AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 2002 REGISTRATION NO. 333-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------- GERON CORPORATION (Exact Name of Registrant as Specified in Its Charter) -------------------- DELAWARE 75-2287752 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) -------------------- 230 CONSTITUTION DRIVE MENLO PARK, CALIFORNIA 94025 (650) 473-7700 (Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) -------------------- THOMAS B. OKARMA PRESIDENT AND CHIEF EXECUTIVE OFFICER GERON CORPORATION 230 CONSTITUTION DRIVE MENLO PARK, CALIFORNIA 94025 (650) 473-7700 (Name, Address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service) -------------------- Copies to: -------------------- Alan C. Mendelson, Esq. Latham & Watkins 135 Commonwealth Drive Menlo Park, California 94025 (650) 328-4600 -------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective. ------------------------------ If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] 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, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please 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. [ ] ------------------------------ CALCULATION OF REGISTRATION FEE ========================================================================================================== PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE(3) - ---------------------------------------------------------------------------------------------------------- Common Stock, par value $.001 per share(4) 210,000 shares $7.33 $1,539,300 $141.62 ========================================================================================================== (1) In the event of a stock split, stock dividend, or similar transaction involving Geron's common stock, in order to prevent dilution, the number of shares registered shall automatically be increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act. (2) The offering price is estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) and based upon the average of the high and low prices reported by Nasdaq National Market on March 4, 2002. (3) Calculated in accordance with Rule 457(o) under the Securities Act of 1933. (4) Each share of the registrant's common stock being registered hereunder includes Series A junior participating preferred stock purchase rights. Prior to the occurrence of certain events, the Series A junior participating preferred stock purchase rights will not be exercisable or evidenced separately from the registrant's common stock and have no value except as reflected in the market price of the share to which they are attached. 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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 7, 2002 UP TO 210,000 SHARES OF GERON CORPORATION COMMON STOCK Our common stock is traded on the Nasdaq National Market under the symbol "GERN." On March 6, 2002, the closing price of our common stock was $8.30. This prospectus relates to the sale of up to 210,000 shares of our common stock by Lynx Therapeutics, Inc. We will not receive any of the proceeds from the sale of these shares covered by this prospectus. INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 1. ---------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of the prospectus. Any representation to the contrary is a criminal offense. ---------------------- The date of this prospectus is ___________, 2002.
TABLE OF CONTENTS PAGE ---- ABOUT GERON..................................................................... 1 RISK FACTORS.................................................................... 1 FORWARD-LOOKING STATEMENTS...................................................... 12 USE OF PROCEEDS................................................................. 13 SELLING STOCKHOLDER............................................................. 13 PLAN OF DISTRIBUTION............................................................ 14 VALIDITY OF COMMON STOCK........................................................ 15 EXPERTS......................................................................... 15 LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.................................. 15 WHERE YOU CAN FIND MORE INFORMATION............................................. 16
ABOUT GERON We are a biopharmaceutical company focused on developing and commercializing therapeutic and diagnostic products for applications in oncology and regenerative medicine, and research tools for drug discovery. Our product development programs are based upon three patented core technologies: telomerase, human embryonic stem cells and nuclear transfer. Telomeres are the ends of chromosomes that protect chromosomes from degradation and act as a molecular "clock" for cellular aging. Telomerase is an enzyme that restores telomere length and rewinds the molecular "clock," thereby extending the cell's ability to multiply or replicate. By activating telomerase, we seek to increase the lifespan of normal cells which have prematurely aged in the body to treat certain chronic degenerative diseases. Conversely, by inhibiting or targeting telomerase we hope to kill cancer cells in which telomerase is abnormally turned on and to diagnose cancer by measuring telomerase activity. Human embryonic stem cells can develop and differentiate into all cells and tissues in the body. As such, they are a potential source for the manufacture of replacement cells and tissues for organ repair applications in regenerative medicine. Nuclear transfer is a method for generating whole animals from genetic material derived solely from the nucleus of a single cell obtained from a single animal. We are actively licensing this technology to others for applications in agriculture and production of biologicals. We were incorporated in 1990 under the laws of Delaware. Our principal executive offices are located at 230 Constitution Drive, Menlo Park, California 94025, and our telephone number is (650) 473-7700. References in this prospectus to "we," "us," "our," and "Geron" refer to Geron Corporation and its subsidiaries. RISK FACTORS Our business is subject to various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this Prospectus. Any of these risks could materially adversely affect our business, operating results and financial condition. OUR BUSINESS IS AT AN EARLY STAGE OF DEVELOPMENT. The study of the mechanisms of cellular aging and cellular immortality, including telomere biology and telomerase, human embryonic stem cells, and the process of nuclear transfer are relatively new areas of research. Our business is at an early stage of development. Our ability to produce products that progress to and through clinical trials is subject to our ability to, among other things: - continue to have success with our research and development efforts; - select therapeutic compounds for development; - obtain the required regulatory approvals; and - manufacture and market resulting products. When potential lead drug compounds or product candidates are identified through our research programs, they will require significant preclinical and clinical testing prior to regulatory approval in the United States and elsewhere. In addition, we will also need to determine whether any of these potential products can be manufactured in commercial quantities at an acceptable cost. Our efforts may not result in a product that can be marketed. Because of the significant scientific, regulatory and commercial milestones that must be reached for any of our research programs to be successful, any program may be abandoned, even after significant resources have been expended. WE HAVE A HISTORY OF OPERATING LOSSES AND ANTICIPATE FUTURE LOSSES; CONTINUED LOSSES COULD IMPAIR OUR ABILITY TO SUSTAIN OPERATIONS. We have incurred net operating losses every year since our operations began in 1990. As of December 31, 2001, our accumulated deficit was approximately $191.9 million. Losses have resulted principally from costs incurred in connection with our research and development activities and from general and administrative costs associated with our operations. We expect to incur additional operating losses over the next several years as our research and development efforts and preclinical testing activities are expanded. Substantially all of our revenues to date have been research support payments under the collaboration agreements with Kyowa Hakko and Pharmacia. In 2001,
we regained our right to telomerase inhibitors from Pharmacia and we will not receive future payments from Pharmacia. Kyowa Hakko provided additional research funding in 2001 and is not contractually obligated to provide any further research funding. We may be unsuccessful in entering into any new corporate collaboration that results in revenues. Even if we are able to obtain new collaboration arrangements with third parties the revenues generated from these arrangements will be insufficient to continue or expand our research activities and otherwise sustain our operations. We are unable to estimate at this time the level of revenue to be received from the sale of diagnostic products and telomerase-immortalized cell lines, and do not currently expect to receive significant revenues from the sale of these products. Our ability to continue or expand our research activities and otherwise sustain our operations is dependent on our ability, alone or with others to, among other things, manufacture and market therapeutic products. We may never receive material revenues from product sales or if we do receive revenues, such revenues may not be sufficient to continue or expand our research activities and otherwise sustain our operations. WE WILL NEED ADDITIONAL CAPITAL TO CONDUCT OUR OPERATIONS AND DEVELOP OUR PRODUCTS, AND OUR ABILITY TO OBTAIN THE NECESSARY FUNDING IS UNCERTAIN. We will require substantial capital resources in order to conduct our operations and develop our products. While we estimate that our existing capital resources, interest income and equipment financing arrangements will be sufficient to fund our current level of operations through June 30, 2003, we cannot guarantee that this will be the case. The timing and degree of any future capital requirements will depend on many factors, including: - the accuracy of the assumptions underlying our estimates for our capital needs in 2002 and beyond; - continued scientific progress in our research and development programs; - the magnitude and scope of our research and development programs; - our ability to maintain and establish strategic arrangements for research, development, clinical testing, manufacturing and marketing; - our progress with preclinical and clinical trials; - the time and costs involved in obtaining regulatory approvals; - the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; and - the potential for new technologies and products. We intend to acquire additional funding through strategic collaborations, public or private equity financings, capital lease transactions or other financing sources that may be available. Additional financing may not be available on acceptable terms, or at all. Additional equity financings could result in significant dilution to stockholders. Further, in the event that additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of our technologies, product candidates or products that we would otherwise seek to develop and commercialize ourselves. If sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs, each of which could have a material adverse effect on our business. WE MAY BE UNABLE TO IDENTIFY A SAFE AND EFFECTIVE INHIBITOR OF TELOMERASE WHICH MAY PREVENT US FROM DEVELOPING A VIABLE CANCER TREATMENT PRODUCT, WHICH WOULD ADVERSELY IMPACT OUR FUTURE BUSINESS PROSPECTS. As a result of our drug discovery efforts to date, we have identified compounds in laboratory studies that demonstrate potential for inhibiting telomerase in humans. Kyowa Hakko has selected one of these compounds, GRN163, as a lead compound for preclinical development as a telomerase inhibitor for cancer. Further research is required to determine if this compound can be fully developed as an efficacious, safe and commercially viable treatment for cancer. This compound, and other compounds we have identified, may prove to have undesirable and unintended side effects or other characteristics adversely affecting its safety or efficacy that would likely prevent or limit its commercial use. Accordingly, it may not be appropriate for us to proceed with clinical development, to obtain regulatory approval or to market a telomerase inhibitor for the treatment of cancer. If we abandon our research for 2
cancer treatment for any of these reasons or for other reasons, our business prospects would be materially and adversely affected. IF OUR ACCESS TO NECESSARY TISSUE SAMPLES, INFORMATION OR LICENSED TECHNOLOGIES IS RESTRICTED, WE WILL NOT BE ABLE TO DEVELOP OUR BUSINESS. To continue the research and development of our therapeutic and diagnostic products, we need access to normal and diseased human and other tissue samples, other biological materials and related clinical and other information. We compete with many other companies for these materials and information. We may not be able to obtain or maintain access to these materials and information on acceptable terms, if at all. In addition, government regulation in the United States and foreign countries could result in restricted access to, or prohibiting the use of, human and other tissue samples. If we lose access to sufficient numbers or sources of tissue samples, or if tighter restrictions are imposed on our use of the information generated from tissue samples, our business will be materially harmed. SOME OF OUR COMPETITORS MAY DEVELOP TECHNOLOGIES THAT ARE SUPERIOR TO OR MORE COST-EFFECTIVE THAN OURS, WHICH MAY IMPACT THE COMMERCIAL VIABILITY OF OUR TECHNOLOGIES AND WHICH MAY SIGNIFICANTLY DAMAGE OUR ABILITY TO SUSTAIN OPERATIONS. The pharmaceutical and biotechnology industries are intensely competitive. We believe that other pharmaceutical and biotechnology companies and research organizations currently engage in or have in the past engaged in efforts related to the biological mechanisms of cell aging and cell immortality and potential applications in regenerative medicine, including the study of telomeres, telomerase, human embryonic stem cells, and nuclear transfer. In addition, other products and therapies that could compete directly with the products that we are 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 competitors of ours. Many of the pharmaceutical companies developing and marketing these competing products have significantly greater financial resources and expertise than we do in: - research and development; - manufacturing; - preclinical and clinical testing; - obtaining regulatory approvals; and - marketing. Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Academic institutions, government agencies and other public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements for research, clinical development and marketing of products similar to ours. These companies and institutions compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring technologies complementary to our programs. There is also competition for access to libraries of compounds to use for screening. Should we fail to secure and maintain access to sufficiently broad libraries of compounds for screening potential targets, our business would be materially harmed. In addition to the above factors, we expect to face competition in the following areas: - 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. 3
As a result of the foregoing, our competitors may develop more effective or more affordable products, or achieve earlier patent protection or product commercialization than we do. Most significantly, competitive products may render the products that we develop obsolete. THE ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF OUR RESEARCH USING EMBRYONIC STEM CELLS AND NUCLEAR TRANSFER COULD PREVENT US FROM DEVELOPING OR GAINING ACCEPTANCE FOR COMMERCIALLY VIABLE PRODUCTS IN THIS AREA. Our programs in regenerative medicine may involve the use of human pluripotent stem cells that would be derived from human embryonic or fetal tissue. The use of human embryonic stem cells gives rise to ethical, legal and social issues regarding the appropriate use of these cells. In the event that our research related to human embryonic stem cells becomes the subject of adverse commentary or publicity, the market price for our common stock could be significantly harmed. Some groups have voiced opposition to our technology and practices. The concepts of cell regeneration, cell immortality, and genetic cloning have stimulated significant debate in social and political arenas. We use human pluripotent stem cells derived through a process that uses either donated embryos that are no longer necessary following a successful in vitro fertilization procedure or donated fetal material as the starting material. Further, many research institutions, including some of our scientific collaborators, have adopted policies regarding the ethical use of human embryonic and fetal tissue. These policies may have the effect of limiting the scope of research conducted using human embryonic stem cells, resulting in reduced scientific progress. In addition, the United States government and its agencies have in recent years refused to fund research which involves the use of human embryonic tissue. President Bush, however, announced on August 9, 2001 that he would permit federal funding of research on human embryonic stem cells using the limited number of embryonic stem cell lines that had already been created. A newly created president's council will monitor stem cell research, and the guidelines and regulations it recommends may include restrictions on the scope of research using human embryonic or fetal tissue. Our inability to conduct research using human embryonic stem cells due to such factors as government regulation or otherwise could have a material adverse effect on us. Finally, we acquired Roslin Bio-Med to gain the rights to nuclear transfer technology. The Roslin Institute produced Dolly the sheep in 1997 -- the first mammal cloned from an adult cell. Geron acquired exclusive rights to this technology for all areas except human reproductive cloning and certain other limited applications. Although we will not be pursuing human reproductive cloning, we continue to develop techniques for use in agricultural cloning. Government imposed restrictions with respect to any or all of these practices could: - harm our ability to establish critical partnerships and collaborations; - prompt government regulation of our technologies; - cause delays in our research and development; and - cause a decrease in the price of our stock. If human therapeutic cloning is restricted or banned (as it would be under bill H.R. 2505 recently passed by the U.S. House of Representatives), our ability to commercialize those applications could be significantly harmed. Also, if regulatory bodies were to ban nuclear transfer processes, our research using nuclear transfer technology could be cancelled and our business could be significantly harmed. PUBLIC ATTITUDES TOWARDS GENE THERAPY MAY NEGATIVELY AFFECT REGULATORY APPROVAL OR PUBLIC PERCEPTION OF OUR PRODUCTS. The commercial success of our product candidates will depend in part on public acceptance of the use of gene therapies for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community. Adverse events in the field of gene therapy that have occurred or may occur in the future also may result in greater governmental regulation of our product candidates and potential regulatory delays relating to the testing or approval of our product candidates. Negative public reaction to gene therapy in the development of certain of our therapies could result in greater government regulation, stricter clinical trial oversight, commercial product labeling requirements of gene therapies and could cause a decrease in the demand for any products that we may develop. The subject of genetically 4
modified organisms has received negative publicity in Europe, which has aroused public debate. The adverse publicity in Europe could lead to greater regulation and trade restrictions on imports of genetically altered products. If similar adverse public reaction occurs in the United States, genetic research and resultant products could be subject to greater domestic regulation and could cause a decrease in the demand for our potential products. ENTRY INTO CLINICAL TRIALS WITH ONE OR MORE PRODUCTS MAY NOT RESULT IN ANY COMMERCIALLY VIABLE PRODUCTS. We do not expect to generate any significant revenues from product sales for a period of several years. We may never generate revenues from product sales or become profitable because of a variety of risks inherent in our business, including risks that: - clinical trials may not demonstrate the safety and efficacy of our products; - completion of clinical trials may be delayed, or costs of clinical trials may exceed anticipated amounts; - we may not be able to obtain regulatory approval of our products, or may experience delays in obtaining such approvals; - we may not be able to manufacture our drugs economically on a commercial scale; - we and our licensees may not be able to successfully market our products; - physicians may not prescribe our products, or patients may not accept such products; - others may have proprietary rights which prevent us from marketing our products; and - competitors may sell similar, superior or lower-cost products. IMPAIRMENT OF OUR INTELLECTUAL PROPERTY RIGHTS MAY LIMIT OUR ABILITY TO PURSUE THE DEVELOPMENT OF OUR INTENDED TECHNOLOGIES AND PRODUCTS. Protection of our proprietary technology is critically important to our business. Our success will depend in part on our ability to obtain and enforce our patents and maintain trade secrets, both in the United States and in other countries. The patent positions of pharmaceutical and biopharmaceutical companies, including ours, are highly uncertain and involve complex legal and technical questions. In particular, legal principles for biotechnology patents in the United States and in other countries are evolving, and the extent to which we will be able to obtain patent coverage to protect our technology, or enforce issued patents, is uncertain. Further, our patents may be challenged, invalidated or circumvented, and our patent rights may not provide proprietary protection or competitive advantages to us. In the event that we are unsuccessful in obtaining and enforcing patents, our business would be negatively impacted. Publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries by at least several months and sometimes several years. Therefore, the persons or entities that we or our licensors name as inventors in our patents and patent applications may not have been the first to invent the inventions disclosed in the patent applications or patents, or file patent applications for these inventions. As a result, we may not be able to obtain patents from discoveries that we otherwise would consider patentable and that we consider to be extremely significant to our future success. Where several parties seek patent protection for the same technology, the U.S. Patent Office may declare an interference proceeding in order to ascertain the party to which the patent should be issued. Patent interferences are typically complex, highly contested legal proceedings, subject to appeal. They are usually expensive and prolonged, and can cause significant delay in the issuance of patents. Moreover, parties that receive an adverse decision in an interference can lose important patent rights. In our Form 10-K filings for 1999 and 2000, we reported that the U.S. Patent Office had suspended examination of two of our patent applications relating to telomerase pending a possible declaration of interference. The U.S. Patent Office has now lifted those suspensions and, in 2001, issued to us a U.S. patent with claims covering cloned human telomerase. While this was a positive development, it does not mean that the risk of an interference has been eliminated. The interference process can also be used to challenge a patent that has been issued to another party. As noted previously, the U.S. Patent Office has granted a request from Geron for the declaration of an interference between one of our pending applications and an issued patent in the area of nuclear transfer. We requested this interference in order to clarify our patent rights in the nuclear transfer area, and, based on a review of publicly available information, believe that the technology at issue was invented first at the Roslin Institute and is encompassed within 5
our nuclear transfer license. However, we do not have access to the other party's invention records, and, as in any legal proceeding, the outcome is uncertain. If interferences or other challenges to our patent rights are not resolved promptly in our favor, our existing business relationships may be jeopardized and we could be delayed or prevented from entering into new collaborations or from commercializing certain products, which could materially harm our business. Patent litigation may also be necessary to enforce patents issued or licensed to us or to determine the scope and validity of our proprietary rights or the proprietary rights of another. We may not be successful in any patent litigation. Patent litigation can be extremely expensive and time-consuming, even if the outcome is favorable to us. An adverse outcome in a patent litigation or any other proceeding in a court or patent office could subject our business to significant liabilities to other parties, require disputed rights to be licensed from other parties or require us to cease using the disputed technology. IF WE FAIL TO MEET OUR OBLIGATIONS UNDER LICENSE AGREEMENTS, WE MAY FACE LOSS OF OUR RIGHTS TO KEY TECHNOLOGIES ON WHICH OUR BUSINESS DEPENDS. Our business depends on our three core technology platforms, each of which is based in part on patents licensed from third parties. Those third-party license agreements impose obligations on us, such as payment obligations and obligations to diligently pursue development of commercial products under the licensed patents. If a licensor believes that we have failed to meet our obligations under a license agreement, the licensor could seek to limit or terminate our license rights, which would most likely lead to costly and time-consuming litigation. During the period of any such litigation our ability to carry out the development and commercialization of potential products could be significantly and negatively affected. If our license rights were ultimately lost, our ability to carry on our business based on the affected technology platform would be severely affected. WE MAY BE SUBJECT TO LITIGATION THAT WILL BE COSTLY TO DEFEND OR PURSUE AND UNCERTAIN IN ITS OUTCOME. Our business may bring us into conflict with our licensees, licensors, or others with whom we have contractual or other business relationships, or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be expensive and may require a significant amount of management's time and attention, at the expense of other aspects of our business. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities, or otherwise affect our legal or contractual rights, which could have a significant effect on our business. WE MAY BE SUBJECT TO INFRINGEMENT CLAIMS THAT ARE COSTLY TO DEFEND, AND WHICH MAY LIMIT OUR ABILITY TO USE DISPUTED TECHNOLOGIES AND PREVENT US FROM PURSUING RESEARCH AND DEVELOPMENT OR COMMERCIALIZATION OF POTENTIAL PRODUCTS. Our commercial success depends significantly on our ability to operate without infringing patents and proprietary rights of others. Our technologies may infringe the patents or proprietary rights of others. In addition, we may become aware of discoveries and technology controlled by third parties that are advantageous to our research programs. In the event our technologies do infringe on the rights of others or we require the use of discoveries and technology controlled by third parties, we may be prevented from pursuing research, development or commercialization of potential products or may be required to obtain licenses to those patents or other proprietary rights or develop or obtain alternative technologies. We may not be able to obtain alternative technologies or any required license on commercially favorable terms, if at all. If we do not obtain the necessary licenses or alternative technologies, we may be delayed or prevented from pursuing the development of some potential products. Our failure to obtain alternative technologies or a license to any technology that we may require to develop or commercialize our products will significantly and negatively affect our business. Patent law relating to the scope and enforceability of claims in the technology fields in which we operate is still evolving, and the degree of future protection for any of our proprietary rights is highly uncertain. In this regard, patents may not issue from any of our patent applications or our existing patents may be found to be invalid by a court. In addition, our success may become dependent on our ability to obtain licenses for using the patented discoveries of others. We are aware of patent applications and patents that have been filed by others with respect to 6
our technologies and we may have to obtain licenses to use these technologies. Moreover, other patent applications may be granted priority over patent applications that we or any of our licensors have filed. Furthermore, others may independently develop similar or alternative technologies, duplicate our technologies or design around the patented technologies we have developed. In the event that we are unable to acquire licenses to critical technologies that we cannot patent ourselves, we may be required to expend significant time and resources to develop alternative technology, and we may not be successful in this regard. If we cannot acquire or develop the necessary technology, we may be prevented from pursuing some of our business objectives. Moreover, one or more of our competitors could acquire or license the necessary technology. Any of these events could materially harm our business. MUCH OF THE INFORMATION AND KNOW-HOW THAT IS CRITICAL TO OUR BUSINESS IS NOT PATENTABLE AND WE MAY NOT BE ABLE TO PREVENT OTHERS FROM OBTAINING THIS INFORMATION AND ESTABLISHING COMPETITIVE ENTERPRISES. We sometimes rely on trade secrets to protect our proprietary technology, especially in circumstances in which patent protection is not believed to be appropriate or obtainable. We attempt to protect our proprietary technology in part by confidentiality agreements with our employees, consultants, collaborators and contractors. We cannot assure you that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors, any of which would harm our business significantly. WE DEPEND ON OUR COLLABORATORS TO HELP US COMPLETE THE PROCESS OF DEVELOPING AND TESTING OUR PRODUCTS AND OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS MAY BE IMPAIRED OR DELAYED IF OUR COLLABORATIVE PARTNERSHIPS ARE UNSUCCESSFUL. Our strategy for the development, clinical testing and commercialization of our products requires entering into collaborations with corporate partners, licensors, licensees and others. We are dependent upon the subsequent success of these other parties in performing their respective responsibilities and the continued cooperation of our partners. Our collaborators may not cooperate with us or perform their obligations under our agreements with them. We cannot control the amount and timing of our collaborators' resources that will be devoted to our research activities related to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us. Our ability to successfully develop and commercialize a telomerase inhibitor in Asia depends on our corporate alliance with Kyowa Hakko. Our ability to successfully develop and commercialize telomerase diagnostic products depends on our corporate alliance with Roche Diagnostics. Under our collaborative agreements with these collaborators, we rely significantly on them, among other activities, to: - design and conduct advanced clinical trials in the event that we reach clinical trials; - fund research and development activities with us; - pay us fees upon the achievement of milestones; and - market with us any commercial products that result from our collaborations. The development and commercialization of products from these collaborations will be delayed if Kyowa Hakko or Roche Diagnostics fail to conduct these collaborative activities in a timely manner or at all. In addition, Kyowa Hakko or Roche Diagnostics could terminate their agreements with us and we may not receive any development or milestone payments. If we do not achieve milestones set forth in the agreements, or if Kyowa Hakko or Roche Diagnostics or any of our future collaborators breach or terminate collaborative agreements with us, our business may be materially harmed. OUR RELIANCE ON THE RESEARCH ACTIVITIES OF OUR NON-EMPLOYEE SCIENTIFIC ADVISORS AND OTHER RESEARCH INSTITUTIONS, WHOSE ACTIVITIES ARE NOT WHOLLY WITHIN OUR CONTROL, MAY LEAD TO DELAYS IN TECHNOLOGICAL DEVELOPMENTS. We rely extensively and have relationships with scientific advisors at academic and other institutions, some of whom conduct research at our request. These scientific advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. We have limited control over the activities of these advisors and, except as otherwise required by our collaboration and consulting agreements, can expect only limited amounts of their time to be dedicated to our activities. If our scientific advisors 7
are unable or refuse to contribute to the development of any of our potential discoveries, our ability to generate significant advances in our technologies will be significantly harmed. In addition, we have formed research collaborations with many academic and other research institutions throughout the world, including the Roslin Institute. These research facilities may have commitments to other commercial and non-commercial entities. We have limited control over the operations of these laboratories and can expect only limited amounts of time to be dedicated to our research goals. THE LOSS OF KEY PERSONNEL COULD SLOW OUR ABILITY TO CONDUCT RESEARCH AND DEVELOP PRODUCTS. Our future success depends to a significant extent on the skills, experience and efforts of our executive officers and key members of our scientific staff. Competition for personnel is intense and we may be unable to retain our current personnel or attract or assimilate other highly qualified management and scientific personnel in the future. The loss of any or all of these individuals could harm our business and might significantly delay or prevent the achievement of research, development or business objectives. We also rely on consultants and advisors, including the members of our Scientific Advisory Board, who assist us in formulating our research and development strategy. We face intense competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well as academic and other research institutions. We may not be able to attract and retain these individuals on acceptable terms. Failure to do so would materially harm our business. WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN SUFFICIENT INSURANCE ON COMMERCIALLY REASONABLE TERMS OR WITH ADEQUATE COVERAGE AGAINST POTENTIAL LIABILITIES IN ORDER TO PROTECT OURSELVES AGAINST PRODUCT LIABILITY CLAIMS. Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic and diagnostic products. We may become subject to product liability claims if the use of our products is alleged to have injured subjects or patients. This risk exists for products tested in human clinical trials as well as products that are sold commercially. We currently have no clinical trial liability insurance and we may not be able to obtain and maintain this type of insurance for any of our clinical trials. In addition, product liability insurance is becoming increasingly expensive. As a result, we may not be able to obtain or maintain product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities which could have a material adverse effect on us. BECAUSE WE OR OUR COLLABORATORS MUST OBTAIN REGULATORY APPROVAL TO MARKET OUR PRODUCTS IN THE UNITED STATES AND FOREIGN JURISDICTIONS, WE CANNOT PREDICT WHETHER OR WHEN WE WILL BE PERMITTED TO COMMERCIALIZE OUR PRODUCTS. Federal, state and local governments in the United States and governments in other countries have significant regulations in place that govern many of our activities. The preclinical testing and clinical trials of the products that we develop ourselves or that our collaborators develop are subject to extensive government regulation and may prevent us from creating commercially viable products from our discoveries. In addition, the sale by us or our collaborators of any commercially viable product will be subject to government regulation from several standpoints, including the processes of: - manufacturing; - advertising and promoting; - selling and marketing; - labeling; and o distributing. We may not obtain regulatory approval for the products we develop and our collaborators may not obtain regulatory approval for the products they develop. Regulatory approval may also entail limitations on the indicated uses of a proposed product. Because certain of our product candidates involve the application of new technologies and may be based upon a new therapeutic approach, such products may be subject to substantial additional review by various government regulatory authorities, and, as a result, we may obtain regulatory approvals for such products 8
more slowly than for products based upon more conventional technologies. If, and to the extent that, we are unable to comply with these regulations, our ability to earn revenues will be materially and negatively impacted. The regulatory process, particularly for biopharmaceutical products like ours, is uncertain, can take many years and requires the expenditure of substantial resources. Any product that we or our collaborative partners develop must receive all relevant regulatory agency approvals or clearances, if any, before it may be marketed in the United States or other countries. Generally, biological drugs and non-biological drugs are regulated more rigorously than medical devices. In particular, human pharmaceutical therapeutic products are subject to rigorous preclinical and clinical testing and other requirements by the Food and Drug Administration in the United States and similar health authorities in foreign countries. The regulatory process, which includes extensive preclinical testing and clinical trials of each product in order to establish its safety and efficacy, is uncertain, can take many years and requires the expenditure of substantial resources. Data obtained from preclinical and clinical activities is susceptible to varying interpretations that could delay, limit or prevent regulatory agency approvals or clearances. In addition, delays or rejections may be encountered as a result of changes in regulatory agency policy during the period of product development and/or the period of review of any application for regulatory agency approval or clearance for a product. Delays in obtaining regulatory agency approvals or clearances could: - significantly harm the marketing of any products that we or our collaborators develop; - impose costly procedures upon our activities or the activities of our collaborators; - diminish any competitive advantages that we or our collaborative partners may attain; or - adversely affect our ability to receive royalties and generate revenues and profits. Even if we commit the necessary time and resources, economic and otherwise, the required regulatory agency approvals or clearances may not be obtained for any products developed by or in collaboration with us. If regulatory agency approval or clearance for a new product is obtained, this approval or clearance may entail limitations on the indicated uses for which it may be marketed that could limit the potential commercial use of the product. Furthermore, approved products and their manufacturers are subject to continual review, and discovery of previously unknown problems with a product or its manufacturer may result in restrictions on the product or manufacturer, including withdrawal of the product from the market. Failure to comply with regulatory requirements can result in severe civil and criminal penalties, including but not limited to: - recall or seizure of products; - injunction against manufacture, distribution, sales and marketing; and - criminal prosecution. The imposition of any of these penalties could significantly impair our business, financial condition and results of operations. TO BE SUCCESSFUL, OUR PRODUCTS MUST BE ACCEPTED BY THE HEALTH CARE COMMUNITY, WHICH CAN BE VERY SLOW TO ADOPT OR UNRECEPTIVE TO NEW TECHNOLOGIES AND PRODUCTS. Our products and those developed by our collaborative partners, if approved for marketing, may not achieve market acceptance since physicians, patients or the medical community in general may decide to not accept and utilize these products. The products that we are attempting to develop may represent substantial departures from established treatment methods and will compete with a number of traditional drugs and therapies manufactured and marketed by major pharmaceutical companies. The degree of market acceptance of any of our developed products will depend on a number of factors, including: - our establishment and demonstration to the medical community of the clinical efficacy and safety of our product candidates; - our ability to create products that are superior to alternatives currently on the market; - our ability to establish in the medical community the potential advantage of our treatments over alternative treatment methods; and - reimbursement policies of government and third-party payors. 9
If the health care community does not accept our products for any of the foregoing reasons, or for any other reason, our business would be materially harmed. THE REIMBURSEMENT STATUS OF NEWLY-APPROVED HEALTH CARE PRODUCTS IS UNCERTAIN AND FAILURE TO OBTAIN REIMBURSEMENT APPROVAL COULD SEVERELY LIMIT THE USE OF OUR PRODUCTS. Significant uncertainty exists as to the reimbursement status of newly approved health care products, including pharmaceuticals. If we fail to generate adequate third party reimbursement for the users of our potential products and treatments, then we may be unable to maintain price levels sufficient to realize an appropriate return on our investment in product development. In both domestic and foreign markets, sales of our products, if any, will depend in part on the availability of reimbursement from third-party payors, examples of which include: - government health administration authorities; - private health insurers; - health maintenance organizations; and - pharmacy benefit management companies. 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 and other medical products may change or be adopted before any of our potential products are approved for marketing. Cost control initiatives could decrease the price that we receive for any product we may develop in the future. In addition, third-party payors are increasingly challenging the price and cost-effectiveness of medical products and services and any of our potential products and treatments may ultimately not be considered cost effective by these third parties. Any of these initiatives or developments could materially harm our business. OUR ACTIVITIES INVOLVE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE MATERIALS BY OUR EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT LEGAL AND FINANCIAL PENALTIES. Our research and development activities involve the controlled use of hazardous materials, chemicals and various radioactive compounds. As a consequence, we are subject to numerous environmental and safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials. We may be required to incur significant costs to comply with current or future environmental laws and regulations and may be adversely affected by the cost of compliance with these laws and regulations. Although we believe that our safety procedures for using, handling, storing and disposing of hazardous 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, state or federal authorities could curtail our use of these materials and we could be liable for any civil damages that result, the cost of which could be substantial. Further, any failure by us to control the use, disposal, removal or storage of, or to adequately restrict the discharge of, or assist in the cleanup of, hazardous chemicals or hazardous, infectious or toxic substances could subject us to significant liabilities, including joint and several liability under certain statutes, and any liability could exceed our resources and could have a material adverse effect on our business, financial condition and results of operations. Additionally, an accident could damage our research and manufacturing facilities and operations. Additional federal, state and local laws and regulations affecting us may be adopted in the future. We may incur substantial costs to comply with and substantial fines or penalties if we violate any of these laws or regulations. OUR STOCK PRICE HAS HISTORICALLY BEEN VERY VOLATILE. Stock prices and trading volumes for many biopharmaceutical companies fluctuate widely for a number of reasons, including some reasons which may be unrelated to their businesses or results of operations such as media coverage, legislation and regulatory measures and the activities of various interest groups or organizations. This 10
market volatility, as well as general domestic or international economic, market and political conditions, could materially and adversely affect the market price of our common stock and the return on your investment. Historically, our stock price has been extremely volatile. Between January 1998 and December 31, 2001, our stock has traded as high as $75.88 per share and as low as $3.50 per share. The significant market price fluctuations of our common stock are due to a variety of factors, including: - depth of the market for the common stock; - the experimental nature of our prospective products; - fluctuations in our operating results; - market conditions relating to the biopharmaceutical and pharmaceutical industries; - any announcements of technological innovations, new commercial products or clinical progress or lack thereof by us, our collaborative partners or our competitors; or - announcements concerning regulatory developments, developments with respect to proprietary rights and our collaborations. In addition, the stock market is subject to other factors outside our control that can cause extreme price and volume fluctuations. Securities class action litigation has often been brought against companies, including many biotechnology companies, which then experience volatility in the market price of their securities. Litigation brought against us could result in substantial costs and a diversion of management's attention and resources, which could adversely affect our business. THE SALE OF A SUBSTANTIAL NUMBER OF SHARES, INCLUDING SHARES THAT WILL BECOME ELIGIBLE FOR SALE IN THE NEAR FUTURE, MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK. Sales of substantial number of shares of our common stock in the public market could significantly and negatively affect the market price for our common stock. As of December 31, 2001, we had 24,481,774 shares of common stock outstanding. Of these shares, approximately 10,534,534 shares were issued (including shares issuable upon conversion or exercise of convertible notes or warrants) since December 1998 pursuant to private placements. Of these shares, approximately 9,623,463 shares have been registered pursuant to shelf registration statements and therefore may be resold (if not sold prior to the date hereof) in the public market and approximately 911,071 of the remaining shares may be resold pursuant to Rule 144 into the public markets as early as March 9, 2002 upon the expiration of a lockup agreement with us. OUR UNDESIGNATED PREFERRED STOCK MAY INHIBIT POTENTIAL ACQUISITION BIDS; THIS MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK AND THE VOTING RIGHTS OF THE HOLDERS OF COMMON STOCK. Our certificate of incorporation provides our Board of Directors with the authority to issue up to 3,000,000 shares of undesignated preferred stock and to determine the rights, preferences, privileges and restrictions of these shares without further vote or action by the stockholders. As of March 5, 2002, the Board of Directors still has authority to designate and issue up to 2,950,000 shares of preferred stock. 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 shares of preferred stock may delay or prevent a change in control transaction without further action by our stockholders. As a result, the market price of our common stock may be adversely affected. The issuance of preferred stock may also result in the loss of voting control by others. PROVISIONS IN OUR SHARE PURCHASE RIGHTS PLAN, CHARTER AND BYLAWS, AND PROVISIONS OF DELAWARE LAW, MAY INHIBIT POTENTIAL ACQUISITION BIDS FOR US, WHICH MAY PREVENT HOLDERS OF OUR COMMON STOCK FROM BENEFITING FROM WHAT THEY BELIEVE MAY BE THE POSITIVE ASPECTS OF ACQUISITIONS AND TAKEOVERS. Our Board of Directors has adopted a share purchase rights plan, commonly referred to as a "poison pill". This plan entitles existing stockholders to rights, including the right to purchase shares of common stock, in the event of an acquisition of 15% or more of our outstanding common stock. Our share purchase rights plan could prevent stockholders from profiting from an increase in the market value of their shares as a result of a change of control of Geron by delaying or preventing a change of control. In addition, our Board of Directors has the authority, without 11
further action by our stockholders, to issue additional shares of common stock, to fix the rights and preferences of, and to issue authorized but undesignated shares of preferred stock. In addition to our share purchase rights plan and the undesignated preferred stock, provisions of our charter documents and bylaws may make it substantially more difficult for a third party to acquire control of us and may prevent changes in our management, including provisions that: - prevent stockholders from taking actions by written consent; - divide the Board of Directors into separate classes with terms of office that are structured to prevent all of the directors from being elected in any one year; and - set forth procedures for nominating directors and submitting proposals for consideration at stockholders' meetings. Provisions of Delaware law may also inhibit potential acquisition bids for us or prevent us from engaging in business combinations. Either collectively or individually, these provisions may prevent holders of our common stock from benefiting from what they may believe are the positive aspects of acquisitions and takeovers, including the potential realization of a higher rate of return on their investment from these types of transactions. FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated by reference into this prospectus contain forward-looking statements that are based on current expectations, estimates and projections about our industry, management's beliefs, and assumptions made by management. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any forward-looking statements. The risks and uncertainties include those noted in "Risk Factors" above and in the documents incorporated by reference. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 12
USE OF PROCEEDS The proceeds from the sale of the common stock sold pursuant to this prospectus will belong to the selling stockholder. We will not receive any proceeds from such sales. SELLING STOCKHOLDER The following table sets forth the name of the selling stockholder, the number of shares of common stock owned beneficially by the selling stockholder as of March 5, 2002, the number of shares which may be offered pursuant to this prospectus and the number of shares to be owned by the selling stockholder after this offering. The selling stockholder may sell up to 210,000 shares of our common stock pursuant to this prospectus. Since the selling stockholder may offer all, some or none of its common stock, no definitive estimate as to the number of shares thereof that will be held by the selling stockholder after the offering can be provided. In addition, since the date the selling stockholder provided information regarding its ownership of the shares, it may have sold, transferred or otherwise disposed of all or a portion of their shares of common stock in transactions exempt from the registration requirements of the Securities Act. Information concerning the selling stockholder may change from time to time and, when necessary, any changed information will be set forth in a prospectus supplement to this prospectus. On March 5, 2002, pursuant to a purchase agreement with Lynx Therapeutics, Inc. ("Lynx") and dated as of March 5, 2002, we purchased Lynx's right, title, and interest to certain patents and patent applications owned by Lynx in exchange for cash and shares of our common stock. In connection with the purchase agreement, we issued a total of 210,000 shares of our common stock to Lynx pursuant to a common stock purchase agreement dated as of March 5, 2002. The number of shares that we have registered is based upon the actual number of shares issued to the selling stockholder pursuant to the common stock purchase agreement. To our knowledge, the selling stockholder named in the table has sole voting and investment power with respect to all shares of common stock beneficially owned. This information is based upon information provided by the selling stockholder, and assumes the sale of all of the resale shares by the selling stockholder. The applicable percentages of ownership are based on an aggregate of 24,491,771 shares outstanding as of March 5, 2002. Shares Beneficially Shares Shares Owned After Owned Being Offering (2) Name Prior to Offering Offered(1) Number Percentage - ------------------------------ ------------------- ---------- ------ ---------- Lynx Therapeutics, Inc. 210,000 210,000 0 * - ---------- (1) This prospectus shall also cover any additional shares of common stock, pursuant to Rule 416 under the Securities Act of 1933, that may become issuable in connection with the shares registered for sale by this prospectus by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration that results in an increase in the number of our outstanding shares of common stock. (2) Assumes the sale of all shares of common stock offered by this prospectus. * Less than 1% 13
PLAN OF DISTRIBUTION We are registering 210,000 shares of our common stock on behalf of the selling stockholder. The selling stockholder and any of its pledgees, assignees and successors-in-interest may, from time to time, sell any or all of the shares of common stock offered hereby on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholder may use any one or more of the following methods when selling shares: - on the Nasdaq Small Cap Market; - in the over-the-counter market; - ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; - block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; - purchases by a broker-dealer as principal and resale by the broker-dealer for its account; - an exchange distribution in accordance with the rules of the applicable exchange; - privately negotiated transactions; - short sales; - broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share; - a combination of any such methods of sale; and - any other method permitted pursuant to applicable law. The selling stockholder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. The selling stockholder may also engage in short sales against the box, puts and calls and other transactions in our securities or derivatives of our securities and may sell or deliver shares in connection with these trades. The selling stockholder may pledge its shares to its brokers under the margin provisions of customer agreements. If the selling stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. The selling stockholder has advised us that it has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of its shares other than ordinary course brokerage arrangements, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholder. Broker-dealers engaged by the selling stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholder, or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser, in amounts to be negotiated. The selling stockholder does not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The selling stockholder and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Upon notification to us by the selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary 14
distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing the following: - the name of the selling stockholder and of the participating broker-dealer(s); - the number of shares involved; - the price at which such shares were sold; - the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; - that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and - other facts material to the transaction. In addition, we will file a supplement to this prospectus when the selling stockholder notifies us that a donee or pledgee intends to sell more than 500 shares of our common stock. We entered into a common stock purchase agreement with the selling stockholder which requires us to register for resale the shares received by the selling stockholder pursuant such purchase agreement and also provides for cross indemnification against specific liabilities in connection with the offering. We have advised the selling stockholder that the anti-manipulation provisions of Regulation M promulgated under the Securities Exchange Act of 1934 may limit the timing of purchases and sales of our shares offered by this prospectus. VALIDITY OF COMMON STOCK Latham & Watkins will pass on the validity of the issuance of the shares of common stock offered by this prospectus. EXPERTS The consolidated financial statements of Geron Corporation at December 31, 2001 and 2000, and for each of the three years in the period ended December 31, 2001 incorporated by reference 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 incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our bylaws provide for indemnification of our directors and officers to the fullest extent permitted by law. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or controlling persons of Geron pursuant to Geron's Certificate of Incorporation, bylaws and the Delaware General Corporation Law, Geron has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 15
WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. You may also inspect copies of these materials and other information about us at the offices of the Nasdaq Stock Market, Inc., National Market System, 1735 K Street, N.W., Washington, D.C. 20006-1500. The SEC allows us to "incorporate by reference" the information we file with them which means that we can disclose important information to you by referring you to those documents instead of having to repeat the information in this prospectus. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until the selling stockholder sells all the shares: - Our annual report on Form 10-K for the fiscal year ended December 31, 2001; - Our definitive proxy statement filed pursuant to Section 14 of the Exchange Act in connection with our 2001 Annual Meeting of Stockholders; and - The description of our common stock set forth in our registration statement on Form 8-A, filed with the Commission on June 13, 1996 (File No. 0-20859). We have filed with the SEC a registration statement on Form S-3 under the Securities Act. This prospectus does not contain all of the information in the registration statement. We have omitted certain parts of the registration statement, as permitted by the rules and regulations of the SEC. You may inspect and copy the registration statement, including exhibits, at the SEC's public reference room or internet site. Our statements in this prospectus about the contents of any contract or other document are not necessarily complete. You should refer to the copy of each contract or other document we have filed as an exhibit to the registration statement for complete information. We will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference, including exhibits to these documents. You should direct any requests for documents to David L. Greenwood, Chief Financial Officer, Geron Corporation, 230 Constitution Drive, Menlo Park, California 94025, telephone: (650) 473-7700. 16
================================================================================ 210,000 SHARES OF COMMON STOCK GERON CORPORATION PROSPECTUS ____________, 2002 YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. ================================================================================
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The following sets forth the costs and expenses, all of which shall be borne by the Registrant, in connection with the offering of the securities pursuant to this Registration Statement: Registration Fee $ 141.62 Accounting Fees and Expenses $ 5,000.00* Legal Fees and Expenses $ 20,000.00* Miscellaneous $ 1,500.00* Total $ 26,641.62* * Estimated Item 15. Indemnification of Directors and Officers. Section 145 of the Delaware General Corporation Law allows for the indemnification of officers, directors, and other corporate agents in terms sufficiently broad to indemnify these persons for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. The registrant's certificate of incorporation and bylaws provide for indemnification of the registrant's directors, officers, employees and other agents to the extent and under the circumstances permitted by the Delaware General Corporation Law. The registrant has also entered into agreements with its directors and officers that will require the registrant, among other things, to indemnify them against liabilities that may arise by reason of their status or service as directors to the fullest extent not prohibited by law. In addition, the registrant carries director and officer liability insurance. Item 16. Exhibits. Exhibits Description - -------- ----------- 4.1* Common Stock Purchase Agreement dated as of March 5, 2002, by and between Registrant and Lynx Therapeutics, Inc. 5.1 Opinion of Latham & Watkins. 10.1* Purchase Agreement dated March 5, 2002, by and between Registrant and Lynx Therapeutics, Inc. 23.1 Consent of Ernst & Young LLP, Independent Auditors. 23.2 Consent of Latham & Watkins (included in Exhibit 5.1). 24.1 Power of Attorney (included on the signature page to this Registration Statement). * Confidential treatment has been requested. Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the II-1
estimated maximum offering price may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; Provided, however, that subparagraphs (i) and (ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in the periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be treated as a new registration statement of the securities offered, and the offering of the securities at that time to be deemed the initial bona fide offering. (3) To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement 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. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, 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 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, 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 Act and will be governed by the final adjudication of such issue. II-2
SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Menlo Park, State of California, on March 7, 2002. GERON CORPORATION By: /s/ David L. Greenwood ------------------------------------ David L. Greenwood Senior Vice President and Chief Financial Officer POWER OF ATTORNEY KNOW ALL BY THESE PERSONS PRESENT, that the persons whose signatures appear below do hereby constitute and appoint Thomas B. Okarma and David L. Greenwood, or either of them, our true and lawful attorneys-in-fact and agents, each with full power to sign for us or any of us in our names and in any and all capacities, any and all amendments (including post-effective amendments) to this Registration Statement, or any related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents required in connection therewith with the Securities and Exchange Commission hereby do ratifying and confirming all that each of said attorneys-in-fact, or either of them, or his or her substitute or substitutes, shall do or cause to be done by virtue thereof. 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. Signature Title Date - --------- ----- ---- /s/ Thomas B. Okarma Chief Executive Officer, President and March 7, 2002 - --------------------------------- Director (principal executive officer) Thomas B. Okarma /s/ David L. Greenwood Senior Vice President and Chief March 7, 2002 - --------------------------------- Financial Officer (principal financial David L. Greenwood and accounting officer) /s/ Alexander E. Barkas Director March 7, 2002 - --------------------------------- Alexander E. Barkas, Ph.D. /s/ Edward V. Frtizky Director March 7, 2002 - --------------------------------- Edward V. Fritzky /s/ Thomas D. Kiley Director March 7, 2002 - --------------------------------- Thomas D. Kiley /s/ Robert B. Stein Director March 7, 2002 - --------------------------------- Robert B. Stein /s/ John P. Walker Director March 7, 2002 - --------------------------------- John P. Walker /s/ Patrick J. Zenner Director March 7, 2002 - --------------------------------- Patrick J. Zenner S-1
EXHIBIT INDEX Exhibits Description - -------- ----------- 4.1* Common Stock Purchase Agreement dated March 5, 2002, by and between Registrant and Lynx Therapeutics, Inc. 5.1 Opinion of Latham & Watkins. 10.1* Purchase Agreement dated as of March 5, 2002, by and between Registrant and Lynx Therapeutics, Inc. 23.1 Consent of Ernst & Young LLP, Independent Auditors. 23.2 Consent of Latham & Watkins (included in Exhibit 5.1). 24.1 Power of Attorney (included on the signature page to this Registration Statement). * Confidential treatment has been requested.
EXHIBIT 4.1 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS * . A COMPLETE, UNREDACTED VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. - ------------------------------------------------------------------------------- COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as of March 5, 2002, by and between Geron Corporation, a Delaware corporation having its principal place of business at 230 Constitution Drive, Menlo Park, California 94025 (the "COMPANY"), and Lynx Therapeutics, Inc., a Delaware corporation having its principal place of business at 25861 Industrial Boulevard, Hayward, CA 94545 (the "ACQUIRER"). A. The Company has agreed to issue 210,000 shares of the Company's common stock, par value $.001 per share (the "COMMON STOCK") to Acquirer pursuant to that certain Purchase Agreement between the Company and Acquirer dated as of March 5, 2002 (the "PURCHASE AGREEMENT"). B. The Acquirer and the Company desire to specify the terms and conditions of the Company's issuance of such common stock. THE PARTIES AGREE AS FOLLOWS: 1. ISSUANCE OF SHARES; PURCHASE PRICE. The Acquirer hereby acquires and the Company hereby issues to Acquirer 210,000 shares (the "SHARES") of Common Stock in consideration of the license granted pursuant to that certain License Agreement between the Company and the Acquirer dated as of March 5, 2002. 2. CLOSING; DELIVERY. The consummation of the transaction contemplated by this Agreement (the "CLOSING") shall be held on the date hereof ("CLOSING DATE"). The Closing shall be held at the offices of the Company or at such other time or place as Acquirer and the Company may mutually agree. At the Closing, the Company shall deliver to the Acquirer a stock certificate, in the name of the Acquirer, representing the Shares against delivery of the Patent Assignment (as defined in the Purchase Agreement). 3. CLOSING CONDITIONS. 3.1 The Company's respective obligations to issue and deliver the stock certificate representing the Shares to the Acquirer shall be subject to the following condition, which may be waived by the Company: 3.1.1 the execution of the Purchase Agreement; and
3.1.2 the accuracy of the representations and warranties made by the Acquirer shall be true and correct in all material respects as of the Closing Date. 3.2 The Acquirer's obligation to accept delivery of the stock certificate representing the Shares shall be subject to the following conditions, any one or more of which may be waived the Acquirer: 3.2.1 the execution of the Purchase Agreement; 3.2.2 the covenants and obligations that the Company is required to perform or to comply with pursuant to this Agreement, at or prior to the Closing, must have been duly performed and complied with in all material respects; 3.2.3 the Company shall have available under its Certificate of Incorporation sufficient authorized shares of capital stock to issue and sell the Shares to Acquirer; and 3.2.4 the accuracy of the representations and warranties made by the Company shall be true and correct in all material respects as of the Closing Date. 4. RESTRICTIONS ON RESALE OF SHARES. 4.1 Legends. The Acquirer understands and acknowledges that the Shares are not registered under the Securities Act of 1933 (the "ACT") and that under the Act and other applicable laws the Acquirer may be required to hold such Shares for an indefinite period of time. Each stock certificate representing Shares shall bear the following legends: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES SHALL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, SUCH REGISTRATION IS UNNECESSARY FOR SUCH TRANSFER TO COMPLY WITH THE ACT. THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF THE COMMON STOCK PURCHASE AGREEMENT, DATED MARCH 5, 2002. A COPY OF THE AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF THE COMPANY." 5. REGISTRATION RIGHTS 5.1 The Company agrees to prepare and file with the Securities and Exchange Commission ("COMMISSION"), on or before March 8, 2002, a registration statement under the Act (the "REGISTRATION STATEMENT"), on Form S-3 or other appropriate form, so as to permit a non-underwritten public offering and resale of 2
the Shares under the Act by the Acquirer. The Company agrees to diligently pursue making that registration statement effective as soon as practicable following the execution of this Agreement. The Company will notify the Acquirer of the effectiveness of the Registration Statement within one business day of receiving notice from the Commission. 5.2 The Company will prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus as may be necessary to keep the Registration Statement or post-effective amendment filed under this Section 5 effective under the Act until the earlier of (i) the date that none of the Shares covered by such Registration Statement are outstanding, (ii) the date that all of the Shares have been sold pursuant to such Registration Statement, (iii) the date the Acquirer receives an opinion of counsel to the Company, which counsel shall be reasonably acceptable to the Acquirer, that the Shares may be sold under the provisions of Rule 144 without limitation as to volume, (iv) the date that all Shares have been otherwise transferred to persons who may trade such shares without restriction under the Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend, or (v) the date all Shares may be sold at any time, without volume or manner of sale limitations pursuant to Rule 144(k) or any similar provision then in effect under the Act in the opinion of counsel to the Company, which counsel shall be reasonably acceptable to the Acquirer (the "EFFECTIVENESS PERIOD"). 5.3 The Company shall furnish to the Acquirer with respect to the Shares registered under the Registration Statement such reasonable number of copies of the Registration Statement, prospectuses and preliminary prospectuses in conformity with the requirements of the Act and such other documents as the Acquirer may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Shares by the Acquirer, provided, however, that the obligation of the Company to deliver copies of prospectuses or preliminary prospectuses to the Acquirer shall be subject to the receipt by the Company of reasonable assurances from the Acquirer that the Acquirer will comply with the applicable provisions of the Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses or preliminary prospectuses. 5.4 All fees, disbursements and out-of-pocket expenses and costs incurred by the Company in connection with the preparation and filing of the Registration Statement and any post-effective amendments thereto under this Section 5 and in complying with applicable securities and Blue Sky laws (including, without limitation, all attorneys' fees of the Company) shall be borne by the Company. The Acquirer shall bear the cost of underwriting and/or brokerage discounts, fees and commissions, if any, applicable to the Shares being registered and the fees and expenses of their counsel. The Company at its expense will supply the Acquirer with copies of the applicable Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by the Acquirer. 3
5.5 The Company will advise the Acquirer, promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission delaying or suspending the effectiveness of the Registration Statement or of the initiation of any proceeding for that purpose, that the Company will use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued. 5.6 With a view to making available to the Acquirer the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the Commission that may at any time permit the Acquirer to sell the Securities to the public without registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) such date as all of the Shares may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as all of the Shares shall have been resold; and (ii) file with the Commission in a timely manner all reports and other documents required of the Company under the Act and under the Exchange Act of 1934, as amended. 5.7 The Acquirer will cooperate with the Company in all respects in connection with this Agreement, including timely supplying all information reasonably requested by the Company (which shall include all information regarding the Acquirer and proposed manner of sale of the Shares required to be disclosed in any Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Shares and entering into and performing their obligations under any underwriting agreement, if the offering is an underwritten offering, in usual and customary form, with the managing underwriter or underwriters of such underwritten offering. Nothing in this Agreement shall obligate the Acquirer to consent to be named as an underwriter in any Registration Statement. 5.8 If the Registration Statement has not been declared effective by the Commission on or before * (the "OPTION DATE"), then the Acquirer shall have the option to return for cancellation (the "CANCELLATION OPTION") all of the Shares to the Company. As consideration for the return of the Shares to the Company for cancellation, the Company shall pay to Acquirer an amount equal to * Dollars ($*), payable in immediately available funds. The Acquirer shall not be required to make any representations or warranties with respect to the Shares, except with respect to its ownership of the Shares. At anytime following the Option Date, the Acquirer may exercise the Cancellation Option by delivering written notice to the Company that states that it has elected to exercise the Cancellation Option (the "CANCELLATION OPTION EXERCISE NOTICE"). If the Cancellation Option Notice is not received by the Company within thirty (30) days following the Option Date, then the Cancellation Option shall expire and be of no further force or effect. This Cancellation Option shall not be enforceable by any transferee of the Shares held by the Acquirer. * 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
6. INDEMNIFICATION. For the purpose of this Section 6: the term "REGISTRATION STATEMENT" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 5.1; and the term "UNTRUE STATEMENT" shall include any untrue statement or alleged untrue statement, or any omission or alleged omission to state in the Registration Statement 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. 6.1 The Company agrees to indemnify and hold harmless the Acquirer from and against any losses, claims, damages or liabilities to which the Acquirer may become subject (under the Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon (i) any untrue statement of a material fact contained in the Registration Statement, (ii) any omission of a material fact required to be stated in the Registration Statement or necessary in order to make the statements in the Registration Statement not misleading or (iii) any failure by the Company to fulfill any undertaking included in the Registration Statement, and the Company will reimburse the Acquirer for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim, provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, an untrue statement made in such Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Acquirer specifically for use in preparation of the Registration Statement or the failure of the Acquirer to comply with its covenants and agreements contained in Sections 8.1 or 8.5.2 hereof or any misstatement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to the Acquirer prior to the pertinent sale or sales by the Acquirer. 6.2 The Acquirer agrees to indemnify and hold harmless the Company (and each person, if any, who controls the Company within the meaning of Section 15 of the Act, each officer of the Company who signs the Registration Statement and each director of the Company) from and against any losses, claims, damages or liabilities to which the Company (or any such officer, director or controlling person) may become subject (under the Act or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (i) any failure to comply with the covenants and agreements contained in Sections 8.1 or 8.5.2 hereof or (ii) any untrue statement of a material fact contained in the Registration Statement or any omission of a material fact required to be stated in the Registration Statement or necessary in order to make the statements in the Registration Statement not misleading if such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Acquirer specifically for use in preparation of the Registration Statement, and the Acquirer 5
will reimburse the Company (or such officer, director or controlling person), as the case may be, for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that the Acquirer shall not be liable in any such case for (A) any untrue statement or omission in the Registration Statement, prospectus, or other such document which statement is corrected by the Acquirer and delivered to the Company prior to the sale from which such loss occurred, (B) any untrue statement or omission in any prospectus which is corrected by the Acquirer in any subsequent prospectus, or supplement or amendment thereto, and delivered to the Company prior to the sale or sales from which a loss or liability arose, or (C) any failure by the Company to fulfill any of its obligations under Section 6.1 hereof. 6.3 Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 6, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 6 (except to the extent that such omission materially and adversely affects the indemnifying party's ability to defend such action) or from any liability otherwise than under this Section 6. Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof, provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the reasonable opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person; provided, however, that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms 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 indemnification 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. 6
7. REPRESENTATIONS AND ACKNOWLEDGMENTS OF THE COMPANY. The Company hereby represents, warrants and covenants to the Acquirer as follows: 7.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as presently proposed to be conducted. The Company is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. 7.2 Authorization. All corporate action on the part of Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of Company hereunder and the authorization, issuance and delivery of the Shares has been taken or will be taken prior to the Closing, and this Agreement, when executed and delivered will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors' rights generally, as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 7.3 Valid Issuance of Common Stock. The Shares that are being purchased by Acquirer hereunder, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly authorized and issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws. 7.4 Legal Proceedings and Orders. There is no action, suit, proceeding or investigation pending or threatened against the Company that questions the validity of this Agreement or the right of the Company to enter into this Agreement or to consummate the transactions contemplated hereby, nor is the Company aware of any basis for any of the forgoing. The Company is neither a party nor subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that would affect the ability of the Company to enter into this Agreement or to consummate the transactions contemplated hereby. 8. REPRESENTATIONS AND ACKNOWLEDGMENTS OF THE ACQUIRER. The Acquirer hereby represents, warrants, acknowledges and agrees that: 8.1 Investment. The Acquirer is acquiring the Shares for the Acquirer's own account, and not directly or indirectly for the account of any other person. The Acquirer is acquiring the Shares for investment and not with a view to distribution or resale 7
thereof except in compliance with the Act and any applicable state law regulating securities. 8.2 Access to Information. Acquirer has consulted with its own attorney, accountant, or investment advisor as the Acquirer has deemed advisable with respect to the investment and has determined its suitability for Acquirer. The Acquirer has had the opportunity to ask questions of, and to receive answers from, appropriate executive officers of the Company with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial condition and results of operations of the Company. The Acquirer has had access to such financial and other information as is necessary in order for the Acquirer to make a fully informed decision as to investment in the Company, and has had the opportunity to obtain any additional information necessary to verify any of such information to which the Acquirer has had access. Acquirer acknowledges that neither the Company nor any of its officers, directors, employees, agents, representatives, or advisors have made any representation or warranty. 8.3 Business and Financial Expertise. The Acquirer further represents and warrants that it has such business or financial expertise as to be able to evaluate its investment in the Company and purchase of the Shares. 8.4 Speculative Investment. The Acquirer acknowledges that the investment in the Company represented by the Shares is highly speculative in nature and is subject to a high degree of risk of loss in whole or in part; the amount of such investment is within the Acquirer's risk capital means and is not so great in relation to the Acquirer's total financial resources as would jeopardize the personal financial needs of the Acquirer in the event such investment were lost in whole or in part. 8.5 Unregistered Securities. Acquirer acknowledges that: 8.5.1 The Acquirer must bear the economic risk of investment for an indefinite period of time because the Shares have not been registered under the Act and therefore cannot and will not be sold unless they are subsequently registered under the Act or an exemption from such registration is available. The Company has made no agreements, covenants or undertakings whatsoever to register any of the Shares under the Act, except as provided in Section 5 above. The Company has made no representations, warranties or covenants whatsoever as to whether any exemption from the Act, including, without limitation, any exemption for limited sales in routine brokers' transactions pursuant to Rule 144 under the Act, will become available and any such exemption pursuant to Rule 144, if available at all, will not be available unless: (i) a public trading market then exists in the Company's common stock, (ii) the Company has complied with the information requirements of Rule 144, and (iii) all other terms and conditions of Rule 144 have been satisfied. 8
8.5.2 Transfer of the Shares has not been registered or qualified under any applicable state law regulating securities and, therefore, the Shares cannot and will not be sold unless they are subsequently registered or qualified under any such act or an exemption therefrom is available. The Company has made no agreements, covenants or undertakings whatsoever to register or qualify any of the Shares under any such act, except as provided in Section 5 above. The Company has made no representations, warranties or covenants whatsoever as to whether any exemption from any such act will become available. 8.5.3 The Acquirer hereby certifies that it is an "accredited investor" as that term is defined in Rule 501 under the Act. 9. TAX ADVICE. The Acquirer acknowledges that the Acquirer has not relied and will not rely upon the Company or the Company's counsel with respect to any tax consequences related to the ownership, purchase, or disposition of the shares. The Acquirer assumes full responsibility for all such consequences and for the preparation and filing of all tax returns and elections which may or must be filed in connection with such shares. 10. NOTICES. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given on the date of service if served personally or five days, not including Saturdays, Sundays, or national holidays, after mailing if mailed by first class United States mail, certified or registered with return receipt requested, postage prepaid, and addressed as follows: To the Company at: Geron Corporation 230 Constitution Drive Menlo Park, California 94025 Attention: Chief Financial Officer Telephone: (650) 473-7700 Facsimile: (650) 473-7750 To the Acquirer at: Lynx Therapeutics, Inc. 25861 Industrial Boulevard Hayward, CA 94545 Attention: Chief Financial Officer Telephone: (510)670-9300 Facsimile: (510)670-9303 11. BINDING EFFECT. This Agreement shall be binding upon the heirs, legal representatives and successors of the Company and of the Acquirer; provided, however, that the Acquirer may not assign any rights or obligations under this Agreement. The Company's rights under this Agreement shall be freely assignable. 9
12. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties pertaining to the Shares and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. IN WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement as of the date first above written. GERON CORPORATION /s/ David L. Greenwood ---------------------------------------- By: David L. Greenwood Title: Chief Financial Officer and Senior Vice President, Corporate Development LYNX THERAPEUTICS, INC. /s/ Norman J.W. Russell --------------------------------------- By: Norman J.W. Russell Title: President and Chief Executive Officer 10
EXHIBIT 5.1 [LATHAM & WATKINS LETTERHEAD] March 7, 2002 Geron Corporation 230 Constitution Drive Menlo Park, California 94025 Re: Registration of 210,000 shares of common stock, par value $.001 per share, of Geron Corporation, pursuant to a Registration Statement on Form S-3 Ladies and Gentlemen: In connection with the registration of 210,000 shares of common stock, par value $.001 per share, of Geron Corporation, a Delaware corporation (the "Company"), under the Securities Act of 1933, as amended, on Form S-3 filed with the Securities and Exchange Commission on the date hereof (the "Registration Statement"), you have requested our opinion with respect to the matters set forth below. The shares being registered include 210,000 shares of common stock which were issued and sold to Lynx Therapeutics, Inc., pursuant to a Common Stock Purchase Agreement dated as of March 5, 2002 by and between the Company and Lynx Therapeutics, Inc. (the "Shares"). In our capacity as your special counsel in connection with such registration, we are familiar with the proceedings taken by the Company in connection with the authorization, issuance and sale of the Shares. In addition, we have made such legal and factual examinations and inquiries, including an examination of originals or copies certified or otherwise identified to our satisfaction of such documents, corporate records and instruments, as we have deemed necessary or appropriate for purposes of this opinion. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as copies. As to facts material to the opinions, statements and assumptions expressed herein, we have, with your consent, relied upon oral or written statements and representations of officers and other representatives of the Company and others. In addition, we have obtained and relied upon such certificates and assurances from public officials as we have deemed necessary. We are opining herein as to the effect on the subject transaction only of the General Corporation Law of the State of Delaware, and we express no opinion with respect to
LATHAM & WATKINS March 7, 2002 Page 2 the applicability thereto, or the effect thereon, of the laws of any jurisdiction or any other laws or as to any matters of municipal law or the laws of any local agencies within any state. Subject to the foregoing, it is our opinion that, as of the date hereof, the Shares have been duly authorized and are validly issued, fully paid and nonassessable. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm contained under the heading "Validity of Common Stock." Very truly yours, /s/ Latham & Watkins
EXHIBIT 10.1 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS * . A COMPLETE, UNREDACTED VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. - -------------------------------------------------------------------------------- PURCHASE AGREEMENT This PURCHASE AGREEMENT (the "Agreement") is made as of March 5, 2002 (the "Effective Date"), by and between Geron Corporation, a Delaware corporation ("Buyer") and Lynx Therapeutics, Inc., a Delaware corporation ("Seller"). RECITALS A. Seller owns certain proprietary technology relating to oligonucleotide N3'->P5' phosphoramidates, their manufacture, and their uses in a variety of fields ("Amidate Technology"). B. Buyer desires to acquire from Seller, and Seller desires to transfer to Buyer on the terms and conditions set forth herein, Seller's right, title and interest to certain patents and patent applications owned by Seller and incorporating the Amidate Technology. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants, representations, warranties, conditions, and agreement hereinafter expressed, the parties hereby agree as follows: ARTICLE I DEFINITIONS 1.1 "Affiliate" means any person, corporation, partnership, limited liability company, limited liability partnership, joint venture, association, company, or other legal entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the referenced party. In this definition, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a party, whether through ownership of securities, by contract, or otherwise. 1.2 "Amidate Product" means any product which contains, incorporates, is based upon, is derived in whole or in part from, or is made with the use of, any one or more of the Lynx Patents. 1.3 "Lynx Patents" means the patents and patent applications listed on Exhibit B hereto; and with respect to U.S. patents and applications; any division, continuation, continuation-in-part, substitute, renewal, reissue, extension, confirmation, reexamination, registration, patent term extension or supplemental protection certificate thereof; all foreign equivalents of any of the foregoing patents and applications;; and all patents issuing on any of the foregoing applications.
1.4 "Northwestern Patents" means the patents and patent applications listed on Exhibit C hereto; and with respect to U.S. patents and applications; any division, continuation, continuation-in-part, substitute, renewal, reissue, extension, confirmation, reexamination, registration, patent term extension or supplemental protection certificate thereof; all foreign equivalents of any of the foregoing patents and applications;; and all patents issuing on any of the foregoing applications. 1.5 "Northwestern License" means the license agreement dated October 27, 1993 between the Seller and Northwestern University ("Northwestern"), which is attached hereto as Exhibit D, pursuant to which Northwestern licensed to the Seller certain rights to the Northwestern Patents. 1.6 "Patent Assignment" means the form of instrument attached hereto as Exhibit A. 1.7 "Sublicenses" means, collectively, (i) the license agreement dated as of June 15, 1998 between the Seller and Cruachem, Inc., which is attached hereto as Exhibit E, and (ii) the license agreement dated as of January 29, 1999 between the Seller and JBL Scientific, Inc., which is attached hereto as Exhibit F, pursuant to each of which Seller has sublicensed certain rights under the Lynx Patents and the Northwestern Patents. ARTICLE II PURCHASE AND SALE 2.1 Lynx Patents. Seller hereby sells, assigns, conveys, and transfers to Buyer, all right, title and interest of the Seller in and to the Lynx Patents. For the avoidance of doubt, the agreement to assign, convey and transfer in the preceding sentence (i) is subject to the rights granted to the sublicensees under the Sublicenses, and (ii) does not include any assignment, conveyance, transfer of, or any other interest in, any rights in or to the Northwestern Patents. 2.2 Northwestern Patents and License. Seller hereby, assigns, conveys, and transfers to Buyer, all right, title and interest of the Seller in and to the Northwestern Patents and the Northwestern License. For the avoidance of doubt, the agreement to assign, convey and transfer in the preceding sentence (i) is subject to the terms and conditions of the Northwestern License, including Section 9.1 of the Northwestern License; (ii) is subject to the rights granted to the sublicensees under the Sublicenses, and (iii) does not include any assignment, conveyance, transfer of, or any other interest in, any rights in or to the Lynx Patents. Seller will promptly seek and diligently pursue Northwestern's unconditional consent to this assignment, will keep Buyer regularly informed of its progress in obtaining such consent, and will use its best efforts to obtain such consent by no later than *. If Northwestern does not consent unconditionally to the assignment by *, Buyer may, at any time thereafter by written notice to Seller, obtain from Seller, in lieu of the assignment of the Northwestern Patents and the Northwestern License, an exclusive sublicense under the Northwestern License, subject to its terms and conditions and subject to the Sublicenses, on the terms and conditions specified in Exhibit G attached hereto. The parties acknowledge that Seller has not been able to provide Buyer with all relevant documents with respect to the Northwestern Patents, and as a result Buyer has not been able to perform complete due diligence with respect to the Northwestern Patents. Within * days of the Effective Date, Seller will provide to Buyer complete file histories of the Northwestern Patents, and Buyer will have * days thereafter to perform such due diligence. If Buyer concludes as a result of such due diligence that the value of the Northwestern Patents is substantially different than * 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
Buyer believed, Buyer will so notify Seller within * days after Seller provides such complete file histories, and Seller and Buyer will negotiate in good faith concerning an appropriate adjustment of the terms of this Agreement, provided that the purchase price payable under Section 2.5 will not be changed. 2.3 Sublicenses. Seller hereby, assigns, conveys, and transfers to Buyer, all right title and interest of the Seller in and to the Sublicenses, subject to their terms. 2.4 Deliveries of Seller. Simultaneously with execution of this Agreement, Seller shall execute and deliver the Patent Assignment to Buyer. Within five (5) days after the Effective Date, Seller will deliver to Buyer originals or complete and accurate copies of all documents in Seller's possession, custody, or control relating to the Lynx Patents or the Northwestern Patents. If Seller has documents that, in Seller's reasonable judgment, would be necessary or useful in defending any of the Lynx Patents or the Northwestern Patents against claims of invalidity, Seller will deliver such documents to Buyer at Buyer's request, and will not after the date of this Agreement destroy any such documents without offering Buyer the opportunity to take possession of such documents for Buyer's potential future use. 2.5 Purchase Price. In consideration of the sale and assignment of Seller's right, title and interest in the Lynx Patents, the Northwestern Patents, and the Northwestern License or exclusive sublicense thereunder as provided in paragraph 2.2, Buyer will pay Seller a total purchase price of Two Million Five Hundred Thousand dollars ($2,500,000), payable as follows: One Million Dollars ($1,000,000) in cash payable in immediately available funds within one (1) business day after the Effective Date. Two Hundred Ten Thousand (210,000) shares of Buyer's Common Stock,), delivered simultaneously with the execution of, and subject to the terms of, the Stock Purchase Agreement attached as Exhibit H. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations of Seller. Seller represents and warrants to Buyer as follows: (a) Seller is a corporation, duly organized, validly existing and in good standing under the laws of the state of Delaware, and has all requisite powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted. (b) The execution, delivery and performance by Seller of this Agreement, and the consummation by Seller of the transactions contemplated hereby and thereby, are within Seller's legal powers and have been duly authorized by all necessary action on the part of Seller, and, to the best of Seller's knowledge and belief, will not infringe or violate the rights of any other party. This Agreement is a valid and binding agreement of Seller, enforceable in accordance with its terms. (c) Seller is the sole and exclusive owner of the Lynx Patents and has the lawful right to perform its obligations under this Agreement. Seller's interest in the Lynx Patents is not subject to any lien, pledge, grant of security interests, or any 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. 3
encumbrance. To the best of Seller's knowledge and belief, all filings have been made and all fees have been paid and all such other things have been done as to maintain the Lynx Patents in good standing. Seller does not own or control any patents or patent applications relating to Amidate Technology other than the Lynx Patents and the Northwestern Patents. (d) The Northwestern License and the Sublicenses are in full force and effect and have not been amended. Seller is in compliance with its obligations under the Northwestern License, and has received no notice of any claim to the contrary. Seller's rights to the Northwestern Patents under the Northwestern License are not subject to any lien, pledge, grant of security interests, or any other encumbrance. To the best of Seller's knowledge and belief, all filings have been made and all fees have been paid and all such other things have been done as to maintain the Northwestern Patents in good standing. (e) The Lynx Patents and Seller's interest in the Northwestern Patents are assigned and transferred WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. SELLER MAKES NO REPRESENTATION OR WARRANTY THAT THE LYNX PATENTS OR THE NORTHWESTERN PATENTS ARE VALID OR WILL NOT INFRINGE ANY PATENT OR OTHER PROPERTY RIGHT. (f) As at the date of this Agreement, to the best of its knowledge, information and belief after reasonable inquiry, Seller has not received any notices or communications alleging that the Lynx Patents or the Northwestern Patents are invalid or infringe the rights of any third party. There is no action, suit, investigation, or proceeding of which Seller has received written notice, pending or, to the knowledge of Seller, threatened, before any court or arbitrator or any governmental body, agency or official that has or could materially affect the Lynx Patents, the Northwestern Patents or the Northwestern License or which in any matter challenges or seeks to prevent, enjoin, alter or materially delay the transaction contemplated hereby or would have a material adverse effect on Seller's ability to perform its obligations under this Agreement. (g) As of the date of this Agreement, no third party has any rights or licenses in respect of the Lynx Patents, the Northwestern Patents, or the Northwestern License, other than as reflected in the Sublicenses. (h) Nothing in this Agreement shall be construed as: (i) a warranty or representation by Seller as to the validity, enforceability, or scope of any of the Lynx Patents or the Northwestern Patents hereunder or elsewhere; (ii) a warranty or representation that any Amidate Products or anything else made, used, sold, or otherwise disposed of under the Lynx Patents or the Northwestern Patents is or will be free from infringement of patents of third parties; (iii) an obligation to bring or prosecute actions or suits against third parties for patent infringement; (iv) conferring by implication, estoppel, or otherwise, any license or rights under any patents or patent applications of Seller other than those of the Lynx Patents and the Northwestern Patents; or (v) an obligation to furnish any know-how not provided in the Lynx Patents themselves. 4
3.2 Representations of Buyer. Buyer represents and warrants to Seller as follows: (a) Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the state of Delaware, and has all requisite powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted. (b) The execution, delivery and performance by Buyer of this Agreement, and the consummation by Buyer of the transactions contemplated hereby and thereby, are within Buyer's legal powers and have been duly authorized by all necessary action on the part of Buyer. This Agreement is a valid and binding agreement of Buyer, enforceable in accordance with its terms. (c) There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer before any court or arbitrator or any governmental body, agency or official which in any matter challenges or seeks to prevent, enjoin, alter or materially delay the transaction contemplated hereby or would have a material adverse effect on Buyer's ability to perform its obligations under this Agreement. ARTICLE IV INDEMNIFICATION 4.1 By Seller. Seller shall indemnify and hold Buyer harmless, and hereby forever releases and discharges Buyer, from and against all losses, liabilities, damages and expenses (including reasonable attorneys' fees and costs) resulting from all claims, demands, actions and other proceedings by any third party to the extent arising from (a) any misrepresentation or breach by Seller of any representation or warranty or other provision of this Agreement or (b) any claim that the performance of this Agreement by Seller would violate or infringe the rights of any third party, or (c) any claim arising out of the Northwestern License or the Sublicenses based on Seller's alleged breach, or Seller's acts or failure to act, or obligations of Seller that accrued, before the Effective Date), or (d) the gross negligence or willful misconduct of Seller in its performance under this Agreement. 4.2 By Buyer. Buyer shall indemnify and hold Seller harmless, and hereby forever releases and discharges Seller, from and against all losses, liabilities, damages and expenses (including reasonable attorneys' fees and costs) resulting from all claims, demands, actions and other proceedings by any third party to the extent arising from (a) any misrepresentation or breach by Buyer of any representation or warranty or other provision of this Agreement, (b) the research, use, development, manufacturing, commercialization or marketing of Amidate Products or the use of Lynx Patents by Buyer or its Affiliates, or (c) the gross negligence or willful misconduct of Buyer in its performance under this Agreement. 4.3 Procedure. A party (the "Indemnitee") that intends to claim indemnification hereunder shall promptly notify the other party (the "Indemnitor") of any claim, demand, action or other proceeding for which the Indemnitee intends to claim such indemnification. The Indemnitor shall have the right to participate in and to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that the Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of the Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between the Indemnitee and any other party represented by such counsel in such proceedings. The failure to deliver notice to 5
the Indemnitor within a reasonable time after notice of any such claim or demand, or the commencement any such action or other proceeding, if prejudicial to its ability to defend such claim, demand, action or other proceeding, shall relieve such Indemnitor of any liability to the Indemnitee hereunder with respect thereto, but the omission so to deliver notice to the Indemnitor shall not relieve it of any liability that it may otherwise have to the Indemnitee. The Indemnitor may not settle or otherwise consent to an adverse judgment in such claim, demand, action or other proceeding, that diminishes the rights or interests of Indemnitee without the prior express written consent of the Indemnitee, which consent shall be unreasonably withheld or delayed. The Indemnitee, its employees and agents, shall reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any claim, demand, action or other proceeding covered hereby. ARTICLE V MISCELLANEOUS 5.1 Survival of Obligations. The representations and warranties set forth in Article III hereof shall survive for ten years following the date of this Agreement. The rights and obligations set forth in Articles IV and V hereof shall survive indefinitely. 5.2 Binding Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and to their respective successors and permitted assigns. 5.3 Confidentiality. Neither party shall issue any press release or make any other announcement with respect to this Agreement or the transactions contemplated hereby, except as required by law, without the prior consent of the other party (which shall not be unreasonably withheld or delayed). 5.4 Remedies. Nothing contained herein is intended to or shall be construed to limit the remedies which either party may have against the other in the event of a breach of or default under this Agreement, it being intended that any remedies shall be cumulative and not exclusive. 5.5 Further Assurances. Each party agrees to take such further action and execute, deliver and/or file such documents or instruments as are necessary to carry out the terms and purposes of this Agreement; provided, however, that reasonable expenses for such further action shall be borne by the requesting party. 5.6 Entire Agreement and Modification. This Agreement, including the schedules and exhibits hereto and the documents delivered pursuant hereto, constitutes the entire agreement between the parties. No amendments to, modifications of, or additions to this Agreement shall be valid unless the same shall be in writing and signed by all parties hereto. 5.7 Severability. If any provision of this Agreement shall be determined to be contrary to law and unenforceable by any court of law, the remaining provisions shall be severable and enforceable in accordance with their terms. 5.8 Counterparts. This Agreement may be executed in one or more counterparts and by facsimile signature, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 6
5.9 Headings; Interpretation. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement. 5.10 Notices. All notices, requests, demands and other communications hereunder shall be deemed to have been duly given if the same shall be in writing and shall be delivered or sent by registered or certified mail, postage prepaid, and addressed as set forth below: (a) If to Buyer: Geron Corporation. 230 Constitution Drive Menlo Park, CA Fax: 650-473-7750 Attention: David Greenwood (b) If to Seller: Lynx Therapeutics, Inc. 25861 Industrial Blvd. Hayward, CA 94545 Fax: 510-670-9303 Attention: Norman Russell Any such notice shall be effective upon receipt. Either party may change the address to which notices are to be addressed by giving the other party notice in the manner herein set forth. 5.11 Governing Law. This Agreement shall be construed and interpreted according to the laws of the State of California, without regard to its conflict of laws principles. IN WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement by their duly authorized representatives as of the day and year first above written. LYNX THERAPEUTICS, INC. By /s/ Norman J.W. Russell ------------------------------------- Name: Norman J.W. Russell Title: President and Chief Executive Officer GERON CORPORATION By: /s/ David L. Greenwood ------------------------------------ Name: David L. Greenwood Title: Chief Financial Officer and Senior Vice President, Corporate Development 7
EXHIBIT A ASSIGNMENT In consideration of good and valuable consideration paid to the undersigned Assignor, Lynx Therapeutics, Inc., a corporation organized under the laws of Delaware, having an office at 25861 Industrial Blvd., Hayward, CA 94545, by the Assignee, Geron Corporation, Inc., a corporation organized under the laws of Delaware, having an office at 230 Constitution Drive, Menlo Park, CA 94303, the receipt of which is hereby acknowledged, the undersigned Assignor by these presents hereby sells, assigns, transfers, and sets over unto the Assignee the entire right, title, and interest in and to the patents and patent applications described in Appendix A hereto and the inventions described therein, together with any division, continuation, continuation-in-part, substitute, renewal, reissue, extension, confirmation, reexamination, registration, patent term extension or supplemental protection certificate thereof; all foreign equivalents of any of the foregoing patents and applications; and all patents issuing on any of the foregoing applications, including all treaty and convention rights and the right to sue for present, past, and future infringement, the same to be held and enjoyed by said Assignee, its successors, assigns, or other legal representatives, to the full ends of the terms for which all patents therefor may be granted, as fully and entirely as the same would have been held and enjoyed by the undersigned if this assignment and sale had not been made. And by this covenant the undersigned will execute or procure any further necessary assurance of title to said patent applications and patents; and at any time, upon the request and at the expense of said Assignee, will execute and deliver any and all papers that may be necessary or desirable to perfect the title to said patent applications or patents which may be granted therefor in said Assignee, its successors, assigns or other legal representatives, and, upon the request and at the expense of said Assignee, will execute any additional or divisional applications for patents for said inventions, or any part or parts thereof, and for the reissue of any patents granted or to be granted therefor, and will make all rightful oaths and do all lawful acts requisite for procuring the same or for aiding therein, without further compensation, but at the expense of said Assignee, its successors, assigns, or other legal representatives. ----------------------- Witness: By ------------------------------------- Name - -------------------------------------- Name: ---------------------------------------- Title AFFIX SEAL
EXHIBIT B LYNX PATENTS LYNX REF. CNTRY TYPE STATUS APP.NO. FILING DATE PATENT NO. ISSUE DATE PUB.NO. PUB.DATE - --------- ----- ---- ------ ------- ----------- ---------- ---------- ------- -------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * =============================================================================================== * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * - ----------------------------------------- * CLIENT REF TITLE FILING DATE STATUS - - ---------- ----- ----------- ------ * * * * * * * * * * * * * * * * 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.
EXHIBIT C NORTHWESTERN PATENTS FILING ISSUE LYNX REF. SUBJECT MATTER DATE DATE PATENT NO. STATUS - ------------------------------------------------------------------------------------------------ * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 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.
EXHIBIT D NORTHWESTERN LICENSE LICENSE AGREEMENT This AGREEMENT made this twenty seventh day of October, 1993, by and between NORTHWESTERN UNIVERSITY ("NORTHWESTERN"), an Illinois corporation having a principal office at 633 Clark Street, Evanston, Illinois 60208, and Lynx Therapeutics Inc. , a Delaware corporation having a principal office at 465 Lincoln Centre Drive, Foster City, California 94404 (hereinafter "LYNX"). WITNESSES THAT: WHEREAS, NORTHWESTERN represents that Robert Letsinger, an employee of NORTHWESTERN, and Sergei Gryaznov, a former employee of Northwestern (the Inventors), have made a certain invention entitled ******************************************************************************** ****************** while employed at NORTHWESTERN, and that a patent application has been filed thereon, having United States Serial Number ******** entitled *********************. WHEREAS, NORTHWESTERN, subject to U.S. grant obligations has the right to make, use, sell, and grant licenses under the INVENTION and PATENT RIGHTS as defined herein; and NORTHWESTERN wishes to have the INVENTION, as defined by the PATENT RIGHTS, utilized for the public interest; and WHEREAS LYNX desires to obtain a license to manufacture, sell, and use the INVENTION and PATENT RIGHTS defined herein and upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the promises and the faithful performance of the covenants contained herein, IT IS AGREED: 1.0 DEFINITIONS For the purposes of this Agreement, and solely for that purpose, the terms hereinafter set forth shall be defined as follows: 1.1 "INVENTION" shall mean the invention as described in EXHIBIT A, and/or as covered in the PATENT RIGHTS. * 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
1.2 "PATENT RIGHTS" shall mean the United States patent resulting from the application having United States Serial Number ******** entitled *********** ************* for the INVENTION together with any divided, continuation, or other continuation-in-part applications based thereon, and any reissues or extensions based on any such patents, and any foreign counterparts pending or issued thereof. 1.3 "LICENSED PRODUCT" shall mean any products covered by, or the manufacture, use, or sale of which is covered by, any INVENTION as described by any valid claim in an issued and unexpired patent, which patent application or patent is included in the PATENT RIGHTS. 1.4 "FIELD OF USE" shall mean the use of the INVENTION and PATENT RIGHTS for human therapeutics. 1.5 "NET SALES PRICE" shall mean the gross sales price of any LICENSED PRODUCT or INVENTION made and sold pursuant to this Agreement, less allowances to customers for damaged or returned products and the amounts of discounts, transportation charges, and all sales and excise taxes and duties paid, absorbed, or allowed. 2.0 LICENSE 2.1 NORTHWESTERN hereby grants to LYNX and LYNX hereby accepts from NORTHWESTERN, upon the terms and conditions herein specified, an exclusive (except as herein specified), worldwide, and non-assignable (except as herein specified) License to use the INVENTION and PATENT RIGHTS to test, evaluate, and develop the INVENTION and LICENSED PRODUCT covered hereby and to make, have made, use and sell the products thereof during the term of this Agreement, and during the term of any extension thereof, unless sooner terminated as hereinafter provided. 2.2 NORTHWESTERN hereby grants to LYNX and LYNX hereby accepts from NORTHWESTERN, upon the terms and conditions herein specified, the right to extend the License granted hereunder to its sublicensee(s). LYNX shall promptly notify NORTHWESTERN in writing that a sublicense has been granted no later than the effective date of the sublicense. LYNX may negotiate such terms as it chooses for each sublicense, provided that NORTHWESTERN shall receive a royalty for all sales made by sublicensee(s) at a rate not less than that provided for in this Agreement plus fifty percent (50%) of any lump sum amounts received by LYNX from sublicensee(s) where there is no royalty. 2.3 If LYNX shall so notify NORTHWESTERN in advance thereof in writing, any sublicensee(s) to whom the License shall have been extended pursuant to Paragraph 2.2 hereof may make the reports and royalty payments specified in Paragraph 4.0 hereof directly to NORTHWESTERN on behalf of LYNX; otherwise, such reports and payments on account of sales by such sublicensee(s) shall be made by LYNX. * 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
2.4 NORTHWESTERN retains a non-exclusive, royalty-free, irrevocable License to make, have made and use the INVENTION, PATENT RIGHTS and LICENSED PRODUCT for its own use. 2.5 Outside the scope of the License between NORTHWESTERN and LYNX no other, further, or different license or right, and no further power to sublicense is hereby granted or implied. 3.0 LICENSE ISSUE FEE 3.1 LYNX shall pay to NORTHWESTERN, upon execution and delivery of this Agreement, a license issue fee of ***********************. 3.2 The total of the license issue fee provided for in the foregoing Article 3.1 shall not be refundable and shall not be applied against any royalties which may become payable under this Agreement. 4.0 ROYALTIES, RECORDS AND REPORTS 4.1 During the term of this Agreement, unless sooner terminated, LYNX shall pay to NORTHWESTERN, in the manner hereinafter provided, earned royalties at the rate of *** percent (****%) of the NET SALES PRICE of all LICENSED PRODUCT sold by LYNX and its sublicensee(s), anywhere in the world. 4.2 LICENSED PRODUCT shall be considered sold when sold or invoiced, and if not sold or invoiced, when delivered to a third party. 4.3 LYNX shall be responsible for the performance hereunder of all obligations including payment of royalties, keeping of records, and reporting by LYNX and any sublicensee(s) to whom the License shall have been extended pursuant to this Agreement. 4.4 So long as this Agreement remains in force, LYNX shall deliver to NORTHWESTERN, within sixty (60) days after the first day of January and July of each year, a true and accurate report, giving such particulars of the business conducted by LYNX and its sublicensee(s) during the preceding six (6) months under this Agreement as are necessary to accurately account for sales subject to royalties under this Agreement. 4.5 Simultaneously with the delivery of each report required by the preceding paragraph 4.4, LYNX shall pay to NORTHWESTERN the net royalties and any other such payment due under this Agreement for the period covered by such report. If no royalties are due, it shall be so reported. 4.6 All payments from LYNX to NORTHWESTERN shall be in U.S. dollars. The rates of exchange for such payments shall be midpoint between the buying and selling rates for U.S. * 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
dollars as quoted by the Chase Manhattan Bank in New York, New York at the close of business on the last business day preceding the date payment is due. 4.7 In case of any delay in payment by LYNX to NORTHWESTERN not occasioned by force majeure, interest at the rate of one percent (1%) per month, assessed from the thirty-first day after the due date of said payment, shall be due by LYNX without any special notice. 4.8 Royalties shall accrue in accordance with this Agreement, upon the first commercial sale of a licensed product. 4.9 LYNX shall keep full, true, and accurate books of account containing all particulars which may be necessary for the purpose of showing the amount payable to NORTHWESTERN by way of royalty as aforesaid or by way of any other provision hereunder. Said books of account shall be kept at LYNX'S principal place of business. Said books and the supporting data shall be open at all reasonable times, for three (3) years following the end of the calendar year to which they pertain, to inspection by NORTHWESTERN for the purpose of verifying LYNX'S royalty statements, or LYNX'S compliance in other respects with this Agreement. 4.10 LYNX shall reimburse NORTHWESTERN for all out-of-pocket costs of filing, prosecution and maintenance for all patent applications and all patents issuing thereon filed and made at the request of LYNX. All such patents and patent applications shall become part of the PATENT RIGHTS licensed to LYNX hereunder. Such reimbursements shall be made to NORTHWESTERN within sixty (60) days of receipt of invoice by LYNX. Any reimbursements made by LYNX hereunder shall be creditable by LYNX against royalty payable by it pursuant to Article 4.1 above. With respect to each payment due NORTHWESTERN, LYNX may deduct up to 50% of each such payment for the above-referenced costs and expenses incurred by LYNX in filing, prosecuting, or maintaining any patent or patent application until LYNX has been fully reimbursed for all such costs and expenses incurred. United States patent costs shall be credited to earned royalties on the NET SALES PRICE of LICENSED PRODUCTS in the United States and foreign patent costs shall be credited to foreign NET SALES PRICE. 5.0 AUDITING 5.1 NORTHWESTERN and its representatives will be entitled to examine and audit all reports of sales of the LICENSED PRODUCT by LYNX and any sublicensee at any time during normal business hours. In the event that an audit reveals any underpayment or undercredit or royalties and/or milestone payments by LYNX subject to the provisions herein, LYNX will promptly pay or credit to NORTHWESTERN, as the case may be, the full amount of that underpayment or undercredit, together with interest thereon at a rate of one percent (1%) per month, assessed from the thirty-first day after said payment was due. In the event that the audit reveals an underpayment or undercredit of more than 3% of the amount which should have been reported and paid, LYNX or sublicensee, as the case may be, will promptly pay the entire cost of that audit. 14
6.0 PERFORMANCE 6.1 LYNX shall use commercially reasonable efforts to commence and maintain regular commercial production and sale of LICENSED PRODUCT. 6.2 If earned royalties for the years 1994, 1995, 1996 and 1997 and thereafter are less than ******** dollars ($*****), ******** dollars ($*****), ******* dollars ($******), and *********** dollars ($******) respectively, the following minimum royalty payments shall be due to NORTHWESTERN on the following dates: ******** dollars ($******) due January 1, 1995; ******** dollars ($******) due January 1, 1996; ******** dollars ($******) due January 1, 1997; ******** dollars ($******) due January 1, 1998 * 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
and each year thereafter during the term of this Agreement or any extensions thereof. 7.0 TERM AND EXTENSION 7.1 This exclusive License shall continue until the expiration of the last to expire of any patents under PATENT RIGHTS. 8.0 TERMINATION 8.1 If LYNX shall become bankrupt or insolvent and/or if the business of LYNX shall be placed in the hands of a Receiver, Assignee, or Trustee, whether by the voluntary act of LYNX or otherwise, this License will be deemed to have automatically terminated as of a date ****** (***) days prior to that event, provided, however, that such termination shall not terminate any obligations which may have accrued prior thereto. 8.2 Notwithstanding provisions of Article 6.1, upon any breach or default under this Agreement by LYNX, NORTHWESTERN may terminate this License by ***** (****) days written notice by registered mail to LYNX. Said notice shall become effective at the end of said period, unless during said period LYNX shall cure such breach or default and notify NORTHWESTERN thereof. 8.3 LYNX may terminate this License at any time upon ******* (***) days written notice by registered mail to NORTHWESTERN. 8.4 Upon termination of this License for any reason, all rights granted hereunder shall revert to NORTHWESTERN for the sole benefit of NORTHWESTERN. 8.5 Termination of this License shall result in all sublicenses being assigned to NORTHWESTERN. 8.6 LYNX's responsibilities and obligations to report to NORTHWESTERN and pay royalties to NORTHWESTERN as to any LICENSED PRODUCTS produced or sold by LYNX or its sublicensees under this Agreement prior to termination or expiration hereof shall survive such termination or expiration. 8.7 In the event that this Agreement is terminated by either party, LYNX agrees to provide NORTHWESTERN with names and addresses of sublicensees and copies of all Sublicense Agreements between LYNX and sublicensees as then known to LYNX. 9.0 ASSIGNMENT 9.1 This Agreement may be assigned by NORTHWESTERN. This Agreement may be assigned by LYNX to the successor of its entire business, or to any wholly-owned subsidiary, but shall not be otherwise assignable by LYNX without the written consent of NORTHWESTERN. * 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
10.0 INFRINGEMENT 10.1 NORTHWESTERN agrees to protect its patents within the PATENT RIGHTS from infringement and prosecute infringers when in its reasonable judgment such action may be proper and justified. LYNX shall have the right to sue infringers in its own name if NORTHWESTERN elects not to do so. 10.2 In the event either party hereto shall initiate or carry on legal proceedings to enforce the PATENT RIGHTS against an alleged infringer, the other party hereto shall fully cooperate with the party initiating or carrying on such proceedings. 10.3 In the event NORTHWESTERN or LYNX shall institute suit or other legal proceedings to protect or enforce PATENT RIGHTS as provided herein, the other party shall have the option to join in such proceedings and shall be entitled to be represented by counsel of its own choosing. From any recovery awarded as a result of such suit or legal proceedings, (i) the initiating party may recover the full amount of its expenses of prosecuting the same (including attorney's fees and court costs); (ii) the other party may then recover, to the extent possible after full payment of (i) above, the full amount of its costs of participating in the same; (iii) NORTHWESTERN, after full payment of (i) and (ii) above, shall receive ***** percent (***%) of any remainder; and (iv) the initiating party may retain the balance. A party shall not discontinue or settle any such suit or legal proceedings brought by it without obtaining prior concurrence of the other party, and giving the other party a timely opportunity to continue such proceedings in its own name, under its sole control, at its sole expense, and at its sole recovery. 11.0 SEVERABILITY 11.1 Should any part or provision of this Agreement be unenforceable or otherwise in conflict with or in violation of the law of any jurisdiction, the remainder of this Agreement shall remain binding upon the parties. 12.0 INDEMNITY AND NEGATION OF WARRANTIES 12.1 LYNX agrees to indemnify, hold harmless and defend NORTHWESTERN, its officers, employees, and agents against any and all claims, suits, losses, damages, costs, fees, and expenses resulting from or arising out of the production or use of the LICENSED PRODUCTS by LYNX, its sublicensees, and others purchasing, using and/or receiving the LICENSED PRODUCTS. 12.2 LYNX shall maintain appropriate insurance, in good standing, at least in the amount of ********* dollars ($*******) per occurrence, the amount subject to change from time to time as designated by NORTHWESTERN in writing, naming NORTHWESTERN as additional insured. LYNX shall deliver to NORTHWESTERN a copy of such insurance policy and all extensions thereof. 12.3 Nothing in this Agreement shall be construed as: * 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
12.31 a warranty or representation by NORTHWESTERN as to the validity or scope of any Patent Rights; or 12.32 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; or; 12.33 an obligation by NORTHWESTERN to bring or prosecute actions or suits against third parties for infringement. 12.4 NORTHWESTERN makes no representation other than those specified in this Agreement. NORTHWESTERN MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF LICENSED PRODUCT. 13.0 GENERAL 13.1 LYNX shall not use the name of any Inventor listed in PATENT RIGHTS, of any institution with which he has been or is connected, nor of NORTHWESTERN, nor any adaptation of any of them, in any advertising, promotional or sales literature, without prior written consent obtained from NORTHWESTERN in each case. 13.2 Any notice required or permitted to be given by this Agreement shall be given postpaid first class certified mail; unless otherwise stated: TO LYNX: LYNX THERAPEUTICS, INC. 465 Lincoln Centre Drive Foster City, California 94404 Attn: Mr. Timothy Geiser TO LICENSOR: NORTHWESTERN UNIVERSITY Technology Transfer Program 633 Clark Street Evanston, Illinois 60208 Attn: Administrator Technology Transfer Program Such addresses may be altered by written notice. If no time limit is specified for a notice required or permitted to be given under this Agreement, the time limit therefore shall be twenty (20) full business days, not including the day of mailing. 13.3 This Agreement and its effect is subject to and shall be construed and enforced in accordance with the laws of the State of Illinois, United States of America. 13.4 The parties to this Agreement recognize and agree that each is operating as an independent contractor and not as an agent of the other. 18
13.5 The captions herein are for convenience only and shall not be deemed to limit or otherwise affect the construction thereof. 13.6 Any waiver by either party of the breach of any term or condition of this agreement will not be considered as a waiver of any subsequent breach of the same or any other term or condition hereof. 14.0 ENTIRE AGREEMENT 14.1 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter of this Agreement, and merges all prior discussion's between them. Neither of the parties shall be bound by any conditions, definitions, warranties, or representations with respect to the subject matter of this Agreement or as duly set forth on or subsequent to the date hereof in writing unless signed by a proper and duly authorized representative of the party to be bound thereby. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly executed this Agreement as of the day and the year first above written. NORTHWESTERN UNIVERSITY ATTEST: By: /s/ C. W. Kern ----------------------------- ------------------------------------ Asst. Secretary C. William Kern Vice President for Research Date: 10/29/93 Date: October 29, 1993 -------------- ---------------------- LYNX THERAPEUTICS ATTEST /s/ Lynn C. Soucy By:/s/Timothy Geiser --------------------------- ------------------------------------- Timothy Geiser Ph.D. Vice President, Technology Development Manufacturing and Operations Date: November 3, 1993 Date: 3 November 1993 ---------------------- ---------------------- 19
EXHIBIT E CRUACHEM, INC. SUBLICENSE LICENSE AGREEMENT This License Agreement ("Agreement") is effective as of the 15th day of June, 1998 ("Effective Date"), by and between Cruachem, Inc., a Delaware corporation, having its principal office at 34 Mount Pleasant Drive, Aston, Pennsylvania 19014 ("Licensee"), and Lynx Therapeutics, Inc., a Delaware corporation, having its principal office at 3832 Bay Center Place, Hayward, California, USA ("Licensor"). RECITALS WHEREAS, Licensor owns and is an exclusive licensee of proprietary technology relating to oligonucleotide N3'->P5' phosphoramidates, their manufacture, and their uses in a variety of fields ("Amidate Technology"); WHEREAS, Licensee has expertise in nucleic acid chemistry and is in the business of manufacturing, marketing, selling, and distributing nucleic acid compounds; and WHEREAS, Licensee desires to acquire from Licensor, and Licensor desires to grant to Licensee in exchange for the consideration described below the right to use Licensor's Amidate Technology to manufacture, market, sell, and commercialize oligonucleotide N3'-->P5' phosphoramidates in the Research Field. NOW, THEREFORE, in view of the foregoing premises and in consideration of the mutual promises and covenants contained in the Agreement, Licensor and Licensee agree as follows: ARTICLE 1. DEFINITIONS. 20
1.1 "Affiliate" means a corporation, partnership, entity, person, firm, company or joint venture that controls, is controlled by or is under the common control with the referenced Party. For the purposes of this definition the word "control" (including, with correlative meaning, the terms "controlled by" or "is under the common control with") means the power to direct or cause the direction of the management and policies of such entity, or the ownership of at least fifty percent (50%) of the voting stock of such entity. 1.2 "Licensed Product" shall mean any product(s) whose manufacture, use, or sale in any country would, but for this Agreement, comprise an infringement, including contributory infringement, of one or more Valid Claims. 1.3 "Monomer Licensed Product" shall mean a Licensed Product which is a monomer used in the synthesis of an oligonucleotide N3'--->P5' phosphoramidate. 1.4 "Net Sales" means the total amount invoiced or otherwise charged by Licensee or its Affiliates or its sublicensee on account of the final or end product sale of a Licensed Product to a non-Affiliate, less the following deductions to the extent actually incurred or allowed based upon the sale of such Licensed Product: (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such non-Affiliate for spoiled, damaged, out dated and returned Licensed Product; (b) freight and insurance costs for transporting such Licensed Product, to the extent invoiced to the purchaser; (c) sales, value-added and other direct taxes on the sale of the Licensed Product; (d) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Licensed Product; (e) trade, cash, and quantity discounts off of the invoiced price and similar promotional discounts (such as management fees required by hospital buying groups) off the invoiced price, all to the extent consistent with normal practice in the industry; (f) amounts reflecting retroactive price adjustments on sale of Licensed Products, to the extent not previously deducted from Net Sales; and 21
(g) rebates or chargebacks made on the sale of such Licensed Product, to the extent consistent with the normal practice in the industry, and provided that any and all of the foregoing are calculated in accordance with generally accepted accounting principles applicable to the locality where the invoices are prepared and consistently applied. 1.5 "Patent Rights" shall mean the patents and patent applications listed in Exhibit A; and with respect to U.S. patents and applications, all foreign equivalents thereof; and patents issuing on said foreign and U.S. patent applications. "Patent Rights" shall also include any divisional, continuation, reissue, reexamination or extension of the above-described patent applications and resulting patents, along with any extended or restored term, and any confirmation patent, registration patent, or patent of addition. 1.6 "Research Field" shall mean any use in the field of scientific or commercial research, excepting any use that Involves treating humans in any way whatsoever for any condition or any use that involves diagnosis of, testing for, or detection of, a disease condition, or the predisposition or susceptibility thereto, or the clinical progress thereof. 1.7 "Valid Claim" means any claim(s) in an unexpired patent or pending in a patent application included within the Patent Rights which has not been held unenforceable, unpatentable, or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer. ARTICLE 2. GRANT. 2.1 Subject to all the terms and limitations of this Agreement, Licensor hereby grants to Licensee and its Affiliates a worldwide non-exclusive royalty-bearing license, without the right to sublicense, under the Patent Rights to make, market, distribute, and sell Licensed Products and/or Monomer Licensed Products in the Research Field; provided, however, that Monomer Licensed Products shall be distributed or sold only to qualified licensees of Licensor under the 22
Patent Rights. 2.2 Licensee covenants that it will not make, use, market, distribute, and sell Licensed Products outside the Research Field, nor shall Licensee or any of its Affiliates promote the use, marketing, distribution, or sale of Licensed Products outside the Research Field. 2.3 Licensee will promptly disclose and hereby grants back to Licensor a worldwide, royalty-free, sublicensable license of a scope that permits Licensor to fully exploit any improvement made in the manufacture, purification, or quality control of oligonucleotide N3'---> P5' phosphoramidates during the term of this Agreement; provided that such improvements would be covered by or within the scope of a Valid Claim of a patent or patent application licensed hereunder. For other improvements made in the manufacture, purification, or quality control of oligonucleotide N3'--->P5' phosphoramidates during the term of this Agreement that are not covered by or within the scope of a Valid Claim of a patent or patent application licensed hereunder, Licensee hereby grants Licensor an option to a worldwide royalty-bearing license, with right to Sublicense, to make, use, and sell such improvements under reasonable terms. ARTICLE 3. ROYALTIES. 3.1 In consideration of the rights and licenses herein granted to it, Licensee shall pay to Licensor a royalty of **** percent (***%) on the Net Sales of Licensed Products and Monomer Licensed Products sold by Licensee or its Affiliates, provided, however, that from and after the first anniversary of the Effective Date of the Agreement, Licensee shall pay to Licensor a royalty amount which is the greater of ******* Dollars ($*****) and **** percent (***%) of the Net Sales of Licensed Products and Monomer Licensed Products sold by Licensee or its Affiliates. Royalties on Net Sales of Licensed Products are payable by Licensee until the last patent under Patent Rights, embodying a Valid Claim, expires. 3.2 Payments of royalties on Net Sales of Licensed Products (other than the minimum annual royalties whose payment schedule is set forth below) under this Article are to be made to * 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. 23
Licensor within forty-five (45) days of the end of each December and June for sales invoiced in the six month period prior to the end of each of those months. Royalties shall be accompanied by a statement that shall include for each country in which sales of products occurred: the gross sales and Net Sales in each country's currency; the royalty rate; the related amounts payable in each country's currency; the applicable exchange rate to convert from each country's currency to U.S. dollars; and the amounts payable in U.S. dollars. Royalties shall first be calculated in the currency of the country in which sales took place and then directly converted to U.S. Dollars using the exchange rate as reported in the Wall Street Journal for the last business day of the calendar quarter of sales. All payments hereunder shall be made to Licensor in U.S. dollars by bank wire transfer in immediately available funds to such account designated by Licensor. The paying party shall provide notice at least five (5) business days prior to the wire transfer date of the amount of payment, the nature of the payment (with reference to the applicable section of the subject agreement) and the date of receipt of good funds. Such notice should be given to the Controller of Licensor at the address set forth at the beginning of this Agreement or such other address directed by Licensor. 3.3 Any payment under this Article not paid by the payment due date shall bear interest at the rate which is the lesser of ten percent (10%) per annum or the maximum rate permitted by applicable law, calculated on the number of days such payment is delinquent. 3.4 The payments under this Article shall be free and clear of any taxes, duties, levies, fees or charges, except for withholding taxes (to the extent applicable). The paying party shall make any withholding payments due on behalf of Licensor and shall promptly provide Licensor with written documentation of any such payment sufficient to satisfy the reasonable requirements of an appropriate tax authority concerning an application by Licensor for a foreign tax credit for such payment or for similar treatment. The paying party agrees to take such reasonable and lawful steps as Licensor may request to minimize the amount of tax to which the payments to Licensor are subject. ARTICLE 4. DUE DILIGENCE. 24
4.1 Licensee shall at its expense: (a) use its best efforts to promote the sale of the Licensed Products and Monomer Licensed Products and to satisfy market demand for them; (b) engage in advertising and sales promotion of Licensed Products and Monomer Licensed Products; and (c) maintain an active and suitably trained sales force to carry out such efforts. 4.2 Licensee's due diligence obligation shall be deemed satisfied hereunder by documented expenditures of at least ************* dollars ($*******) on sales promotion and marketing of Licensed Products in the following amounts in the following periods: Sale promotion & marketing expenses Period during which amount is expended - ----------------------------------- -------------------------------------- $ ********. From Effective Date to 1st anniversary thereof $ ********. From 1st anniversary to 2nd anniversary $ ********. From 2nd anniversary to 3rd anniversary ARTICLE 5. QUALITY ASSURANCE. 5.1 Licenses shall use its best efforts to make Licensed Products and Monomer Licensed Products of the highest quality for their intended use. Licensee shall make Licensed Products and Monomer Licensed Products with the minimal purity standards set forth in Exhibit B. ARTICLE 6. BOOKS AND RECORDS. 6.1 Licensee shall keep, for at least three (3) years, records of all sales of products in sufficient detail to permit Licensor to confirm the accuracy of Licensee's payment calculations. Once a year, at the request and the expense of Licensor, upon at least five (5) days prior written notice, Licensee shall permit a nationally recognized, independent, certified public accountant, * 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. 25
appointed by Licensor and acceptable to Licensee, access to these records during regular business hours solely to the extent necessary to verify such calculations, provided that such an accountant has entered into a confidentiality agreement with Licensee with terms substantially similar to the confidentiality provisions of this Agreement, limiting the use and disclosure of such information to purposes germane to this section. Results of any such examination shall be made available to both parties to this Agreement. If such examination reveals an underpayment of amounts by five percent (5%) or more, Licensee shall pay all costs of such examination. In the event such accountant concludes that additional payments are owed, the additional payments shall be paid within thirty (30) days of the date Licensor delivers to Licensee the accountant's written report reflecting such conclusion. This section shall survive any termination of this Agreement for ten (10) years. ARTICLE 7. TERM AND TERMINATION. 7.1 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 and shall remain in effect for the life of the last-to-expire patent licensed under this Agreement, or until the last patent application licensed under this Agreement is abandoned. 7.2 Any termination of this Agreement will not affect the rights and obligations set forth in the following Articles: Article 3. Royalties Article 6. Books and Records Article 10. Indemnification Article 11. Confidentiality Article 12. Use of Names 7.3 If Licensee should violate or fail to perform any material term or covenant of this Agreement, then Licensor may give written notice of such default ("Notice of Default") to Licensee. If Licensee should fail to repair such default within sixty (60) days after the date of 26
such Notice of Default, Licensor shall have the right to terminate this Agreement and the licenses herein by a second written notice ("Notice of Termination") to Licensee. If a Notice of Termination is sent to Licensee, this Agreement shall automatically terminate on the date such notice takes effect. Such termination shall not relieve Licensee of its obligation to pay any royalty or license fees owing at the time of such termination and will not impair any accrued right of Licensor. Material terms under this Agreement include, but are not Limited to, Article 2 (Grant), Article 3 (Royalties), Article 4 (Due Diligence), Article 5 (Quality Assurance), Article 6 (Books and Records), and Article 10 (Indemnification). 7.4 Licensee shall have the right at any time to terminate this Agreement by giving notice in writing to Licensor. Such Notice of Termination shall be effective sixty (60) days after the date thereof. 7.5 Any termination pursuant to the above paragraph shall not relieve Licensee of any obligation or liability accrued hereunder prior to such termination or rescind anything done by Licensee or any payments made to Licensor hereunder prior to the time such termination becomes effective, and such termination shall not affect in any manner rights of Licensor arising under this Agreement prior to such termination. ARTICLE 8. REPRESENTATIONS AND WARRANTIES. 8.1 Licensor warrants and represents to Licensee that it has the lawful right to grant the license under this Agreement and that the Licensor has made all filings and paid all fees and done all such other things as to maintain the Patent Rights in good standing. 8.2 This license and the associated inventions are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. LICENSOR MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION OR LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER PROPERTY RIGHT. 27
8.3 Nothing in this Agreement shall be construed as: (a) a warranty or representation by Licensor as to the validity, enforceability, or scope of any of the Patent Rights hereunder, or elsewhere; (b) 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; (c) an obligation to bring or prosecute actions or suits against third parties for patent infringement, except as provided in Article 11; (d) conferring by implication, estoppel, or otherwise, any license or rights under any patents or patent applications of Licensor other than those of the Patent Rights as defined herein; or (e) an obligation to furnish to Licensee any know-how or other information relating to the Patent Rights. ARTICLE 9. LIMITATION OF LIABILITY. 9.1 In no event shall Licensor be liable for any incidental, special, or consequential damages resulting from exercise of the license granted herein or the use of any invention described in any of the Patent Rights or the use of any Licensed Products. ARTICLE 10. INDEMNIFICATION. 10.1 Licensee will indemnity hold harmless, and defend Licensor, its officers, employees, and agents against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license. This indemnification will include, but will not be limited to, any product liability. 10.2 Licensor will indemnity, hold harmless, and defend Licensee, its officers, employees, and agents against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of acts or omissions which are the sole responsibility of Licensor. This indemnification will include, but will not be limited to, any product liability. ARTICLE 11. CONFIDENTIALITY. 28
11.1 Licensee and Licensor respectively will treat and maintain the proprietary business, patent prosecution, software, engineering drawings, process and technical information, and other proprietary information ("Proprietary Information") of the other party in confidence using at least the same degree of care as that party uses to protect its own proprietary information of a like nature for a period from the date of disclosure until five years after the date of termination of this Agreement. 11.2 All Proprietary Information will be labeled or marked confidential or as otherwise similarly appropriate by the disclosing party, or if the Proprietary Information is orally disclosed, it will be reduced to writing or some other physically tangible form, marked and labeled as set forth above by the disclosing party, and delivered to the receiving party within 30 days after the oral disclosure as a record of the disclosure and the confidential nature thereof Notwithstanding the foregoing, Licensee and Licensor may use and disclose Proprietary Information to its employees, agents, consultants, contractors, provided that any such parties are bound by a like duty of confidentiality. 11.3 Nothing contained herein will in any way restrict or impair the right of Licensee or Licensor to use, disclose, or otherwise deal with any Proprietary Information: 11.3a that recipient can demonstrate by written records was previously known to it; 11.3b that is now, or becomes in the future, public knowledge other than through acts or omissions by recipient. 11.3c that is lawfully obtained without restrictions by recipient from sources independent of the disclosing party; 11.3d that 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 29
request of a governmental entity or agency; or 11.3e that is furnished to a third party by the recipient with similar confidentiality restrictions imposed on such third party, as evidenced in writing. 11.4 Upon termination of this Agreement, Licensee and Licensor will destroy or return to the disclosing party proprietary information received from the other in its possession within 15 days following the effective date of termination. Licensee and Licensor will provide each other, within 30 days following termination, with a written notice that Proprietary Information has been returned or destroyed. Each party may, however, retain one copy of Proprietary Information for archival purposes in non-working files. ARTICLE 12. USE OF NAMES. 12.1 Neither party shall use the name or trademarks of the other party without the prior written consent of the other party. Notwithstanding the previous sentence, Licensee shall prominently display in catalogues, brochures, or other advertisements or materials describing Licensed Products, Licensor's name in association with such products in one of the following forms: "LYNX", "Lynx", "Lynx Therapeutics", or "Lynx Therapeutics, Inc." ARTICLE 13. NOTICES. 13.1 Any notice or payment required to be given to either party will be deemed to have been properly given and to be effective (a) on the date of delivery if delivered in person or (b) five days after mailing if mailed by first-class certified mail, postage paid, to the respective addresses given below, or to another address as it may designate by written notice given to the other party. As to Licensor: Lynx Therapeutics, Inc. 30
3832 Bay Center Place Hayward, CA 94545 Attn: CEO As to Licensee: Cruachem, Inc. 34 Mount Pleasant Drive Aston, PA 19014 Attn: CEO ARTICLE 14. ASSIGNABILITY. 14.1 Neither this Agreement nor any rights or benefits hereunder shall be assignable or transferable by Licensee without the prior written consent of Licensor, except that Licensee may assign its rights and obligations under this Agreement as a part of the sale or transfer of its entire business. ARTICLE 15. GOVERNING LAWS. 15.1 This Agreement shall be considered to have been made in the United States, and shall be interpreted in accordance with the laws of the State of California. ARTICLE 16. MISCELLANEOUS. 16.1 Headings. 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. 16.2 Entire Agreement. This Agreement embodies the entire understanding of the parties and will supersede all previous communication, representations or understandings, either oral or 31
written, between the parties relating to the subject matter hereof. No amendment or modification hereof will be valid or binding upon the parties unless made in writing and signed on behalf of each party. 16.3 Severability. In case any of the provisions contained in the Agreement are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not affect any other provisions hereof, but this Agreement will be construed as if such invalid or illegal or unenforceable provisions had never been contained herein. 16.4 Waiver. 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 will be deemed a waiver as to any subsequent and /or similar breach or default. 16.5 No Agency. Nothing herein shall be deemed to create an agency, joint venture, or partnership relationship between Licensee and Licensor. 32
16.7 Export Control Laws. Licensee will observe all applicable United States and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. 16.8 Patent Marking. Licensee will mark all Licensed Products made, distributed, or sold under the terms of this Agreement, or their containers, in accordance with the applicable patents marking laws. Licensee shall prominently display in catalogues, brochures, or other advertisements or materials describing Licensed Products, a label license statement with the following, or comparable, restriction: Purchase of this product is accompanied by a license under U.S. patents 5,599,922; 5,591,607; 5,631,135; 5,726,297; 5,476,925; 5,646,260; their foreign counterparts, and other pending patents, owned or exclusively licensed by Lynx Therapeutics, Inc., to use this product for research only. Use in humans or use for diagnostic purposes is not authorized. In Witness Whereof, Licensee and Licensor have caused this Agreement to be duly executed by their duly authorized representatives as of the date first shown herein. LYNX THERAPEUTICS, INC. CRUACHEM, INC. By: By: ---------------------------------- ------------------------------------- Title: Title: ------------------------------- ---------------------------------- 33
EXHIBIT A. (TO CRUACHEM, INC. SUBLICENSE) PATENT RIGHTS. Filing Date Issue Docket No. Subject Matter (m-d-y) Ser. No. Date Pat.No. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 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. 34
EXHIBIT B. (TO CRUACHEM, INC. SUBLICENSE) MINIMUM QUALITY ASSURANCE. 1. Oligonucleotide N3'->P5' phosphoramidates: Minimum purity of * percent (*%) as measured by ion exchange chromatograpy or capillary electrophoresis. 11. Monomers: Minimum purity of * percent (*%) as measured by reverse phase HPLC. * 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. 35
EXHIBIT F JBL SCIENTIFIC, INC. SUBLICENSE LICENSE AGREEMENT This License Agreement ("Agreement") is effective as of ________________ ("Effective Date"), by and between JBL Scientific. Inc., a corporation, having its principal office at 277 Granada Drive, San Luis Obispo. California. USA. ("Licensee"). and Lynx Therapeutics. Inc., a Delaware corporation. having its principal office at 3832 Bay Center Place, Hayward California, USA ("Licensor"). RECITALS WHEREAS, Licensor owns and is an exclusive licensee of proprietary technology relating to oligonucleotide N3'--->P5' phosphoramidates, their manufacture, and their uses in a variety of fields ("Amidate Technology"); WHEREAS, Licensee has expertise in nucleic acid chemistry and is in the business of manufacturing, marketing, selling, and distributing nucleic acid compounds; and WHEREAS, Licensee desires to acquire from Licensor, and Licensor desires to grant to Licensee in exchange for the consideration described below the right to use Licensor's Amidate Technology to manufacture, market, sell, and commercialize oligonucleotide N3'-->P5' phosphoramidates in the Research Field. NOW, THEREFORE, in view of the foregoing premises and in consideration of the mutual promises and covenants contained in the Agreement, Licensor and Licensee agree as follows: ARTICLE 1. DEFINITIONS. 36
1.1 "Affiliate" means a corporation, partnership, entity, person, firm, company or joint venture that controls, is controlled by or is under the common control with the referenced Party. For the purposes of this definition the word "control" (including, with correlative meaning, the terms "controlled by" or "is under the common control with") means the power to direct or cause the direction of the management and policies of such entity, or the ownership of at least fifty percent (50%) of the voting stock of such entity. 1.2 "Licensed Product" shall mean any product(s) whose manufacture, use, or sale in any country would, but for this Agreement, comprise an infringement, including contributory infringement, of one or more Valid Claims. 1.3 "Monomer Licensed Product" shall mean a Licensed Product which is a monomer used in the synthesis of an oligonucleotide N3'->P5' phosphoramidate. 1.4 "Net Sales" means the total amount invoiced or otherwise charged by Licensee or its Affiliates or its sublicensee on account of the final or end product sale of a Licensed Product to a non-Affiliate, less the following deductions to the extent actually incurred or allowed based upon the sale of such Licensed Product: (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such non-Affiliate for spoiled, damaged, out dated and returned Licensed Product; (b) freight and insurance costs for transporting such Licensed Product, to the extent invoiced to the purchaser, (c) sales, value-added and other direct taxes on the sale of the Licensed Product; (d) customs duties, surcharges and other governmental charges incurred in connection the exportation or importation of such Licensed Product; (e) trade, cash, and quantity discounts off of the invoiced price and similar promotional discounts (such as management fees required by hospital buying groups) off the invoiced price, all to the extent consistent with normal practice in the industry; (f) amounts reflecting retroactive price adjustments on sale of Licensed Products, to the extent not previously deducted from Net Sales; and 37
(g) rebates or chargebacks made on the sale of such Licensed Product, to the extent consistent with the normal practice in the industry, and provided that any and all of the foregoing are calculated in accordance with generally accepted accounting principles applicable to the locality where the invoices are prepared and consistently applied. 1.5 "Patent Rights" shall mean the patents and patent applications listed in Exhibit A; and with respect to U.S. patents and applications, all foreign equivalents thereof, and patents issuing on said foreign and U.S. patent applications. "Patent Rights" shall also include any divisional, continuation, reissue, reexamination or extension of the above-described patent applications and resulting patents, along with any extended or restored term, and any confirmation patent, registration patent, or patent of addition. 1.6 "Research Field" shall mean any use in the field of scientific or commercial research, excepting any use that involves treating humans in any way whatsoever for any condition or any use that involves diagnosis of, testing for, or detection of, a disease condition, or the predisposition or susceptibility thereto, or the clinical progress thereof 1.7 "Valid Claim" means any claim(s) in an unexpired patent or pending in a patent application included within the Patent Rights which has not been held unenforceable, unpatentable, or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer. ARTICLE 2. GRANT. 2.1 Subject to all the terms and limitations of this Agreement, Licensor hereby grants to Licensee and its Affiliates a worldwide non-exclusive royalty-bearing license, without the right to sublicense. Under the Patent Rights to make, market, distribute, and sell Licensed Products and/or Monomer Licensed Products in the Research Field. 38
2.2 Licensee covenants that it will not make, use, market, distribute, and sell Licensed Products outside the Research Field, nor shall Licensee or any of its Affiliates promote the use, marketing, distribution, or sale of Licensed Products outside the Research Field. 2.3 Licensee will promptly disclose and hereby grants back to Licensor a worldwide, royalty-free sublicensable license of a scope that permits Licensor to fully exploit any improvement made in the manufacture, purification, or quality control of oligonucleotide N3'-> P5' phosphoramidates during the term of this Agreement; provided that such improvements would be covered by or within the scope of a Valid Claim of a patent or patent application licensed hereunder. For other improvements made in the manufacture, purification, or quality control of oligonucleotide N3'->P5' phosphoramidates during the term of this Agreement that are not covered by or within the scope of a Valid Claim of a patent or patent application licensed hereunder, Licensee hereby grants Licensor an option to a worldwide royalty-bearing license, with right to sublicense, to make, use, and sell such improvements under reasonable terms. ARTICLE 3. ROYALTIES. 3.1 In consideration of the rights and licenses herein granted to it, Licensee shall pay to Licensor a royalty of * percent (*%) on the Net Sales of Licensed Products and Monomer Licensed Products sold by Licensee or its Affiliates; provided, however, that from and after the first anniversary of the Effective Date of the Agreement, Licensee shall pay to Licensor a royalty amount which is the greater of * dollars ($*) and * percent (*%) of the Net Sales of Licensed Products and Monomer Licensed Products sold by Licensee or its Affiliates. Royalties on Net Sales of Licensed Products are payable by Licensee until the last patent under Patent Rights, embodying a Valid Claim, expires. 3.2 Payments of royalties on Net Sales of Licensed Products (other than the minimum annual royalties whose payment schedule is set forth below) under this Article are to be made to Licensor within forty-five (45) days of the end of each December and June for sales invoiced in * 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. 39
the six month period prior to the end of each of those months. Royalties shall be accompanied by a statement that shall include for each country in which sales of products occurred: the gross sales and Net Sales in each country's currency; the royalty rate; the related amounts payable in each country's currency; the applicable exchange rate to convert from each country's currency to U.S. dollars; and the amounts payable in U.S. dollars. Royalties shall first be calculated in the currency of the country in which sales took place and then directly converted to U.S. Dollars using the exchange rate as reported in the Wall Street Journal for the last business day of the calendar quarter of sales. All payments hereunder shall be made to Licensor in U.S. dollars by bank wire transfer in immediately available funds to such account designated by Licensor. The paying party shall provide notice at least five (5) business days prior to the wire transfer date of the amount of payment, the nature of the payment (with reference to the applicable section of the subject agreement) and the date of receipt of good funds. Such notice should be given to the Controller of Licensor at the address set forth at the beginning of this Agreement or such other address directed by Licensor. 3.3 Any payment under this Article not paid by the payment due date shall bear interest at the rate which is the lesser of ten percent (10%) per annum or the maximum rate permitted by applicable law calculated on the number of days such payment is delinquent. 3.4 The payments under this Article shall be free and clear of any taxes, duties, levies, fees or charges, except for withholding taxes (to the extent applicable). The paying party shall make any withholding payments due on behalf of Licensor and shall promptly provide Licensor with written documentation of any such payment sufficient to satisfy the reasonable requirements of an appropriate tax authority concerning an application by Licensor for a foreign tax credit for such payment or for similar treatment. The paying party agrees to take such reasonable and lawful steps as Licensor may request to minimize the amount of tax to which the payments to Licensor are subject. ARTICLE 4. DUE DILIGENCE. 40
4.1 Licensee shall at its expense: (a) use its best efforts to promote the sale of the Licensed Products and Monomer Licensed Products and to satisfy market demand for them; (b) engage in advertising and sales promotion of Licensed Products and Monomer Licensed Products; and (c) maintain an active and suitably trained sales force to carry out such efforts. 4.2 Licensee's due diligence obligation shall be deemed satisfied hereunder by documented expenditures of at least * dollars ($*) on sales promotion and marketing of Licensed Products in the following amounts in the following periods: Sale promotion & marketing expenses Period during which amount is expended - ----------------------------------- -------------------------------------- $ *. From Effective Date to 1st anniversary thereof $ *. From 1st anniversary to 2nd anniversary $ *. From 2nd anniversary to 3rd anniversary ARTICLE 5. QUALITY ASSURANCE. 5.1 Licensee shall use its best efforts to make Licensed Products and Monomer Licensed Products of the highest quality for their intended use. Licensee shall make Licensed Products and Monomer Licensed Products with the minimal purity standards set forth in Exhibit B. ARTICLE 6. BOOKS AND RECORDS. 6.1 Licensee shall keep, for at least three (3) years, records of all sales of products in sufficient detail to permit Licensor to confirm the accuracy of Licensee's payment calculations. Once a year at the request and the expense of Licensor, upon at least five (5) days prior written notice, Licensee shall permit a nationally recognized, independent, certified public accountant, appointed by Licensor and acceptable to Licensee, access to these records during regular business hours solely to the extent necessary to verify such calculations, provided that such an accountant has entered into a confidentiality agreement with Licensee with terms substantially * 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. 41
similar to the confidentiality provisions of this Agreement, limiting the use and disclosure of such information to purposes germane to this section. Results of any such examination shall be made available to both parties to this Agreement. If such examination reveals an underpayment of amounts by five percent (5%) or more, Licensee shall pay all costs of such examination. In the event such accountant concludes that additional payments are owed, the additional payments shall be paid within thirty (30) days of the date Licensor delivers to Licensee the accountant's written report reflecting such conclusion. This section shall survive any termination of this Agreement for ten (10) years. ARTICLE 7. TERM AND TERMINATION. 7.1 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 and shall remain in effect for the life of the last-to-expire patent licensed under this Agreement, or until the last patent application licensed under this Agreement is abandoned. 7.2 Any termination of this Agreement will not affect the rights and obligations set forth in the following Articles: Article 3. Royalties Article 6. Books and Records Article 10. Indemnification Article 11. Confidentiality Article 12. Use of Names 7.3 If Licensee should violate or fall to perform any material term or covenant of this Agreement, then Licensor may give written notice of such default ("Notice of Default") to Licensee. If Licensee should fail to repair such default within sixty (60) days after the date of such Notice of Default, Licensor shall have the right to terminate this Agreement and the licenses herein by a second written notice ("Notice of Termination") to Licensee. If a Notice of 42
Termination is sent to Licensee, this Agreement shall automatically terminate on the date such notice takes effect. Such termination shall not relieve Licensee of its obligation to pay any royalty or license fees owing at the time of such termination and will not impair any accrued right of Licensor. Material terms under this Agreement include, but are not limited to, Article 2 (Grant), Article 3 (Royalties), Article 4 (Due Diligence), Article 5 (Quality Assurance), Article 6 (Books and Records), and Article 10 (Indemnification). 7.4 Licensee shall have the right at any time to terminate this Agreement by giving notice in writing to Licensor. Such Notice of Termination shall be effective sixty (60) days after the date thereof 7.5 Any termination pursuant to the above paragraph shall not relieve Licensee of any obligation or liability accrued hereunder prior to such termination or rescind anything done by Licensee or any payments made to Licensor hereunder prior to the time such termination becomes effective, and such termination shall not affect in any manner rights of Licensor arising under this Agreement prior to such termination. ARTICLE 8. REPRESENTATIONS AND WARRANTIES. 8.1 Licensor warrants and represents to Licensee that it has the lawful right to grant the license under this Agreement and that the Licensor has made all filings and paid all fees and done all such other things as to maintain the Patent Rights in good standing. 8.2 This license and the associated inventions are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. LICENSOR MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION OR LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER PROPERTY RIGHT. 8.3 Nothing in this Agreement shall be construed as: (a) a warranty or representation by 43
Licensor as to the validity, enforceability, or scope of any of the Patent Rights hereunder, or elsewhere; (b) 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: (c) an obligation to bring or prosecute actions or suits against third parties for patent infringement, except as provided in Article 11; (d) conferring by implication, estoppel, or otherwise, any license or rights under any patents or patent applications of Licensor other than those of the Patent Rights as defined herein; or (e) an obligation to furnish to Licensee any know-how or other information relating to the Patent Rights. ARTICLE 9. LIMITATION OF LIABILITY. 9.1 In no event shall Licensor be liable for any incidental, special, or consequential damages resulting from exercise of the license granted herein or the use of any invention described in any of the Patent Rights or the use of any Licensed Products. ARTICLE 10. INDEMNIFICATION. 10.1 Licensee will indemnify, hold harmless, and defend Licensor, its officers, employees, and agents against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license. This indemnification will include, but will not be limited to, any product liability. ARTICLE 11. CONFIDENTIALITY. 11.1 Licensee and Licensor respectively will treat and maintain the proprietary business, patent prosecution, software, engineering drawings, process and technical information, and other proprietary information ("Proprietary Information") of the other party in confidence using at least the same degree of care as that party uses to protect its own proprietary information of a like 44
nature for a period from the date of disclosure until five years after the date of termination of this Agreement. 11.2 All Proprietary Information will be labeled or marked confidential or as otherwise similarly appropriate by the disclosing party, or if the Proprietary Information is orally disclosed, it will be reduced to writing or some other physically tangible form, marked and labeled as set forth above by the disclosing party, and delivered to the receiving party within 30 days after the oral disclosure as a record of the disclosure and the confidential nature thereof. Notwithstanding the foregoing, Licensee and Licensor may use and disclose Proprietary Information to its employees, agents, consultants, contractors, provided that any such parties are bound by a like duty of confidentiality. 11.3 Nothing contained herein will in any way restrict or impair the right of Licensee or Licensor to use, disclose. or otherwise deal with any Proprietary Information: 11.3a that recipient can demonstrate by written records was previously known to it; 11.3b that is now, or becomes in the future, public knowledge other than through acts or omissions by recipient. 113c that is lawfully obtained without restrictions by recipient from sources independent of the disclosing party; 11.3d that 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; or 11.3e that is furnished to a third party by the recipient with similar confidentiality restrictions imposed on such third party, as evidenced in writing. 45
11.4 Upon termination of this Agreement, Licensee and Licensor will destroy or return to the disclosing party proprietary information received from the other in its possession within 15 days following the effective date of termination. Licensee and Licensor will provide each other, within 30 days following termination, with a written notice that Proprietary Information has been returned or destroyed. Each party may, however, retain one copy of Proprietary Information for archival purposes in non-working files. ARTICLE 12. USE OF NAMES. 12.1 Neither party shall use the name or trademarks of the other party without the prior written consent of the other party. Notwithstanding the previous sentence, Licensee shall prominently display in catalogues, brochures, or other advertisements or materials describing Licensed Products, Licensor's name in association with such products in one of the following forms: "LYNX", "Lynx", "Lynx Therapeutics", or "Lynx Therapeutics, Inc." ARTICLE 13. NOTICES. 13.1 Any notice or payment required to be given to either party will be deemed to have been properly given and to be effective (a) on the date of delivery if delivered in person or (b) five days after mailing if mailed by first-class certified mail, postage paid, to the respective addresses given below, or to another address as it may designate by written notice given to the other party. As to Licensor: Lynx Therapeutics, Inc. 3832 Bay Center Place Hayward, CA 94545 Attn: CEO As to Licensee: JBL Scientific, Inc. 46
277 Granada Drive San Luis Obispo, CA 93401 Attn: President ARTICLE 14. ASSIGNABILITY. 14.1 Neither this Agreement nor any rights or benefits hereunder shall be assignable or transferable by Licensee without the prior written consent of Licensor, except that Licensee may assign its rights and obligations under this Agreement as a part of the sale or transfer of its entire business. ARTICLE 15. GOVERNING LAWS. 15.1 This Agreement shall be considered to have been made in the United States and shall be interpreted in accordance with the laws of the State of California. ARTICLE 16. MISCELLANEOUS. 16.1 Headings. 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. 16.2 Entire Agreement. This Agreement embodies the entire understanding of the parties and will supersede all previous communication, representations or understandings, either oral or written, between the parties relating to the subject matter hereof. No amendment or modification hereof will be valid or binding upon the parties unless made in writing and signed on behalf of each party. 16.3 Severability. In case any of the provisions contained in the Agreement are held to be 47
invalid, illegal, or unenforceable in any respect, such invalidity, illegality. or unenforceability will not affect any other provisions hereof, but this Agreement will be construed as if such invalid or illegal or unenforceable provisions had never been contained herein. 16.4 Waiver. It is agreed that no waiver by either party hereto of an breach or default of any of the covenants or agreements herein set forth will be deemed a waiver as to any subsequent and/or similar breach or default. 16.5 No Agency. Nothing herein shall be deemed to create an agency, joint venture, or partnership relationship between Licensee and Licensor. 16.7 Export Control Laws. Licensee will observe all applicable United States and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. 16.8 Patent Marking. Licensee will mark all Licensed Products made, distributed, or sold under the terms of this Agreement, or their containers, in accordance with the applicable patents marking laws. Licensee shall prominently display in catalogues, brochures, or other advertisements or materials describing Licensed Products, a label license statement with the following, or comparable, restriction: Purchase of this product is accompanied by a license under U.S. patents 5,599,922; 5,837,835; 5,591,607; 5,631,135; 5,726,297; 5,684,143; 5,824,793; 5,859,233; 5,476.925; 5,646,260; 5,648,480; their foreign counterparts, and other pending patents, owned or exclusively licensed by Lynx Therapeutics, Inc., to use this product for research only. Use in humans or use for diagnostic purposes is not authorized. In Witness Whereof, Licensee and Licensor have caused this Agreement to be duly executed by their duly authorized representatives as of the date first shown herein. 48
LYNX THERAPEUTICS, INC. JBL SCIENTIFIC, INC. By: By: --------------------------------- ------------------------------------ Title: Title: ------------------------------ --------------------------------- 49
EXHIBIT A. (TO JBL SCIENTIFIC, INC. SUBLICENSE) PATENT RIGHTS. Filing Date Issue Docket No. Subject Matter (m-d-y) Ser. No. Date Pat. No. * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * *. * * * * * 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. 50
EXHIBIT B. (TO JBL SCIENTIFIC, INC. SUBLICENSE) MINIMUM QUALITY ASSURANCE. I. Oligonucleotide N3'-->P5' phosphoramidates: Minimum purity of * percent (*%) as measured by ion exchange chromatograpy or capillary electrophoresis. II. Monomers Minimum purity of *percent (*%) as measured by reverse phase HPLC. * 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. 51
EXHIBIT G TERMS FOR EXCLUSIVE SUBLICENSE UNDER NORTHWESTERN LICENSE Definitions: Same as in Northwestern License License Grant: Exclusive worldwide sublicense of all Lynx's rights under the Northwestern License, subject to the terms and conditions of the Northwestern License License Fee: None Royalties: As provided in Section 4.1 of the Northwestern License, payable directly to Northwestern Patent Costs: Reimbursement to Northwestern as provided in Section 4.10 of the Northwestern License Minimum Royalty: As provided in Section 6.2 of the Northwestern License, payable directly to Northwestern Term: Equal to the term of the Northwestern License Termination: Lynx will not terminate the Northwestern License without the express prior written consent of Geron Indemnity: Indemnification of Northwestern as provided in Sections 12.1 and 12.2 of the Northwestern License Existing Sublicenses: Geron's rights will be subject to the existing Sublicenses, and Geron will be entitled to all royalties and other sublicensor rights (and responsible for all sublicensor obligations) under such Sublicenses, including without limitation the obligation to pay Northwestern its share, if any, of royalties from such Sublicenses. Other Terms: As negotiated by 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. 52
EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Geron Corporation for the registration of 210,000 shares of its common stock and to the incorporation by reference therein of our report dated February 8, 2002, with respect to the consolidated financial statements of Geron Corporation included in its Annual Report (Form 10-K) for the year ended December 31, 2001, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Palo Alto, California March 6, 2002