
be null and void.
B. Base rent shall be as set forth in Section 2.2. below.
C. There shall be no further option to extend.
D. All other terms and conditions shall be as set forth in the Lease, and
all references to the demised term shall mean the extended term.
E. The option to extend may only be exercised by Geron Corporation ;
provided that, Geron may exercise the option in its behalf if Geron Corporation
has subleased any or all of the demised premises and Landlord has consented to
such sublease. The option cannot be transferred nor can it be exercised by Geron
Corporation if Geron Corporation has assigned its rights under this Lease to a
third party.
ARTICLE 2 - RENT
Section 2.1. Tenant covenants and agrees to pay to Landlord without setoff,
recoupment, deduction or demand, of any nature whatsoever, base rent as follows:
for the first year during the demised term from the commencement of the demised
term at 200 Constitution Drive until the commencement of the demised term at 194
Constitution Drive the amount of Twelve Thousand Ninety Six Dollars ($12,096.00)
per month, and for the balance of the first year commencing with the
commencement of the demised term at 194 Constitution Drive the amount of Twenty
Thousand Seven Hundred Twenty Six and 40/100 Dollars ($20,726.40) per month; for
the second year during the demised term the amount of Two Hundred Fifty Eight
Thousand Six Hundred Sixty Five and 47/100 Dollars
- 2 -
<PAGE> 11
($258,665.47) per annum, payable in twelve (12) equal monthly installments
of Twenty One Thousand Five Hundred Fifty Five and 46/100 Dollars ($21,555.46);
for the third year of the demised term the amount of Two Hundred Sixty Nine
Thousand Twelve and 08/100 Dollars ($269,012.08) per annum, payable in twelve
(12) equal monthly installments of Twenty Two Thousand Four Hundred Seventeen
and 67/100 Dollars ($22,417.67); for the fourth year during the demised term the
amount of Two Hundred Seventy Nine Thousand Seven Hundred Seventy Two and
56/100 Dollars ($279,772.56) per annum, payable in twelve (12) equal monthly
installments of Twenty Three Thousand Three Hundred Fourteen and 38/100 Dollars
($23,314.38); and for the fifth year during the demised term the amount of Two
Hundred Ninety Thousand Nine Hundred Sixty Three and 46/100 Dollars
($290,963.46) per annum, payable in twelve (12) equal monthly installments of
Twenty Four Thousand Two Hundred Forty Six and 96/100 Dollars ($24,246.96). Base
rent shall be paid monthly in advance on the first (1st) day of each calendar
month.
Section 2.2. Base rent during the extended term, if any, shall be as
follows: for the sixth year during the extended term the amount of Three Hundred
Two Thousand Six Hundred Two Dollars ($302,602.00) per annum, payable in twelve
(12) equal monthly installments of Twenty Five Thousand Two Hundred Sixteen and
83/100 Dollars ($25,216.83); for the seventh year during the extended term the
amount of Three Hundred Fourteen Thousand Seven Hundred Six and 06/100 Dollars
($314,706.06) per annum, payable in twelve (12) equal monthly installments of
Twenty Six Thousand Two Hundred Twenty Five and 50/100 Dollars ($26,225.50); for
the eighth year during the extended term the amount of Three Hundred Twenty
Seven Thousand Two Hundred Ninety Four and 30/100 Dollars ($327,294.30) per
annum, payable in twelve (12) equal monthly installments of Twenty Seven
Thousand Two Hundred Seventy Four and 53/100 Dollars ($27,274.53); for the ninth
year during the extended term the amount of Three Hundred Forty Thousand Three
Hundred Eighty Six and 07/100 Dollars ($340,386.07) per annum, payable in twelve
(12) equal monthly installments of Twenty Eight Thousand Three Hundred Sixty
Five and 51/100 Dollars ($28,365.51); and for the tenth year during the extended
term the amount of Three Hundred Fifty Four Thousand One and 51/100 Dollars
($354,001.51) per annum, payable in twelve (12) equal monthly installments of
Twenty Nine Thousand Five Hundred and 13/100 Dollars ($29,500.13).
Section 2.3. All sums payable and all statements deliverable to Landlord by
Tenant under this Lease shall be paid and delivered at 60 Hillsdale Mall, San
Mateo, California 94403-3497, or at such other place as Landlord may from time
to time direct by notice to Tenant and all such sums shall be paid in lawful
money of the United States.
Section 2.4.A. Upon occupancy of the demised premises, Tenant shall pay to
the Landlord Twelve Thousand Ninety Six Dollars ($12,096.00) which shall be
applied by Landlord to the first base rent to become due and payable under this
Lease, and
- 3 -
<PAGE> 12
B. Upon occupancy of 200 Constitution, Tenant shall pay to Landlord Twelve
Thousand One Hundred Twenty Three and 48/100 Dollars ($12,123.48); and upon
occupancy of 194 Constitution, Tenant shall pay to Landlord an additional Twelve
Thousand One Hundred Twenty Three and 48/100 Dollars ($12,123.48), all of which
shall be held as a Security Deposit pursuant to the terms of Section 19.9.
Section 2.5. In addition to base rent under Section 2.1., all other
payments to be made under this Lease by Tenant to Landlord shall be deemed to be
and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the payment
thereof, all rent and additional rent shall be due and payable together with the
next succeeding installment of base rent; and Landlord shall have the same
remedies for failure to pay the same as for a nonpayment of base rent.
Section 2.6. Any amount due from Tenant to Landlord that is not paid when
due shall bear interest at the highest rate then permitted to be charged on late
payments under leases under California law; provided, however, the payment of
any such interest shall not excuse or cure the default upon which such interest
accrued. Tenant acknowledges and agrees that payment of such interest on late
payments is reasonable compensation to Landlord for the additional costs
incurred by Landlord caused by such late payment, including, but not limited to,
collection and administration expenses and the loss of the use of the money that
was late in payment.
Section 2.7. For the purpose of this Lease, a year shall be twelve (12)
calendar months, commencing with the first day of the first full calendar month
of the demised term and the succeeding anniversaries thereof. For any period
prior to the commencement of the first year or subsequent to the end of the last
year of the demised term, rent shall be prorated on the basis of the rental rate
then payable.
ARTICLE 3 - LANDLORD'S WORK - TENANT'S WORK
Section 3.1. Landlord represents, to the best of Landlord's knowledge, that
the building and the demised premises have been constructed in compliance with
all requirements of municipal, county, state, federal and other applicable
governmental authorities in effect and applicable to the building and the
demised premises as of the date this Lease is executed by Landlord and Tenant.
Landlord further represents that all basic mechanical (including heating,
ventilating and air conditioning), plumbing, sprinkler and electrical systems
shall be in good and operating condition as of the date the Tenant takes
possession of the demised
-4-
<PAGE> 13
premises. The foregoing representation shall not apply to any special
mechanical equipment, plumbing, sprinkler or electrical systems installed by the
prior tenant.
Pursuant to California Health and Safety Code section 25359.7(a), Landlord
has notified Tenant that hazardous substances have come to be located on the
demised premises as a result of the activities of the existing tenant of the
demised premises. Tenant's obligation to occupy, take possession of or accept
the demised premises is, at Tenant's option, subject to the following conditions
precedent:
(1) The "full closure" of that portion of the demised premises
known as 200 Constitution Drive on or before May 31, 1993, and the
"full closure" of that portion of the demised premises known as 194
Constitution Drive on or before October 31, 1993. The foregoing shall
be accomplished at no cost or expense to Tenant. "Full closure" shall
mean the written confirmation by applicable governmental authorities
that the demised premises have complied with applicable closure
requirements and that all decommissioning, testing and cleanup work
required by applicable governmental authorities as a condition of such
closure requirements have been met and satisfied including, without
limitation, those required by federal, California and local statutes,
regulations and ordinances and by the Menlo Park Fire Department and
the County of San Mateo. Landlord agrees to use its best efforts to
cause the existing tenant to perform all investigations and activities
necessary to obtain such full closure on or before the dates stated.
Written evidence of full closure shall be delivered to Tenant promptly
upon receipt by Landlord from the applicable governmental authorities.
If full closure is not obtained by February 1, 1993 with respect to 200
Constitution and August 1, 1993 with respect to 194 Constitution and if
Tenant does not, nevertheless, elect to occupy the 200 Constitution or
194 Constitution portion of the demised premises for which full closure
is not obtained then, in that event, the commencement of the demised
term and Tenant's obligation to pay rent shall, for such 200
Constitution portion or 194 Constitution portion, be delayed by one (1)
day for each day that full closure is delayed beyond such respective
commencement dates.
(2) Landlord shall deliver to Tenant on or before thirty (30) days
after full closure of, respectively, 200 Constitution Drive and 194
Constitution Drive, a written environmental site assessment prepared by
a licensed environmental consultant reasonably approved by Tenant (the
"ESA") stating that (or in the opinion of the consultant or to the best
of the consultant's knowledge or belief) no hazardous substance
unlawfully exists on or at the demised premises which would materially
interfere with Tenant's use and occupancy of the demised premises or
create a potential threat to human health. Landlord shall engage and
compensate the ESA consultant. Tenant approves Green Environment as the
environmental consultant.
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(3) If the ESA does not make the statement required by paragraph
(2), then Landlord may, at its option, perform or cause to be performed
and completed all further environmental assessments, investigations and
remediation work recommended in the ESA on or before sixty (60) days
after the ESA is delivered to Tenant. Such further assessments,
investigations and remediation work shall be accomplished at no cost
and expense to Tenant.
If any one or more of the conditions described above are not fully
satisifed within the time and in the manner specified, Tenant may, at its
option, at any time thereafter until such condition is fully satisfied, cancel
and terminate this Lease upon giving written notice of termination to Landlord
at least thirty (30) days prior to the effective date of termination specified
in such notice. In such event, this Lease shall terminate on the specified date
and Tenant shall, except as hereinbelow provided, have no further obligation or
liability to Landlord whatsoever.
Landlord agrees at all times to protect, indemnify, defend and hold
harmless Tenant from and against any and all claims, liabilities, damages,
costs, fines, penalties and expenses, including attorneys' fees, arising
directly or indirectly from or in connection with the condition and/or operation
of the demised premises on or before the date Tenant takes possession of the
demised premises.
Except as hereinabove provided, Tenant's possession of the demised premises
shall establish that the demised premises are in satisfactory condition at the
time of Tenant's possession except for latent defects. Tenant's taking
possession of the demised premises and acceptance shall not constitute a waiver
of any representation or requirement set forth in this Section or any defect in
regard to the mechanical, electrical, plumbing, sprinkler or other building
systems. In the event that Tenant has occupied the 200 Constitution portion of
the demised premises and Landlord has paid a portion of the Tenant Improvement
allowance to Tenant pursuant to the terms of Section 3.2.B. below and Tenant
shall thereafter terminate this Lease then, in that event, Tenant shall repay to
Landlord the amount of the Tenant Improvement allowance previously paid to
Tenant.
Section 3.2.A. Tenant shall provide certain leasehold improvements ("Tenant
Improvements") to be made to the demised premises in accordance with plans and
specifications therefor (the "Plans") to be prepared under the direction of a
licensed professional architect acceptable to Landlord and Tenant. Such plans,
once approved by Landlord and Tenant, shall be made a part hereof as
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Exhibit "C". Landlord's approval of the Plans shall not be unreasonably
withheld. Tenant shall have the right to make changes in the Plans from time to
time provided such changes are approved by Landlord, such approval not to be
unreasonably withheld or delayed.
B. Landlord shall contribute as an allowance toward the cost of the Tenant
Improvements an amount equal to the lesser of (a) the actual cost of the Tenant
Improvements or (b) Fifty One Thousand Eight Hundred Sixteen Dollars
($51,816.00) (i.e., Three Dollars ($3.00) per square foot [17,272 sq. ft. x
$3.00 = $51,816.00]) on the following terms and conditions:
(i) completion of the Tenant Improvements in or to the demised premises
required by the Plans to be made by Tenant;
(ii) acquisition by Tenant and receipt of a copy by Landlord of a
certificate of occupancy (or other governmental authorization to occupy the
demised premises) for the demised premises properly issued by the governmental
body having jurisdiction thereof;
(iii) receipt by Landlord of a statement from Tenant's architect certifying
that the demised premises have been constructed in complete compliance with the
Plans;
(iv) receipt by Landlord of paid invoices, cancelled checks, contracts and
other appropriate documentation to support and substantiate the cost of the
Tenant Improvements; and
(v) the allowance shall be paid to Tenant within thirty (30) days after
Tenant occupies the demised premises, provided the conditions contained in (i)
through (iv) hereinabove have been met.
Notwithstanding the foregoing, Landlord and Tenant agree that since
Tenant's occupancy is to occur in phases that Landlord will contribute up to
$30,000.00 of the allowance towards Tenant's cost of installing Tenant
Improvements in the 200 Constitution Drive portion of the demised premises
provided that Tenant has complied with the conditions set forth in (i) through
(iv) above with respect to such portion of the demised premises.
As used herein, the term "cost" shall be deemed to mean the actual hard
costs of construction, including contractor fees, incurred for the Tenant
Improvements to be installed in the demised premises, and the following costs
are specifically excluded therefrom: the cost of Tenant's personal property and
removable trade fixtures, inventory, and all soft costs, including without
limitation, architect's fees, fees for permits, consulting engineer costs,
inspection fees, fees of testing services and fees for processing and completing
changes to Tenant's drawings and specifications.
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C. To the extent that the final Tenant Improvement cost is less than Three
Dollars ($3.00) per square foot, the initial base rent as reserved under Section
2.1. shall be decreased at the rate of 2.2 cents ($0.022) per square foot per
month for each One Dollar ($1.00) per square foot of cost reduction, (e.g., if
the Tenant Improvement cost is Two Dollars ($2.00) per square foot [i.e.,
$34,544.00] then the initial base rent shall be decreased by $379.98 per month
[i.e., 17,172 square feet times $0.022 per month]). Subsequent increases to base
rent shall be recalculated also to reflect the agreed upon Four Percent (4%) per
annum increases in the reduced base rent pursuant to this Section 3.2.C. . The
rent reduction, if any, shall not be determined or implemented until after
Tenant has completed all of the Tenant Improvements in the demised premises
(both to 200 Constitution and 194 Constitution) and has occupied all of the
demised premises.
Section 3.3. Landlord and Tenant acknowledge that the demised premises are
currently improved with tenant improvements which shall (subject to the work to
be completed hereunder and the existing tenant's rights to remove trade
fixtures, equipment and other personal property) remain in the demised premises
upon the existing tenant's surrender of the existing demised premises. Tenant's
lease of the demised premises includes the full use and benefit of the existing
tenant improvements and Landlord and Tenant acknowledge that the base rent
reflects the fact that the demised premises are improved. Landlord shall be
responsible for the repair of any damage caused to the demised premises and/or
to existing tenant improvements arising out of the existing tenant's vacating
the demised premises and for delivery of the demised premises in the condition
described in Section 3.1. Landlord makes no representations as to the operating
condition of any of the tenant improvements or other equipment to be left
behind, including any tenant installed mechanical systems or equipment.
ARTICLE 4 - STREETS
Section 4.1. Tenant will endeavor to cause require employees, and to direct
customers and other persons visiting Tenant, to park in the parking area
provided for the demised premises described in Article 18 and as shown on
Exhibit "A-1" and to allow Landlord to post the streets for no parking.
ARTICLE 5 - UTILITY SERVICES
Section 5.1. Landlord has, at its own cost and expense, secured the
installation of water, gas, sanitary sewers and electrical services to the
demised premises, made all necessary connections thereof to the building, and
paid all government fees and costs associated with said connections so that the
foregoing utility services are provided to the demised premises. Tenant shall
pay all meter or service charges made by public utilities companies and shall
pay for the water, gas and/or electricity used on the demised premises and sewer
use fees and charges whether ad valorum or not and any so called "sewer
connection charges" based
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on increased wastewater discharge from the demised premises exclusively.
Tenant shall maintain such connections of utilities to the building.
Section 5.2. Landlord shall not be liable to Tenant for the failure of any
utility services unless caused by Landlord's deliberate act or omission provided
that, in the event utility services to the demised premises are interrupted on
account of Landlord's negligence, and in the further event Tenant as a result
thereof cannot operate Tenant's business, then the base rent and additional rent
called for under this Lease shall abate until such time as utility service is
restored. Notwithstanding the foregoing, if utility serves to the demised
premises are interrupted on account of Landlord's negligence and such
interruption continues for more than 10 consecutive business days, Tenant shall
have the right to terminate this Lease, which termination shall be effective as
of the date Tenant's written notice is delivered to Landlord.
ARTICLE 6 - ASSIGNMENT - CHANGE OF OWNERSHIP
Section 6.1.
A. Except as otherwise provided herein, Tenant shall not, by operation of
law or otherwise, transfer, assign, sublet, enter into license or concession
agreements, change ownership, mortgage or hypothecate this Lease or the Tenant's
interest in and to the demised premises without first procuring the written
consent of Landlord. Any attempted transfer, assignment, subletting, license or
concession agreement, change of ownership, mortgage or hypothecation without
Landlord's written consent shall be void and confer no rights upon any third
person. Landlord's consent to a proposed sublease shall not be unreasonably
withheld or delayed. Landlord's consent to a proposed assignment shall not be
unreasonably withheld or delayed provided that the proposed assignee shall have:
(i) a net worth, at the time of the assignment or sublease, determined in
accordance with good accounting principles, equal to or in excess of the net
worth of Tenant at the date of the Lease; (ii) been active in its current
business for a minimum of three (3) years immediately prior to the assignment or
sublease; and (iii) a good reputation in the business community; provided
further that Tenant shall give Landlord not less than sixty (60) days notice
prior to the effective date of any such assignment or sublease, and Landlord may
at its election by giving written notice (the "Recapture Notice") to Tenant
within fifteen (15) days after receipt of Tenant's notice, notify Tenant that
Landlord intends to recapture the demised premises and terminate this Lease. If
Tenant notifies Landlord in writing, within ten (10) days after the giving of
the Recapture Notice, that Tenant withdraws Tenant's notice, then Tenant shall
be deemed to have withdrawn Tenant's request for Landlord's consent to the
proposed transfer, assignment, sublease, license, concession agreement, mortgage
or hypothecation and Landlord shall have no right to recapture the demised
premises and/or terminate this Lease pursuant to this Section. If Tenant fails
to notify Landlord in writing, within ten (10) days after the giving of the
Recapture Notice, that Tenant withdraws Tenant's notice or if Tenant notifies
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Landlord, in writing, within ten (10) days after the giving of the Recapture
Notice that Tenant does not withdraw Tenant's notice, then if and to the extent
permitted by applicable law, this Lease shall automatically be deemed terminated
as of the commencement or effective dates stated in Tenant's notice for the
proposed transfer, assignment, sublease, license, concession agreement, mortgage
or hypothecation, and Tenant shall surrender possession of the demised premises
as of such date. Nothing herein contained shall relieve Tenant and any Guarantor
from its covenants and obligations for the demised term. Tenant agrees to
reimburse Landlord for Landlord's reasonable outside attorneys' fees (not to
exceed $1,000.00 ) incurred in conjunction with the processing and documentation
of any such requested transfer, assignment, subletting, licensing or concession
agreement, change of ownership, mortgage or hypothecation of this Lease or
Tenant's interest in and to the demised premises. If Landlord consents to any
assignment or sublease pursuant to this Article, Tenant shall pay Landlord, as
additional rent:
(i) in the case of each and every assignment, an amount equal to
ALL monies, property, and other consideration of every kind whatsoever
paid or payable to Tenant by the assignee for such assignment of the
leasehold estate and for all Included Property, if any, of Tenant
transferred to the assignee as part of the transaction, less the
unamortized cost of the Included Property, if any, determined on a
straight-line basis over the period of the remaining demised term as
such unamortized cost is certified to Landlord by Tenant's independent
certified public accountant (at Tenant's expense). "Included Property"
means all property of Tenant transferred to the assignee as part of the
assignment of the leasehold estate (including, but not limited to,
fixtures, leasehold improvements installed at Tenant's expense,
furniture, equipment, and furnishings); and
(ii) in the case of each and every sublease, ALL rent, and/or other
monies, property, and consideration of every kind whatsoever paid or
payable to Tenant by the subtenant under the sublease, LESS all
Tenant's reasonable costs actually incurred of subleasing such space,
including, without limitation, broker's commissions, and base rent and
additional rent under this Lease accruing during the term of the
sublease in respect of the subleased space as and when such rent,
monies, property and consideration is received by Tenant as sublessor.
B. Each transfer, assignment, subletting, license, concession agreement,
mortgage and hypothecation to which there has been consent shall be by an
instrument in writing in form satisfactory to Landlord, and shall be executed by
the transferor, assignor, sublessor, licensor, concessionaire, hypothecator or
mortgagor and the transferee, assignee, sublessee, licensee, concessionaire or
mortgagee in each instance, as the case may be; and each transferee, assignee,
sublessee, licensee, concessionaire or mortgagee shall agree in writing for the
benefit of Landlord herein to assume, to be bound by, and to perform the terms,
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covenants and conditions of this Lease to be done, kept and performed by Tenant,
including the payment of all amounts due or to become due under this Lease
directly to Landlord. One (1) executed copy of such written instrument shall be
delivered to Landlord. Failure to first obtain in writing Landlord's consent or
failure to comply with the provisions of this Article shall operate to prevent
any such transfer, assignment, subletting, license, concession agreement,
mortgage, or hypothecation from becoming effective.
C. If Tenant is a corporation the shares of which are not
actively traded upon a stock exchange or in the over-the-counter market, a
transfer or series of transfers during any consecutive 12-month period during
the demised term of this Lease, whereby fifty percent (50%) or more of the
issued and outstanding shares of such corporation are transferred (but excepting
transfers upon deaths of individual stockholders or transfers to affiliates or
partners of entity stockholders ) from a person or persons or entities who were
beneficial owners thereof at the time of the execution of this Lease to persons
or entities who were not beneficial owners of shares of the corporation at the
time of the execution of this Lease shall be deemed an assignment of this Lease.
Notwithstanding anything in this Section 6.1.C. or this Lease to the contrary,
the sale by Tenant of any of the shares of Tenant through a public offering or
private placement shall not be deemed a transfer or assignment of this Lease or
a subletting, license, concession agreement, mortgage or hypothecation and
Landlord's consent shall not be necessary.
Notwithstanding anything in this Article 6 to the contrary,
Tenant shall have the right, without Landlord's consent, to enter into an
assignment of this Lease or a transfer of rights hereunder
(a) to any corporation or entity that (i) controls or is
controlled by or is under common control with Tenant, or (ii) acquires all or
substantially all of Tenant's assets, if such corporation or entity assumes in
writing all of Tenant's obligations under this Lease and shall have a tangible
net worth immediately after the assignment or transfer of rights which equals or
exceeds Tenant's tangible net worth immediately prior thereto; or (b) as a
result of a merger or reorganization, as defined in Section 181(a) of the
California General Corporation Law in which Tenant is a constituent corporation,
if the surviving corporation shall have a tangible net worth immediately after
such merger or reorganization which equals or exceeds Tenant's tangible net
worth immediately prior thereto; or (c) as a result of an exchange
reorganization, as defined in Section 181(b) of the California General
Corporation Law, which shares of Tenant are acquired by another corporation, the
Tenant shall have a tangible net worth immediately after such exchange
reorganization which equals or exceeds Tenant's tangible net worth immediately
prior thereto.
D. Landlord's rights to assign this Lease are and shall remain unqualified.
Upon any sale of the demised premises and provided the assignee assumes all
obligations under this Lease, Landlord shall thereupon be entirely released of
all obligations of Landlord hereunder and shall not be subject to any liability
resulting
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from any act or omission or event occurring after such sale; provided
that, if Tenant is not in default, Landlord shall transfer Tenant's entire
Security Deposit for the benefit of such assignee.
E. The consent of Landlord to any transfer, assignment, sublease, license
or concession agreement, change in ownership, mortgage or hypothecation of this
Lease is not and shall not operate as a consent to any future or further
transfer, assignment, sublease, license or concession agreement, change in
ownership, mortgage or hypothecation, and Landlord specifically reserves the
right to refuse to grant any such consents except as otherwise provided in this
Section 6.1.
ARTICLE 7 - TENANT'S ADDITIONAL AGREEMENTS
Section 7.1. Landlord acknowledges that it is not the intent of this
Article 7 to prohibit Tenant from operating its business as described in Article
8 of this Lease or to unreasonably interfere with the operation of Tenant's
business and Tenant may operate its business according to the custom of Tenant's
industry provided Tenant complies with the terms of the Lease. Tenant agrees at
all times during the demised term to: (A) Keep the demised premises in a neat
and clean condition. (B) Promptly remove all waste, garbage or refuse from the
demised premises. (C) Promptly comply with all laws and ordinances and all rules
and regulations of duly constituted governmental authorities affecting the
demised premises, and the cleanliness, safety, use and occupation thereof, but
this clause (C) shall not be construed to require Tenant to comply with any such
laws, ordinances, rules or regulations which require structural changes in the
building and/or the demised premises unless the same are made necessary by act
or work performed by Tenant or the nature of Tenant's business. (D) Prevent the
escape from the demised premises of all fumes, odors and other noxious
substances which may constitute a nuisance or interfere with other tenants.
Section 7.2. Tenant agrees that it will not at any time during the demised
term without first obtaining the Landlord's written consent: (A) Conduct or
permit any fire, bankruptcy or auction sale in the demised premises. (B) Place
on the exterior walls (including both interior and exterior surfaces of windows
and doors), the roof of any buildings or any other part of the demised premises,
any sign, symbol, advertisement, neon light, other light or other object or
thing visible to public view outside of the demised premises. (C) Change the
exterior color of the demised premises or of the building in which the same are
situate, or any part thereof, or the color, size, location or composition of any
sign, symbol or advertisement that may have been approved by Landlord. (D) Park,
operate, load or unload, any truck or other delivery vehicle on any
place other than the loading area designated for Tenant's use. (E) Use the
plumbing facilities for any purpose other than that for which they were
constructed or unlawfully dispose of any foreign substance therein. (F) Install
any exterior lighting or plumbing facilities, shades or awnings, amplifiers or
similar devices, or use any advertising medium which may be heard or experienced
outside the demised premises, such as loudspeakers, phonographs, or radio
broadcasts. (G) Deface any portion of the
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building or improvements in which the demised premises are located, normal usage
excepted. In the event any portion of the building is defaced or damaged by
Tenant (normal wear and tear excepted given Tenant's permitted usage of the
demised premises), Tenant agrees to repair such damage. (H) Permit any rubbish
or garbage to accumulate on the demised premises, or any part thereof, unless
confined in metal containers so located as not to be visible to members of the
public. (I) Install, maintain or operate any sign except as approved in writing
by Landlord and in accordance with applicable governmental restrictions and
approvals. Tenant shall be entitled to one building sign (which may be installed
on Tenant's occupancy of the 200 Constitutuion Drive portion of the demised
premises), and to the existing monument sign for the demised premises. (J) Store
materials, supplies, equipment, finished products, raw materials or articles of
any nature outside of the demised premises, except for an outdoor blockhouse or
other structure in compliance with local ordinances and subject to Landlord's
approval. (K) Use the demised premises for retail or residential purposes.
Section 7.3. Tenant agrees that it will not at any time during the demised
term: (A) Perform any act or carry on any practice which may injure the demised
premises. (B) Burn any trash in or about the demised premises. (C) Keep or
display any merchandise or other object on or otherwise obstruct any sidewalks,
walkways or areaways. (D) Use or permit the use of any portion of the demised
premises as living quarters, sleeping apartments, lodging rooms, or for any
unlawful purpose. (E) Use or permit the demised premises to be used for any
purpose which is or shall not then be allowed under the Zoning Ordinance of the
City of Menlo Park, California, in that area.
Section 7.4. Except as provided in Section 7.1. and subject to Section
3.1., Tenant shall, at its expense, comply with all applicable laws,
regulations, rules and orders, regardless of when they become or became
effective, including, without limitation, those relating to health, safety,
noise, environmental protection, waste disposal, and water and air quality, and
furnish satisfactory evidence of such compliance upon reasonable request of
Landlord.
Should any illegal discharge, leakage, spillage, emission or pollution of
any type occur upon or from the demised premises due to Tenant's use and
occupancy thereof, Tenant, at its expense, shall be obligated to remedy the same
to the satisfaction of the governmental body having jurisdiction thereover.
Tenant agrees to indemnify, hold harmless, and defend Landlord against all
liability, cost, and expense (including without limitation any fines, penalties,
judgments, litigation costs, and attorneys' fees) incurred by Landlord as a
result of Tenant's breach of this section, or as a result of any such discharge,
leakage, spillage, emission, or pollution, regardless of whether such liability,
cost, or expense arises during or after the demised term, unless such liability,
cost or expense is caused by the negligence of Landlord.
Tenant shall pay all amounts due Landlord under this section, as additional
rent, within sixty (60) days after any such amounts become due.
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ARTICLE 8 - USE OF PREMISES
Section 8.1. Tenant shall use the demised premises solely for general
office, biomedical research and development, and for no other purposes without
Landlord's written consent.
ARTICLE 9 - INDEMNITY AND PUBLIC LIABILITY INSURANCE
Section 9.1.A. Tenant agrees to indemnify and save harmless Landlord from
and against all claims arising from any act, omission or negligence of Tenant,
or its contractors, licensees, agents, servants, invitees or employees, or
arising from any accident, injury or damage caused to any person, or to the
property of any person occurring during the demised term in or about the demised
premises, the sidewalks (if any) adjoining the same arising from Tenant's use of
the demised premises or the conduct of Tenant's business therefrom, and from and
against all costs, expenses and liabilities incurred in or in connection with
any such claim or proceeding brought thereon, including, but not limited to,
reasonable attorneys' fees and court costs, except to the extent such claims
result from Landlord's negligent acts or willful misconduct.
B. Landlord agrees to indemnify and save harmless Tenant from and against
all claims arising from any act, omission or negligence of Landlord, or its
contractors, licensees, agents, servants, invitees or employees, and from and
against all costs, expenses and liabilities incurred in or in connection with
any such claim or proceeding brought thereon, including, but not limited to,
reasonable attorneys' fees and court costs, except to the extent such claims
result from Tenant's negligent acts or willful misconduct.
Section 9.2. Tenant agrees to maintain in full force during the demised
term a policy of public liability and property damage insurance under which
Landlord (and such other persons, firms or corporations as are designated by
Landlord and are properly includible as additional insureds under the terms of
any such policies of insurance) and Tenant are named as insureds. All public
liability and property damage policies shall contain a provision that Landlord,
although named as an insured, shall nevertheless be entitled to recovery under
said policies for any loss occasioned to it, its servants, agents and employees,
by reason of the negligence of Tenant. Each such policy shall be issued by an
insurance carrier licensed to do business in the State of California with a
Best's rating of "A" or better and financial category "IX" or better, be
noncancelable with respect to the Landlord and Landlord's said designees without
twenty (20) days' written notice to the Landlord and Landlord's said designees,
and a duplicate original or certificate thereof shall be delivered to Landlord
prior to commencement of the demised term and thereafter thirty (30) days prior
to expiration of the term of each policy. The limits of liability of such
comprehensive general liability insurance shall be Two Million Dollars
($2,000,000.00) for injury or death to one or more persons and damage to
property, combined single limit. All public liability, property damage
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and other casualty policies shall be written as primary policies, not
contributing with and not in excess of coverage which Landlord may carry.
If after applicable periods of notice and cure Tenant shall not comply with
its covenants to maintain insurance made above, or if Tenant fails to provide
duplicate originals or certificates thereof to Landlord as is provided above,
Landlord may, but shall not be required to, obtain any such insurance; and if
Landlord does obtain any such insurance, Tenant shall, on demand, reimburse
Landlord for the premium for any such insurance.
Section 9.3. Except for Landlord's negligence and/or willful misconduct,
Tenant agrees to use and occupy the demised premises and to use all other
portions of the Business Park (shown on Exhibit "B" hereto) (which it is herein
given the right to use) at its own risk and hereby releases to the full extent
permitted by law the Landlord, and its agents, servants, contractors and
employees, from all claims and demands of every kind resulting from any
accident, damage or injury occurring therein. Landlord shall have no
responsibility or liability for any loss of or damage to fixtures or other
personal property of Tenant. The provisions of this Section shall apply during
the whole of the demised term.
ARTICLE 10 - FIRE INSURANCE AND CASUALTY
Section 10.1. If the demised premises should be damaged or destroyed during
the demised term by any casualty insurable under Landlord's standard fire and
extended coverage insurance policies, Landlord shall (except as hereinafter
provided and subject to Section 10.11) (a) restore the portion of the building
and/or demised premises so damaged or destroyed to the same condition as it was
in immediately before such destruction; (b) Landlord shall not be required to
restore alterations or improvements made by Tenant or Tenant's personal property
unless they are an integral part of the demised premises and specifically
covered by insurance proceeds received by Landlord, such excluded items being
the responsibility of Tenant to restore; and (c) such damage or destruction
shall not terminate this Lease. Landlord's obligation under this Section shall
in no event exceed either (A) the scope of the work done by Landlord in the
original construction of such building (including any work made necessary on
account of changes in applicable building codes), or (B) the proceeds of the
insurance policy Landlord has agreed to keep on the building and the demised
premises insuring against loss or damage by such fire and extended coverage
insurance, with a full replacement cost endorsement, if reasonably obtainable
from responsible insurance companies licensed to do business in California,
unless Landlord nevertheless elects to repair and/or rebuild the building and
the demised premises. Landlord may carry any deductible under said insurance
Landlord elects; provided that Landlord's obligation to repair will include the
amount of said deductible and
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Tenant agrees to reimburse Landlord for any such deductible used for repair up
to the amount of $10,000.00. Tenant shall in the event of any such damage or
destruction, unless this Lease shall be terminated as hereinafter provided, be
responsible for replacing or repairing all exterior signs, trade fixtures,
equipment, display cases, and other installations originally installed by the
Tenant. Tenant shall have no interest in the proceeds of any insurance carried
by Landlord.
Section 10.2. Tenant's base rent shall be abated proportionately during any
period in which, by reason of any such damage or destruction, the building is
rendered partially or totally untenantable. Such abatement shall continue for
the period commencing with such destruction or damage and ending with the
substantial completion by the Landlord of such work or repair and/or
reconstruction as Landlord is obligated to do.
Section 10.3. If the building or o the demised premises should be damaged
or destroyed to the extent of 33-1/3% or more of the then monetary value thereof
or if Landlord determines that the cost of restoration exceeds the amount of
insurance proceeds relating to such destruction actually recovered by Landlord
by an event described in Section 10.1., then Landlord may terminate this Lease
by written notice to Tenant given within thirty (30) days of such damage or
destruction.
If Landlord does not elect to terminate this Lease then Landlord shall
repair and/or rebuild the same as provided in Section 10.1. If such damage or
destruction occurs and this Lease is not so terminated, this Lease shall remain
in full force and effect and the parties waive the provisions of any law to the
contrary. The Landlord's obligation under this Section shall in no event exceed
the scope of the work to be done by the Landlord in the original construction of
said building and the demised premises (including any work made necessary on
account of changes in applicable building codes).
Section 10.5. Landlord shall maintain and Tenant agrees in addition to any
rent provided for herein to pay to the Landlord the cost of the fire and
extended coverage insurance policy carried by Landlord on the demised premises
during the entire demised term or any renewal or extension thereof. This Section
expressly permits the Landlord to carry standard fire and extended coverage
policies to the extent of one hundred percent (100%) of the insurable value and
Landlord agrees that said policies will, if available, carry full replacement
cost endorsement.
Section 10.6. During the demised term, Tenant shall carry, at its expense,
insurance against loss and damage by fire with an "All Risk" endorsement for the
full insurable value of Tenant's trade fixtures, furnishings, operating
equipment and personal property, including wall coverings, carpeting and drapes,
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if installed by Tenant. Landlord and Landlord's mortgagee shall be named as
additional insureds under said policy which shall be noncancelable with respect
to Landlord and Landlord's mortgagee without twenty (20) days' prior written
notice. A certificate evidencing such coverage shall be delivered to Landlord on
or before the commencement of the demised term and thereafter thirty (30) days
prior to the expiration of the term of such policy. Such insurance shall be
written as a primary policy, not contributing with and not in excess of coverage
Landlord may carry. If Tenant shall not comply with its covenants to maintain
said insurance, or if Tenant fails to provide a certificate thereof to Landlord
after the applicable period of notice and cure, Landlord may, but shall not be
required to, obtain any such insurance; and if Landlord does obtain any such
insurance, Tenant shall, on demand, reimburse Landlord for the premium for any
such insurance.
Section 10.7. In the event the demised premises or the building shall be
damaged as a result of any flood, earthquake, act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's fire and extended coverage insurance, to any extent
whatsoever, Landlord may within ninety (90) days following the date of such
damage, commence repair, reconstruction or restoration of the demised premises
or the building and prosecute the same diligently to completion, in which event
this Lease shall continue in full force and effect, or within said ninety (90)
day period elect not to so repair, reconstruct or restore the demised premises
or the building, in which event this Lease shall cease and terminate. In either
such event Landlord shall give Tenant written notice of its intention within
thirty (30) days of any such damage or casualty.
Section 10.8. Upon any termination of this Lease under the provisions of
this Article 10, the rent shall be adjusted and shall terminate as of the date
of such termination and the parties shall be released without further obligation
to the other party upon the surrender of possession of the demised premises to
Landlord, except for items that have been theretofore accrued and are then
unpaid and except for any prepaid rent and security deposits, and except for
obligations that are designated as surviving such termination.
Section 10.9. Notwithstanding anything in this Article 10 or elsewhere in
this Lease to the contrary, Landlord may maintain any insurance on the demised
premises that Landlord deems necessary or advisable, including, but not limited
to, any rental insurance, owner's protective liability insurance or any
insurance required by any mortgagee of Landlord; and Landlord may include the
amount of the premiums for such insurance in the total of the insurance premiums
which Tenant is required to pay under the terms hereof.
Section 10.10. Notwithstanding anything to the contrary in the Lease, the
parties hereto release each other and their respective agents, employees,
officers, independent contractors, licensees, invitees, customers of, or
retained by, either party, successors, assignees and subtenants from all claims
for damage, loss or injury to the building, the demised premises, and to the
fixtures, alterations and improvements of either Landlord or Tenant in or on the
building to the extent such
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damage, loss or injury is covered by any insurance policy carried, or required
to be carried, by Landlord and Tenant and in force at the time of such damage.
Landlord and Tenant shall cause each insurance policy taken by it pursuant to
this Lease to provide that the insurance company waivers all right of recovery
by way of subrogration against Landlord or Tenant in connection with any damage,
loss or injury covered by such policy.
Section 10.11. Notwithstanding any other provision of this Lease to the
contrary, in the event of any casualty to the building or the demised premises
(insured or uninsured) which Landlord is required, or otherwise elects,
hereunder to repair, which casualty substantially interferes with Tenant's
business on the demised premises and the extent of which casualty is such that
it would take, in Landlord's reasonable opinion, longer than one hundred fifty
(150) days to complete the necessary repairs or reconstruction thereof as
indicated in a notice from Landlord given to Tenant within thirty (30) days of
any damage or destruction, then, in that event, Tenant may terminate this Lease
by written notice to Landlord given within twenty (20) days after the date of
Landlord's notice to Tenant. If Tenant does not elect to terminate the Lease
then Landlord shall commence the necessary repair or reconstruction and
diligently prosecute the same to completion as hereinabove provided.
ARTICLE 11 - REPAIR
Section 11.1. Landlord agrees, at Landlord's sole expense, to repair
structural portions of the building (including, without limitation, the
structural foundation, structural exterior and bearing walls and structural
portions of the roof) on the demised premises throughout the life of the Lease.
Structural defects and maintenance shall not be deemed to include minor cracks
or fissures in walls or floors which do not affect the structural integrity of
such walls or floors, nor the requirement of painting or caulking such cracks or
fissures. Landlord shall also, at Landlord's expense, repair damage to the
building and demised premises (i) caused by the negligence or willful misconduct
of Landlord, its employees, agents, invitees, or contractors to the extent not
covered by insurance (exclusive of any deductibles referenced in Section 10.1.)
carried, or required to be carried, by Landlord or Tenant hereunder or (ii)
resulting from a latent defect in the design or construction of the building and
occurring during the first year of the demised term.
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Section 11.2. Tenant agrees during the demised term or any extension
thereof to maintain the interior of the building on the demised premises, and
every part thereof, except as to work to be performed by Landlord under Sections
11.1. and 11.3. Tenant further agrees to clean, inside and out, all of the glass
on the exterior of the building which is part of the demised premises. If Tenant
should fail to faithfully perform its maintenance obligations hereunder then
Landlord shall, upon having given notice to Tenant of the need for said
maintenance and after applicable cure periods, have the right to perform, or
cause to be performed, said maintenance and Tenant shall on demand reimburse
Landlord for Landlord's costs of providing such maintenance.
Section 11.3 Subject to Landlord's obligations pursuant to Section 11.1,
Landlord shall provide the following services and Tenant shall, in addition to
all other payments required to be made under other provisions of this Lease
within thirty (30) days of Tenant's receipt of Landlord's notice thereof,
reimburse Landlord for Landlord's gross costs of: (i) maintaining, repairing and
replacing the roof (subject to the provisions of Section 11.5); (ii) painting,
maintaining and repairing the exterior of the building; (iii) maintaining,
repairing and replacing the elevator and elevator equipment room (if any); (iv)
maintenance and repair associated with the mechanical and electrical rooms; (v)
maintenance and repair of the trash enclosure utilized in connection with the
building; (vi) maintenance, repair and replacement of the glass on the exterior
of the building and (vii) any other maintenance and repair other than that which
Landlord is required to perform at Landlord's expense per Section 11.1. Tenant
shall also, within thirty (30) days of Tenant's receipt of Landlord's notice
thereof, reimburse Landlord for Landlord's gross costs of maintaining, repairing
and replacing the heating and air conditioning equipment serving the demised
premises, whether furnished by Landlord or Tenant (subject to the provisions of
Section 11.5). Landlord's said gross costs as used in this Section 11.3. shall
include all reasonable costs and expenses of every kind or nature incurred by
Landlord in the performance of such maintenance, repair or replacements which
costs and expenses shall be competitive with the cost of comparable maintenance,
repair or replacements performed elsewhere in the City of Menlo Park for
buildings and demised premises comparable to the building and demised premises
leased to Tenant hereunder. Tenant shall have the right to inspect, make copies
of and audit, upon prior written notice and not more than once during any year,
Landlord's books and records with respect to such costs and expenses.
Section 11.4. If during the term of this Lease Landlord's insurance carrier
requires the installation of an Ansul Fire Control System or its equivalent, or
any fire detection device, because of the nature of the particular activities
being carried on by Tenant in the demised premises, then said system or device
shall be installed at the sole cost of the Tenant within the time specified in
writing by Landlord's insurance carrier.
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Section 11.5. Notwithstanding the provisions of Section 11.3. and Section
18.3. hereof, Tenant's obligation to reimburse Landlord for costs associated
with the replacement of (as opposed to repairs and maintenance) the roof, the
heating, ventilating and air-conditioning units furnished by Landlord, the paved
parking areas or other hardscape areas in the Parking and Accommodation Areas
described in Article 18 or the plumbing and electrical systems serving the
demised premises and located under the slab of the building or underground,
during the demised term, and any option period, shall be limited to a
proportionate share of such replacement costs calculated by multiplying the cost
of any such replacement by a fraction, the numerator of which is the number of
years (both elapsed and not elapsed) in the demised term, including any option
period which has been (or is subsequently) exercised by Tenant, and the
denominator of which is the estimated useful life of the replacement based on
generally accepted accounting principles. The foregoing limitation shall not
apply to any costs for replacements made necessary on account of: (i) negligent
acts or omissions of Tenant or its agents, employees invitees or contractors;
(ii) the particular nature of Tenant's business or operations; or (iii)
equipment furnished by Tenant and maintained by Landlord.
Section 11.6. Tenant shall have the right, but not the obligation, after
applicable periods of notice and cure pursuant to Section 13.2., to cure
Landlord's failure to maintain and repair the building and the demised premises
as provided in Section 11.1. and deduct from rent (not exceeding one month's
rent) its reasonable costs incurred in curing Landlord's failure. If, by reason
of emergency, repairs become necessary which by the terms of this Lease are the
responsibility of Landlord, Tenant may make such repairs which in the reasonable
opinion of Tenant are necessary for the preservation of the demised premises, or
for the safety or health of the occupants of the demised premises; provided,
however, that Tenant shall use its best efforts to inform the Landlord before
proceeding with such repairs.
ARTICLE 12 - FIXTURES & ALTERATIONS
Section 12.1. All trade fixtures owned by Tenant and installed in the
demised premises shall remain the property of Tenant and may be removed from
time to time and shall be removed at the expiration of the demised term. Tenant
shall repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the last day of
the demised term, all such fixtures shall become the property of Landlord unless
Landlord elects to require their removal which election shall be contained in a
written notice to Tenant given at lease thirty (30) days prior to the expiration
of the demised term, in which case Tenant shall promptly remove them and restore
the demised premises to its condition prior to such removal. If Landlord elects
to have Tenant remove such fixtures pursuant to this Section, and Tenant fails
to remove such fixtures, Landlord may, at Landlord's sole discretion, store such
fixtures at Tenant's expense.
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Section 12.2. Tenant shall not make any alterations, additions or
improvements in or to the demised premises or the building without submitting
plans and specifications therefor for the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed and, if granted, may
be subject to such reasonable conditions as Landlord may deem appropriate;
provided that, Landlord's consent shall not be required where the cost of the
work is less than $10,000.00, for non-structural interior alterations, additions
or improvements which do not materially affect the sprinkler system and/or
mechanical/electrical system or require removal or modification of improvements
installed by Landlord, and provided further that Tenant shall notify Landlord of
any such alterations, additions or improvements, and provide plans or other
suitable description thereof. Any such alterations, additions or improvements
consented to by Landlord shall be made at Tenant's sole cost and expense in
accordance with the plans and specifications therefor and Tenant agrees to
provide Landlord with an "as built" set of plans and specifications after any
such work is completed. Tenant shall secure any and all governmental permits,
approvals or authorizations required in connection with any such work, and shall
hold Landlord harmless from any and all liability, costs, damages, expenses
(including attorneys' fees) and any and all liens resulting therefrom. All
alterations, decorations, additions and improvements (and expressly including
all light fixtures and floor coverings installed by Tenant), except furniture,
removable paneling and partitions, wall fixtures and trade fixtures, security
and computer installations, personal property, appliances and equipment which do
not become permanently affixed to the demised premises, shall be deemed to
belong to Tenant, but shall be deemed to have been attached to the demised
premises or the building and to have become the property of Landlord upon the
termination of the demised term. Upon the expiration or sooner termination of
the demised term hereof, Tenant shall, upon written demand by Landlord, at
Tenant's sole cost and expense, forthwith remove any alterations, decorations,
additions or improvements made by Tenant, designated by Landlord to be removed
at the time Landlord gave Tenant written notice of Landlord's approval of such
alterations, additions or improvements and Tenant shall forthwith at its sole
cost and expense repair any damage to the demised premises or the building
caused by such removal.
ARTICLE 13 - REMEDIES
Section 13.1. Should Tenant default in the performance of any of its
obligations under this Lease with reference to the payment of rent and such
default continue for five (5) days after the date such payment is due, or should
Tenant default in the performance of any other obligations under this Lease and
such default continue for thirty (30) days after receipt of written notice from
Landlord specifying such default or beyond the time reasonably necessary to cure
if such default is of a nature to require more than thirty (30) days to remedy,
then, in addition to all other rights and remedies Landlord may have under this
Lease or under applicable law, Landlord shall have the following rights and
remedies:
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(1) The Landlord has the remedy described in California Civil Code Section
1951.4 (Landlord may continue the lease in effect after Tenant's breach and
abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain liable
to perform all of its obligations under this Lease and Landlord may enforce all
of Landlord's rights and remedies, including the right to recover rent as it
falls due. If Tenant abandons the demised premises or fails to maintain and
protect the same as herein provided, Landlord shall have the right to do all
things necessary or appropriate to maintain, preserve and protect the demised
premises, including the reasonable provision of security, and may do all things
appropriate to a re-letting of the demised premises, and none of said acts shall
be deemed to terminate Tenant's right of possession, unless Landlord elects to
terminate the same by written notice to Tenant. Tenant agrees to reimburse
Landlord on demand for all amounts reasonably expended by Landlord in
maintaining, preserving and protecting the demised premises, together with
interest on the amounts expended from time to time at the maximum legal rate.
Landlord shall also have the right to repair, remodel and renovate the demised
premises at the expense of Tenant and as deemed reasonably necessary by
Landlord.
(2) Landlord shall have the right to terminate Tenant's possession of
the demised premises, and if Tenant's right to possession of the demised
premises is terminated by Landlord, Tenant agrees to pay to Landlord on demand
(i) the worth at the time of the award of all unpaid rent earned at the time of
termination; (ii) the amounts by which the unpaid rent which would have been
earned after the date of termination until the time of the award exceeds the
amount of such rental loss that Tenant proves could have been avoided; (iii) the
worth at the time of the award of the amount by which the unpaid rent for the
balance of the demised term of this Lease after the time of the award exceeds
the amount of rental loss that Tenant proves could be reasonably be avoided;
(iv) all other amounts due Landlord from Tenant under the terms of this Lease,
or necessary to compensate Landlord for all detriment proximately caused by
Tenant's failure to perform its obligations under this Lease. The right to
possession of the demised premises by Tenant should not be deemed terminated
until Landlord gives Tenant written notice of such termination or until Landlord
re-lets all or a portion of the demised premises. The "worth at the time of the
award" of the amounts referred to in clauses (i) and (ii) above is to be
computed by allowing interest at the maximum rate permitted by applicable law.
The worth at the time of the award of the amount referred to in clause (iii)
above is to be computed by discounting such amount at the discount rate of the
Federal
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Reserve Bank of San Francisco at the time of the award plus one percent (1%). In
the event that Landlord seeks to recover the amount due, Landlord shall be
entitled to recover the amounts specified in paragraphs (a) (1), (a) (2) and (a)
(4) of Section 1951.2 of the Civil Code of California as such section reads at
the date of this Lease, together with interest on said amounts at the maximum
legal rate from the dates they were due. Landlord shall be required to mitigate
damages by making a good faith effort to re-let the demised premises.
(3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law, provided
that each shall be cumulative and in addition to every other right or remedy
given herein or now hereafter existing at law or in equity or by statute.
Section 13.2. Landlord shall in no event be in default in the performance
of any of its obligations hereunder unless and until Landlord shall have failed
to perform such obligations within thirty (30) days or such additional times as
is reasonably required to correct any such default after notice by Tenant to the
Landlord properly specifying wherein the Landlord has failed to perform any such
obligation.
ARTICLE 14 - BANKRUPTCY
Section 14.1. If any of the following events occur:
(1) The entry of an order for relief under Title 11 of the United States
Code as to Tenant or its executors, administrators or assigns, if any, or the
adjudication of Tenant or its executors, administrators or assigns, if any, as
insolvent or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act (unless, in the case of an involuntary petition filed against
Tenant such petition is not dismissed within sixty (60) days after its original
filing);
(2) The appointment of a receiver, trustee or other custodian of the
property of Tenant by reason of the insolvency or inability of Tenant to pay its
debts (unless possession is restored to Tenant within sixty (60) days after such
appointment);
(3) The assignment of the property of Tenant for the benefit of creditors;
(4) The commencement of any proceedings under any state or federal
insolvency or bankruptcy law, or any comparable law that is now or hereafter may
be in effect, whereby Tenant seeks to be, or would be, discharged of its debts
or the payment of its debts is sought to be delayed (unless, in the case of an
involuntary petition filed against Tenant such petition is not dismissed within
sixty (60) days after its original filing);
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then Landlord may, at any time thereafter, in addition to any and all other
rights or remedies of Landlord under this Lease or under applicable law, upon
written notice to Tenant, terminate this Lease, and upon such notice this Lease
shall cease and terminate with the same force and effect as though the date set
forth in said notice were the date originally set forth herein and fixed for the
expiration of the demised term. Tenant shall thereupon vacate and surrender the
demised premises, but shall remain liable as provided in Article 13.
ARTICLE 15 - SURRENDER OF PREMISES
Section 15.1. Tenant shall, upon termination of the demised term, or any
earlier termination of this Lease, surrender to Landlord the demised premises,
including, without limitation, all building equipment and apparatus, and
fixtures (except as provided in Sections 12.1. and 12.2.) then upon the demised
premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as hereinbefore provided.
ARTICLE 16 - EMINENT DOMAIN
Section 16.1. If during the demised term, or during the period of time
between the execution of this Lease and the commencement date, there is any
taking of all or any part of the demised premises or any interest in this Lease
by the exercise of any governmental power, by any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation (any of the proceeding a "Condemnor"), or voluntary sale or
transfer by Landlord to any Condemnor, either under the threat of condemnation
or while legal proceedings from Condemnation are pending (any of the preceding a
"Condemnation"), the rights and obligations of Landlord and Tenant shall be
determined pursuant to this Article. If such condemnation is of the entire
demised premises, then this Lease shall terminate on the date the Condemnor has
the right to possession of the demised premises (the "Date of Condemnation"). If
such condemnation is of any portion, but not all, of the demised premises, then
this Lease shall (subject to Section 16.4.) remain in effect, except that, if
the remaining portion of the demised premises is, in Tenant's reasonable
judgment, rendered unsuitable for Tenant's continued use of the demised
premises, then Tenant may elect to terminate this Lease by so notifying Landlord
in writing (the "Termination Notice") within thirty (30) days after the date
that the nature and extent of the Condemnation has been determined. Such
termination shall be effective on the Date of Condemnation. If Tenant does not
give Landlord the Termination Notice within such thirty (30) day period, then
all obligations of Tenant under this Lease shall remain in effect, except that
(unless the demised premises are restored as set forth below) base rent and
additional rent shall be reduced by the ratio of (i) the area of the demised
premises taken to (ii) the area of the demised premises immediately prior to the
Date of Condemnation. Notwithstanding anything to the
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contrary in this Section, if, within twenty (20) days after Landlord's
receipt of the Termination Notice, Landlord notifies Tenant that Landlord at its
cost will add to the remaining demised premises so that the area of the demised
premises will be substantially the same after the Condemnation as it was before
the Condemnation, and Landlord commences the restoration promptly and completes
it within ninety (90) days after Landlord so notifies Tenant, then all
obligations of Tenant under this Lease shall remain in effect, except that base
rent and additional rent shall be abated or reduced during the period from the
Date of Condemnation until the completion of such restoration by the ratio of
(A) the area of the demised premises taken to (B) the area of the demised
premises immediately prior to the Date of Condemnation.
Section 16.2. Each party waives the provisions of Code of Civil Procedure
Section 1265.130 allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking.
Section 16.3. All damages or awards for any taking under the power of
eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
less depreciation, if, and to the extent, factored into the condemning
authority's award.
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Section 16.4. If more than thirty-three percent (33%) of the floor areas
of the demised premises shall be taken under power of eminent domain, or if
more than fifty percent (50%) of the Parking and Accommodation Areas shall be
so taken, Landlord may, by written notice to Tenant delivered on or before
the date of surrendering possession to the public authority pursuant to such
taking, terminate this Lease as of such date.
Section 16.5. If this Lease is terminated as provided in this Article, the
rent shall be paid up to the day that possession is so taken by public authority
and Landlord shall make a prorata refund of any rent and all deposits paid by
Tenant in advance and not yet earned.
ARTICLE 17 - REAL PROPERTY TAXES
Section 17.1. Tenant shall reimburse Landlord for all real property taxes,
assessments and ongoing sewer fees applicable to the demised premises. Taxes
shall be prorated to lease years for purpose of making this computation. Such
payment shall be made by Tenant within thirty (30) days after receipt of
Landlord's written statement setting forth the amount of such computation
thereof. If the term of this Lease shall not expire concurrently with the
expiration date of the fiscal tax year, Tenant's liability for taxes for the
last partial lease year shall be prorated on an annual basis.
Section 17.2. If the demised premises are not separately assessed, Tenant's
liability shall be an equitable proportion of the real property taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Landlord from the respective valuations assigned
in the assessor's work sheets or such other information as may be reasonably
available. Landlord's reasonable determination thereof, in good faith, shall be
conclusive.
Section 17.3. Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Landlord.
If any of Tenant's said personal property shall be assessed with Landlord's
real property, Tenant shall pay Landlord the taxes attributable to Tenant within
ten (10) days after receipt of a written statement setting forth the taxes
applicable to Tenant's property.
Section 17.4. In addition to all other payments provided for herein, the
Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid to any instrumentality of local, state or
federal government in connection with parking on the demised premises, including
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policing; supervising with attendants; other costs in connection with
providing charged parking; repairs, replacements and maintenance not properly
chargeable to capital account under good accounting principles; interest and
depreciation of the actual cost of modification or improvements to the areas,
facilities and improvements maintained in Article 18 either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord in accordance with applicable governmental requirements to facilitate
payment of a parking charge by the general public for parking in the parking
area, or both, and other similar costs; and there shall be excluded (a) cost of
construction of such improvements which is properly chargeable to capital
account and (b) depreciation of the original cost of construction of all items
not previously mentioned in this sentence. If Landlord shall require the payment
of a parking charge by the general public for parking in the parking area, then
during any period in which such a charge is made the total revenue (after
deducting excise and similar taxes thereon and taxes, fees or surcharges imposed
by any agency or instrumentality of local, state or federal government) actually
received in cash or its equivalent by Landlord for such parking charge shall be
credited against said gross costs.
Section 17.5. Notwithstanding the provisions of Article 17 hereinabove,
Tenant shall pay any increase in "real property taxes" resulting from any and
all improvements of any kind whatsoever placed on or in the demised premises for
the benefit of or at the request of Tenant regardless of whether said
improvements were installed or constructed either by Landlord or Tenant.
Section 17.6. In addition to all other payments provided for herein, the
Tenant shall on demand reimburse Landlord for any tax (excluding income tax)
and/or business license fee or other levy that may be levied, assessed or
imposed upon the rent or other payments provided for herein or on the square
footage of the demised premises, on the act of entering into this Lease, or on
the occupancy of the Tenant however described, as a direct substitution in whole
or in part for, or in addition to, any real property taxes, whether pursuant to
laws presently existing or enacted in the future.
Section 17.7. Notwithstanding anything to the contrary in this Lease,
Tenant shall not be responsible for the payment of any municipal, county, state
or federal income, franchise, estate, successor, inheritance or transfer taxes
of Landlord.
Section 17.8. Tenant at its cost, shall have the right, at any time, to
contest any real property and personal property taxes that are to be paid by
Tenant. If Tenant contests the real property and/or personal property taxes,
Tenant shall do so by making payment of such taxes "under protest" and
thereafter proceeding with its contest. Landlord shall not be required to join
in any proceeding or contest brought by Tenant unless the provision of any law
require that the proceeding or contest be brought by or in the name of Landlord
or any other owner of the demised premises. In that case, Landlord shall join
the contest or permitted to be brought in Landlord's name so long as Landlord is
not required to bear any cost. Tenant, on final determination of the contest,
shall immediately
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pay or discharge any decision or judgment rendered, together with all
costs, charges, interest and penalties incidental to the decision or judgment.
ARTICLE 18 - PARKING AND ACCOMMODATION AREAS
Section 18.1. Landlord grants to Tenant during the demised term the
non-exclusive right to use the parking facilities and other areas provided and
designated as "Parking and Accommodation Areas" and consisting, in part, of 88
parking spaces as depicted on Exhibit "A-1" hereto for the accommodation and
parking of such automobiles of the Tenant, its officers, agents and employees,
its customers' licensees and invitees while working or visiting Tenant. Tenant
will endeavor to cause its officers, agents and employees to park their
automobiles only in the Parking Areas provided for the demised premises and
Tenant specifically will endeavor to cause such officers, agents and employees
to not park on any public streets in the vicinity of the demised premises.
Except as provided in Section 17.4., Landlord shall not charge parking fees for
such right to use parking facilities.
Section 18.2. All parking areas and facilities furnished by Landlord in the
Parking and Accommodation Areas, including but not limited to, pedestrian
sidewalks, landscaped areas and parking areas shall at all times be subject to
the control and management of Landlord so that Landlord will be in a position to
make available efficient and convenient use thereof, and Landlord shall have the
right from time to time to establish, modify and enforce reasonable rules and
regulations with respect to all facilities and areas in the Parking and
Accommodation Areas, mentioned in this Article and Tenant agrees to abide by and
conform therewith. Landlord shall have the right, so long as Landlord does not
reduce the number of parking spaces depicted on Exhibit "A- 1" or permanently
materially and adversely interfere with Tenant's use and enjoyment of the
Parking and Accommodation Areas, to construct, maintain and operate lighting
facilities on all of said areas and improvements, to police the same, from time
to time to change the area, location and arrangement of parking areas and
facilities, to restrict employee parking to employee parking areas, to construct
(at Landlord's sole cost and expense) surface, subterranean and/or elevated
parking areas and facilities, to establish and from time to time change the
level of parking surfaces, to close if necessary all or any portion of said
areas or facilities to such extent as may in the opinion of Landlord's counsel
be legally sufficient to prevent a dedication thereof or the accrual of any
rights of any person or of the public therein, and to do and perform such other
acts in and to said areas and improvements respectively as in the use of good
business judgment the Landlord shall determine to be for the convenience and use
thereof by Tenant, and its respective employees and visitors.
Section 18.3. Tenant agrees during the demised term to pay to Landlord an
annual charge which shall be Landlord's actual gross costs of operating,
maintaining and/or replacing all of the areas and facilities mentioned in this
Article in the Parking and Accommodation Areas. The annual charge shall be an
estimate
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<PAGE> 37
computed on the basis of periods of twelve (12) consecutive calendar
months, commencing and ending on such dates as may be designated by Landlord,
and shall be paid in monthly installments on the first day of each calendar
month in the amount estimated by Landlord. Within ninety (90) days after the end
of each such annual period, Landlord will determine (and furnish to Tenant a
statement showing in reasonable detail) the actual annual costs for such
operation, maintenance and replacement for such period and the amounts so
estimated and paid during such period shall be adjusted within such ninety (90)
days (including adjustments on a prorata basis of any partial such period at
either end of the demised term) and one party shall pay to the other on demand
whatever amount is necessary to effectuate such adjustment.
Landlord's said gross costs shall consist of and include all out-of-pocket
costs and expenses of every kind or nature incurred by Landlord in the
operation, maintenance and/or replacement of all of the areas, facilities and
improvements in the Parking and Accommodation Areas mentioned in this Article
determined in accordance with good accounting practice by an accountant employed
by Landlord. The determination of such accountant shall be conclusive. Without
otherwise limiting the generality of the foregoing, there shall (subject to the
provisions of Section 11.5.) be included in such gross costs for operation,
maintenance, and/or replacement, public liability and property damage insurance;
landscape maintenance; maintenance of utilities; water; cleaning of areas,
facilities and improvements; operation of lighting; common area taxes and
assessments determined in the same manner as taxes and assessments on the
demised premises; policing and sweeping of parking areas; supervising with
attendants; repairs, replacements and maintenance; and an amount equal to ten
percent (10%) of the total of all of the above for administration of the Parking
and Accommodation Areas.
Section 18.4. The Parking and Accommodation Areas included for the purpose
of this Article are those shown on Exhibit "A-1" outside of the building area.
ARTICLE 19 - MISCELLANEOUS
Section 19.1. Landlord and its designee shall have the right during
reasonable business hours and upon reasonable notice to enter the demised
premises except restricted areas as reasonably established by Tenant for
security purposes (and in emergencies at all times), (i) to inspect the same,
(ii) for any purpose connected with Landlord's rights or obligations under this
Lease and, (iii) for all other lawful purposes, provided, however, Landlord's
entry shall not unreasonably interfere with Tenant's use and occupancy of the
demised premises.
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<PAGE> 38
Section 19.2. Except as provided in Section 11.6., Tenant shall not be
entitled to make repairs at Landlord's expense, and Tenant waives the provisions
of Civil Code Sections 1941 and 1942 with respect to Landlord's obligations for
tenantability of the demised premises and Tenant's right to make repairs and
deduct the expenses of such repairs from rent.
Section 19.3. This Lease shall be governed exclusively by the provisions
hereof and by the laws of the State of California as the same from time to time
exist. This Lease expresses the entire understanding and all agreements of the
parties hereto with each other and neither party hereto has made or shall be
bound by any agreement or any representation to the other party which is not
expressly set forth in this Lease.
Section 19.4. If Tenant should hold over after the demised term and any
extension thereof as herein provided for without Landlord's prior written
consent, then such holding over shall be construed as a tenancy from month to
month at a rent 150% of that provided for under the monthly rental of the
principal term of this Lease.
Section 19.5. Tenant agrees to maintain all toilet and washroom facilities
within the demised premises in a neat, clean and sanitary condition.
Section 19.6. Landlord covenants and agrees that Tenant, subject to the
terms and provisions of this Lease, on paying the rent and observing, keeping
and performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the demised premises during the demised term without hindrance
or ejection by any person lawfully claiming under or against the Landlord.
Section 19.7. Subject to Article 6, the terms and provisions hereof shall
be construed as running with the land and shall be binding upon and inure to the
benefit of heirs, executors, administrators, successors and assigns of Landlord
and Tenant.
Section 19.8.
A. Tenant shall promptly pay all sums of money in respect to any labor,
services, materials, supplies or equipment furnished or alleged to have been
furnished to Tenant in, at or about the demised premises, or furnished to
Tenant's agents, employees, contractors or subcontractors, that may be secured
by any mechanic's, materialmen's, supplier's or other liens against the demised
premises or Landlord's interest therein. In the event any such or similar liens
shall be filed, Tenant shall, within three (3) days of receipt thereof, give
notice to Landlord of such lien, and Tenant shall, within ten (10) days after
receiving notice of the filing of the lien, discharge such lien by payment of
the amount due to the lien claimant. However, Tenant may in good faith contest
such lien provided that within such ten (10) day period Tenant provides Landlord
with a surety bond of a company acceptable to Landlord, protecting against said
lien in an amount at least one and
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<PAGE> 39
one-half (1-1/2) times the amount claimed or secured as a lien or such
greater amount as may be required by applicable law; and provided further that
Tenant, if it should decide to contest such lien, shall agree to indemnify,
defend and save harmless Landlord from and against all costs arising from or in
connection with any proceeding with respect to such lien. Failure of Tenant to
discharge the lien, or if contested to provide such bond and indemnification,
shall constitute a default under this Lease and in addition to any other right
or remedy of Landlord, Landlord may, but shall not be obligated to, discharge or
secure the release of any lien by paying the amount claimed to be due, and the
amount so paid by Landlord, and all costs and expenses incurred by Landlord
therewith, including, but not limited to, court costs and reasonable attorneys'
fees, shall be due and payable by Tenant to Landlord forthwith on demand.
B. At least fifteen (15) days before the commencement by Tenant of any
material construction or remodeling work on the demised premises, Tenant shall
give written notice thereof to Landlord. Landlord shall have the right to post
and maintain on the demised premises such Notices of Non-Responsibility, or
similar notices, provided for under applicable laws.
Section 19.9.
A. Tenant shall deposit with Landlord the sum specified in Section 2.4.(B)
hereof as a "Security Deposit". The Security Deposit shall be held by Landlord
as security for the faithful performance of all the terms of this Lease to be
observed and performed by Tenant. The Security Deposit shall not be mortgaged,
assigned, transferred or encumbered by Tenant without the written consent of
Landlord and any such act on the part of Tenant shall be without force and
effect and shall not be binding upon Landlord.
B. If any of the rents herein reserved or any other sum payable by Tenant
to Landlord shall be overdue and unpaid or should Landlord make payments on
behalf of Tenant, which payments Landlord is permitted by the terms hereof to
make, or Tenant shall fail to perform any of the terms of this Lease, then
Landlord may, at its option and without prejudice to any other remedy which
Landlord may have on account thereof apply the entire Security Deposit, or so
much thereof as may be necessary to compensate Landlord toward the payment of
rent or additional rent or loss or damage sustained by Landlord due to such
breach on the part of Tenant, and Tenant shall forthwith upon demand restore
said Security Deposit to the original sum deposited. Should Tenant comply with
all of said terms and promptly pay all of the rent and all other sums payable by
Tenant to Landlord, said Security Deposit shall be returned in full to Tenant at
the end of the demised term.
C. In the event of bankruptcy or other similar proceedings listed in
Article 14 hereof, the Security Deposit shall be deemed to be applied first to
the payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
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<PAGE> 40
D. In the event Landlord delivers the Security Deposit to the purchaser of
Landlord's interest in the demised premises, Landlord, after written notice to
Tenant of said delivery, shall be discharged from any further liability with
respect to the Security Deposit. This provision shall also apply to any
subsequent transferees.
Section 19.10. All notices, statements, demands, requests, consents,
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party, if sent by overnight carrier
or United States certified mail, return receipt requested, postage prepaid, and
addressed as follows:
If sent to Tenant, the same shall be addressed to the Tenant at 194-200
Constitution Drive, Menlo Park, California 94025, or at such other place as
Tenant may from time to time designate by notice to Landlord.
If sent to Landlord, the same shall be addressed to Landlord at 60
Hillsdale Mall, San Mateo, California 94403-3497, or at such other place as
Landlord may from time to time designate by notice to Tenant.
Any such notice when sent by overnight carrier or certified mail as above
provided shall be deemed duly served on the third business day following the
date of such mailing.
Section 19.11. As used in this Lease and when required by the context, each
number (singular or plural) shall include all numbers, and each gender shall
include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.
Section 19.12. In case of litigation with respect to the mutual rights,
obligations, or duties of the parties hereunder, the prevailing party shall be
entitled to reimbursement from the other party of all costs and reasonable
attorneys' fees, actually incurred.
Section 19.13. Each term and each provision of this instrument performable
by Tenant shall be construed to be both a covenant and a condition.
Section 19.14. Except as otherwise expressly stated, each payment provided
herein to be made by Tenant to Landlord shall be in addition to and not in
substitution for the other payments to be made by Tenant to Landlord.
Section 19.15. Time is and shall be of the essence of this Lease and all of
the terms, provisions, covenants and conditions hereof.
Section 19.16. The Tenant warrants that the Tenant has not had any dealings
with any realtor, broker, or agent in connection with the negotiation of this
Lease excepting only Cornish & Carey, whom Landlord agrees to pay whatever
commission may be due. Each party agrees to hold the other harmless from any
cost, expense or liability for any compensation, commissions or charges
- 32 -
<PAGE> 41
claimed by any realtor, broker, or agent with respect to this Lease and/or
the negotiation thereof with whom the other party has or purportedly has dealt.
Section 19.17. This Lease shall be subject and subordinate to any ground
lease, mortgage or deed of trust now or hereafter encumbering all or any portion
of the demised premises. As a condition precedent to the effectiveness of any
such subordination of this Lease to any future ground lease, mortgage or deed of
trust, and with respect to each existing ground lease, mortgage or deed of
trust, Landlord shall provide (or, in the case of a ground lease, mortgage or
deed of trust existing as of the date of this Lease, use its best efforts to
provide) to Tenant a commercially reasonable nondisturbance and attornment
agreement in favor of Tenant executed by the ground lessor, mortgagee or trust
deed beneficiary, as the case may be, which shall provide that Tenant's quiet
possession of the demised premises and Tenant's rights under this Lease shall
not be affected or disturbed so long as Tenant is not in default under the
provisions of this Lease. If any mortgagee, trustee or holder of such security
instrument elects to have the Tenant's interest in this Lease superior to any
such instrument by notice to Tenant, then this Lease should be deemed superior
to the lien of any such mortgage, deed of trust or security indenture whether
this Lease was executed before or after said mortgage, deed of trust and/or
security indenture.
Section 19.18. Landlord reserves the right during the last six months of
the demised term of this Lease or the last six months of any extension hereof to
enter the property during normal working hours upon reasonable notice for the
purpose of showing the demised premises except restricted areas reasonably
established by Tenant for security purposes to prospective tenants or purchasers
and to place signs (for the last year) on the demised premises advertising the
property for lease or sale.
IN WITNESS WHEREOF, the parties have executed this instrument.
TENANT: LANDLORD:
GERON CORPORATION, DAVID D. BOHANNON ORGANIZATION,
a Delaware corporation a California corporation
By: /s/ Geron Corporation By: /s/ David D. Bohannon Organization
--------------------------- ----------------------------------
Vice President Vice President
By: /s/ Geron Corporation By: /s/ David D. Bohannon Organization
--------------------------- ----------------------------------
Assistant Secretary
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<PAGE> 42
EXHIBIT "A"
BOHANNON INDUSTRIAL PARK
194-200 CONSTITUTION DRIVE
MENLO PARK, CA
DESCRIPTION OF DEMISED PREMISES
FOR
GERON CORP.
A portion of Parcel 1 as designated on the map entitled, "Parcel Map,
being a resubdivision of Lots 36, 37, 38, 39 and 40 of Bohannon Industrial Park
Unit No. 7 (Vol. 60 of Maps, Page 10), Menlo Park, San Mateo County, California,
"which map was filed in the office of the County Recorder of San Mateo County,
State of California, on October 2, 1973, in Volume 22 of Parcel Maps at Page 26,
more particularly described as follows:
Beginning at a point from which the northerly corner of Parcel 1
bears North 67(degree) 17' West 69.00 feet and North 22(degree) 43' East 59.00
feet; thence from said point of beginning South 67(degree) 17' East 72.00 feet;
thence North 22(degree) 43' East 39.00 feet; thence South 67(degree) 17' East
72.00; thence South 22(degree) 43' West 140.00 feet; thence North 67(degree) 17'
West 144.00 feet and North 22(degree) 43' East 101.00 feet to the point of
beginning.
Containing approximately 17,352 square feet.
<PAGE> 43
[BOHANNON INDUSTRIAL PARK MAP]
BOHANNON INDUSTRIAL PARK
------------------------
CONSTITUTION DR. MENLO PARK/CA.
EXHIBIT "A-1"
-------------
<PAGE> 44
[BOHANNON PARK MAP]
EXHIBIT 'B'
<PAGE> 45
[BOHANNON INDUSTRIAL PARK MAP]
BOHANNON INDUSTRIAL PARK
------------------------
CONSTITUTION DR. MENLO PARK/CA.
EXHIBIT "C"
-------------
<PAGE> 1
EXHIBIT 10.14
EQUIPMENT FINANCING AGREEMENT
(Number 10751)
THIS EQUIPMENT FINANCING AGREEMENT NUMBER 10751 ("Agreement") is dated as of the
date set forth at the foot hereof and is between LEASE MANAGEMENT SERVICES,
INC., ("Secured Party") and GERON CORPORATION ("Debtor").
1. EQUIPMENT; SECURITY INTEREST. The terms and conditions of this Agreement
cover each item of machinery, equipment and other property (individually an
"Item" or "Item of Equipment" and collectively the "Equipment") described in a
schedule now or hereafter executed by the parties hereto and made a part hereof
(individually a "Schedule" and collectively the "Schedules"). Debtor hereby
grants Secured Party a security interest in and to all Debtor's right, title and
interest in and to the Equipment under the Uniform Commercial Code, such grant
with respect to an Item of Equipment to be as of Debtor's execution of a related
Equipment Financing Commitment referencing this Agreement or, if Debtor then has
no interest in such Item, as of such subsequent time as Debtor acquires an
interest in the Item. Such security interest is granted by Debtor to secure
performance by Debtor of Debtor's obligations to Secured Party hereunder and
under any other agreements under which Debtor has or may hereafter have
obligations to Secured Party. Debtor will ensure that such security interest
will be and remain a sole and valid first lien security interest subject only to
the lien of current taxes and assessment not in default but only if such taxes
are entitled to priority as a matter of law.
2. DEBTOR'S OBLIGATIONS. The obligations of Debtor under this Agreement
respecting an Item of Equipment, except the obligation to pay installment
payments with respect thereto which will commence as set forth in Paragraph 3
below, commence upon the grant to Secured Party of a security interest in the
Item. Debtor's obligations hereunder with respect to an Item of Equipment and
Secured Party's security interest therein will continue until payment of all
amounts due, and performance of all terms and conditions required hereunder
provided, however, that if this Agreement is in default said obligations and
security interest will continue during the continuance of said default. Upon
termination of Secured Party's security interest in an Item of Equipment,
Secured Party will execute such release of interest with respect thereto as
Debtor reasonably requests.
3. INSTALLMENT PAYMENTS AND OTHER PAYMENTS. Debtor will repay advances Secured
Party makes on account of the Equipment in installment payments in the amounts
and at the times set forth in the Schedules, whether or not Secured Party has
rendered an invoice therefor, at the office of Secured Party set forth at the
foot hereof, or to such person and/or at such other place as Secured Party may
from time to time designate by notice to Debtor. Any other amounts required to
be paid Secured Party by Debtor hereunder are due upon Debtor's receipt of
Secured Party's invoice therefor and will be payable as directed in the invoice.
Payments under this Agreement may be applied to Debtor's then accrued
obligations to Secured Party in such order as Secured Party may choose.
4. NET AGREEMENT; NO OFFSET, SURVIVAL. This Agreement is a net agreement, and
Debtor will not be entitled to any abatement of installment payments or other
payments due hereunder or any reduction thereof under any circumstance or for
any reason whatsoever. Debtor hereby waives any and all
<PAGE> 2
existing and future claims, as offsets, against any installment payments or
other payments due hereunder and agrees to pay the installment payments and
other amounts due hereunder as and when due regardless of any offset or claim
which may be asserted by Debtor or on its behalf. The obligations and
liabilities of Debtor hereunder will survive the termination of the Agreement.
5. FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT. DEBTOR
ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND ACQUIRED
SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT SECURED PARTY IS NOT AND WILL NOT
BE THE VENDOR OF ANY EQUIPMENT AND THAT SECURED PARTY HAS NOT MADE AND WILL NOT
MAKE ANY AGREEMENT, REPRESENTATION OR WARRANTY WITH RESPECT TO THE
MERCHANTABILITY, CONDITION, QUALIFICATION OR FITNESS FOR A PARTICULAR PURPOSE OR
VALUE OF THE EQUIPMENT OR ANY OTHER MATTER WITH RESPECT THERETO IN ANY RESPECT
WHATSOEVER.
7. ACCEPTANCE. Execution by Debtor and Secured Party of a Schedule covering the
Equipment or any Items thereof will conclusively establish that such Equipment
has been included under and will be subject to all the terms and conditions of
this Agreement. If Debtor has not furnished Secured Party with an executed
Schedule by the earlier of fourteen (14) days after receipt thereof or
expiration of the commitment period set forth in the applicable Equipment
Financing Agreement, Secured Party may terminate its obligation to advance funds
as to the applicable Equipment.
8. LOCATION; INSPECTION; USE. Debtor will keep, or in the case of motor
vehicles, permanently garage and not remove from the United States, as
appropriate, each Item of Equipment in Debtor's possession and control at the
Equipment Location designated in the applicable Schedule, or at such other
location to which such Item may have been moved with the prior written consent
of Secured Party. Whenever requested by Secured Party, Debtor will advise
Secured Party as to the exact location of an Item of Equipment. Secured Party
will have the right to inspect the Equipment and observe its use during normal
business hours, subject to Debtor's security procedures and to enter into and
upon the premises where the Equipment may be located for such purpose. The
Equipment will at all times be used solely for commercial or business purposes
and operated in a careful and proper manner and in compliance with all
applicable laws, ordinances, rules and regulations, all conditions and
requirements of the policy or policies of insurance required to be carried by
Debtor under the terms of this Agreement and all manufacturer's instructions and
warranty requirements. Any modifications or additions to the Equipment required
by any such governmental edict or insurance policy will be promptly made by
Debtor.
9. ALTERATIONS; SECURITY INTEREST COVERAGE. Without the prior written consent of
Secured Party, Debtor will not make any alterations, additions or improvements
to any Item of Equipment which detract from its economic value or functional
utility, except as may be required pursuant to Paragraph 8 above. Secured
Party's security interest in the Equipment will include all modifications and
additions thereto and replacements and substitutions therefor, in whole or in
part. Such reference to replacements and substitutions will not grant Debtor
greater rights to replace or substitute than are provided in Paragraph 11 below
or as may be allowed upon the prior written consent of Secured Party.
<PAGE> 3
10. MAINTENANCE. Debtor will maintain the Equipment in good repair, condition
and working order. Debtor will also cause each Item of Equipment for which a
service contract is generally available to be covered by such a contract which
provides coverages typical to property of the type involved and is issued by a
competent servicing entity.
11. LOSS AND DAMAGE; CASUALTY VALUE. In the event of the loss of, theft of,
requisition of, damage to or destruction of an Item of Equipment ("Casualty
Occurrence"), Debtor will give Secured. Party prompt notice thereof and will
thereafter place such Item in good repair, condition and working order,
provided, however, that if such Item is determined by Secured Party to be lost,
stolen, destroyed or damaged beyond repair, is requisitioned or suffers a
constructive total loss as defined in any applicable insurance policy carried by
Debtor in accordance with Paragraph 14 below, Debtor, at Secured Party's option,
will (a) replace such Item with like Equipment in good repair, condition and
working order whereupon such replacement equipment will be deemed such Item for
all purposes hereof or (b) pay Secured Party the "Casualty Value" of such Item
which will equal the total of (i) all installment payments and other amounts due
from Debtor to Secured Party at the time of such payment and (ii) future
installment payments due with respect to such Item with each such payment
including any final uneven payment discounted at eight (8%) per annum simple
interest from the date due to the date of such payment. Upon such replacement or
payment, as appropriate, this Agreement and Secured Party's security interest
will terminate with, and only with, respect to the Item of Equipment so replaced
or as to which such payment is made in accordance with Paragraph 2 above.
12. TITLING; REGISTRATION. Each item of Equipment subject to title registration
laws will at all times be titled and/or registered by Debtor as Secured Party's
agent and attorney-in-fact with full power and authority to register (but
without power to affect title to) the Equipment in such manner and in such
jurisdiction or jurisdictions as Secured Party directs. Debtor will promptly
notify Secured Party of any necessary or advisable retitling and/or
reregistration of an Item of Equipment in a jurisdiction other than the one in
which such Item is then titled and/or registered. Any and all documents of title
will be furnished or caused to be furnished Secured Party by Debtor within sixty
(60) days of the date any titling or registering or restating or reregistering,
as appropriate, is directed by Secured Party.
13. TAXES. Debtor will make all filings as to and pay when due all personal
property and other ad valorem taxes and all other taxes, fees, charges and
assessments based on the ownership or use of the Equipment and will pay as
directed by Secured Party or reimburse Secured Party for all other taxes,
including, but not limited to, gross receipt taxes (exclusive of federal and
state taxes based on Secured Party's net income, unless such net income taxes
are in substitution for or relieve Debtor from any taxes which Debtor would
otherwise be obligated to pay under the terms of this Paragraph 13), fees,
charges and assessments whatsoever, however designated, whether based on the
installment payments or other amounts due hereunder, levied, assessed or imposed
upon the Equipment or otherwise related hereto or to the Equipment, now or
hereafter levied, assessed or imposed under the authority of a federal, state,
or local taxing jurisdiction, regardless of when and by whom payable. Filings
with respect to such other amounts will,
<PAGE> 4
at Secured Party's option, be made by Secured Party or by Debtor as directed by
Secured Party.
14. INSURANCE. Debtor will procure and continuously maintain all risk insurance
against loss or damage to the Equipment from any cause whatsoever for not less
than the full replacement value thereof naming Secured Party as Loss Payee. Such
insurance must be in a form and with companies approved by Secured Party, must
provide at least thirty (30) days advance written notice to Secured Party of
cancellation, change or modification in any term, condition, or amount of
protection provided therein, must provide full breach of warranty protection and
must provide that the coverage is "primary coverage" (does not require
contribution from any other applicable coverage). Debtor will provide Secured
Party with an original policy or certificate evidencing such insurance. In the
event of an assignment of this Agreement of which Debtor has notice, Debtor will
cause such insurance to provide the same protection to the assignee as its
interests may appear. The proceeds of such insurance, at the option of the
Secured Party or such assignee, as appropriate, will be applied toward (a)
repair or replacement of the appropriate Item or Items of Equipment, (b) payment
of the Casualty Value thereof and/or (c) payment of, or as provision for,
satisfaction of any other accrued obligations of Debtor hereunder. Debtor hereby
appoints Secured Party as Debtor's attorney-in-fact with full power and
authority to do all things, including, but not limited to, making claims,
receiving payments and endorsing documents, checks or drafts, necessary to
secure payments due under any policy contemplated hereby on account of a
Casualty Occurrence. Debtor and Secured Party contemplate that the jurisdictions
where the Equipment will be located will not impose any liability upon Secured
Party for personal injury and/or property damage resulting out of the
possession, use, operation or condition of the Equipment. In the event Secured
Party determines that such is not or may not be the case with respect to a given
jurisdiction, Debtor will provide Secured Party with public liability and
property damage coverage applicable to the Equipment in such amounts and in such
form as Secured Party requires.
15. SECURED PARTY'S PAYMENT. If Debtor fails to pay any amounts due hereunder or
to perform any of its other obligations under this Agreement, Secured Party may,
at its option, but without any obligation to do so, pay such amounts or perform
such obligations, and Debtor will reimburse Secured Party the amount of such
payment or cost of such performance, plus interest at 1.5% per month.
16. INDEMNITY. Debtor does hereby assume liability for and does agree to
indemnify, defend, protect, save and keep harmless Secured Party from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including court costs and legal
expenses, of whatever kind and nature, imposed on, incurred by or asserted
against Secured Party (whether or not also indemnified against by any other
person) in any way relating to or arising out of this Agreement or the
manufacture, financing, ownership, delivery, possession, use, operation,
condition or disposition of the Equipment by Secured Party or Debtor, including,
without limitation, any claim alleging latent and other defects, whether or not
discoverable by Secured Party or Debtor, and any other claim arising out of
strict liability in tort, whether or not in either instance relating to an event
occurring while Debtor remains obligated under this Agreement, and any claim for
patent, trademark or copyright infringement.
<PAGE> 5
Debtor agrees to give Secured Party and Secured Party agrees to give Debtor
notice of any claim or liability hereby indemnified against promptly following
learning thereof.
17. DEFAULT. Any of the following will constitute an event of default hereunder:
(a) Debtor's failure to pay when due any installment payment or other amount due
hereunder, which failure continues for ten (10) days after the due date thereof;
(b) Debtor's default in performing any other obligation, term or condition of
this Agreement or any other agreement between Debtor and Secured Party or
default under any further agreement providing security for the performance by
Debtor of its obligations hereunder provided such default has continued for more
than twenty (20) days, except as provided in (c) and (d) hereinbelow, or,
without limiting the generality of subparagraph (1) hereinbelow, default under
any lease or any mortgage or other instrument contemplating the provision of
financial accommodation applicable to the real property where an Item of
Equipment is located; (c) any writ or order of attachment or execution or other
legal process being levied on or charged against any Item of Equipment and not
being released or satisfied within ten (10) days; (d) Debtor's failure to comply
with its obligations under Paragraph 14 above or any transfer by Debtor in
violation of Paragraph 21 below; (e) a non-appealable judgment for the payment
of money in excess of $100,000 being rendered by a court of record against
Debtor which Debtor does not discharge or make provision for discharge in
accordance with the terms thereof within ninety (90) days from the date of entry
thereof; (f) death or judicial declaration of incompetency of Debtor, if an
individual; (g) the filing by Debtor of a petition under the Bankruptcy Act or
any amendment thereto or under any other insolvency law or law providing for the
relief of debtors, including, without limitation, a petition for reorganization,
arrangement or extension, or the commission by Debtor of an act of bankruptcy;
(h) the filing against Debtor of any such petition not dismissed or permanently
stayed within thirty (30) days of the filing thereof; (i) the voluntary or
involuntary making of an assignment of substantial portion of its assets by
Debtor for the benefit of creditors, appointment of a receiver or trustee for
Debtor or for any of Debtor's assets, institution by or against Debtor or any
other type of insolvency proceeding (under the Bankruptcy Act or otherwise) or
of any formal or informal proceeding for dissolution, liquidation, settlement of
claims against or winding up of the affairs of Debtor, Debtor's cessation of
business activities or the making by Debtor of a transfer of all or a material
portion of Debtor's assets or inventory not in the ordinary course of business;
(j) the occurrence of any event described in parts (e), (f), (g), (h) or (i)
hereinabove with respect to any guarantor or other party liable for payment or
performance of this Agreement; (k) any certificate, statement, representation,
warranty or audit heretofore or hereafter furnished with respect hereto by or on
behalf of Debtor or any guarantor or other party liable for payment or
performance of this Agreement proving to have been false in any material respect
at the time as of which the facts therein set forth were stated or certified or
having omitted any substantial contingent or unliquidated liability or claim
against Debtor or any such guarantor or other party; (1) breach by Debtor of any
lease or other agreement providing financial accommodation under which Debtor or
its property is bound; or (m) a transfer of effective control of Debtor, if an
organization.
<PAGE> 6
18. REMEDIES. Upon the occurrence of an event of default, Secured Party will
have the rights, options, duties and remedies of a secured party, and Debtor
will have the rights and duties of a debtor, under the Uniform Commercial Code
(regardless of whether such Code or a law similar thereto has been enacted in a
jurisdiction wherein the rights or remedies are asserted) and, without limiting
the foregoing, Secured Party may exercise any one or more of the following
remedies: (a) declare the Casualty Value or such lesser amount as may be set by
law immediately due and payable with respect to any or all Items of Equipment
without notice or demand to Debtor; (b) sue from time to time for and recover
all installment payments and other payments then accrued and which accrue during
the pendency of such action with respect to any or all Items of Equipment; (c)
take possession of and, if deemed appropriate, render unusable any or all Items
of Equipment, without demand or notice, wherever same may be located, without
any court order or other process of law and without liability for any damages
occasioned by such taking of possession and remove, keep and store the same or
use and operate or lease the same until sold; (d) require Debtor to assemble any
or all Items of Equipment at the Equipment Location therefor, or at such
location to which such Equipment may have been moved with the written consent of
Secured Party or such other location in reasonable proximity to either of the
foregoing as Secured Party designates; (e) upon ten days notice to Debtor or
such other notice as may be required by law, sell or otherwise dispose of any
Item of Equipment, whether or not in Secured Party's possession, in a
commercially reasonable manner at public or private sale at any place deemed
appropriate and apply the new proceeds of such sale, after deducting all costs
of such sale, including, but not limited to, costs of transportation,
repossession, storage, refurbishing, advertising and brokers' fees, to the
obligations of Debtor to Secured Party hereunder or otherwise, with Debtor
remaining liable for any deficiency and with any excess being returned to
Debtor; (f) upon thirty (30) days notice to Debtor, retain any repossessed or
assembled Items of Equipment as Secured Party's own property in full
satisfaction of Debtor's liability for the installment payments due hereunder
with respect thereto, provided that Debtor will have the right to redeem such
Items by payment in full of its obligations to Secured Party hereunder or
otherwise or to require Secured Party to sell or otherwise dispose of such Items
in the manner set forth in subparagraph (e) hereinabove upon notice to Secured
Party within such thirty (30) day period; or (g) utilize any other remedy
available to Secured Party under the Uniform Commercial Code or similar
provision of law or otherwise at law or in equity.
No right or remedy conferred herein is exclusive of any other right or remedy
conferred herein or by law; but all such remedies are cumulative of every other
right or remedy conferred hereunder or at law or in equity, by statute or
otherwise, and may be exercised concurrently or separately from time to time.
Any sale contemplated by subparagraph (e) of this Paragraph 18 may be adjourned
from time to time by announcement at the time and place appointed for such sale,
or for any such adjourned sale, without further published notice, Secured Party
may bid and become the purchaser at any such sale. Any sale of an Item of
Equipment, whether under said subparagraph or by virtue of judicial proceedings,
will operate to divest all right, title, interest, claim and demand whatsoever;
either at law or in equity, of Debtor in and to said item and will be a
perpetual bar to any claim against such Item, both at law and in equity, against
Debtor and all persons claiming by, through or under Debtor.
<PAGE> 7
19. DISCONTINUANCE OF REMEDIES. If Secured Party proceeds to enforce any right
under this Agreement and such proceedings are discontinued or abandoned for any
reason or are determined adversely, then and in every such case Debtor and
Secured Party will be restored to their former positions and rights hereunder.
20. SECURED PARTY'S EXPENSES. Debtor will pay Secured Party all costs and
expenses, including attorney's fees and court costs and sales costs not offset
against sales proceeds under Paragraph 18 above, incurred by Secured Party in
exercising any of its rights or remedies hereunder or enforcing any of the
terms, conditions or provisions hereof. This obligation includes the payment or
reimbursement of all such amounts whether an action is ultimately filed and
whether an action is ultimately dismissed.
21. ASSIGNMENT. Without the prior written consent of Secured Party, Debtor will
not sell, lease, pledge or hypothecate, except as provided in this Agreement,
any Item of Equipment or any interest therein or assign, transfer, pledge, or
hypothecate this Agreement or any interest in this Agreement or permit the
Equipment to be subject to any lien, charge or encumbrance of any nature except
the security interest of Secured Party contemplated hereby. Debtor's interest
herein is not assignable and will not be assigned or transferred by operation of
law. Consent to any of the foregoing prohibited acts applies only in the given
instance and is not a consent to any subsequent like act by Debtor or any other
person.
All rights of Secured Party hereunder may be assigned, pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without notice
to Debtor but always, however, subject to the rights of Debtor under this
Agreement. If Debtor is given notice of any such assignment, Debtor will
acknowledge receipt thereof in writing. In the event Secured Party assigns this
Agreement or the installment payments due or to become due hereunder or any
other interest herein, whether as security for any of its indebtedness or
otherwise, no breach or default by Secured Party hereunder or pursuant to any
other agreement between Secured Party and Debtor, should there be one, will
excuse performance by Debtor of any provision hereof, it being understood that
in the event of such default or breach by Secured Party that Debtor will pursue
any rights on account thereof solely against Secured Party. No such assignee,
unless such assignee agrees in writing, will be obligated to perform any duty,
covenant or condition required to be performed by Secured Party in connection
with this Agreement.
Subject always to the foregoing, this Agreement inures to the benefit of, and is
binding upon, the heirs, legatees, personal representative, successors and
assigns of the parties hereto.
22. MARKINGS; PERSONAL PROPERTY. If Secured Party supplies Debtor with labels,
plates, decals or other markings stating that Secured Party has an interest in
the Equipment, Debtor will affix and keep the same prominently displayed on the
Equipment or will otherwise mark the Equipment or its then location or
locations, as appropriate, at Secured Party's request to indicate Secured
Party's security interest in the Equipment. The Equipment is, and at all times
will remain, personal property notwithstanding that the Equipment or any Item
thereof may now be, or hereafter become, in any manner affixed or attached to,
or embedded in, or permanently resting upon real property or any improvement
thereof or attached in any manner to what is
<PAGE> 8
permanent as by means of cement, plaster, nails, bolts, screws or otherwise. If
requested by Secured Party, Debtor will obtain and deliver to Secured Party
waivers of interest or liens in recordable form satisfactory to Secured Party
from all persons claiming any interest in the real property on which an Item of
Equipment is or is to be installed or located.
23. LATE CHARGES. Time is of the essence in this Agreement and if any
Installment Payment is not paid within ten (10) days after the due date thereof,
Secured Party shall have the right to add and collect, and Debtor agrees to pay:
(a) a late charge on and in addition to, such Installment Payment equal to five
(5%) of such Installment Payment or a lesser amount if established by any state
or federal statute applicable thereto, and (b) interest on such Installment
Payment from thirty (30) days after the due date until paid at the highest
contract rate enforceable against Debtor under applicable law but never to
exceed eighteen percent (18%) per annum.
24. NON-WAIVER. No covenant or condition of this Agreement can be waived except
by the written consent of Secured Party. Forbearance or indulgence by Secured
Party in regard to any breach hereunder will not constitute a waiver of the
related covenant or condition to be performed by Debtor.
25. ADDITIONAL DOCUMENTS. In connection with and in order to perfect and
evidence the security interest in the Equipment granted Secured Party hereunder
Debtor will execute and deliver to Secured Party such financing statements and
similar documents as Secured Party requests. Debtor authorizes Secured Party
where permitted by law to make filings of such financing statements without
Debtor's signature. Debtor further will furnish Secured Party (a) on a timely
basis, Debtor's future financial statements, including Debtor's most recent
annual report, balance sheet and income statement, prepared in accordance with
generally accepted accounting principles, which reports, Debtor warrants, shall
fully and fairly represent the true financial condition of Debtor (b) any other
information normally provided by Debtor to the public and (c) such other
financial data or information relative to this Agreement and the Equipment,
including, without limitation, copies of vendor proposals and purchase orders
and agreements, listings of serial numbers or other identification data and
confirmations of such information, as Secured Party may from time to time
reasonably request. Debtor will procure and/or execute, have executed,
acknowledge, have acknowledged, deliver to Secured Party, record and file such
other documents and showings as Secured Party deems necessary or desirable to
protect its interest in and rights under this Agreement and interest in the
Equipment. Debtor will pay as directed by Secured Party or reimburse Secured
Party for all filing, search, title report, legal and other fees incurred by
Secured Party in connection with any documents to be provided by Debtor pursuant
to this Paragraph or Paragraph 22 and any further similar documents Secured
Party may procure.
26. DEBTOR'S WARRANTIES. Debtor certifies and warrants that the financial data
and other information which Debtor has submitted, or will submit, to Secured
Party in connection with this Agreement is, or will be at time of delivery, as
appropriate, a true and complete statement of the matters therein contained.
Debtor further certifies and warrants: (a) this Agreement has been duly
authorized by Debtor and when executed and delivered by the person signing on
behalf of Debtor below will constitute the legal, valid and binding obligation,
contract and agreement of Debtor enforceable
<PAGE> 9
against Debtor in accordance with its respective terms; (b) this Agreement and
each and every showing provided by or on behalf of Debtor in connection herewith
may be relied upon by Secured Party in accordance with the terms thereof
notwithstanding the failure of Debtor or other applicable party to ensure proper
attestation thereto, whether by absence of a seal or acknowledgment or
otherwise; (c) Debtor has the right, power and authority to grant a security
interest in the Equipment to Secured Party for the uses and purposes herein set
forth and (d) each Item of Equipment will, at the time such Item becomes subject
hereto, be in good repair, condition and working order.
27. ENTIRE AGREEMENT. This instrument with exhibits and related documentation
constitutes the entire agreement between Secured Party and Debtor and will not
be amended, altered or changed except by a written agreement signed by the
parties.
28. NOTICES. Notices under this Agreement must be in writing and must be mailed
by United States mail, certified mail with return receipt requested, duly
addressed, with postage prepaid, to the party involved at its respective address
set forth at the foot hereof or at such other address as each party may provide
on notice to the other from time to time. Notices will be effective when
deposited. Each party will promptly notify the other of any change in that
party's address.
29. GENDER, NUMBER: JOINT AND SEVERAL LIABILITY. Whenever the context of this
Agreement requires, the neuter gender includes the feminine or masculine and the
singular number includes the plural; and whenever the words "Secured Party" are
used herein, they include all assignees of Secured Party, it being understood
that specific reference to "assignee" in Paragraph 14 above is for further
emphasis. If there is more than one Debtor named in this Agreement, the
liability of each will be joint and several.
30. TITLES. The titles to the Paragraphs of this Agreement are solely for the
convenience of the parties and are not an aid in the interpretation of the
instrument.
31. GOVERNING LAW; VENUE. This Agreement will be governed by and construed in
accordance with the laws of the State of California. Venue for any action
related to the Agreement will be in an appropriate court in San Mateo County,
California, to which Debtor consents, or in another court selected by Secured
Party which has jurisdiction over the parties. In the event any provision hereof
is declared invalid, such provision will be deemed severable from the remaining
provisions of this Agreement, which will remain in full force and effect.
32. TIME. Time is of the essence of this Agreement and for each and all of its
provisions.
In WITNESS WHEREOF, the undersigned have executed this Agreement as of Jan 5,
1992.
GERON CORPORATION
21375 Cabot Boulevard
<PAGE> 10
Hayward, CA 94545
By: /s/ Jeryl Hilleman
------------------
Jeryl Hilleman, V.P., Finance,
Administration, Secretary &
Treasurer
LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
By: /s/ Barbara Kaiser
------------------
Barbara Kaiser Sr. Vice President
<PAGE> 1
EXHIBIT 10.15
LEASE MANAGEMENT SERVICES, INC.
A Subsidiary of Phoenixcor Financial Services
MASTER LEASE AGREEMENT NUMBER 10451
LESSEE: Geron Corporation LESSOR: LEASE MANAGEMENT SERVICES. INC.
21375 Cabot Boulevard 2500 Sand Hill Road, Suite 101
Hayward, CA 94545 Menlo Park, CA 94025
- --------------------------------------------------------------------------------
LEASE TERMS
- --------------------------------------------------------------------------------
1. LEASE. Lessor hereby agrees to lease to Lessee and Lessee hereby agrees
to lease from Lessor, subject to the terms of this Master Lease Agreement and
any addenda thereto (the "Master Lease") and the Schedule defined below, the
personal property (together with all attachments, replacements, parts,
substitutions, additions, repairs, accessions, and accessories, incorporated
therein and/or affixed, thereto) (the "Equipment") described in any Lease
Schedule and any addenda thereto (a "Schedule") executed by the parties hereto
and incorporating the terms of this Master Lease by reference therein (the
"Lease"). The parties agree that this Lease is a "Finance Lease" as defined by
Section 10103(1)(g) of the California Commercial Code (Cal.Com.C.). Lessee
acknowledges either (a) that Lessee has reviewed and approved any written Supply
Contract (as defined by Cal.Com.C 10103(1)(y)) covering the Equipment purchased
from the "Supplier" (as defined by Cal.Com.C 10103 (1)(x)) thereof for lease to
Lessee or (b) that Lessor has informed or advised Lessee, in writing, either
previously or by this Lease of the following: (i) the identity of the Supplier;
(ii) that the Lessee may have rights under the Supply Contract; and (iii) that
the Lessee may contact the Supplier for a description of any such rights Lessee
may have under the Supply Contract.
2. TERM AND RENT. The term of this Lease shall be as specified in the
Schedule(s). The rental payments ("Rent") for the Equipment shall be as set
forth in the Schedule(s) and any addenda and shall be payable at the time set
forth therein.
3. LATE CHARGES. Time is of the essence in this Lease and if any Rent is
not paid within ten (10) days after the due date thereof, Lessor shall have the
right to add and collect, and Lessee agrees to pay: (a) a late charge on and in
addition to such Rent equal to five percent (5%) of such Rent or a lesser amount
if established by any state or federal statute applicable thereto, and (b)
interest on such Rent from thirty (30) days after the due date until paid at the
highest contract rate enforceable against Lessee under applicable law but never
to exceed eighteen percent (18%) per annum.
4. DISCLAIMER OF WARRANTIES. LESSOR IS NOT THE MANUFACTURER, SUPPLIER OR
SELLER OF THE EQUIPMENT. LESSOR IS NOT THE AGENT OF THE MANUFACTURER, SUPPLIER
OR SELLER OF THE EQUIPMENT. LESSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES AS TO
ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE FITNESS,
MERCHANTABILITY, CONDITION, QUALITY, DURABILITY OR SUITABILITY OF THE EQUIPMENT
IN ANY RESPECT, OR IN CONNECTION WITH, OR FOR THE PURPOSES AND USES OF LESSEE,
OR ANY OTHER REPRESENTATION OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO. As between Lessor and Lessee, the Equipment shall
be accepted and leased by Lessee "as is" and "with all faults." Lessee
specifically waives all rights to make claim against Lessor herein for breach of
any warranty of any kind whatsoever, asserting and resolving any such claims
directly with the Supplier of the Equipment, and Lessor hereby assigns to Lessee
all warranties, if any, received by Lessor resulting from its ownership of the
Equipment. Lessor shall not be respon sible for any repairs, service or defects
in the quality or in its operation or for any delay of Supplier and Lessee
waives any claim it might have with respect to Lessor for any loss, damage, or
expense caused by the Equipment, its use or maintenance. In no event shall
Lessor be liable for any consequential damages. Supplier is not an agent of
Lessor and no employee, salesperson, or agent of Supplier is authorized to
waive, supplement, or otherwise alter any provision of this Lease, and no
representation as to the Equipment or any other matter by the Supplier shall in
any way affect the Lessee's duty to pay Rent and perform all its obligations as
set forth in this Lease. Lessor makes no warranty that the Equipment is in
compliance with applicable governmental requirements, rules or regulations.
Lessor has not made any representation or warranty to Lessee as to the tax
benefits, if any, Lessee will obtain from this Lease, or as to the manner in
which Lessee should treat this Lease in Lessee's records for tax, financial
reporting or accounting purposes.
5. ACCEPTANCE. Lessee's acceptance of the Equipment shall be conclusively
and irrevocably evidenced by Lessee signing the Lessor's standard form
Certificate of Acceptance. If Lessee fails or refuses to sign the Certificate of
Acceptance as to all or any part of the Equipment within a reasonable time,
Lessee shall automatically assume all of Lessor's purchase obligations for the
Equipment and Lessee agrees to indemnify and defend Lessor from any claims
including any demand for payment of the purchase price for the Equipment by the
manufacturer, Supplier or seller of the Equipment.
6. USE, OPERATION AND LOCATION. Lessee shall not use or operate the
Equipment so as to violate the terms of any insurance coverage for the Equipment
as required herein. Lessee agrees not to allow the Equipment to be used by
persons other than employees of Lessee, not to rent or sublet the Equipment or
any part thereof to others, to use the Equipment solely for commercial,
agricultural or business purposes, and to use and operate the Equipment in
accordance with the manufacturer's operating procedures and all applicable
governmental laws, ordinances, rules and regulations. If at any time during the
term hereof, Lessor supplies Lessee with labels or other markings, stating that
the Equipment is owned by Lessor, Lessee (or Lessor, at Lessor's option) shall
affix and keep the labels upon a prominent place on the Equipment.
The Equipment shall be located as shown on the Schedule(s). Lessee, without the
prior written consent of Lessor, shall not remove the Equipment from such
location nor give up possession or control thereof. Lessor, upon prior
reasonable notice to Lessee, shall have the right to inspect the Equipment
during Lessee's normal business hours.
7. ALTERATIONS, MAINTENANCE AND REPAIRS. Lessee, at its sole expense, shall
keep Equipment in good condition and working order and furnish all labor, parts
and supplies required therefor. Lessee agrees to maintain accurate and complete
records of all repairs and maintenance to the Equipment. Any modifications or
additions to the Equipment required by any governmental edict shall be promptly
made by Lessee at its own expense.
Without the prior written consent of Lessor, Lessee shall not make any
alterations, additions or improvements to the Equipment which are permanent or
which detract from its economic value or functional utility, except as may be
required pursuant to the preceding sentence of this Paragraph 7. All additions
and improvements to the Equipment shall belong to and immediately become the
property of Lessor and shall be returned to Lessor with the Equipment upon the
expiration or earlier termination of this Lease unless Lessor notifies Lessee to
restore such Equipment to its original state.
8. LOSS, DAMAGE. Lessee assumes the risk of loss and damage to the
Equipment, or any portion thereof, from every cause whatsoever, including but
not limited to damage, destruction, loss or theft. No loss, theft, damage,
destruction of the Equipment shall relieve Lessee of the obligation to pay Rent
or to comply with any other obligation under this Lease. In the event of damage
to any item of Equipment, Lessee shall immediately place the Equipment in good
condition and working order at Lessee's expense. If Lessor determines that any
item of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee
shall, at Lessor's option, either:
(a) Replace the same with like equipment in good condition and working
order, free and clear of all liens, claims and encumbrances, which equipment
shall thereupon become subject to this Lease; or
(b) Pay Lessor, not as a penalty, but herein liquidated for all purposes an
amount equal to the sum of (i) any accrued and unpaid Rent as of the date the
loss, theft, damage or destruction occurred ("Date of Loss") plus the total of
any amounts due to Lessor pursuant to Paragraph 3; (ii) the present value of all
future rentals reserved in this Lease and contracted to be paid over the
unexpired term of this Lease discounted at a rate equal to the discount rate of
the Federal Reserve Bank of San Francisco as of the Date of Loss; (iii) the
discounted value of the agreed upon or estimated residual value of the Equipment
as of the expiration of this Lease or any renewal thereof discounted at a rate
equal to the discount rate of the Federal Reserve Bank of San Francisco as of
the Date of Loss; and (iv) any other amount otherwise then due and owing under
this Lease or which otherwise will become due and owing irrespective of the fact
that the Equipment has been damaged, destroyed, lost or stolen including any
additional taxes or other charges that may otherwise arise by reason of the
damage, destruction, loss or theft of the Equipment. Lessee further agrees to
pay late charges calculated in accordance with Paragraph 3 from the Date of Loss
to the date the casualty payment is paid to Lessor.
9. INSURANCE. Commencing on the date risk of loss passes to Lessor from the
Supplier and continuing until all of Lessee's obligations under this Lease have
been satisfied, Lessee shall, at Lessee's own expense, keep the Equipment and
any replacements thereto insured against such risks, and in such amounts, in
such form and with such companies as are satisfactory to Lessor. All such
insurance policies shall protect Lessor and Lessee, as their respective
interests may appear, and shall provide that all losses shall be payable to and
adjusted solely with Lessor. Lessee shall, at Lessee's own expense, also
maintain public liability insurance, in such amounts, in such form and with such
companies as are satisfactory to Lessor, insuring Lessor with respect to injury
to person or property resulting from the condition, locations, maintenance, and
actual or alleged use of the Equipment. Lessee shall, prior to the acceptance of
a Schedule by Lessor, deliver to Lessor each of the foregoing policies or
satisfactory evidence of such insurance. Each such policy shall contain an
endorsement providing that the insurer will give Lessor not less than 30 days'
prior written notice of the effective date of any alteration or cancellation of
such policy. Lessee shall furnish annually to Lessor satisfactory evidence of
the maintenance of such insurance. Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact to make claim for, receive payment of, and execute any
and endorse all documents for loss or damages under any insurance policy as
herein specified. In case of the failure of Lessee to maintain any of such
insurance, Lessor shall have the right, but shall not be obligated, to obtain
such insurance, and therefor, Lessee hereby grants Lessor the irrevocable right
to select an insurance broker for the procurement and maintenance of such
insurance coverage herein specified.
10. TAXES. Lessee shall pay directly, or to Lessor, all license fees,
registration fees, assessments and taxes which may now or hereafter be imposed
upon the ownership, sale (if authorized), possession or use of the Equipment,
excepting only those based on Lessor's income or any single business tax of
Lessor. All required personal property tax returns relating to the Equipment
shall be filed by Lessor unless otherwise provided in writing. If Lessee fails
to pay any said fees,
- --------------------------------------------------------------------------------
THIS LEASE MAY NOT BE AMENDED EXCEPT BY A WRITING SIGNED BY LESSOR AND LESSEE.
LESSEE'S INITIALS /S/ JLH
Dated: Jan 5, 1993
LESSEE: LESSOR:
Geron Corporation LEASE MANAGEMENT SERVICES, INC.
By /s/ Jeryl Lynn Hilleman By /s/ Barbara Kaiser
Title V.P. Finance & Administration Title Senior Vice President
WHITE - LESSOR'S COPY YELLOW - FILE COPY PINK - LESSEE'S COPY
<PAGE> 2
assessments, or taxes, Lessor shall have the right but not the obligation to pay
the same, and such amount. including penalties and costs, shall be repayable to
Lessor at the next Rent due date, and if not so paid, shall be the same as
failure to pay any Rent due hereunder. Lessor shall not be responsible for
contesting any valuation of or tax imposed on the Equipment but may do so
strictly as an accommodation to Lessee and shall not be liable or accountable to
Lessee therefor. If Lessee pays any taxes, fees or assessments directly to the
appropriate taxing authority, Lessee agrees to immediately notify Lessor and to
provide Lessor documentary evidence of said payment.
11. LESSEE'S FAILURE TO PAY: LESSOR'S PAYMENT. In the event Lessee fails to
pay any amounts due hereunder, including Lessee's obligation to pay taxes and
insurance, or to perform any of its other obligations under this Lease, Lessor
may, at its option, pay such amounts or perform such obligations, and Lessee
shall reimburse Lessor the amount of such payment or cost of such performance,
including any charges or penalties which have been levied by the taxing
authority or insurance carrier for such late payment. Within ten (10) days from
demand, such reimbursement shall be paid as additional Rent plus late charges as
calculated in accordance with Paragraph 3 from the date of Lessor's payment to
the date of reimbursement.
12. TITLE. The Equipment is, and shall at all times be the sole and
exclusive property of Lessor, and Lessee shall have no right. title or interest
therein or thereto except as expressly set forth in this Lease. Further, the
Equipment shall at all times remain personal property, notwithstanding that the
Equipment or any part thereof may be affixed or attached to real property or any
building thereon.
Lessee shall keep the Equipment free and clear from all liens charges.
encumbrances, legal process, and claims. Lessee shall not assign, sublet,
hypothecate, sell, transfer or give up possession of the Equipment or any
interest in this Lease, and any such attempt shall be null and void.
13. INDEMNITY. Lessee shall indemnify and hold Lessor harmless from and
against all claims, losses, liabilities (including negligence, tort and strict
liability), damages, judgments, suits, and all legal proceedings, and any and
all costs and expenses in connection therewith (including attorneys' fees)
arising out of or in any manner connected (a) with the manufacture, purchase,
financing, ownership, delivery, rejection, nondelivery, possession, use,
transportation, storage, operation, maintenance, repair, return or other
disposition of the Equipment; or (b) with this Lease, including, without
limitation, claims for injury or death of persons and for damage to property,
and claims for patent, trademark or copyright infringement, and give Lessor
prompt notice of any claim or liability.
14. NON-TERMINABLE LEASE: OBLIGATIONS UNCONDITIONAL. This Lease cannot be
terminated except as expressly provided herein. Lessee hereby agrees that
Lessee's obligation to pay all Rent and any other amounts owing hereunder shall
be absolute and unconditional.
15. HOLDING OVER. Any use of the Equipment by Lessee beyond the initial
Lease term or any renewal thereof shall be an extension of this Lease term at
the then current Rent on a month-to-month basis terminable by Lessor on ten (10)
days' notice to Lessee and all obligations of Lessee herein contained, including
payment of Rent, shall continue during such holding over. Any holdover period is
limited to twelve (12) months without written consent of Lessor.
16. RETURN OF EQUIPMENT. Upon the expiration or earlier termination of this
Lease, with respect to the Equipment or any part thereof, Lessee shall return
the same to Lessor in good condition and working order, ordinary wear and tear
excepted, in the following manner as selected by Lessor:
(a) By properly packing and delivering the Equipment at Lessee's cost and
expense, to such place as Lessor shall specify within the County in which the
same was delivered to Lessee; or
(b) By properly packing and loading the Equipment, at Lessee's cost and
expense, on board such carrier as Lessor shall specify, and shipping the same,
freight prepaid, to the destination indicated by Lessor.
Lessee agrees to pay for all repair to the Equipment other than
attributable to ordinary wear and tear. Notice of Lessee's intent to return
Equipment must be received by Lessor at least sixty (60) days prior to return.
17. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee
hereby waives any and all rights and remedies conferred upon a Lessee by
Sections 10508 through 10522 of the Cal.Com.C., including but not limited to
Lessee's rights to: (i) cancel this Lease; (ii) repudiate this Lease; (iii)
reject the Equipment; (iv) revoke acceptance of the Equipment; (v) recover
damages from Lessor for any breaches of warranty or for any other reason; (vi) a
security interest in the Equipment in Lessee's possession or control for any
reason; (vii) deduct all or any part of any claimed damages resulting from
Lessor's default, if any, under this Lease; (viii) accept partial delivery of
the Equipment; (ix) "cover" by making any purchase or lease of or contract to
purchase or lease Equipment in substitution for Equipment due from Lessor; (x)
recover any general, special, incidental or consequential damages, for any
reason whatsoever; and (xi) specific performance, replevin, detinue,
sequestration, claim and delivery or the like for any Equipment identified to
this Lease. To the extent permitted by applicable law, Lessee also hereby waives
any rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use any Equipment in mitigation of Lessor's
damages as set forth in Paragraph 19 or which may otherwise limit or modify any
of Lessor's rights or remedies under Paragraph 19. Any action by Lessee against
Lessor for any default by Lessor under this Lease, including breach of warranty
or indemnity, shall be commenced within one (1) year after any such cause of
action accrues.
18. DEFAULT. Any of the following events or conditions shall constitute an
event of default ("Event of Default") hereunder:
(a) Lessee's failure to pay when due any Rent or other amount due
hereunder;
(b) Lessee's failure to perform any other term, covenant or condition
hereof or a default under any other agreement between Lessor and Lessee;
(c) The breach of any representation or warranty made by Lessee or any
guarantor of this Lease;
(d) Seizure of the Equipment under legal process;
(e) A filing by or against Lessee of a Petition for Reorganization or
Liquidation under the Bankruptcy Code or any amendments thereto or any other
insolvency law providing for the relief of debtors;
(f) The voluntary or involuntary making of an assignment of a substantial
portion of its assets by Lessee for the benefit of creditors, employment of a
receiver or trustee for Lessee or for any of Lessee's assets, the institution of
formal or informal proceedings by or against Lessee for dissolution,
liquidation, settlement of claims against or winding up of the affairs of
Lessee, or the making by Lessee of a transfer of all or a material portion of
Lessee's assets or inventory not in the ordinary course of business;
(g) The value or condition of any collateral furnished by the Lessee, or
any guarantor of this Lease, becomes impaired or diminished as to, in Lessor's
reasonable opinion, increase Lessor's credit risk;
(h) If, in Lessor's reasonable opinion, there should be a material adverse
change in the financial condition of Lessee.
19. REMEDIES. Upon the occurrence of any Event of Default and at any time
thereafter, Lessor may, with or without cancelling this Lease, in its sole
discretion, do any one or more of the following:
(a) upon notice to Lessee cancel this Lease and any or all Schedules;
(b) continue to be the owner of the Equipment and may, but is not obligated
to, take possession of the Equipment, dispose of the Equipment by sale or
otherwise, all of which determinations may be made by Lessor in its absolute
discretion and for its own account;
(c) declare immediately due and payable all Rents due and to become due
hereunder for the full term of this Lease (including any renewal or purchase
obligations);
(d) recover from Lessee damages not as a penalty but herein liquidated for
all purposes and in an amount equal to the sum of (i) any accrued and unpaid
rent as of the date of entry of judgment in favor of Lessor plus the total of
any amounts due to Lessor pursuant to Paragraph 3; (ii) the present value of all
future rentals reserved in this Lease and contracted to be paid over the
unexpired term of this Lease discounted at a rate equal to the discount rate of
the Federal Reserve Bank of San Francisco as of the date of entry of judgment in
favor of Lessor; (iii) all commercially reasonable costs and expenses incurred
by Lessor in any repossession, recovery, storage, repair, sale, re-lease or
other disposition of the Equipment including reasonable attorneys' fees and
costs incurred in connection therewith or otherwise resulting from Lessee's
default; (iv) the present value of the agreed upon or estimated residual value
of the Equipment as of the expiration of this Lease or any renewal thereof
discounted at a rate equal to the discount rate of the Federal Reserve Bank of
San Francisco as of the date of entry of judgment in favor of Lessor; and (v)
any indemnity, if then determinable, plus interest at eighteen percent (18%) per
annum;
(e) in its sole discretion, re-lease or sell any or all of the Equipment at
a public or private sale on such terms and notice as Lessor shall deem
reasonable and recover from Lessee damages, not as a penalty, but herein
liquidated for all purposes and in an amount equal to the sum of (i) any accrued
and unpaid rent as of the later of (A) the date of default or (B) the date that
Lessor has obtained possession of the Equipment or such other date as Lessee has
made an effective tender of possession of the Equipment back to Lessor ("Default
Date"); plus rent (at the rate provided for in this Lease) for the additional
period (but in no event longer than two (2) months) that it takes Lessor to
resell or re-let all of the Equipment, plus the total of any amounts due to
Lessor pursuant to Paragraph 3; (ii) the present value of all future rentals
reserved in this Lease and contracted to be paid over the unexpired term of this
Lease discounted at a rate equal to the discount rate of the Federal Reserve
Bank of San Francisco as of the Default Date; (iii) all commercially reasonable
costs and expenses incurred by Lessor in any repossession, recovery, storage,
repair, sale, re-lease or other disposition of the Equipment including
reasonable attorneys' fees and costs incurred in connection with or otherwise
resulting from the Lessee's default; (iv) estimated residual value of the
Equipment as of the expiration of this Lease or any renewal thereof; and (v) any
indemnity, if then determinable, plus interest at eighteen percent (18%) per
annum; LESS the amount received by Lessor upon such public or private sale or
re-lease of such items of Equipment, if any;
(f) exercise any other right or remedy which may be available to it under
the Uniform Commercial Code or any applicable law.
A cancellation hereunder shall occur only upon notice by Lessor and only as
to such items of Equipment as Lessor specifically elects to cancel and this
Lease shall continue in full force and effect as to the remaining items, if any.
If this Lease is deemed at any time to be one intended as security, Lessee
agrees that the Equipment shall secure; in addition to the indebtedness set
forth herein, all other indebtedness at any time owing by Lessee to Lessor.
No remedy referred to in this Paragraph is intended to be exclusive, but
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity. No express or implied waiver
by Lessor of any default shall constitute a waiver of any other default by
Lessee or a waiver of any of Lessor's rights.
20. ASSIGNMENT BY LESSOR. LESSOR MAY ASSIGN OR TRANSFER THIS LEASE OR ANY
SCHEDULES OR LESSOR'S INTEREST IN THE EQUIPMENT WITHOUT NOTICE TO LESSEE. Any
assignee or transferee of Lessor shall have the rights, but none of the
obligations, of Lessor under this Lease. Lessee agrees that it will not assert
against any assignee or transferee of Lessor any defense, counterclaim or offset
that Lessee may have against Lessor and that upon notice, it will pay Rent to
such assignee or transferee. Lessee acknowledges that any assignment or transfer
by Lessor shall not materially change Lessee's duties or obligations under this
Lease nor materially increase the burdens or risks imposed on Lessee.
21. NO ASSIGNMENT BY LESSEE. LESSEE SHALL NOT ASSIGN OR IN ANY WAY DISPOSE
OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO
ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR.
22. FURTHER ASSURANCES. Lessee will promptly and duly execute and deliver
to Lessor such further documents and take such further actions as Lessor may
from time to time deem necessary in order to carry out the intent and purpose of
this Lease and to protect the interests of Lessor under this Lease. Lessee, at
the request of Lessor, agrees to execute and deliver to Lessor, any financing
statements, fixture filings, or other instruments necessary for perfecting the
interest and title of Lessor in this Lease and the Equipment, agrees that a copy
of this Lease may be so filed, and agrees that all costs incurred in connection
therewith (including, without limitation, filing fees and taxes) shall be paid
by Lessee. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to affix
Lessee's signature to any and all such documents. Lessee will deliver to Lessor
monthly financial statements (unaudited but prepared in accordance with
generally accepted accounting principles) within 30 days of each month-end and
audited annual financial statements within three months of fiscal year-end,
which financial statements, Lessee warrants, shall fully and fairly represent
the true financial condition of Lessee.
23. MISCELLANEOUS. This Lease shall constitute an agreement of lease and
nothing herein shall be construed as giving to Lessee any right, title or
interest in any of the Equipment except as a Lessee only. If Lessee is a
partnership, then this Lease is executed by a general partner thereof, and if
Lessee is a corporation, then this Lease is executed by a duly authorized
officer of said corporation pursuant to authority granted by the board of
directors of said corporation. This Lease may be executed in several
counterparts, each of which shall constitute an original and in each case, such
counterparts together shall constitute but one and the same instrument.
(a) Law: Jurisdiction, Venue. This Lease shall be deemed to have been made
and accepted in San Mateo County, California, where Lessor's principal place of
business is located, and shall be governed by the laws of the State of
California, except for local recording statutes. Lessee hereby agrees that all
actions and proceedings arising from this Lease may be litigated, at the
election of Lessor, only in courts having sites within the State of California
and Lessee hereby consents to the jurisdiction of any state or federal court
located within the State of California. Lessee agrees that if any action is
brought to enforce the provisions of this Lease by either party, the County of
San Mateo shall be a proper place for the trial of such action. Lessee agrees to
waive trial by jury.
(b) Binding on Successors. The terms and conditions of this Lease shall,
subject only to the provisions as to assignment, be binding upon and inure to
the benefit of Lessor and Lessee and their respective heirs, executors,
administrators and assigns.
(c) Survival. Lessee's indemnities such as given in Paragraphs 13 and in
any addenda to this Lease shall survive the expiration or other termination of
this Lease.
(d) Entire Agreement; Non-Waiver; Notices; Severability. This Lease
constitutes the entire understanding between Lessor and Lessee relating to the
subject matter hereof. Any representation, promises or conditions not contained
herein shall not be binding unless in writing and signed by duly authorized
representatives of each party. No covenant or condition of this Lease can be
waived except by the written consent of Lessor. Any notices required to be given
hereunder shall be given in writing at the address of each party herein set
forth, or at such other address as either party may substitute by written notice
to the other. If any condition of this Lease is held invalid, such an invalidity
shall not affect any other provisions hereof.
(e) Gender; Number; Joint and Several Liability; Authorization; Paragraph
Headings. Whenever the content of this Lease requires, the masculine gender
includes the feminine or neuter, and the single number includes the plural.
Whenever the word "Lessor" is used herein, it shall include all assignees of
Lessor. Whenever the word "herein" is used referring to this Lease, it shall
include the applicable Schedules hereto. If there is more than one lessee named
in this Lease, the liability of each shall be joint and several. Lessee hereby
authorizes Lessor to (i) insert serial numbers and other identification in the
Equipment Description when known and (ii) correct any patent errors or omissions
in this Lease. The titles to the Paragraphs of this Lease are solely for the
convenience of the parties and shall in no way be held to explain, modify,
amplify or aid in the interpretation of the terms and provisions hereof.
<PAGE> 1
EXHIBIT 10.16
NOTE SECURED BY STOCK PLEDGE AGREEMENT
$55,000 July 7, 1993
Menlo Park, California
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the
order of Geron Corporation (the "Company"), at its principal offices at 200
Constitution Drive, Menlo Park, California 94545, the principal sum of
Fifty-Five Thousand Dollars ($55,000), together with interest from the date of
this Note upon the terms and conditions specified below.
1. Principal and Interest. The principal balance of this Note
together with interest accrued and unpaid to date shall be due and payable on
the earlier of (i) three (3) years from the date of this Note, or (ii) nine (9)
months after the closing of an initial public offering of the Company's Common
Stock pursuant to a Registration Statement or Form S-1.
2. Rate of Interest. Interest shall accrue under the Note at a rate
equal to Three and Ninety-Five One Hundredths percent (3.95%), compounded
annually.
3. Application of Payments. Each payment shall be made in lawful
tender of the United States. Prepayment of principal and accrued interest may be
made at any time without penalty.
4. Events of Acceleration. The entire unpaid principal sum and
interest of this Note shall become immediately due and payable upon one or more
of the following events:
A. the failure of the Maker to pay when due under this Note any
payment of principal or interest and the continuation of such default for more
than thirty (30) days; or
B. fifteen days following the date the Maker ceases to provide
substantial services to the Company; or
C. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any petition in
bankruptcy or any petition for relief under the provisions of the federal
bankruptcy act or any other state or federal law for the relief of debtors and
the continuation of such petition without dismissal for a period of thirty (30)
days or more, the appointment of a receiver or trustee to take possession of any
property or assets of the Maker, or the attachment of or execution against any
property or assets of the Maker; or
D. the occurrence of any event of default under the Stock Pledge
Agreement securing this Note or any obligation secured thereby; or
5. Employment Requirement. The benefits of the interest arrangements
under this Note are not transferable by Maker and are conditioned on the future
performance of substantial services by the Maker. For purposes of applying the
provisions of this Note, the Maker shall be considered to provide substantial
services to the Company for so long as the Maker renders services as a full-time
employee of the Company or one or more of its 40%-or-more owned (directly or
indirectly) subsidiaries.
<PAGE> 2
6. Security. Payment of this Note shall be secured by that certain
Stock Pledge Agreement by Maker of even date herewith covering 240,000 shares of
the Company's Common Stock. Maker, however, shall remain personally liable for
payment of this note, and assets of the Maker, in addition to the collateral
under the Stock Pledge Agreement, may be applied to the satisfaction of the
Maker's obligations hereunder.
7. Certification. The Maker certifies that he reasonably expects to
be entitled to and will itemize deductions for federal income tax purposes for
each year the Note is outstanding.
8. Collection. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
9. Waiver. No previous waiver and no failure or delay by the Company
in acting with respect to the terms of this Note or the Stock Pledge Agreement
shall constitute a waiver of any breach, default, or failure of condition under
this Note, Stock Pledge Agreement or the obligations secured thereby. A waiver
of any term of this Note, Stock Pledge Agreement or of any of the obligations
secured thereby must be made in writing and shall be limited to the express
terms of such waiver.
The Maker waives presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; notice of
interest on interest; and diligence in taking any action to collect any sums
owing under this Note or in proceeding against any of the rights or interests in
or to properties securing payment of this Note.
10. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
11. Governing Law. This Note shall be construed in accordance with
the laws of the State of California.
/s/ Michael D. West
-----------------------------
Maker: Michael D. West
2.
<PAGE> 3
STOCK PLEDGE AGREEMENT
In order to secure payment of that certain Note Secured By Stock
Pledge Agreement dated July __, 1993 (the "Note") payable to the order of Geron
Corporation ("the Company") having its corporate offices at 200 Constitution
Drive, Menlo Park, CA 94545, in the principal amount of Fifty-Five Thousand
Dollars ($55,000) which the undersigned delivered in connection with a loan
extended to the undersigned by the Company. Such Note is secured by 240,000
shares of the Company's common stock ("Common Stock"). The undersigned hereby
grants the Company a security interest in, and assigns, transfers to and pledges
with the Company, the following securities and other property:
(i) the 240,000 shares of the Company's Common Stock
delivered to and deposited with the Company as collateral for the Note;
(ii) any and all new, additional or different securities or
other property subsequently distributed with respect to the shares
identified in subparagraph (i) which are to be delivered to and
deposited with the Company pursuant to the requirements of paragraph 3
of this agreement;
(iii) any and all other property and money which is
delivered to or comes into the possession of the Company pursuant to the
terms and provisions of this agreement; and
(iv) the proceeds of any sale, exchange or disposition of
the property and securities described in subparagraphs (i), (ii) or
(iii) above.
All securities, property and money so assigned, transferred to and
pledged with the Company shall be herein referred to as the "Collateral" and
shall be accompanied by one or more stock power assignments properly endorsed by
the undersigned. The Company shall hold the Collateral in accordance with the
following terms and provisions:
1. Warranties. The undersigned hereby warrants that the undersigned
is the owner of the Collateral and has the right to pledge the Collateral and
that the Collateral is free from all liens, adverse claims and other security
interests (other than those created hereby).
2. Rights and Powers. The Company may, without obligation to do so,
exercise at any time and from time to time one or more of the following rights
and powers with respect to any or all of the Collateral:
(a) accept in its discretion, but subject to the applicable
limitations of paragraphs 7(c) and 7(e), other property of the undersigned in
exchange for all or part of the Collateral and release Collateral to the
undersigned to the extent necessary to effect such exchange, and in such event
the money, property or securities received in the exchange shall be held by the
Company as substitute security for the Note and all other indebtedness secured
hereunder;
(b) perform such acts as are necessary to preserve and protect the
Collateral and the rights, powers and remedies granted with respect to such
Collateral by this agreement; and
(c) transfer record ownership of the Collateral to the Company or
its nominee and receive, endorse and give receipt for, or collect by legal
proceedings or otherwise, dividends or
<PAGE> 4
other distributions made or paid with respect to the Collateral, provided and
only if there exists at the time an outstanding event of default under paragraph
8 of this agreement.
Any action by the Company pursuant to the provisions of this
paragraph 2 may be taken without notice to the undersigned. Expenses reasonably
incurred in connection with such action shall be payable by the undersigned and
form part of the indebtedness secured hereunder as provided in paragraph 10.
So long as there exists no event of default under paragraph 8 of
this agreement, the undersigned may exercise all stockholder voting rights and
be entitled to receive any and all regular cash dividends paid on the
Collateral. Accordingly, until such time as an event of default occurs under
this agreement, all proxy statements and other stockholder materials pertaining
to the Collateral shall be delivered to the undersigned at the address indicated
below.
Any cash sums which the Company may receive in the exercise of its
rights and powers under paragraph 2(c) above shall be applied to the payment of
the Note and any other indebtedness secured hereunder, in such order of
application as the Company deems appropriate. Any remaining cash shall be paid
over to the undersigned.
3. Duty to Deliver. Any new, additional or different securities
which may now or hereafter become distributable with respect to the Collateral
by reason of (i) any stock dividend, stock split or reclassification of the
capital stock of the Company or (ii) any merger, consolidation or other
reorganization affecting the capital structure of the Company shall, upon
receipt by the undersigned, be promptly delivered to and deposited with the
Company as part of the Collateral hereunder. Such securities shall be
accompanied by one or more properly-endorsed stock power assignments.
4. Care of Collateral. The Company shall exercise reasonable care in
the custody and preservation of the Collateral, but shall have no obligation to
initiate any action with respect to, or otherwise inform the undersigned of, any
conversion, call, exchange right, preemptive right, subscription right, purchase
offer or other right or privilege relating to or affecting the Collateral. The
Company shall have no duty to preserve the rights of the undersigned against
adverse claims or to protect the Collateral against the possibility of a decline
in market value. The Company shall not be obligated to take any action with
respect to the Collateral requested by the undersigned unless the request is
made in writing and the Company determines that the requested action will not
unreasonably jeopardize the value of the Collateral as security for the Note and
other indebtedness secured hereunder.
The Company may at any time release and deliver all or part of the
Collateral to the undersigned, and the receipt thereof by the undersigned shall
constitute a complete and full acquittance for the Collateral so released and
delivered. The Company shall accordingly be discharged from any further
liability or responsibility for the Collateral, and the released Collateral
shall no longer be subject to the provisions of this agreement. However, any and
all releases of the Collateral shall be effected in compliance with the
applicable limitations of paragraphs 7(c) and 7(e).
5. Payment of Taxes and Other Charges. The undersigned shall pay,
prior to the delinquency date, all taxes, liens, assessments and other charges
against the Collateral, and in the event of the undersigned's failure to do so,
the Company may at its election pay any or all of such taxes and charges without
contesting the validity or legality thereof. The payments so made shall become
part of the indebtedness secured hereunder and until paid shall bear interest at
the rate specified in the Note.
2.
<PAGE> 5
6. Transfer of Collateral. In connection with the transfer or
assignment of the Note (whether by negotiation, discount or otherwise), the
Company may transfer all or any part of the Collateral, and the transferee shall
thereupon succeed to all the rights, powers and remedies granted the Company
hereunder with respect to the Collateral so transferred. Upon such transfer, the
Company shall be fully discharged from all liability and responsibility for the
transferred Collateral.
7. Release of Collateral. Provided (i) all indebtedness secured
hereunder (other than payments not yet due and payable under the Note) shall at
the time have been paid in full or cancelled and (ii) there does not otherwise
exist any event of default under paragraph 8, the pledged shares of Common
Stock, together with any additional Collateral which may hereafter be pledged
and deposited hereunder, shall be released from pledge and returned to the
undersigned in accordance with the following provisions:
(a) Upon payment or prepayment of principal under the Note, together
with payment of all accrued interest to date, one or more shares of the Common
Stock held as Collateral hereunder shall (subject to the applicable limitations
of paragraphs 7(c) and 7(e) below) be released to the undersigned within thirty
(30) days after such payment or prepayment. The number of the shares to be so
released shall be equal to the number obtained by multiplying (i) the total
number of shares of Common Stock held under this agreement at the time of the
payment or prepayment, by (ii) a fraction the numerator of which shall be the
amount of the principal paid or prepaid and the denominator of which shall be
the unpaid principal balance of the Note immediately prior to such payment or
prepayment. In no event, however, shall any fractional shares be released.
(b) Any additional Collateral which may hereafter be pledged and
deposited with the Company (pursuant to the requirements of paragraph 3) with
respect to the shares of Common Stock pledged hereunder shall be released at the
same time the particular shares of Common Stock to which the additional
Collateral relates are to be released in accordance with the applicable
provisions of paragraph 7(a). Under no circumstances, however, shall any shares
of Common Stock or any other Collateral be released if previously applied to the
payment of any indebtedness secured hereunder.
(c) In no event, however, shall any shares of Common Stock be
released pursuant to the provisions of paragraphs 7(a) or 7(b) if, and to the
extent, the fair market value of the Common Stock and all other Collateral which
would otherwise remain in pledge hereunder after such release were effected
would be less than the unpaid balance of the Note (principal and accrued
interest).
(d) For all valuation purposes under this agreement, the fair market
value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the
over-the-counter market, the fair market value shall be the mean between
the highest bid and lowest asked prices (or, if such information is
available, the closing selling price) per share of Common Stock on the
date in question in the over-the-counter market, as such prices are
reported by the National Association of Securities Dealers through its
NASDAQ system or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Common Stock on the date
in question, then the mean between the highest bid price and lowest
asked price (or the closing selling price) on the last preceding date
for which such quotations exist shall be determinative of fair market
value.
3.
<PAGE> 6
(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value shall be
the closing selling price per share of Common Stock on the date in
question on the stock exchange serving as the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then the fair market
value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the
over-the-counter market, then the fair market value shall be determined
by the Company's Board of Directors after taking into account such
factors as the Board shall deem appropriate.
(e) In the event the Collateral becomes in whole or in part
comprised of "margin securities" within the meaning of Section 207.2(i) of
Regulation G of the Federal Reserve Board, then no Collateral shall thereafter
be substituted for any new Collateral under the provisions of paragraph 2(a) or
be released under paragraph 7(a) or (b), unless there is compliance with each of
the following requirements:
(i) The substitution or release must not increase the amount
by which the indebtedness secured hereunder exceeds the maximum loan
value of the shares of Common Stock and other Collateral immediately
prior to such substitution or release.
(ii) The substitution or release must not cause the amount
of indebtedness secured hereunder to exceed the maximum loan value of
the shares of Common Stock and any other Collateral remaining after such
substitution or release is effected. This clause (ii) requirement will,
however, be applicable only if the maximum loan value of such Common
Stock and other Collateral prior to the substitution or release equals
or exceeds the indebtedness at the time secured hereunder.
(iii) For purposes of this paragraph 7(e), the maximum loan
value of each item of Collateral shall be determined on the day the
substitution or release is to be effected and shall, in the case of the
Common Stock and any other Collateral (other than margin securities),
equal the good faith loan value thereof (as defined in Section
207.2(e)(1) of Regulation G) and shall, in the case of all margin
securities (other than shares of Common Stock), equal fifty percent
(50%) of the current market value of such securities.
8. Events of Default. The occurrence of one or more of the following
events shall constitute an event of default under this agreement:
(a) the failure of the undersigned to pay, the principal and
interest, when due under the Note;
(b) the occurrence of any other acceleration event specified in
the Note;
(c) the failure of the undersigned to perform any obligation
imposed upon the undersigned by reason of this agreement; or
4.
<PAGE> 7
(d) the breach of any warranty of the undersigned contained in
this agreement.
Upon the occurrence of any such event of default, the Company may,
at its election, declare the Note and all other indebtedness secured hereunder
to become immediately due and payable and may exercise any or all of the rights
and remedies granted to a secured party under the provisions of the California
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder.
Any proceeds realized from the disposition of the Collateral
pursuant to the foregoing power of sale shall be applied first to the payment of
expenses incurred by the Company in connection with the disposition, then to the
payment of the Note and finally to any other indebtedness secured hereunder. Any
surplus proceeds shall be paid over to the undersigned. However, in the event
such proceeds prove insufficient to satisfy all obligations of the undersigned
under the Note, then the undersigned shall remain personally liable for the
resulting deficiency.
9. Other Remedies. The rights, powers and remedies granted to the
Company pursuant to the provisions of this agreement shall be in addition to all
rights, powers and remedies granted to the Company under any statute or rule of
law. Any forbearance, failure or delay by the Company in exercising any right,
power or remedy under this agreement shall not be deemed to be a waiver of such
right, power or remedy. Any single or partial exercise of any right, power or
remedy under this agreement shall not preclude the further exercise thereof, and
every right, power and remedy of the Company under this agreement shall continue
in full force and effect unless such right, power or remedy is specifically
waived by an instrument executed by the Company.
10. Costs and Expenses. All costs and expenses (including reasonable
attorneys fees) incurred by the Company in the exercise or enforcement of any
right, power or remedy granted it under this agreement shall become part of the
indebtedness secured hereunder and shall constitute a personal liability of the
undersigned payable immediately upon demand and bearing interest until paid at
the per annum rate equal to the minimum per annum rate, compounded annually,
required to avoid the imputation of interest income to the Company and
compensation income to the undersigned under the Federal tax laws.
11. Applicable Law. This agreement shall be governed by and
construed in accordance with the laws of the State of California and shall be
binding upon the executors, administrators, heirs and assigns of the
undersigned.
5.
<PAGE> 8
12. Severability. If any provision of this agreement is held to be
invalid under applicable law, then such provision shall be ineffective only to
the extent of such invalidity, and neither the remainder of such provision nor
any other provisions of this agreement shall be affected thereby.
IN WITNESS WHEREOF, this agreement has been executed by the
undersigned on this ___ day of July 1993.
/s/ Michael D. West
----------------------------
Michael D. West, Ph.D.
Address: 15 Wakefield Court
Belmont, California
Agreed to and Accepted by:
GERON CORPORATION
By: /s/ Jeryl Hilleman
----------------------------
Title: Vice President
-------------------------
Dated: July 2, 1993
6.
<PAGE> 9
GERON CORPORATION
AMENDMENT TO NOTE SECURED BY STOCK PLEDGE AGREEMENT
This Amendment to Promissory Note is made as of May 20, 1996, by and
between Geron Corporation, a Delaware corporation (the "COMPANY") and Dr.
Michael D. West ("MAKER") and is entered into with respect to the Note Secured
by Stock Pledge Agreement (the "Note") dated as of July 7, 1993, pursuant to
which the Company loaned Maker an aggregate principal amount of $55,000 (the
"Borrowed Amount").
RECITALS
WHEREAS, the parties desire to extend the term of the Note to provide
that the principal balance under the Note will become due and payable on the
earlier of July 7, 1997 or nine months after the closing of an initial public
offering of the Company's Common Stock, and to amend the Note to provide that
interest shall accrue at the rate of 6% per annum, beginning as of July 8, 1996.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, it is agreed as follows:
(a) Paragraph 1 of the Note is hereby amended to read as follows:
"1. Principal and Interest. The principal balance of this
Note shall become due and payable on the earlier of
(i) nine (9) months after the closing of an initial
public offering of the Company's Common Stock or (ii)
July 1, 1997. Interest on the principal balance of
this Note shall accrue at the rate of 6.00% per
annum, compounded annually, beginning as of July 8,
1996."
(b) Paragraph 2 is hereby amended to read as follows:
"2. Application of Payments. Each payment shall be made in
lawful tender of the United States. Prepayment of principal
and interest may be made at any time without penalty. Payments
shall be credited first to accrued and unpaid interest, with
the remainder to principal."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
GERON CORPORATION MAKER
BY: /s/ Geron Corporation /s/ Michael D. West
----------------------- -------------------------------
MICHAEL D. WEST, Ph.D.
TITLE:
-------------------
<PAGE> 1
EXHIBIT 10.17
February 15, 1995
Daniel Levitt, M.D. Ph.D.
Cancer Information Technologies
Suite 101
2 Beachtree Road
Roseland, NJ 07068
Dear Dan:
On behalf of Geron Corporation ("Geron"), I am pleased to offer you the
position of Vice President, Development. The terms of your employment are as
follows:
Your starting salary will be fifteen thousand eight hundred thirty three
dollars ($15,833) per month. You will receive a one-time sign-on bonus of
twenty five thousand dollars ($25,000). In addition, you will be eligible for
an annual December bonus of up to 20% of your calendar year gross compensation.
This bonus is based upon mutually determined individual milestones and the
company's performance.
As a full-time employee of Geron, you will be eligible for our standard
benefits package, including long-term disability and life insurance coverage.
In addition, we will reimburse you for your COBRA expenses for the period from
the start of your employment until you are covered under Geron's medical plan.
We will also reimburse you and your dependents for any emergency dental
treatments which may be necessary during this period. Geron will also provide
you with an officer's idemnification agreement, and institute D&O coverage when
the Board of Directors deems it to be advisable, probably at the time Geron
goes public.
<PAGE> 2
To assist you with your relocation, Geron will reimburse you for:
* reasonable relocation expenses, including expenses associated with the
sale of your New Jersey residence (including broker's and attorney's
fees), the purchase of a new home in the San Francisco Bay Area and the
packing, moving and storage of household goods and automobiles
* up to two trips for you and your family to visit the Bay Area and
select home/school in California
* up to six weeks lodging and expenses for you and your family in
California until you move into a permanent residence.
* 46% of your total relocation expenses to cover your tax obligations.
Geron will also provide a $120,000 interest-free loan at the time you purchase
a home in the San Francisco Bay Area to be used as a down payment for the
purchase of that home. $30,000 of this loan will be forgiven upon the
completion of each twelve months of continuous employment with Geron. Should
you cease employment with Geron prior to total loan forgiveness, the balance
will become payable immediately. If your New Jersey home is not sold by June 30,
1995, Geron will arrange purchase of that home for the greater of $400,000 or
your basis. Finally, Geron will provide you with two thousand dollars ($2,000)
per month housing allowance for a period of thirty six (36) months.
Subject to approval of the Board of Directors, you will be granted an option to
purchase two hundred fifty thousand (250,000) shares of Geron common stock at
the fair market value of such shares at the time of the option grant. The terms
and conditions of this option will be governed by an agreement which will
provide for an initial vesting of 12.5% after your first six months of
employment, with credit toward vesting beginning January 30, 1995, with the
remainder vesting monthly over the following 42 months.
Subject to reasonable approval by the Geron Board of Directors, you may serve
on the Scientific Advisory Boards of up to two outside companies, provided that
these companies are not directly competitive with Geron and violate no
confidentiality agreement. Geron will pay for professional society memberships,
medical licenses and professional journal subscriptions.
Finally, if Geron notifies you that it has elected to terminate your employment
and such termination of employment is without cause, the Company will continue
to pay your salary, less all applicable withholdings, for one year. For
purposes of this letter, "cause" includes,
<PAGE> 3
but is not limited to, gross misconduct, breach of any terms or conditions of
the Company's Proprietary Information and Inventions Agreement, fraud,
embezzlement or misappropriation of any Company property.
As a condition of your employment with Geron, you agree to execute and be bound
by the terms of the enclosed Proprietary Information and Inventions Agreement.
Employment with the Company is not for a specific term and can be terminated by
yourself or the Company at any time for any reason with or without cause. Any
contrary representations which may have been made to you or which may be made
to you are superseded by this offer. We request that all of our employees, to
the extent possible, give us advance notice if they intend to resign.
If you accept this offer, the terms described in this letter and in the
Proprietary Information and Inventions Agreement shall be the terms of your
employment. Any additions or modifications of these terms must be in writing
and signed by yourself and an officer of Geron Corporation.
Dan, please excuse the formality of the above terms, but we thought it would be
in our mutual interests to be as clear as possible. We are very enthusiastic
about the prospect of having you join Geron, which we believe to be one of the
most exciting young companies in the biopharmaceutical industry. With its
strong financial backing and commitment on the part of its founders and
employees, we are confident Geron will succeed. Nonetheless, it will succeed
faster if it can attract people of your quality and track record. If you are in
agreement with the above-stated terms and accept this offer, please return a
signed copy of this letter to me. This offer of employment will expire on
February 21, 1995, unless accepted prior to that date.
Very truly yours,
/s/ JERYL L. HILLEMAN
- ---------------------------------
Jeryl L. Hilleman
Vice President,
Finance & Administration
AGREED to this 17 February, 1995 by: /s/ DANIEL LEVITT, M.D., PH.D.
--------------------------------
Daniel Levitt, M.D., Ph.D.
<PAGE> 1
EXHIBIT 10.18
NOTE SECURED BY SECOND DEED OF TRUST
$120,000.00 July 1, 1995
Menlo Park, California
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the
order of Geron Corporation (the "Company"), at its principal offices at 200
Constitution Drive, Menlo Park, California 94025, the principal sum of One
Hundred Twenty Thousand Dollars ($120,000.00) upon the terms and conditions
specified below.
1. Principal. The principal balance of this Note shall be forgiven
in four equal annual installments of $30,000 on each anniversary of the signing
of this Note so long as the Note remains outstanding and Maker continues to
provide substantial services to the Company.
2. Interest. Except as set forth in this Paragraph, no interest
shall accrue under this Note. Upon (i) Maker's cessation of employment with the
Company or (ii) the date upon which this Note is no longer secured by the Second
Deed of Trust on the Property, interest shall accrue on the unpaid balance of
this Note at the minimum per annum rate, compounded semi-annually, required to
avoid the imputation of compensation income to Maker under the Federal tax laws.
3. Application of Payments. Payment shall be made in lawful tender
of the United States. Prepayment of principal may be made at any time without
penalty.
4. Events of Acceleration. The entire unpaid principal sum of this
Note shall become, at the option of the Company, immediately due and payable
upon one or more of the following events:
A. fifteen (15) days following the date the Maker ceases for any
reason to provide substantial services to the Company; or
B. the failure of the Maker to execute a second deed of trust (the
"Second Deed of Trust") on his principal residence in California within thirty
(30) days of a request from the Company; or
5. Employment Requirement. The benefits of the interest arrangements
under this Note are not transferable by Maker and are conditioned on the
performance of substantial services by the Maker during the term of this Note.
For purposes of applying the provisions of this Note, the Maker shall be
considered to provide substantial services to the Company for so long as the
Maker renders services as a full-time employee of the Company, its successor or
one or more of its 40%-or-more owned (directly or indirectly) subsidiaries.
6. Security. The proceeds of the loan evidenced by this Note will be
applied solely to the purchase of the Maker's principal residence in San
Francisco, California, as more particularly described in Exhibit A attached
hereto (the "Property"). Payment of this Note shall be secured by a Second Deed
of Trust on such principal residence, which Second Deed of Trust is expressly
subordinate to that certain Deed of Trust and Assignment of Rents dated June 20,
1995 executed by Maker for the benefit of The Prudential Home Mortgage Company,
Inc., encumbering the Property. Maker, however, shall remain personally liable
for payment of this Note, and assets of the Maker, in addition to the collateral
under the Second Deed of Trust, may be applied to the satisfaction of the
Maker's obligations hereunder.
<PAGE> 2
7. Sale of Property. Maker shall provide the Company thirty (30) day
advance notice prior to selling, conveying or alienating the Property, or being
divested of his title to the Property in any manner, whether voluntarily or
involuntarily. Upon consummation of any such sale, conveyance, alienation or
divestiture and only to the extent reasonably requested by the Company, Maker
agrees to secure any remaining balance due under the Note with other property of
the Maker with an aggregate value substantially equivalent to the amount of any
remaining balance under the Note.
8. No Term of Employment. Nothing contained in this Note or in the
Second Deed of Trust is intended to operate as, or shall be construed to be, a
promise to employ Employee for any particular period of time and Company hereby
reserves the right to terminate the employment of Employee at any time.
9. Certification. The Maker certifies that he reasonably expects to
be entitled to and will itemize deductions for federal income tax purposes for
each year the Note is outstanding.
10. Collection. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
11. Waiver. A waiver of any term of this Note, the Second Deed of
Trust or of any of the obligations secured thereby must be made in writing and
shall be limited to the express terms of such waiver. No previous waiver and no
failure or delay by the Company in acting with respect to the terms of this Note
or the Second Deed of Trust shall constitute a waiver of any breach, default, or
failure of condition under this Note, the Second Deed of Trust or the
obligations secured thereby.
The Maker waives presentment; demand; notice of dishonor; notice of
protest and nonpayment; notice of costs, expenses or losses and interest
thereon; and notice of interest on interest. The Company shall promptly notify
Maker in the event of default or delinquency or in the event of acceleration.
12. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
13. Governing Law. This Note shall be construed in accordance with
the laws of the State of California.
14. Assignment. This Note shall not be assignable by the Company
except to a person or entity that shall acquire, through merger or otherwise,
all or substantially all of the stock or assets of the Company.
/s/ Daniel Levitt
----------------------------------
Maker: Daniel Levitt, M.D., Ph.D.
2.
<PAGE> 3
EXHIBIT A
LEGAL DESCRIPTION:
All that real property situated in the City of San Francisco, County of San
Francisco, State of California, described as follows:
50 Parker Avenue, Block 1036, Lot 47
3.
<PAGE> 4
GERON CORPORATION
AMENDMENT TO NOTE SECURED BY SECOND DEED OF TRUST
This Amendment to Promissory Note is made as of May 31, 1996, by and
between Geron Corporation, a Delaware corporation (the "COMPANY") and Dr. Daniel
J. Levitt ("MAKER") and is entered into with respect to the Note Secured by
Second Deed of Trust (the "Note") dated as of July 1, 1995, pursuant to which
the Company loaned Maker an aggregate principal amount of $120,000 (the
"Borrowed Amount").
RECITALS
WHEREAS, pursuant to Paragraph 1 of the Prior Note, the Borrowed Amount
of the Note is to be forgiven on each anniversary of the signing of the Note in
four equal annual installments of $30,000; and
WHEREAS, the parties desire that Paragraph 1 of the Note be amended to
provide that the Borrowed Amount be forgiven on each anniversary of the
Borrower's first date of employment with the Company in four equal annual
installments of $30,000;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, it is agreed as follows:
That Paragraph 1 of the Note is hereby amended to read as follows:
"1. Principal. The principal balance of this Note shall
be forgiven in four equal annual installments of
$30,000 on each anniversary of the undersigned
Maker's first date of employment with the Company,
which date is hereby deemed to be March 31, 1995, so
long as the Note remains outstanding and Maker
continues to provide substantial services to the
Company."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
GERON CORPORATION MAKER
BY: /s/ Geron Corporation /s/ Daniel J. Levitt
----------------------- -----------------------------
DANIEL J. LEVITT, M.D., Ph.D.
TITLE:
-------------------
<PAGE> 1
EXHIBIT 10.19
NOTE SECURED BY SECOND DEED OF TRUST
$50,000 May 20, 1993
Menlo Park, California
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the
order of Geron Corporation (the "Company"), at its principal offices at 200
Constitution Drive, Menlo Park, California 94025, the principal sum of Fifty
Thousand Dollars ($50,000) upon the terms and conditions specified below. The
principal amount of this Note represents the balance of a note by Maker in the
amount of $100,000 dated August 21, 1992, the proceeds of which were used to
acquire property in Palo Alto, California and $50,000 of which was repaid by
Maker on May 20, 1993.
1. Principal and Interest. The principal balance of this Note shall
become due and payable on the earlier of (i) nine (9) months after the closing
of an initial public offering of the Company's Common Stock or (ii) three (3)
years from the date of this Note. This Note shall not bear any interest.
2. Application of Payments. Each payment shall be made in lawful
tender of the United States. Prepayment of principal may be made at any time
without penalty.
3. Events of Acceleration. The entire unpaid principal sum of this
Note shall become immediately due and payable upon one or more of the following
events:
AA. the failure of the Maker to make due under this Note any payment
of principal and the continuation of such default for more than thirty (30)
days; or
B. fifteen (15) days following the date the Maker ceases to provide
substantial services to the Company.
C. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any petition in
bankruptcy or any petition for relief under the provisions of the federal
bankruptcy act or any other state or federal law for the relief of debtors and
the continuation of such petition without dismissal for a period of thirty (30)
days or more, the appointment of a receiver or trustee to take possession of any
property or assets of the Maker, or the attachment of or execution against any
property or assets of the Maker; or
D. the failure of the Maker to execute a second deed of trust on
her principal residence in California within thirty (30) days of a request from
the Company.
E. the sale, transfer, mortgage, assignment, encumbrance or lease,
whether voluntarily or involuntarily or by operation of law or otherwise of the
property covered by the Second Deed of Trust, or any portion thereof or interest
therein without the prior written consent of the Company; or
F. the occurrence of any event of default under the Second Deed of
Trust securing this Note or any obligation secured thereby.
4. Employment Requirement. The benefits of the interest
arrangements under this Note are not transferable by Maker and are conditioned
on the future performance of substantial services by the Maker. For purposes of
applying the provisions of this Note, the Maker shall be
<PAGE> 2
considered to provide substantial services to the Company for so long as the
Maker renders services as a full-time employee of the Company or one or more of
its 40%-or-more owned (directly or indirectly) subsidiaries.
5. Security. The proceeds of the loan evidenced by this Note shall
be applied solely to the purchase of the Maker's principal residence in Palo
Alto, California. Payment of this Note shall also be secured by Second Deed of
Trust on such principal residence, as more particularly described in Exhibit "A"
to the Second Deed of Trust executed by the Maker. Maker, however, shall remain
personally liable for payment of this note, and assets of the Maker, in addition
to the collateral under the Second Deed of Trust, may be applied to the
satisfaction of the Maker's obligations hereunder.
6. Certification. The Maker certifies that she reasonably expects
to be entitled to and will itemize deductions for federal income tax purposes
for each year the Note is outstanding.
7. Collection. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
8. Waiver. No previous waiver and no failure or delay by the
Company in acting with respect to the terms of this Note or the Second Deed of
Trust shall constitute a waiver of any breach, default, or failure of condition
under this Note, the Second Deed of Trust or the obligations secured thereby. A
waiver of any term of this Note, the Second Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the
express terms of such waiver.
The Maker waives presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; notice of
interest on interest; and diligence in taking any action to collect any sums
owing under this Note or in proceeding against any of the rights or interests in
or to properties securing payment of this Note.
9. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
10. Governing Law. This Note shall be construed in accordance with
the laws of the State of California.
/s/ Jeryl Lynn Hilleman
--------------------------
Maker: Jeryl Lynn Hilleman
1398 Dane Avenue
Palo Alto, Ca 94301
2.
<PAGE> 3
GERON CORPORATION
AMENDMENT TO NOTE SECURED BY SECOND DEED OF TRUST
This Amendment to Promissory Note is made as of May 20, 1996, by and
between Geron Corporation, a Delaware corporation (the "COMPANY") and Jeryl Lynn
Hilleman ("MAKER") and is entered into with respect to the Note Secured by
Second Deed of Trust (the "Note") dated as of May 20, 1993, pursuant to which
the Company loaned Maker an aggregate principal amount of $50,000 (the "Borrowed
Amount").
RECITALS
WHEREAS, the parties desire to extend the term of the Note to provide
that the principal balance under the Note will become due and payable on the
earlier of May 22, 1997 or nine months after the closing of an initial public
offering of the Company's Common Stock, and to amend the Note to provide that
interest shall accrue at the rate of 6% per annum beginning as of May 22, 1996.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, it is agreed as follows:
(a) Paragraph 1 of the Note is hereby amended to read as follows:
"1. Principal and Interest. The principal balance of this
Note shall become due and payable on the earlier of
(i) nine (9) months after the closing of an initial
public offering of the Company's Common Stock or (ii)
May 22, 1997. Interest on the principal balance of
this Note shall accrue at the rate of 6.00% per
annum, compounded annually, beginning as of May 22,
1996."
(b) Paragraph 2 is hereby amended to read as follows:
"2. Application of Payments. Each payment shall be made in
lawful tender of the United States. Prepayment of principal
and interest may be made at any time without penalty. Payments
shall be credited first to accrued and unpaid interest, with
the remainder to principal."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
GERON CORPORATION MAKER
BY: /s/ Geron Corporation /s/ Jeryl Lynn Hilleman
----------------------- -------------------------------
JERYL LYNN HILLEMAN
TITLE:
-------------------
<PAGE> 1
EXHIBIT 10.20
NOTE SECURED BY SECOND DEED OF TRUST
$150,000.00 December __, 1993
Menlo Park, California
WHEREAS, in March 1993, Calvin B. Harley executed two promissory
notes (the "Notes") in favor of Geron Corporation (the "Company"), his employer,
for an aggregate of $150,000.00, the proceeds of which were used to purchase a
new residence in the Palo Alto area in connection with Mr. Harley's relocation
to California in order to work for the Company;
WHEREAS, the Notes bear no interest pursuant to Section 7872 of the
Internal Revenue Code;
WHEREAS, the Company and Mr. Harley desire to amend and combine the
Notes in one "employee relocation loan" on the following terms and conditions.
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the
order of Geron Corporation, at its principal offices at 200 Constitution Drive,
Menlo Park, California 94025, the principal sum of One Hundred Fifty Thousand
Dollars ($150,000.00) upon the terms and conditions specified below.
1. Principal. The principal balance of this Note shall be due and
payable upon the earlier of (i) nine (9) months after the closing of an initial
public offering of the Company's Common Stock pursuant to a Registration
Statement on Form S-1 or (ii) three (3) years after ____________________.
2. Interest. No interest shall accrue under the Note.
3. Application of Payments. Payment shall be made in lawful tender
of the United States. Prepayment of principal may be made at any time without
penalty.
4. Events of Acceleration. The entire unpaid principal sum of this
Note shall become, at the option of the Company, immediately due and payable
upon one or more of the following events:
A. the failure of the Maker to pay when due under this Note any
installment of principal and the continuation of such default for more than
thirty (30) days; or
B. fifteen (15) days following the date the Maker ceases for any
reason to provide substantial services to the Company; or
C. the failure of the Maker to execute a second deed of trust on his
principal residence in California within thirty (30) days of a request from the
Company; or
D. if the Maker shall sell, convey or alienate said property, or any
part thereof, or any interest therein, or shall be divested of his title or any
interest therein in any manner or way, whether voluntarily or involuntarily,
without the written consent of the Company being first had and obtained; or
E. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any petition in
bankruptcy or any petition for relief under the provisions of the federal
bankruptcy act or any other state or federal law for the relief of debtors and
the continuation of
<PAGE> 2
such petition without dismissal for a period of thirty (30) days or more, the
appointment of a receiver or trustee to take possession of any property or
assets of the Maker, or the attachment of or execution against any property or
assets of the Maker; or
F. the occurrence of any event of default under the Second Deed of
Trust securing this Note or any obligation secured thereby.
5. Employment Requirement. The benefits of the interest arrangements
under this Note are not transferable by Maker and are conditioned on the future
performance of substantial services by the Maker. For purposes of applying the
provisions of this Note, the Maker shall be considered to provide substantial
services to the Company for so long as the Maker renders services as a full-time
employee of the Company or one or more of its 40%-or-more owned (directly or
indirectly) subsidiaries.
6. Security. The proceeds of the loans evidenced by this Note were
applied solely to the purchase of the Maker's principal residence in Palo Alto,
California. Payment of this Note shall be secured by Second Deed of Trust on
such principal residence. Maker, however, shall remain personally liable for
payment of this Note, and assets of the Maker, in addition to the collateral
under the Second Deed of Trust, may be applied to the satisfaction of the
Maker's obligations hereunder.
7. Certification. The Maker certifies that he reasonably expects to
be entitled to and will itemize deductions for federal income tax purposes for
each year the Note is outstanding.
8. Collection. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
9. Waiver. No previous waiver and no failure or delay by the Company
in acting with respect to the terms of this Note or the Second Deed of Trust
shall constitute a waiver of any breach, default, or failure of condition under
this Note, the Second Deed of Trust or the obligations secured thereby. A waiver
of any term of this Note, the Second Deed of Trust or of any of the obligations
secured thereby must be made in writing and shall be limited to the express
terms of such waiver.
The Maker waives presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; notice of
interest on interest; and diligence in taking any action to collect any sums
owing under this Note or in proceeding against any of the rights or interests in
or to properties securing payment of this Note.
10. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
11. Governing Law. This Note shall be construed in accordance with
the laws of the State of California.
/s/ Calvin B. Harley
______________________________
Maker: Calvin B. Harley, Ph.D.
2.
<PAGE> 1
EXHIBIT 10.21
NOTE SECURED BY SECOND DEED OF TRUST
$200,000.00 September 30, 1995
Menlo Park, California
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the
order of Geron Corporation (the "Company"), at its principal offices at 200
Constitution Drive, Menlo Park, California 94025, the principal sum of Two
Hundred Thousand Dollars ($200,000.00) upon the terms and conditions specified
below.
1. Principal and Interest. The principal balance of this Note,
together with all accrued and unpaid interest, shall be due and payable upon the
earlier of (i) nine (9) months after the closing of an initial public offering
of the Company's Common Stock pursuant to a Registration Statement on Form S-1
or (ii) one (1) year after the date of this Note.
2. Interest. Interest shall accrue on the unpaid balance outstanding
from time to time under this Note at the annual rate of 6.00%.
3. Application of Payments. Payment shall be made in lawful tender
of the United States and shall be applied first to the payment of all accrued
and unpaid interest and then to the payment of principal. Prepayment of
principal and accrued interest may be made at any time without penalty.
4. Events of Acceleration. The entire unpaid principal sum of this
Note, together with all accrued and unpaid interest, shall become, at the option
of the Company, immediately due and payable upon one or more of the following
events:
A. the failure of the Maker to pay when due under this Note any
installment of principal or accrued interest and the continuation of such
default for more than thirty (30) days; or
B. fifteen (15) days following the date the Maker ceases for any
reason to provide substantial services to the Company; or
C. the failure of the Maker to execute a second deed of trust on
his principal residence in California within thirty (30) days of a request from
the Company; or
D. if the Maker shall sell, convey or alienate said property, or
any part thereof, or any interest therein, or shall be divested of this title or
any interest therein in any manner or way, whether voluntarily or involuntarily,
without the written consent of the Company being first had and obtained; or
E. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any petition in
bankruptcy or any petition for relief under the provisions of the federal
bankruptcy act or any other state or federal law for the relief of debtors and
the continuation of such petition without dismissal for a period of thirty (30)
days or more, the appointment of a receiver or trustee to take possession of any
property or assets of the Maker, or the attachment of or execution against any
property or assets of the Maker; or
<PAGE> 2
F. the occurrence of any event of default under the Second Deed
of Trust securing this Note or any obligation secured thereby.
5. Employment Requirement. The benefits of the interest arrangements
under this Note are not transferable by Maker and are conditioned on the future
performance of substantial services by the Maker. For purposes of applying the
provisions of this Note, the Maker shall be considered to provide substantial
services to the Company for so long as the Maker renders services as a full-time
employee of the Company or one or more of its 40%-or-more owned (directly or
indirectly) subsidiaries.
6. Security. The proceeds of the loan evidenced by this Note were
applied solely to the purchase of the Maker's principal residence in Monte
Sereno, California. Payment of this Note shall be secured by Second Deed of
Trust on such principal residence. Maker, however, shall remain personally
liable for payment of this Note, and assets of the Maker, in addition to the
collateral under the Second Deed of Trust, may be applied to the satisfaction of
the Maker's obligations hereunder.
7. Collection. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
8. Waiver. No previous waiver and no failure or delay by the Company
in acting with respect to the terms of this Note or the Second Deed of Trust
shall constitute a waiver of any breach, default, or failure of condition under
this Note, the Second Deed of Trust or the obligations secured thereby. A waiver
of any term of this Note, the Second Deed of Trust or of any of the obligations
secured thereby must be made in writing and shall be limited to the express
terms of such waiver.
The Maker waives presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; notice of
interest on interest; and diligence in taking any action to collect any sums
owing under this Note or in proceeding against any of the rights or interests in
or to properties securing payment of this Note.
9. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
10. Governing Law. This Note shall be construed in accordance with
the laws of the State of California.
_______________________________
Maker: David L. Greenwood
-2-
<PAGE> 1
EXHIBIT 10.22
NOTE SECURED BY SECOND DEED OF TRUST
$120,000.00 September 30, 1995
Menlo Park, California
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the
order of Geron Corporation (the "Company"), at its principal offices at 200
Constitution Drive, Menlo Park, California 94025, the principal sum of One
Hundred Twenty Thousand Dollars ($120,000.00) upon the terms and conditions
specified below.
1. Principal. The principal balance of this Note shall be due and
payable upon the earlier of (i) nine (9) months after the closing of an initial
public offering of the Company's Common Stock pursuant to a Registration
Statement on Form S-1 or (ii) three (3) years after the date of this Note.
2. Interest. No interest shall accrue under the Note.
3. Application of Payments. Payment shall be made in lawful tender
of the United States. Prepayment of principal may be made at any time without
penalty.
4. Events of Acceleration. The entire unpaid principal sum of this
Note shall become, at the option of the Company, immediately due and payable
upon one or more of the following events:
A. the failure of the Maker to pay when due under this Note any
installment of principal and the continuation of such default for more than
thirty (30) days; or
B. fifteen (15) days following the date the Maker ceases for any
reason to provide substantial services to the Company; or
C. the failure of the Maker to execute a second deed of trust on
his principal residence in California within thirty (30) days of a request from
the Company; or
D. if the Maker shall sell, convey or alienate said property, or
any part thereof, or any interest therein, or shall be divested of this title or
any interest therein in any manner or way, whether voluntarily or involuntarily,
without the written consent of the Company being first had and obtained; or
E. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any petition in
bankruptcy or any petition for relief under the provisions of the federal
bankruptcy act or any other state or federal law for the relief of debtors and
the continuation of such petition without dismissal for a period of thirty (30)
days or more, the appointment of a receiver or trustee to take possession of any
property or assets of the Maker, or the attachment of or execution against any
property or assets of the Maker; or
F. the occurrence of any event of default under the Second Deed
of Trust securing this Note or any obligation secured thereby.
<PAGE> 2
5. Employment Requirement. The benefits of the interest
arrangements under this Note are not transferable by Maker and are conditioned
on the future performance of substantial services by the Maker. For purposes of
applying the provisions of this Note, the Maker shall be considered to provide
substantial services to the Company for so long as the Maker renders services as
a full-time employee of the Company or one or more of its 40%-or-more owned
(directly or indirectly) subsidiaries.
6. Security. The proceeds of the loan evidenced by this Note were
applied solely to the purchase of the Maker's principal residence in Monte
Sereno, California. Payment of this Note shall be secured by Second Deed of
Trust on such principal residence. Maker, however, shall remain personally
liable for payment of this Note, and assets of the Maker, in addition to the
collateral under the Second Deed of Trust, may be applied to the satisfaction of
the Maker's obligations hereunder.
7. Certification. The Maker certifies that he reasonably expects to
be entitled to and will itemize deductions for federal income tax purposes for
each year the Note is outstanding.
8. Collection. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
9. Waiver. No previous waiver and no failure or delay by the
Company in acting with respect to the terms of this Note or the Second Deed of
Trust shall constitute a waiver of any breach, default, or failure of condition
under this Note, the Second Deed of Trust or the obligations secured thereby. A
waiver of any term of this Note, the Second Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the
express terms of such waiver.
The Maker waives presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; notice of
interest on interest; and diligence in taking any action to collect any sums
owing under this Note or in proceeding against any of the rights or interests in
or to properties securing payment of this Note.
10. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
11. Governing Law. This Note shall be construed in accordance with
the laws of the State of California.
/s/ David L. Greenwood
_________________________________
Maker: David L. Greenwood
-2-
<PAGE> 1
EXHIBIT 10.23
COMMON STOCK WARRANT
WARRANT AGREEMENT TO PURCHASE
160,000
SHARES OF COMMON STOCK
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO AN
EXEMPTION TO SUCH ACT.
GERON CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT, for value received, Cold Spring Harbor
Laboratory (the "Investor") is entitled to purchase, on the terms hereof, up to
160,000 shares of Common Stock (the "Common Stock") of Geron Corporation, a
Delaware corporation (the "Company"), at the per share purchase price described
in Section 1.3 below, subject to the provisions and upon the terms and
conditions hereinafter set forth.
This Warrant is issued pursuant to Section 4. of that certain
Amendment No. 2 to Agreement in Respect of Option between the Investor and the
Company dated January 31, 1994.
1. Exercise of Warrant.
The terms and conditions upon which this Warrant may be exercised,
and the Common Stock covered hereby (the "Warrant Stock") may be purchased, are
as follows:
1.1 Voluntary Exercise. This Warrant may be exercised in full or in
part at any time after the date hereof, but in no case may this Warrant be
exercised later than the close of business on May 3, 2004, after which
time this Warrant shall terminate and shall be void and of no further force and
effect.
<PAGE> 2
1.2 Number of Shares. The number of shares of Common Stock for which
this Warrant is initially exercisable is 160,000 shares, which number is subject
to adjustment pursuant to Section 2 of this Warrant.
1.3 Purchase Price. The per share purchase price for the shares of
Common Stock to be issued upon exercise of this Warrant shall be $2.25, subject
to adjustment as provided herein.
1.4 Method of Exercise. The exercise of the purchase rights
evidenced by this Warrant shall be effected by (a) the surrender of the Warrant,
together with a duly executed copy of the form of a subscription attached
hereto, to the Company at its principal offices and (b) the delivery of the
purchase price by check or bank draft payable to the Company's order or by wire
transfer to the Company's account for the number of shares for which the
purchase rights hereunder are being exercised or any other form of consideration
approved by the Company's Board of Directors.
1.5 Exercise by Exchange. In addition to and without limiting the
rights of the holder hereof under the terms hereof, this Warrant may be
exercised by being exchanged in whole or in part at any time or from time to
time prior to its expiration for a number of shares of Common Stock having an
aggregate fair market value on the date of such exercise equal to the difference
between (x) the fair market value of the number of shares of Common Stock
subject to this Warrant designated by the holder hereof on the date of the
exercise and (y) the aggregate purchase price hereunder for such shares in
effect at such time. The following diagram illustrates how many shares would
then be issued upon exercise pursuant to this Section 1.5:
<TABLE>
<S> <C>
Let FMV = Fair market value per share at date of exercise.
PSP = Per share purchase price at date of exercise.
N = Number of shares desired to be exercised.
X = Number of shares issued after exercise.
X = (FMV)(N) - (PSP)(N)
-------------------
FMV
</TABLE>
Upon any such exercise, the number of shares of Common Stock purchasable upon
exercise of this Warrant shall be reduced by such designated number of shares of
Common Stock and, if a balance of purchasable shares of Common Stock remains
after such exercise, the Company shall execute and deliver to the holder hereof
a new Warrant for such balance of shares of Common Stock. No payment of any cash
or other consideration to the Company shall be required from the holder of this
Warrant in connection with any exercise of this Warrant by exchange pursuant to
this
2.
<PAGE> 3
Section 1.5. Such exchange shall be effective upon the date of receipt by the
Company of the original Warrant surrendered for cancellation and a written
request from the holder hereof that the exchange pursuant to this section be
made, or at such later date as may be specified in such request. No fractional
shares arising out of the above formula for determining the number of shares
issuable in such exchange shall be issued, and the Company shall in lieu thereof
make payment to the holder hereof of cash in the amount of such fraction
multiplied by the fair market value of a share of Common Stock on the date of
the exchange. For the purposes of this Section 1.5, the "fair market value" of
any number of shares of Common Stock shall be calculated on the basis of (a) if
the Common Stock is then traded on a securities exchange, the average of the
closing prices of the Common Stock on such exchange over the 30-day period
ending three (3) days prior to the date of exercise, (b) if the Common Stock is
then regularly traded over-the-counter, the average of the sale prices or
secondarily the closing bid of the Common Stock over the 30- day period ending
three (3) days prior to the date of exercise, or (c) if there is no active
public market for the Common Stock, the fair market value thereof as determined
in good faith by the Board of Directors of the Company. In the event the holder
of this Warrant exercises this Warrant contingent upon the closing of a public
offering, the "fair market value" of a share of Common Stock on the date of
exchange shall be equal to the "Initial Price to Public" specified in the final
prospectus with respect to such public offering.
1.6 Issuance of Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, a certificate or certificates for the purchased
shares shall be issued to the Investor as soon as practicable.
2. Certain Adjustments.
2.1 Mergers, Consolidations or Sale of Assets. If at any time there
shall be a capital reorganization (other than a combination or subdivision of
Warrant Stock otherwise provided for herein), or a merger or consolidation of
the Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the Investor shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the purchase price, the number of shares of stock or
other securities or property of the Company or the successor corporation
resulting from such reorganization, merger, consolidation or sale, to which a
holder of the Common Stock deliverable upon exercise of this Warrant would have
been entitled under the provisions of the agreement in such
3.
<PAGE> 4
reorganization, merger, consolidation or sale if this Warrant had been exercised
immediately before that reorganization, merger, consolidation or sale. In any
such case, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of the Investor after the
reorganization, merger, consolidation or sale to the end that the provisions of
this Warrant (including adjustment of the purchase price then in effect and the
number of shares of Warrant Stock) shall be applicable after that event, as near
as reasonably may be, in relation to any shares or other property deliverable
after that event upon exercise of this Warrant.
2.2 Splits and Subdivisions. In the event the Company should at any
time or from time to time fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
the holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as the
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such distribution, split
or subdivision if no record date is fixed), the per share purchase price shall
be appropriately decreased and the number of shares of Warrant Stock shall be
appropriately increased in proportion to such increase (or potential increase)
of outstanding shares.
2.3 Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share purchase price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.
2.4 Adjustments for Other Distributions. In the event the Company
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 2.2, then, in each
such case for the purpose of this subsection 2.4, upon exercise of this Warrant
the holder hereof shall be entitled to a proportionate share of any such
distribution as though such holder was the holder of the number of shares of
Common Stock of the Company into which this Warrant may be exercised as of the
record date
4.
<PAGE> 5
fixed for the determination of the holders of Common Stock of the Company
entitled to receive such distribution.
2.5 Certificate as to Adjustments. In the case of each adjustment or
readjustment of the purchase price pursuant to this Section 2, the Company will
promptly compute such adjustment or readjustment in accordance with the terms
hereof and cause a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based
to be delivered to the holder of this Warrant. The Company will, upon the
written request at any time of the holder of this Warrant, furnish or cause to
be furnished to such holder a certificate setting forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect; and
(c) The number of shares of Warrant Stock and the amount, if any, of
other property at the time receivable upon the exercise of the Warrant.
2.6 Notices of Record Date, etc. In the event of:
(a) Any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of the last such cash
dividend theretofore paid) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) Any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of assets of the Company to any other person or any
consolidation or merger involving the Company; or
(c) Any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to the holder of this Warrant at least twenty (20) days
prior to the earliest date specified therein, a notice specifying:
(i) The date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right; and
5.
<PAGE> 6
(ii) The date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding-up is expected to become effective and the record date for determining
stockholders entitled to vote thereon.
3. Fractional Shares. No fractional shares shall be issued in
connection with any exercise of this Warrant. In lieu of the issuance of such
fractional share, the Company shall make a cash payment equal to the then fair
market value of such fractional share as determined in good faith by the
Company's Board of Directors.
4. Representations and Warranties of the Company.
4.1 Authorization. The Company has full power and authority to enter
into this Warrant. This Warrant has been duly authorized, executed and delivered
by the Company and constitutes its valid and legally binding obligations,
enforceable in accordance with its terms.
4.2 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of the entire Warrant in addition to such other remedies as shall be
available to the holder of this Warrant, the Company will use its reasonable
best efforts to take such corporate action as may, in the opinion of its
counsel, be necessary in increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
4.3 Valid Issuance. This Warrant, when issued and delivered in
accordance with the terms hereof, and the Warrant Stock, when issued pursuant to
the terms hereof and upon payment of the exercise price, shall, upon such
issuance, be duly authorized, validly issued, fully paid and nonassessable.
5. Privilege of Stock Ownership. Prior to the exercise of this
Warrant, the Investor shall not be entitled, by virtue of holding this Warrant,
to any rights of a stockholder of the Company, including (without limitation)
the right to vote, receive dividends or other distributions, exercise preemptive
rights or be notified of shareholder meetings, and such holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company. Nothing in
6.
<PAGE> 7
this Section 5, however, shall limit the right of the Investor to be provided
the notices described in Section 2 hereof or to participate in distributions
described in Section 2 hereof if the Investor ultimately exercises this Warrant.
6. Limitation of Liability. Except as otherwise provided herein, in
the absence of affirmative action by the holder hereof to purchase the Warrant
Stock, no mere enumeration herein of the rights or privileges of the holder
hereof shall give rise to any liability of such holder for the purchase price or
as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
7. Representations and Warranties of the Investor. The Investor
hereby represents and warrants to the Company with respect to the issuance of
the Warrant and the purchase of the Warrant Stock as follows:
7.1 Authorization. The Investor has full power and authority to
enter into this Warrant. This Warrant has been duly authorized, executed and
delivered by such Investor and constitutes its valid and legally binding
obligation, enforceable in accordance with its terms.
7.2 Purchase Entirely for Own Account. This Warrant is made with the
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Warrant such Investor hereby confirms, that
the Warrant and the Warrant Stock will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Warrant, the Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to the Warrant or the Warrant Stock.
7.3 Investment Experience. The Investor is an institutional investor
in securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Warrant and
the Warrant Stock. The Investor also represents it has not been organized solely
for the purpose of acquiring the Warrant or the Warrant Stock.
7.
<PAGE> 8
7.4 Accredited Investor. Except as disclosed to the Company in
writing, the Investor is an accredited investor as defined in Rule 501(a) of
Regulation D, as amended, promulgated under the Securities Act of 1933, as
amended (the "Act") and agrees not to sell, hypothecate, pledge or otherwise
dispose of any interest in the Warrant and the Warrant Stock in the United
States, its territories, possessions or any area subject to its jurisdiction, or
to any person who is a national thereof or resident therein (including any
estate of such person), or any corporation, partnership or other entity created
or organized therein, unless such securities have been either registered under
the Act, or are exempt from the registration requirements of the Act, in an
opinion of counsel satisfactory to the Company, and the Investor has complied
with any restrictions on transfer contained in this Warrant Agreement.
7.5 Restricted Securities. The Investor understands that the Warrant
being issued hereunder and the Warrant Stock to be purchased hereunder are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act, only in
certain limited circumstances. In this connection, the Investor represents that
it is familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act.
7.6 Legends. It is understood that the certificates evidencing the
Warrant Stock may bear one or all of the following legends:
1. "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT."
2. Any legend required by the laws of the State of California
and any other state in which the securities will be issued.
7.7 Consents. No consent, approval or authorization of or
designation, declaration or filing with any state, federal or foreign
governmental authority on the part of the Investor is required in connection
with the valid execution and delivery of this Warrant Agreement and the
consummation of the transactions contemplated hereby.
8.
<PAGE> 9
8. Registration Rights. Upon execution by the Investor of that
certain Investors' Rights Agreement dated June 3, 1993 between the Company and
certain stockholders of the Company, as currently in effect or as hereafter
amended or superseded (the "Investors' Rights Agreement"), the Investor shall be
subject to and bound by such Investors' Rights Agreement and shall be entitled
to such registration rights as set forth in Section 1 thereof.
9. Market Stand-Off Agreement. The Investor hereby agrees that,
during the period of duration specified by the Company or an underwriter of
common stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except common stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to the Investors' Rights
Agreement) enter into similar agreements;
(c) such period shall not exceed one hundred eighty (180) days
beginning the day after the effective date of such registration statement.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities (as
defined in the Investors' Rights Agreement") of the Investor (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.
10. Transfers and Exchanges.
10.1 This Warrant shall not be transferrable.
10.2 In the event of a partial exercise of this Warrant, the Company
shall issue an appropriate new warrant to the Investor.
9.
<PAGE> 10
10.3 All new warrants issued in connection with transfers, exchanges
or partial exercises shall be identical in form and provision to this Warrant
except as to the number of shares.
11. Successors and Assigns. The terms and provisions of this
Warrant shall be binding upon the Company and the Investor and their respective
successors and assigns, subject at all times to the restrictions set forth
herein.
12. Loss, Theft, Destruction or Mutilation of Warrant Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.
13. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
14. Amendments and Waivers. Any term of this Warrant may be amended
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Investor. Any such amendment or
waiver shall be binding on the parties.
10.
<PAGE> 11
15. Governing Law. The terms and conditions of this Warrant shall be
governed by and construed in accordance with California law, without regard to
conflict of law provisions.
GERON CORPORATION
By: /s/ Geron Corporation
-------------------------
Title: Vice President
----------------------
Dated: April 21, 1994
---------
ACCEPTED AND AGREED:
COLD SPRING HARBOR LABORATORY
By: /s/ Cold Spring Harbor Laboratory
---------------------------------
Title: Administrative Director
------------------------------
Dated: May 4, 1994
------
11.
<PAGE> 12
SUBSCRIPTION
GERON CORPORATION
___________________________
___________________________
Ladies and Gentlemen:
The undersigned, _________________, hereby elects to purchase,
pursuant to the provisions of the Warrant dated _________________, 1994 held by
the undersigned, shares of the Common Stock of Geron Corporation, a Delaware
corporation[, and tenders herewith payment of the purchase price of such shares
in full].
The undersigned hereby confirms and acknowledges the investment
representations and warranties made in Section 7. of the Warrant and accepts
such shares subject to the restrictions of the Warrant and the Investors' Rights
Agreement, copies of which are available from the Secretary of the Company.
Dated: _______________, 19__.
_____________________________
By _____________________________
Address: ________________________________
________________________________
12.
<PAGE> 1
EXHIBIT 11.1
GERON CORPORATION
STATEMENT OF COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
----------- ------------ ----------- ----------- -----------
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ---------------
<PAGE> 1
EXHIBIT 23.3
CONSENT OF TOWNSEND AND TOWNSEND AND CREW
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-1) and the related Prospectus of Geron
Corporation for the registration of shares of its Common Stock.
TOWNSEND AND TOWNSEND AND CREW
Palo Alto, California
June , 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 12,542 8,404
<SECURITIES> 3,011 5,535
<RECEIVABLES> 349 519
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 15,902 14,458
<PP&E> 4,267 4,303
<DEPRECIATION> 1,521 1,742
<TOTAL-ASSETS> 19,749 18,101
<CURRENT-LIABILITIES> 3,787 1,968
<BONDS> 1,654 1,471
0 0
6 6
<COMMON> 1 1
<OTHER-SE> 40,205 43,191
<TOTAL-LIABILITY-AND-EQUITY> 14,308 14,662
<SALES> 0 0
<TOTAL-REVENUES> 5,490 1,335
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 14,209 3,975
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 399 101
<INCOME-PRETAX> (8,199) (2,435)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,199) (2,435)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,199) (2,435)
<EPS-PRIMARY> (1.03) (.30)
<EPS-DILUTED> (1.03) (.30)
</TABLE>
